Wednesday, 9 December 2020
Wine Australia Amendment (Label Directory) Bill 2019; Second Reading
I'm glad to make some comments on the Wine Australia Amendment (Label Directory) Bill 2019, which we support. It makes some positive changes so that copyright and brand protection are given greater security. It's something the wine industry has wanted. It's welcomed by the wine industry, as was said when this was introduced. It's adding one more tool to Wine Australia's export controls toolkit by creating this wine export Label Directory. It ensures that the value from all the hard work people put into developing a strong reputation for their product and for Australian wine across the board, that comes from all of the 65 different identified regions in Australia, is properly protected in terms of copyright and brand reputation.
It is incredible to reflect on the strength of the industry: 2½ thousand wineries, as I understand it; 6,250 grapegrowers; and 150,000 employees, one way or another, across those 65 winegrowing regions. Australia, the 13th largest economy in the world, is the sixth-largest wine producer and the fifth-largest wine exporter in the world.
I think of Western Australia, as I'm sure you do, Mr Deputy Speaker Rick Wilson. We have nine fine wine regions. While we produce only five per cent of Australia's wine, which surprises me a little bit—I usually use the 10 per cent rule for WA—I feel that we can perhaps look to go a bit better in future. But we come back—I hesitate to use that term actually—into the reckoning by virtue of—
An honourable member: By about $15 million.
Yes, that's right—by virtue of the fact that Western Australia produces 20 per cent of Australia's premium wine. It produces only five per cent of wine but 20 per cent of Australia's premium wine by volume, and I'm advised we have collected 30 per cent of Australian wine medals. That's not too bad.
I lived in the south-west, in Margaret River, in the late seventies, so I got to see a little bit of the transformation that occurred in the southern part of the state. The wine industry in Western Australia was established in the Swan Valley. I think the first vines were planted at the beginning of the Swan colony in 1829. That part of Perth—the north-east of Perth—developed to be quite a strong wine-producing region in the fairly early going. It wasn't until the fifties and sixties that grape growing and wine production really shifted south. When I moved down to Margaret River in 1977, there would have been a small handful of producers. The first meeting at which the Margaret River region was kicked off actually occurred, I think, in Busselton in 1966.
By the time I was there, the wine industry was only 10 years old and there weren't that many producers. Well, my word, it changed fast after that and it spread from Margaret River into the Great Southern. You have all these different regions—Manjimup, Blackwood Valley and so on. If you go down there now, as a visitor, particularly to the capes region around Margaret River, you would almost feel that wine production is one of the most dominant forms of economic activity, not least because, when we think about the wine industry, it's not just about what they produce and what they export; most of them have public-facing restaurants, cellar operations and places for people to come and visit and pick. In that way, when we think of its export value, it's not just the $3 billion of exports annually. It's also a really big part of our tourism industry, as a service export and as an attractor. Hopefully, we'll see that come back to how it has been.
An honourable member interjecting—
I know. It's a plague. It's what happens. It's subliminal. That's obviously how it's supposed to work.
An honourable member interjecting—
Yes. I hear too often: 'Something else will happen.' But we should reflect while we make this change, and it's good that it will get done. It's clear that it needs to be done in calendar year 2020. Here we are in the last week, and it's occurring. The wine industry will welcome it.
It has been a really, really tough 12 months. The wine industry was affected by bushfires 12 months ago. The bushfires themselves are an aspect of or are related to the impacts of climate change. We know that, broadly speaking, climate change is making our climate hotter and drier and is increasing the frequency of weather events and bushfires. I know that, at one point, the anticipated impact of smoke taint was thought to be quite significant. In the early going, Australia Grape and Wine Incorporated thought it could be as much as $40 million, and New South Wales Wine estimated a $100 million hit off the back of the bushfires, if you included the tourism impacts. That was significant. My understanding is that, since those estimates were given, the impact has turned out to be a bit less than that, certainly in respect of smoke taint. That is welcome.
With respect to climate change more broadly, obviously that's not unrelated to bushfires and the things that that can produce, but it is having a broader effect. The way that it affects the climate is not always going to be the same. I actually have visited a couple of the vineyards in the capes region. Parts of the Margaret River region are getting a little bit more winter rain on the shoulder of the cool wet season in WA than they used to. That is not helpful for some of the varieties that are grown there.
But generally speaking the hotter and drier conditions will put the industry under pressure. For a range of cultural and historical reasons Australia has tended to favour varieties that, going into the future, probably aren't the best. There are other varieties that are better suited to hotter, drier climates. The difficulty is—that brings us back to the point of this bill, where we're talking about brand value and reputational value—once you're established as a particular region and you're known for particular varieties, it's pretty hard to suddenly shift and pull up vines, not least because of the cost and the time it takes to get back to high-quality fruit production; but also there is the fact that you've become known for your chardonnay or your pinot noir or whatever it happens to be, and if you suddenly shift to varieties that might be more sustainable or productive in the long term, you've also got to do that cultural, reputational brand shift.
That's something I think state and Commonwealth governments should look at. I know that there are producers, companies in the business, that have already begun to almost move their fruit south, essentially. In Western Australian terms that's probably further into the Great Southern. I know in some cases it's to Tasmania, because people are reading the tea leaves on where the climate is going.
The other thing we all know that the industry is dealing with at the moment is related to trade. It is of concern that China has decided to apply tariffs of up to 200 per cent to Australian wine. I don't think anybody can point to a reason for the imposition of those tariffs. There doesn't seem to be any fair basis for the application of those tariffs. They will have a significant impact on Australian winemakers and exporters. They already are, and they will. That will hurt those producers. It will hurt their workers and their families and the communities in which that production occurs. As we know, they are regional and rural parts of Australia where often wine production, sales, exports, and associated tourism, both local, international and intrastate, has actually become one of the more dominant features of the local economy. So to have the hit on multiple fronts, but now through the imposition of these tariffs on the single biggest export destination for Australian wine, really hurts.
Sixty-two per cent of our wine is exported. That's $3 billion worth. China is far and away the largest export destination: $1.26 billion, which is about 42 per cent. It's 25 per cent of what China imports, which I think is interesting. In terms of other Indo-Pacific destinations, in the top 10 are New Zealand, Singapore and Japan. New Zealand's about $100 million; so is Singapore. Japan is half that at $50 million. That gives you a sense of how important China is. India presently is only $6 million worth of wine. That does constitute 20 per cent of their wine imports by value. So we're not that far: if we contribute a quarter of China's wine imports, we contribute about a fifth of India's. But clearly there's so much room to improve that through export facilitation, and also whatever we can do within India to help bring the joys of drinking wine to the emerging middle class in India.
On that, I endorse what the shadow minister for trade has said about the importance of diversification and the fact that we haven't made nearly as much progress with respect to India as we would all like. India and Indonesia are the two markets that are really underdone. If we think of what has happened vis-a-vis China, that's fantastic, but there are great opportunities in Indonesia and India, and that should be the case for wine. We need to put more effort into making that happen. Settling trade agreements by itself is not enough. You need to put resources into trade facilitation. We should be doing that.
More broadly, I would just note that all bilateral relationships work best on a foundation of respect and open but thoughtful communication. We don't have that with China at the moment, for one reason or another. It does take two to tango in all relationships. I think we can look at how we've gotten to this situation, which is for a range of reasons, and the fault is certainly not entirely on Australia's side. In trying to look to how we repair this, I think we can acknowledge that we can do more to re-establish the foundation of that healthier relationship. There's absolutely no question—there never will be—that we should pursue and protect our national interest as shaped by our national values. But anyone who thinks that that's a simple or an uncomplicated matter in a region that is undergoing significant and complex geostrategic change doesn't know much about history or diplomacy, to be fair. Anyone who thinks that Australia can best pursue and protect our national interest by stamping our foot or banging our hand on the table should look up diplomacy in the dictionary.
We do need to be clear-eyed and resolute. I personally don't think that clarity and strength of resolution is supplied by some of the, 'Look at me,' gang conduct that we've seen from self-described wolf warriors or self-described wolverines, for that matter. Sometimes in our bilateral relationships we will need to be flexible and patient; sometimes we will need to be firm. There will be differences of view between Australia and other nations, including China. That has always been the case. That will be the case in future. Some differences we will put aside. Some we will seek to resolve, and we should do that thoughtfully, respectfully, purposefully and diplomatically. It's crucial that key relationships are conducted with care, stability and consistency in accordance with a sensible long-term approach. On that basis—without romanticism or idealism but also without undue pessimism, let alone antagonism—our relationship with China can, and should, be one of mutual benefit and of regional benefit, not just economically but in terms of supporting all facets of peaceful and sustainable development, regional security, and human rights.
We recognise that China's economic miracle has helped enable Australia's best self in terms of trade and the stability of our national economy. In the friendship between the people of our nations, Australia should always be prepared to enable China's best self. Progress for both of our countries—through our bilateral relationship, the regional and multilateral forum in which we participate, and our shared interest in the rule of law—can only occur through shared effort. I hope that's the path we return to in 2021. I wish the government well in making those efforts. It's important for Australia's trade, which includes wine and other products like crayfish out of Western Australia, but the importance goes much, much wider than that. I think we all recognise that.
As I said at the outset, this bill makes a small but positive and welcome change to the wine industry at a time when wine producers, their workers and all involved in the industry have faced a very tough year. Unfortunately, it's not over yet, and we do need to make sure that we continue to look at the key areas of difficulty, especially in relation to climate change, bushfire risks, our existing trading relationships and opportunities to diversify export markets.