Lisa Chesters (Bendigo, Australian Labor Party) Share this | Hansard source

I guess it is fitting that I follow the member for Mallee so that I can set the record straight about quality of the wine in the Bendigo electorate. We are here to debate reforms to the wine equalisation tax, reforms that are long overdue. I think it is important to remind the House how we got to be here and the panic that the government and the Treasurer caused on budget night back in 2015. On the day after the budget I received a phone call from a local winemaker in my electorate, Adam, from Bress Winery. They produce a wide range of wines in Harcourt—which is unusual, because Harcourt is known for its apples and cider. Adam said to me, 'Lisa, the problem with the reform that has been put forward and the date it starts is that that wine is already in the barrel. It's unfair to bring these reforms in so quickly, reducing the cap so quickly, without any notice to winemakers and wine manufacturers.' He was right. That triggered a conversation that I had as a local MP with people in the Labor opposition team but also, like a number of wine growers, I engaged the government and government ministers to say: 'You can't bring this on in this format and in this way. There needs to be broader consultation with the sector.' There were concerns that the original proposal that was announced on budget night focused first on reducing the cap and second on addressing the issue with bulk and unbranded wine. For a long time it's been acknowledged in the wine industry that the real rorting that has gone on with the wine equalisation tax has been in the space of bulk and unbranded wine.

There was also concern on budget night around eligibility. So what constitutes a winemaker? What constitutes a cellar door? Who would actually be eligible for this particular rebate? People in my electorate were so concerned because they believed it would stifle innovation and it would stifle their investment. They were concerned that the original proposal to deal with the fact that there was rorting going on in this space and that it was costing the budget necessary revenue, whilst well intentioned, wouldn't achieve that.

I do want to acknowledge, though, that, after those first alarm bells from the industry and from MPs, the government ministers involved in this space did listen, did take on board those concerns and did start a genuine face-to-face grassroots consultation, engaging with not just the wine associations nationally—that is, the Winemakers' Federation—but also with the wine industry.

We have a very diverse wine industry in Australia. It's not just Jacob's Creek and Yellow Tail, which we know as the big export names and brands. We have a number of small independent winemakers in Australia, particularly in the state of Victoria. In Victoria, the wine industry employs nearly 13,000 people and many of these jobs are in regional Australia. Victoria has more cellar doors than any other state. There are 22 diverse regions, 747 wineries and almost 500 cellar doors. Just to point out how relevant that is for my own electorate, we have the Heathcote winemaking region, the Bendigo winemaking region and Deputy Speaker Mitchell and I actually share the Macedon winemaking region. I should give a shout out to Curly Flat. Whilst it is in the member for McEwen's electorate, it is a pinot enjoyed by all in the Macedon Ranges. The Heathcote wine region, just to give you an example, has 70 vineyards and 59 cellar doors. There are just under 150 cellar doors and vineyards in the Bendigo electorate. We have more wineries in the Bendigo electorate than we have schools. So any reform in this space is critical to Bendigo, central Victoria and, in fact, all winemaking regions in Victoria.

The concern that was raised by a lot of our independent winemakers on budget night in 2015 was well founded. They all said to me that they agreed that there needed to be reform, that we needed to restore the integrity to the wine equalisation measure, that it was about helping small, independent winemakers and that they supported reform in that way but that that reform needed to be inclusive and researched in a way that supported the original integrity. A local winemaker said in our local Bendigo Advertiser that the reduction of the rebate 'would reduce their revenue by $150,000 in the first year and $210,000 in the second year'. That was the cold, hard reality they were facing if what was proposed on budget night went through. He said:

I have serious concerns about viability going forward because of this change …

The price for a tonne of fruit has increased, production has increased, so reducing the rebate will catch a lot of people out.

Because we have had the consultation, our winemakers in our region are now able to change. They are now able to know going forward exactly where they stand. What we have before us is a compromise. It does allow the winemakers I just talked about, because a lot of their sales are through their cellar doors, to claim a top-up. What we have now in front of us is the ability for the winemaker, if they do pass the new cap limit, to receive a top-up through a grant so that they will still be able to invest that money that they've saved back into their business.

As mentioned by the shadow Assistant Treasurer, we on this side of the House, Labor, have acknowledged the need for change for quite some time. The rebate was first introduced in 2004 and provided tax relief of up to $500,000 to wine producers. The intent of the policy, as stated, was to benefit small wine producers in rural and regional Australia. The intent of the policy currently is not being met, and therefore it is the consensus of the government and the opposition, and the industry itself, that there is a need for change. The rebate did lead to overproduction and damaged Australia's reputation for high-quality wine. It was plagued by rorting by virtual winemakers due to the complexity of the arrangements that had been set up. People got really smart. They worked out the loopholes and the ways in which they could game the system. We all need to acknowledge that and be responsible for and proactive about tightening those loopholes.

I should also note that we need to do more about the wines that we wish to retail overseas. People in the industry say part of our problem with being able to market our great wines—from areas like Heathcote, in my electorate, or from anywhere in Victoria, such as the Mornington Peninsula or the Yarra Valley—in the United States market is that the label they associate with Australian wine is Yellow Tail. They don't have the understanding or the knowledge of how good our wines are more broadly. Yellow Tail is bulk wine. It is not the crafted wine. It is not the quality or the boutique wines that we should be known for. So we have a lot of work to do in regard to promoting the amazing and innovative winemakers and wine varieties that we have in all parts of Australia.

This reform is necessary because it does save our budget hundreds of millions of dollars a year. But we question the timing and the way in which this bill has been brought forward. Back in 2015, we said, 'Hey, let's work together, government, to bring about this reform. Let's do the consultation, but bring forward reform that restores the integrity of the original intent of the wine equalisation tax and at the same time save the budget from the rorting that has gone on in this space.' There were no roadblocks put in place by Labor. We were consultative. We were inclusive. So it is a bit disappointing that it's taken this long to come forward.

As stated, the purpose of this reform was to target, in my opinion, bulk and unbranded wine. Removing the rebate from bulk and unbranded wine is important to drive industry restructure and to drive industry. And the industry also wants to see this happen. Changing the eligibility to exclude bulk and unbranded wine will encourage the re-emergence of brand power. It restores and supports our small independent winemakers, which is critical to building the reputation of our wine, particularly overseas, but also critical to encouraging the industry to grow and to innovate. Cleanskins, unbranded wine, work against the objectives of the wine equalisation tax and against the objectives that so many of us talk about in this place of growing the dining experience, growing the dining boom and growing the opportunity for export. We continue to say that we need to focus on the top tier—the top shelf. We need to do that with this measure to ensure that we have the innovation at the grassroots level.

I know that the people in my electorate will welcome the certainty, going forward. Whilst many of the wineries, the 150 or so that I mentioned, never hit the cap because they are too small, the package that we have before us does give them the opportunity to strive, to invest and to think about growing their businesses. The member for Mallee mentioned a few of the wineries that we have in Bendigo. I would need another 15 minutes to mention all of them, but I do want to acknowledge the openness and frankness of the consultation that the winemakers in the Bendigo electorate have had with me about their vision for their industry.

I want to acknowledge the work the state Labor government did around this as well to really promote and support the industry. Getting people to head out to the cellar doors, invest, be involved and spend their dollars in regional communities is about local, state and federal governments working together. We have a famous art gallery in Bendigo that is quite popular but our winemakers say that when there is a show on at the art gallery, like the Marilyn Monroe exhibition, most of their clientele drive up from Melbourne through Heathcote, stop at the wineries, stay overnight, then the next day go to the exhibition and spend the day in Bendigo. A strong cellar door is important for regional tourism. Making sure that we have that opportunity for people to stay in a region is also important. We have our cellar doors working together for some quite fun things like bike trails—being able to ride your bike from winery to winery, order your wine and then have the wine turn up at your hotel later. Equally, a lot of our wineries are now sending their wine all over the country. To federal MPs, if you want to have Bendigo wine to share with your guests and colleagues here a number of our wineries will send wine to Parliament House for you. Our winemakers are not afraid of change. They are incredibly innovative. In Victoria, they employ 13,000 people and a lot of those are in regional areas—and, in particular, in my electorate of Bendigo.

In this contribution I have focused solely on the wine equalisation tax. There is broad agreement amongst the industry, from the small winemaker to the large mass producer that exports, that closing the loopholes is vital for the integrity of the measure. However, there is also acknowledgement that reform shouldn't stop here, that we need to keep the conversation going about wine, about the wine equalisation tax and about alcohol tax. Locally they are keen to discuss volumetrics; they are keen to look at the industry as a whole. Our cider makers and our craft beer associations are all keen to be involved in a conversation about how we can support independent boutique craft wine, cider and beer makers.

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