Wednesday, 9 December 2020
Wine Australia Amendment (Label Directory) Bill 2019; Second Reading
In speaking to this legislation, I commend the many speakers who have already spoken, because I think they've all made the same point—that is, that the wine industry is incredibly important to Australia. The industry claims that it's had an economic value of somewhere around $45 billion to date. I'm not sure what it is right now, given the trade bans, but $45 billion is a significant industry sector. It is a sector that I understand employs either in full-time or part-time jobs somewhere in the order of 165,000-plus people across the country. In 2018, 1.7 million tonnes of wine grapes were crushed, producing 1.29 billion litres of wine. Of that, nearly half came from 18 wine regions in my home state of South Australia. In 2019, around 63 per cent of the wine produced was exported by some 2,900 Australian wine exporting entities. For the year ended December 2019, I understand that 744 million litres of wine, worth $2.9 billion, were exported to China, being the dominant destination country, accounting for nearly 45 per cent of all wine exports by value.
I quote those figures to simply highlight both the importance and the vulnerabilities of the wine region. Spread across dozens of regions across Australia, where the industry is vital to those regions, Australia's wine industry can and does successfully compete with the rest of the world, so much so that in recent years a number of European countries have been resorting to all kinds of tactics to protect their own wine industries from Australian competition—I've spoken about that, and I'm sure others have in the past as well—with overseas winemakers' most common tactic being to claim exclusive rights to wine terminology that for decades described the type of wine rather than a specific brand. That seems to be continuing as a backdoor way of shutting Australian wines out of the international market.
Other risks to the wine industry include not only the competition I was just referring to but trade agreements between countries that we already export wine to and other countries again, which would perhaps undercut the arrangements we have with those countries. Then there are currency fluctuations. Of course when you export a product you are always vulnerable to and at the mercy of the currency of the day. There are weather conditions—and I know many of my colleagues have spoken about this—and also, here in Australia, water availability, which I'm sure the minister knows all about, particularly in the Murray-Darling Basin area, where water availability directly affects the ability of wine growers to survive. Then of course we've had the issue of fire and smoke damage that hit many of the growers last summer.
Notwithstanding those risks, Australia has some of the oldest vineyards in the world and produces some of the best wines in the world. However, anything we can do to provide stability and certainty for our wine producers should be done, and this legislation goes part of the way to doing that. The bill that we're dealing with, the Wine Australia Amendment (Label Directory) Bill 2019, seeks to protect reputable wine producers from copycat labels that seek to profit from the good reputation of proven winemakers. It's a matter that I had personal experience with. A constituent of mine who was a winemaker was having his label almost identically reproduced by someone else but with a slight variation. The matter went to court. In my view it was not successfully resolved, but nevertheless it was a great example of the sort of thing that goes on.
By the wine industry establishing a publicly available directory of grape product labels, it's hopefully intended that that might stamp some of that out. The use of copycat labels not only allows unethical producers to profit from the investment and good work of others; even more concerning, it's likely to damage the good reputation of the recognised brands by consumers seeing labels of brands that have a good reputation but the wine doesn't stack up to that reputation, and that in turn damages the good label and reputation of the original manufacturer.
The wine industry backed this legislation and will maintain the label directory. If breaches occur, export licences can be suspended or cancelled. I guess time will tell just how well the system works. Whilst I support the intent of this legislation, it's a matter that I believe needs to be reviewed at some stage in the future.
I turn briefly to the issue of climate change, because the farming sector is directly affected by climate change and the considerable risks and uncertainties that it creates. In my speech in this very chamber on Tuesday night I referred to the Bureau of Meteorology and CSIRO's State of the Climate 2020 report, which articulates and provides all the factual information required to highlight that climate change is real. It is now no long a matter of conjecture. It's no longer a matter of debate. The statistics, particularly over the last decades, when scientists around the world have been able to carefully focus on the issue of climate change, clearly demonstrate that our climate is changing.
For farmers, that affects their operations. Extreme weather events and normal bad weather might be something that they factor into their operations, but when the climate itself changes and we start to have weather events that are not only more extreme but more frequent, then it directly affects the ability of the product to be grown. With respect to grapes it's even more difficult, because grapes aren't the kind of crop that you can relocate from one part of the country to another. The vines are there, and have been for decades in many cases, and the sites chosen for their plantings were chosen specifically because of the climatic conditions of the area.
So if the climate changes, it's not a matter of simply saying, 'I'm going to plant some more wheat over in that paddock as opposed to this paddock' because it simply doesn't work that way. The huge investments that have been made will be lost or, at the very least, put at risk. There was a report released only last year by the Australian Bureau of Agriculture and Resource Economics and Sciences that found that since the year 2000—that is, in the last two decades—climate change has reduced the revenue of Australian cropping farms by a total of $1.1 billion per year. $1.1 billion a year has been lost from our agricultural production because of climate change. That was according to that report. Of course, the losses are not evenly spread. I accept that climate change also offers opportunities in some other areas. Perhaps in some other places crops might grow better because of it. Nevertheless, right now, the hit is about $1.1 billion. For the wine industry, however, it's a different situation, as I pointed out earlier.
The last matter that I want to speak about is the impact on winegrowers and wine exporters in this country because of the current bans being put on them by the Chinese government. The restrictions, in fact, began to occur nearly a year ago, when the COVID-19 pandemic hit China. I spoke with several winegrowers in my state who were exporting wine to China. In fact, almost their entire exports were going to China. They were all stopped because of the COVID-19 pandemic. So they were starting to get hit before the current restrictions were put in place. We now have a situation where, because of this government's mismanagement of the relationship with China, the chances of those exports resuming are becoming slimmer and slimmer by the day.
It's also the case that China itself has become a major winegrower. In fact, China now has the second-largest area of vineyard plantings in the world. Spain is No. 1 and China is No. 2, with 875,000 hectares of plantings. That is six times larger than Australia's plantings of 146,000 hectares. They don't produce as much wine as Australia right now, but, when those vines mature, they probably will. We'll wait and see whether, in the future, their reliance on Australia—regardless of any trade bans—would begin to diminish.
More concerning is this: China, of course, can go to other countries like Chile, Italy, Spain or France for their wine, and the problem with that is that, once you start to enter into arrangements with another country, winning back the market for Australia becomes incredibly difficult. Once you lose them, there's every likelihood that you've lost them forever. Australia should, of course, be looking for other markets, and I accept that, but, as other speakers have said, that's not going to happen overnight. That will take time, and it won't happen when there's so much wine available and ready to be shipped overseas, for which there is no market. It's not just about the growers. Let's be frank about it: there are whole communities—I'm sure the minister understands that as well as anybody—that rely on those growers to sustain the economy of their communities. I genuinely despair for what they face over the coming months. We need to improve our relationships with China. We need to improve our trade relationship. The government itself was totally promoting and advocating for that only four or five years ago. Having entered into the trade agreement, it seems that we've now gone back further than we were even before the trade agreement. We need to do everything possible to revive that trade agreement, and that starts with the actions of this government.