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Wine Senate
Wine and Grape Industry CALLS FOR CHANGE
The grape and wine industry could see major changes to the way the Federal Government legislates things like tax and funding in the next year, if a new report submitted by the Senate Rural and Regional Affairs and Transport Committee is approved.
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The report, released in February, contains 12 recommendations made by the Committee on topical issues such as the supermarket duopoly, Wine Equalisation Tax rebate, private labels and export grants. By Hannah Sparks
The Committee called for submissions and held three public hearings to take evidence in Adelaide, Launceston and Swan Valley last year. More than 40 organisations and individuals took part, to help pinpoint the changes necessary to improve the demand for Australian wine and its competitive stance globally.
Between 2014-15 IBISWorld estimated that Australia’s grape and wine industry contributed $1.6 billion to the economy, with wine (excluding the Northern Territory) now produced in all states. Yet figures also suggest that the effects of the supply and demand crisis of 2005-06 are still being seen.
The Committee heard consistently of industry downsizing due to recent challenges, including falling profits for winemakers. The Winemakers’ Federation of Australia reported that at the beginning of 2014, the number of producers still not able to cover their variable costs was up to 84 per cent.
Recommendations Met with Disappointment
While industry and the Committee point to the same issues concerning how the demand for Australian wine could be improved, not all agree on how each should be addressed, and the Committee’s 12 recommendations have been met with disappointment from some winemakers and grape growers.
The national representative body for Australian winemakers, WFA, has submitted its own recommendations and detailed recovery plans for the wine industry to the inquiry. The recovery plan has been endorsed by WGGA and state wine organisations.
WFA says it’s most disappointed with the Committee’s recommendation to “phase out” the current WET rebate.
“I think the report and all the reports agree that we need a recovery and the adequate funding to make that happen,” Paul Evans, who was CEO of WFA at the time of print, told drinks trade.
Evans explained: “The reports also all agree that the WET rebate needs reform, which is good, however the majority report argues that the rebate should be abolished altogether, which is not our position. We want measured reform.”
WFA is asking Government to gradually phase out WET rebate eligibility for bulk and unbranded wine by changing the legislative definition of ‘rebatable’ wine. WFA also wants to see the separate New Zealand scheme abolished, saying it affords NZ producers a commercial advantage over Australia.
To support these changes, WFA would like transitional rebate measures for merged claimants introduced, encouraging industry consolidation and benefitting small and medium wine businesses by enabling merged entities to continue to claim the rebates. It is then hoped that the Government would work with WFA and its sister organisation Wine Grape Growers Australia to offer support to affected grape and wine businesses.
Evans said that the Committee’s recommendation to end the WET rebate would impact small and medium sized businesses the most.
“Those who are out there in the regions, playing a very important socio-economic role in their local
“We think the report’s most important role will be to emphasise to Government the need for them to act; to show that the industry is complex and it’s doing it tough, and that the Government has a real distinct role to partner with industry and help it recover” - Paul Evans.
communities. It was the original intent of the rebate to support those businesses and we believe there is still a very compelling argument for it to remain,” Evans said.
“Abolishing the rebate without any sort of strong plan B for that part of the industry is not something we could support,” Evans said.
The Government will respond to the Senate report later this year.
Keep up to date on any changes at www.drinksbulletin.com.au
