Patrick Secker (Barker, Liberal Party) Share this | Hansard source

I rise to speak on the Tax Laws Amendment (2006 Measures No. 3) Bill 2006. Because of the limited time, I will keep my remarks mostly to the wine industry and the WET rebate. I represent in my electorate something like 43 per cent of Australia’s wine industry. I represent the grape areas. I notice that the member for Hunter did speak briefly on this matter, and he has a wine area in his own electorate but certainly nowhere near as large as mine. I have in my electorate the best-known wine area in the world, from an Australian perspective, and that is the Barossa Valley. I also represent the Coonawarra, the Padthaway-Wrattonbully areas, Mount Benson, Riverland, which on its own produces 25 per cent of Australia’s wine, and many other premium areas. So it is a pretty important industry to my electorate. I understand the taxation issues quite well. I can remember when there was no tax on wine. Then tax was brought in at 10 per cent on top of the 15 per cent excise. It then went to 20 per cent. It then went to 22 per cent. It then went to 24 per cent. It then went to 26 per cent on top of the 15 per cent excise. All those tax increases happened under Labor.

It is very easy for someone from the opposition to come into this House and say that they will reduce tax on this or that. I found it very interesting that the member for Hunter tried to take some credit for reducing the WET. Look at the history of how Labor applied taxes to the wine industry. The tax went from zero to 26 per cent. That is the Labor record. There were no rebates, no reductions, only increases. That is their history of taxing the wine industry in Australia. As I said, it is very easy for them to come into this House, move an amendment and say, ‘We’ll reduce tax,’ because they do not have to wear the consequences.

When I first came into the parliament in 1998 representing the seat of Barker, it was with great honour. At that time the regime was 26 per cent wholesale sales tax plus 15 per cent excise—that is, 41 per cent in total. As the previous member said, when we brought in the new tax system with a 10 per cent GST, which can be an input credit, we had to have a wine equalisation tax to represent something like that which we had before. The figure was struck at 29 per cent. So there was a 29 per cent wine equalisation tax on top of the 10 per cent GST. It was actually never meant to be revenue neutral, as was suggested by the member for Hunter. It was meant to put one to two per cent on the average bottle of wine, which it did. There were some arguments as to whether the taxation should be based on the alcohol or on the value of the wine. We came up with this system in consultation with the wine industry. They suggested that it would affect premium wines more—that you would have to pay more than two per cent for premium wines and that, if we did not use the system we did, it could drastically affect our lower priced wines and our cask wine, which are a very important part of wine sales and marketing. So we came up with the 29 per cent.

When I first entered parliament I was told that I had no hope of changing the tax regime. I continued to argue otherwise. In 2001 we made some initial changes and brought in a tax rebate on the first $1 million worth of sales. Even the larger wineries got a $290,000 rebate, whereas previously with cellar door sales it was something like $42,000. So there was an increase of $248,000 in rebates to the industry. That was important because I could already see problems on the horizon for the wine and grape-growing industries. Blind Freddie could have seen from the plantings then that we were going to experience an oversupply—which we have now. In this budget we have further increased the rebate to $1.7 million—from $290,000 to $500,000. That is important for the wine industry. The number of wineries in Australia has greatly increased. We have continued to increase the volume of our exports but we need to address the current oversupply. By ensuring that the wineries out there have a better chance of surviving this oversupply, we have a better chance of getting through the tougher problems. The more wineries there are to buy grapes from the grape growers, the more chance they have of selling their grapes.

I am pleased that again the government has decided to look after the wine and grape-growing industries because wine is an important part of our economy. Wine is now Australia’s third largest export commodity. Many people do not realise that. Wine exports are worth over $2 billion—a substantial amount. That is the result of a lot of hard work by the wine industry and the grape growers of Australia. Our exports have gone up from about half a per cent of our total production to about 65 per cent now. We are exporting more and more of our wine. If you go to the United States, to Asia or to the UK, you will see a lot of Australian wine on the shelves. Australian wines are the biggest sellers in the UK now. We have overtaken the French, who are only next door to the UK. The English love our Aussie wine.

The wine industry is a great industry. I am pleased that the government has made these changes. The wine equalisation tax means that well over 90 per cent of Australian wineries do not pay any tax at all on their wine. The argument that this might lead to people drinking more wine, which might be a health hazard, has fallen flat on its face. If wine is drunk in moderation, it is very good for you. There are plenty of studies all over the world that show that two glasses of wine per day are better for you than none at all. I try to keep to that amount!

The wine equalisation tax is a value based tax. This was a result of what the industry said to us as a government. It is levied at the wholesale level. The tax is paid on the value of the goods and the equivalent value when there is no wholesale sale. Generally, WET is included in the price for which retailers, including bottle shops, hotels, restaurants and cafes, purchase the wine. The WET forms part of the retailer’s cost base and is passed on in the retail price of the wine to the end consumer. In the changes being proposed in the legislation, each wine producer or group of producers will be able to claim an increased rebatable amount of $500,000 each financial year. I was talking to the owner of a winery in my electorate the other day and he said that from about April he had to start paying tax again. Now he will not be paying tax at all. That is certainly a good result for him—and not only that but it enables him to keep producing some of the best wine in the world.

The changes to the legislation will cost about $126 million over the next four years. That is forgone taxation revenue, but it is to the benefit of the wine industry as a whole. It gives me great pleasure to support the Tax Laws Amendment (2006 Measures No. 3) Bill 2006. I urge the House to support the bill.

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