Wednesday, 25 October 2017
Australian Grape and Wine Authority Amendment (Wine Australia) Bill 2017; Second Reading
I represent two premier Australian wine regions—the Margaret River and the Geographe wine regions. That's why I am supporting the Australian Grape and Wine Authority Amendment (Wine Australia) Bill 2017. The bill enables the Australian Grape and Wine Authority to implement all activities under the wine support package, including for cider and international wine tourism. It enables the authority to administer grant programs for wine, including the cellar door grant, and it changes the name of the authority to Wine Australia.
I'm very, very proud of our region's winemakers and wineries. They bring great value and vibrancy to the south-west. In fact, Margaret River is about to celebrate its 50th anniversary of commercial fine wine making in the modern era. Margaret River is an international brand, as we all know. The two main wine regions in the south-west, the Margaret River and Geographe wine regions, have very well-deserved reputations for producing top-quality wines. However, the winemakers never stand still. They are continuously striving to produce even finer quality award-winning wines.
The measures in this bill are important to the over 95 cellar doors in the region that sell wine directly to the public. Many of these are small and family businesses that have invested year upon year, often starting from very humble beginnings; mortgaging their houses or properties to start that small business; at times, like so many small business people, not sleeping at night wondering how to pay wages and bills; and investing countless hours themselves in and on their businesses. But their considerable efforts have produced so many benefits for the region.
A division having been called in the House of Representatives—
Sitting suspended from 17:47 to 18:17
In terms of exports across Australia in 2016, the wines were worth over $2.2 billion. For the south-west region in 2016, the value of exports was over $42 million, according to Wine Australia. In our export markets—predominantly China and Hong Kong—and around Australia the most popular wines are shiraz, cabernet sauvignon and chardonnay. The benefits of these export dollars flow not just to wine producers but to their regional and small communities, and there are so many local jobs involved. Countless other small and family-owned businesses benefit from the wine industry. Just look at the farm supply companies. Cowaramup Agencies supplies trellising, fencing, winemaking, cleaning and packaging supplies. And there is Landmark in Margaret River and in Busselton as well. We have LP and JA Fryer in Harvey—all the rural traders, delivering similar services to the industry.
And consider some of the other local businesses that supply or support the industry, including fencing contractors, transport companies, mechanics, local tourism operators like Bushtucker River and Wine Tours, accountants, and marketing companies like Jack in the Box—the list is endless. It demonstrates why the wine industry is very important in my electorate. It's important to the regional and state economy as well as our broader Australian economy in terms of export earnings as well as the tourism income and local jobs in communities like mine in the south-west.
The coalition government clearly understands the important contribution this industry makes to the local, state and national economy, as demonstrated by the measures in this bill. Industry came to us and said there were problems with the wine equalisation tax rebate scheme. There were integrity concerns, and they said there was a need to target the benefits back to the original purpose: that of supporting small wine producers in rural and regional areas. These changes were negotiated with wine producers across the nation and, most relevantly for me, in the south-west, Margaret River and the Geographe region, through discussions with Assistant Minister Senator Anne Ruston. They were very robust discussions, with a diverse group of growers who raised a range of issues—and they did it so well. Much of what we see in this bill is as a result of consultations and us genuinely understanding the businesses of the small to medium-sized producers. I want to thank every producer who made time to meet with Senator Anne Ruston and me for their frankness during those discussions. I also want to acknowledge the work of the Minister for Revenue and Financial Services, Kelly O'Dwyer.
This initiative also recognises and supports the value and vibrancy that wine producers bring to regional communities like mine. We largely depend on that vibrancy. I will be looking very closely at how my wine regions are represented in the marketing effort. Wine producers in my electorate will be very focused on how they can leverage and improve their export options, particularly on the back of the three free trade agreements concluded by the coalition government. On the back of the federal funding that I secured there will be an upgrade of the Busselton-Margaret River Regional Airport to international passengers and, importantly for my producers, it will have more freight capacity. This is, as I have repeatedly said, a transformative project—one that is greatly anticipated. We are really looking forward to the upgrade of the airport being completed and services being able to run out of there. I can see a lot of fantastic exports from the south-west moving out through that airport.
This bill is ultimately about increased support for small regional wineries. It's exactly what our small to-medium-sized cellar doors need to offer to attract and retain tourists in this area. It's very, very important. I wholeheartedly commend the bill to the House.
It is good to be standing here and talking about the success of the Australian grape and wine industry. I am sure that, after today, many of us will feel like having a glass of wine, but we've got a few hours to go. There is a lot to be proud of in what the Australian wine industry has achieved. It's important, in speaking to the Australian Grape and Wine Authority Amendment (Wine Australia) Bill 2017, to say that, whilst Labor supports this bill, it gives us an opportunity to remind the House that it has been a bit of a journey to get here.
The newly named authority, Wine Australia, will be responsible for administering two funds created as part of the wine equalisation rebate reforms. This was first flagged on budget night in 2016, when the government and the Treasurer of the day thought they could pull a swiftie on the wine industry by saying, 'Yes, here is your $50 million as promised, as part of the reform package,' but then put forward a wine equalisation tax measure which had not been fully agreed to and supported by the wine industry and which was not in the spirit in which it had been discussed prior to its announcement on budget night.
The wine industry—including many wineries in my own electorate of Bendigo—and the opposition had serious concerns about the original design of the measure as put forward by the Treasurer on budget night. The original measure was supposed to start on 1 July this year. In May 2016, it was announced that the cap for the wine equalisation tax would be lowered from $500,000 to $290,000 within 12 months. The day after that budget announcement, winemakers said to me: 'Lisa, it's just not fair. That wine is in the barrel. How can you make such a change so rapidly and so quickly? It will put my business, my enterprise, at serious risk.'
Another issue that winemakers raised about the first draft was that it targeted the cap first and not where the real gaming of the wine equalisation tax is going on, and that is in the bulk and unbranded wine. They said that the way the original changes had been proposed in the bill gave a free kick to the bulk and unbranded wine sector—commonly know as the Coles and Safeway branded wine; it could basically continue to game the system. Through the efforts of Wine Australia, our state based organisation and the opposition, we engaged in a constructive way to say, 'Yes, everybody agrees that there needs to be reform with the wine equalisation tax; however, what has been put forward by the government isn't fair.' After consultation and genuine engagement, the measure was changed to be more reflective and more in line with what the industry had previously asked for and which would deliver similar savings to what had been put forward on budget night. It was about restoring integrity to the wine equalisation tax, which has always supposed to have been about supporting small, independent wineries, many of whom are based in many of our electorates in regional Australia, particularly in my electorate of Bendigo.
In the one area of Heathcote alone, there are over 80 wineries and cellar doors. Quite often I use a statistic which makes schoolchildren and teachers laugh, which is that there are more wineries than schools in my electorate! I have 96 schools across the Bendigo electorate and we have over 150 registered cellar doors and wineries, and that's just the beginning of the extent of the wine industry in areas like mine in Central Victoria. They will benefit from this bill that is before us.
This bill has been designed to deliver on the $50 million that has been allocated for the Export and Regional Wine Support Package. This was part of the commitment to the industry because of the wine equalisation tax reforms. Within this $50 million, for those with $20 million of annual turnover up to a $50,000 cap can be claimed for promotional activity. This fund is limited and the money will be allocated on a first-in-best-dressed basis. I have a few concerns about the first-in-best-dressed basis because it does mean that we may not necessarily get the best products with the best kind of promotional material asking for support. The refund will also cover any manner of expenditure, including taxi fares and business cards in dual languages. Again, with $50 million on the table to support our independent and small winemakers, you just wish that the government could have been a little bit more innovative and put a little bit more thought into how they wanted to spend that $50 million. When talking to my local wineries, they have said to me: 'Business cards are something I can cover. Having a business card I can give to someone is something I can cover. But where I really need support is on how to establish those markets.'
When you have an area like Heathcote, which is a big shiraz region with over 80 independent shiraz producers, they are trying to grapple with whether they have their own name for their wines, like Jasper Hill or Mount Camel, or whether they band together as Heathcote shiraz. They acknowledge that they can't produce enough wine independently to justify the expenditure of opening up an export market in China. China is massive. We could never produce enough wine in Australia to feed the Chinese market. So, as we on this side have talked about a lot, we need to stop thinking 'big' and 'bulk' and start thinking 'niche' and 'top price'. That's very much what our small independent winemakers want to get into. They want to get into telling the winemaking story, making their wine the one-off gift or having it go into the top restaurants.
These are small businesses and, like most small businesses, it's almost a 24/7 operation. They spend so much time making the wine, they need support in marketing the wine. So it is a bit disappointing with $50 million on the table that the government hasn't been more innovative on how this can be spent. I know that Wine Australia is very keen for innovation, and Wine Australia will be working to maximise how this funding can support small winemakers. That's why it's just disappointing that the government has gone for a first-in-best-dressed basis, including taxi fares and business cards. Most small businesses say: 'I've got that covered, but what I really need is help establishing the client base, the market base and how I position my product.' Also, if they hit a barrier—and we have a lot of secondary trade barriers with the Chinese market—they need help getting through.
I also have some concerns about the limit for marketing and promotion. There are China, Hong Kong and the United States, and Japan is a really important country to a lot of our winemakers. Korea is an important country, and increasingly the UK and Europe. So it is disappointing that this provision has been limited to these markets, and maybe it calls the China free trade agreement into question—perhaps it isn't quite delivering what the government is claiming it's delivering if our winemakers now need $50 million to help get their product into China. What has gone on here? Apparently it is great on one hand and our winemakers are doing really well, but then on the other hand we have to give them $50 million to help them get their product there. So maybe there is a bit of a disconnect between what the government is claiming and what is actually happening.
The other part of the scheme that is really important, particularly to my area, is the $10 million that will be allocated to wine tourism and cellar door grants. Infrastructure is important. One of the reasons why this particular part is critical to regional Australia, and in particular regional Victoria, is wine tourism. Whilst the core business is the production of wine, what we have seen really flourish across regional Victoria, whether it be the Bellarine-Geelong, whether it be the Yarra Valley, whether it be heading to the Grampians or whether it be around Bendigo and Central Victoria, is wine tourism. People who travel to Bendigo, perhaps to the art gallery, might go via Heathcote and our wineries. Our wine tourism and cellar doors are critical in terms of regional tourism and are a big part of the culture. A lot of wineries talk to me about capital costs, in terms of establishing those doors, making sure they've got decent and up-to-date maps—making sure they have maps and roads signs that can get you there. Believe it or not, in the age of mobile phones and Google Maps, we still need our road signs because a lot of these areas are in black spots. Some of this funding will go towards helping people navigate the good old-fashioned way to get to wineries because we still haven't fixed a lot of the black spot problems in regional Victoria.
Part of the cash grant scheme will allocate money to cellar doors. Again, this is a bit of a top-up. The government tried to move very quickly to reduce the cap, and we knew that would hurt a number of small to medium wineries. I guess, because of the reform going ahead, it was agreed that we would have a grant scheme to help as a bit of a top-up. If some of our small wineries sell more than what the new cap is, it is kind of restricting. It is important that that continue as well as, as I've said, making sure that we have our wine tourism infrastructure established.
Whilst we on this side do support this bill, we are critical of how long it's taken to get here and of the haphazard and messy way we got here. We hear about the government taking a bipartisan issue on the reform of the wine equalisation tax and support for an important industry in so many of our electorates, and then they just mess it up. Everything this government touches, even when we're trying to work together, gets stuffed up. It's one of the unfortunate things with this government that we have to work so hard from opposition, so hard with the industry, to try and get the government to clean up its own messes. I do have to acknowledge, though, that the minister responsible for this did work with us and was open to reform. Unlike what we have seen from some other ministers who dig their feet in and say, 'Labor is wrong and it's all Labor's fault,' at least Senator Anne Ruston did say, 'Let's work with the industry to get this right.' I do want to acknowledge that, unlike some of her colleagues, she did work with us to make sure that we got a package that the industry could work with, that did restore the integrity of the wine equalisation tax and at the same time ensured that we had this fund created to support the growth of our wine industries here in Australia.
The government should stop all this rhetoric about how great their free trade agreements are for the wine industry because, quite frankly, they're not delivering yet, and they're not delivering for some really fundamental reasons. The small independent winemakers are not getting access to the markets that will help deliver benefits. We are supporting clustering—I have used Heathcote as an example—to encourage the export of wine. Whilst they might not be able to send over a plane full of their own wine, if we could gather wineries together we might be able to do some cross-marketing.
There is still a lot of work to do. The wine sector is unhappy with how this government has rolled out this package and this reform. It's been a messy process, and it didn't need to be this hard. Whilst the outcome that we've got to is acceptable, we shouldn't have to work so hard on a proposal that in its original form was bipartisan. As I have said, the Victorian wine industry contributes $7.6 billion to the Victorian state economy and employs over 13,000 people. In the 22 divisions and winery regions that we have, there are over 500 cellar doors and 477 wineries. As I've said, that's a huge chunk of my electorate in Bendigo. We are proud of what our winemakers are achieving, the work they're doing, the innovations they're making and the fact that so many of our wineries are wanting to become ethical, sustainable wine businesses. We should be supporting the work that they do.
It's great to finally have this being debated and going forward. However, it's just so disappointing that the government messed it up, from the very first night that they announced these reforms on budget night to where we are today.
I rise to speak on the Australian Grape and Wine Authority Amendment (Wine Australia) Bill 2017. It's great to be able to make a contribution on this important subject for our economy. The wine industry is large and getting larger, and it is in all parts of the country. Some listening may think that there'd be no wineries up in Darwin, in the Top End of Australia, but the Northern Territory does, in fact, have mango wine. There is a mango winery, the Red Centre Farm—where mangoes are grown, harvested, pulped, frozen and then sent down to the great state of South Australia—where they're turned into all sorts of fantastic wine products: Mango Moonshine, Mango Mist and Mango Magic. Some listening may have heard of the silly season up in the Top End when the build-up comes, such as we are experiencing at the moment, where there's a bit of mango madness, and I can't vouch for the Mango Magic wine myself, but I know the moonshine is not a bad drop for a mango wine.
All around our country there are wine-growing areas that everyone in this place should be very proud of. On this side, as those that have spoken before me have articulated, we're supporting the Australian Grape and Wine Authority amendment bill. As we've heard, that's going to allow the newly named Wine Australia to administer two funds created as part of the wine equalisation tax, or WET, rebate reforms. One part of that is the Export and Regional Wine Support Package, $50 million; the other is the Wine Tourism and Cellar Door Grant program, $10 million.
It's not a bad package, but, as the member for Bendigo said, it's a shame we had to come on the route that we did to get here. Australia's wine industry is such a vibrant component of regional Australia. We just heard some figures about its input into the Victorian economy of $7.6 billion. I grew up in the Yarra Valley of Victoria. When I was growing up, there were two wineries in our part of the world: Miller's winery and the Fergusson winery. There was a lot of dairy country, but over time many of those dairy properties have become wineries, and the beautiful Yarra Valley, with its cool climate, is making fantastic chardonnays, sparkling wines and pinot noirs. As I said, there were two wineries around Yarra Glen when I was growing up, but I reckon there are probably about 40 now.
I've been very lucky throughout my life to have lived in other wine-growing areas. I just want to tip my hat to them and the fine winemakers who are plying their trade making world-class wines. When I was in the Army, at one time I was posted to Singleton, in the Hunter Valley, which, as you know well, Madam Deputy Speaker Claydon, makes incredible semillons, which is widely considered the iconic wine of the region. The beautiful Hunter Valley produces outstanding shiraz, cab savs, verdelhos and chardonnays. They are also innovating with a variety of new styles. The member for Hunter is a great advocate for wineries in that part of the world and, I understand, a great advocate of the Pokolbin Pride weekend that happened recently, which you, Madam Deputy Speaker, might be frequenting in our beautiful Hunter Valley wine region, listening to Midnight Oil. Midnight Oil were recently up in Darwin as well. It was one of the best concerts I've ever been to, I must say.
The Clare Valley in South Australia cannot be forgotten either, it being one of our oldest wine-making regions. It is well-renowned for riesling. I had the opportunity recently to try a riesling made by one of our own members of parliament: Farrell Wines. For the record, Don Farrell and his winery make a fantastic riesling. The Clare Valley has an amazing story over a long period of time, as far as wine-making goes. It is a story of migration, it is a story of Australia in many ways. They make excellent wines. The exports from those wine-growing areas will really benefit from this legislation, in that funding has been made available for marketing to export markets in China and the States in particular. That's obviously a very good thing for those wineries. We support the bill for those reasons.
I was recently on a parliamentary delegation to Beijing and Shanghai with a number of our colleagues, including the Speaker of the House of Representatives. There's certainly a great interest there in our wines. Looking at the growing number of Chinese entering the middle classes, in particular in places like Hong Kong and Macau, we see that they are having a bit of a crack at wine, and they want the best. They're increasingly wanting to get their hands on some Australian wines, so marketing support really benefits those wineries that are sending their wines overseas.
It is a bit of a shame, however, for some of the smaller wineries, which, with these reforms, are now getting less of a rebate and also aren't benefitting from the marketing assistance, because they're not exporting. For those smaller wineries servicing our domestic market, we need to be aware of the challenges they have with their businesses and we need to be looking for ways in which we can assist them. There is our Red Centre winery at Ti Tree, on the highway, growing mangos that go down to South Australia—I'll put them in that basket as well. We really need to make sure that we maintain the clean, green image that we are renowned for all around the world. We need to value it and protect it because therein lies the credibility and uniqueness of our brands. This reform of the wine equalisation tax rebate is long overdue.
The system had been open to rorting by some of those bulk and unbranded operators, and it's important to recall that the government did plan, back in the day, to pocket $300 million from the first reform proposal it put forward. However, following significant industry backlash and expressions of concern from Labor, the government did back down and went back to the drawing board. The government still plans to be $160 million better off as a result of these reforms and the implementation of this industry support package. There is, possibly, little case for this; those who are doing the right should not be made to pay for the crimes of others.
As I said, the system was a little bit open to rorting and there was some creative entity structuring. However, I don't want to dwell on that too much because, as the member for Bendigo said, Minister Senator Anne Ruston has done a pretty reasonable job talking to the industry and coming up with a package that, more or less, suits their needs and that they're happy with. Understandably, they're not as happy as they could have been, and it has been a bit of a messy process, but we on this side of the House look forward to working with all stakeholders to ensure that the $60 million that we are approving today through the passage of this bill is money well spent.
Finally, I want to reflect on the people who are working in this industry around our country. There are some fantastic wineries in Margaret River. The army kept sending me from wine area to wine area. When I was in Perth I managed to get down there. I'll never forget the Xanadu winery in Margaret River, but I do forget most of my trip to Cape Clairault Wines in the same area! There were outstanding wines and very professional people working at the cutting edge of innovation. Winemaking is not a backyard operation. There are some great backyard operators having a crack at making good Australian wine, but, usually, it is very much a professional undertaking that requires high levels of education, skill, perseverance and tenacity, and Australian winemakers all around our country can be very proud of the job they're doing.
Debating this bill today, I have been proud to just reflect on their work making great produce for our country. I stress again the need for us to maintain the clean, green food bowl image that we have and to make sure that it is real. It is incredibly important that we protect that brand. It will ensure the sustainability—with the support of these measures—of our industry into the future.
I thank the member for Solomon for his fine contribution. As always, he is a great contributor to the debates in the House. I rise to speak on the Australian Grape and Wine Authority Amendment (Wine Australia) Bill 2017. This bill will enable the Australian Grape and Wine Authority to implement all the program activities under the wine support package. It will also enable the authority to administer grants for wine, including the cellar door grant. It will change the name of the authority from the Australian Grape and Wine Authority to the much catchier Wine Australia. The newly named Wine Australia will administer two funds which have been created as part of the wine equalisation tax rebate reforms.
I'd like to take some time to reflect on the journey of these reforms, and what a tortured path it has been. I thank the member for Hunter for reminding those opposite of the history of this reform for the wine sector. Yesterday he took us through the jagged path of reform for the sector that he has personally witnessed as the able member for Hunter since 1996. I know he is very proud of the wine producers in the Hunter, and so he should be. They produce some beautiful wines.
Many if not all of us here will remember the introduction of the GST, the goods and services tax. The 29 per cent wine equalisation tax came to be as the Howard government acknowledged that taxes on wine would have fallen significantly, creating an economic distortion, and would have been socially irresponsible. With a mind to helping out cellar door sales of small vineyards and promoting more activity and growth of small and family owned vineyards and wineries, the Labor Party in opposition moved amendments that would provide for a cellar door exemption from this wine equalisation tax. The always courageous Mr Costello, the Treasurer of the day, rejected our suggested reforms. As the legislation went through the other place, Labor kept up its efforts on behalf of the industry and Mr 'All tip, no iceberg' eventually conceded it was a good idea for small wine producers and such an exemption would in fact help at the cellar door.
But, always up for letting poor policy decisions get in the way of a good idea, the Liberal government, instead of introducing an exemption, in a rotten deal with the Democrats to introduce the GST, which in the process destroyed the Democrats, brought in a rebate and so developed a situation where loopholes in the wine equalisation tax and the rebate processes allowed bulk wine traders to exploit the market and take advantage of the $500,000 rebate, which has sometimes been claimed several times for the same wine. Ultimately what we have seen with this arrangement is bulk producers gaming the system and getting the rebate when it was never intended they receive it. But that is what happens with bad policy and poor implementation—unscrupulous rorters game the system. We all agreed reform was needed.
Let's fast forward a bit to the 2016 budget. What a gem that was! Without warning, the government announced reform of this system. There was no consultation with industry and no consultation with stakeholders. There was just the announcement of, 'By the way, we'll take $300 million out of the industry and pocket that.' It's just like what the government are hoping to do to students in this country. Let's hope the other place can put a stop to that. This government has upped the fees students pay to attend universities by 7.5 per cent. You might think those funds will go to helping improve the student experience, such as through improving infrastructure, funding teaching and learning development, more lecturers themselves or assisting the programs at universities. But, no—they are just hitting up students for cash and pocketing these fees to fix their budget mess, just like they've tried to do with the wine industry.
So the wine industry, quite rightly, opposed the changes. Ultimately, there was a backdown. Common sense prevailed and the government changed tack on the tax rebate cap. The industry group Wines of Western Australia were opposed to the original budget proposals and came out strongly against them. They've been quite generous in their assessment of the backflip. A representative from Wines of Western Australia said: 'I don't call it a backdown. I call it doing the process properly.' That's an industry group having to congratulate this government for getting the process of legislative development right.
You've got to remember this is their constituency. You might reasonably think most vineyard owners or winery owners are probably Liberal voters. Take the seat of Forrest in the south-west of Western Australia. It covers a magnificent part of the world. It's a pretty sturdy Liberal seat. Some figures recently showed it was in some trouble, but I'm sure it's not for the Chief Government Whip. This is their constituency, so you might assume that a Liberal government would consult with their own constituency when they were going to bring in some changes that would affect their constituency's bottom lines, lives and industry. They rail on about small, family owned businesses in this place, saying they're the only ones that seem to understand them. Yet, in this attack—well, I don't think it was an attack; it was negligence—on the wine industry, they've strolled on in and made an announcement without any consultation with these small, family owned businesses that most likely have voted for them for a long time. Maybe they'll reconsider their position after this exercise.
They certainly should—I agree with the member for Lyons on that point.
We agree these reforms are necessary to ensure the long-term viability of the Australian wine industry and improve the integrity of the rebate itself, which, in its previous form, was damaging the sustainability of wine production across Australia. As I've said, the old WET producer rebate created an unfair and uneven incentive for businesses to create a structure that maximised rebate claims. Reforming the rebate better targets the areas for which the policy was initially intended. It was to benefit smaller wine producers, who are making significant commitments and investments to the industry around rural and regional Australia.
As I was saying before, through this legislation Wine Australia is going to administer two funds. The Export and Regional Wine Support Package will have $50 million allocated to it. That will aim to help transform the Australian grape and wine industry through wine tourism and wine exports. Three grant programs will be offered under this package—wine export grants, international wine tourism state grants and international wine tourism competitive grants. We've heard that the object of the wine export grants is to reduce exporting transaction costs for wine exporters and so increase export opportunities to China, Macau, Hong Kong and the US from Australia. The objective of the international wine tourism state grants is to support state wine associations, such as Wines of WA, to work with wine tourism stakeholders to build international wine tourism within the state. In that regard I very much look forward to working with the Hon. Paul Papalia, the member for Warnbro, which is in my seat of Brand, who is the new state Minister for Tourism.
The objective of the international wine tourism competitive grants is to support stakeholders in plans to grow the number of tourists visiting and spending time in the Australian region for the purposes of international wine tourism. It allows entities with an annual turnover of less than $20 million to claim 50 per cent of their promotional activities, up to a cap of $50,000. The fund is limited and money will be allocated on a first-in-best-dressed basis—not exactly the fairest means of distributing funding, especially when funding is limited. There doesn't seem to be a competitive process; it's who gets in the door first. And limiting the markets this promotional grant will go to seems to be a little short-sighted as well. There has been a solid trajectory in growth in Australian wine exports internationally from the nineties until now, and I think our export capacity, particularly into Asia as tastes change, is still to be fully realised, especially in the sense that wine makes up only around five per cent of Australia's agricultural exports.
I might reflect on the WA wine industry. Whilst in Western Australia we produce only around five per cent of Australia's wine by volume, Western Australia produces nearly one-quarter of the nation's premium and super premium wines. That's a fact Western Australian members in this place are very proud of. With our exports generally, we do have a way to go. There's much to celebrate: in 2015 bottled wine exports to China increased by 45 per cent, which demonstrates the power of that emerging Asian market and the demand for the high-quality wine that Australia offers. But still nearly half of our bottled wine exports go to Europe and nearly a third to North America, so even with the massive 45 per cent increase in exports to China there's a lot of opportunity in that market.
I want to reflect for a few minutes of my remaining time on the great local wine industry in my state. Off the back of the wine industry we get to benefit from a fantastic tourism industry that's enjoyed by both domestic and international visitors. I know the member for Lyons, who is sitting here this evening, is a fan of wines from the Margaret River region, as is the Deputy Speaker in the chair, the member for Newcastle.
Yes, Evans & Tate; it's a good brew—wine.
The tourism hotspots of the Swan Valley and Margaret River are beacons in the domestic wine industry and popular places for visitors from everywhere. Margaret River is a treasured destination of mine with an amazing expanse of natural wonders, caves, forests and amazing beaches—with some pretty dangerous surf that will certainly wake you up in the morning if you had an overindulgent wine tour the day before. There are a wide range of activities: surfing, mountain bike trails, hiking, the various national parks, the Munda Biddi Trail, the Bibbulmun Track, vineyards and wines of course, and, I might add, breweries as well.
You haven't tasted wine, I don't think, until you've had some Margaret River wines from the cellar door. I'm going to talk about a couple of my favourites—I have mentioned them here before but I can't help myself. Rosily Vineyard is a great little family owned vineyard where they hand-pick their grapes every harvest season. Another excellent vineyard in the region, some find it hard to get to but I assure you it's not, is Ashbrook Estate. It's another family owned vineyard that's been there for a long time, operated by the Devitt family. They've been running it for over 40 years. Similar to Rosily, all the grapes are harvested by hand from their own vines on their own property, and all the wine is made on the estate, all in their own vats and with their own equipment and bottling. It is acknowledged as one of the highest performing and brilliant little vineyards in the country. It's 2016 semillon and 2016 verdelho won silver in the International Wine Challenge 2017. I congratulate the Devitt family for their combined efforts in the work they are doing.
Of course there is the great Cullen Wines on Caves Road that many are familiar with, built by Dr Kevin Cullen and Diana Madeline Cullen, both remarkable Western Australians who have contributed greatly to their state. I have mentioned before how Mrs Cullen was the first person to import merlot and cabernet franc cuttings to Western Australia. She was part of the first trial of vine growing in Wilyabrup in 1966 and established the Cullen vineyard in 1971. She is rightly acknowledged as an important pioneer of the industry.
The Cullens established their remarkable vineyard and the Margaret River wine industry on the back of their own research and on the advice of Dr John Gladstones, who in the 1960s first identified the potential of Margaret River to become one of the world's greatest wine regions. This is a perfect example of science and research being applied to create a whole new industry. Without the research and the science undertaken by Dr Gladstones and the enthusiasm of the Cullens for that research and acceptance of the science in it, we might not have the Margaret River wine region that we do today. Today, Cullen Wines prospers and, among other great wines, it produces the iconic Diana Madeline bordeaux blend that is highly sought after around the world.
In my electorate of Brand I have a few vineyards. Peel Estate vineyard is a favourite. It's down on the southern end of Baldivis, on the way to Mandurah. Peel Estate was started in the same year I was born. Although you might think I'm younger than I am, that means their first vines were planted in 1973. The winery has added varieties as the years have progressed and the Australian palate has changed. I went down to Peel Estate recently and in the upcoming spring and summer they will be having a great many events. They have jazz music under the trees, and you can see a lovely bush sunset from the Peel Estate vineyards. When I was at the cellar door recently, I was informed that Peel Estate have the oldest zinfandel vines in Western Australia, having planted them in 1976. That makes the vineyard at Peel Estate, in Karnup, towards the end of Baldivis, amongst the oldest in Australia to have zinfandel wines.
Small, often family-run, businesses like these are adapting and changing to meet the demands of consumers. The wine equalisation tax needed changing. Government support needs to adapt but it should not do so to the detriment of the industry. We came close to that but ultimately the bill has been much reformed, so we are supporting the $60 million in grants programs today and look forward to working with stakeholders to ensure that this money is well spent in the future.
I'm very pleased to rise here this evening to support the Australian Grape and Wine Authority Amendment (Wine Australia) Bill 2017, which will make amendments to the Australian Grape and Wine Authority Act 2013. In support of this legislation, I want to address three points. I want to highlight the importance of wine and tourism industries in my electorate and in other members' electorates. I want to acknowledge the role of Brown Brothers as a clear example of what it means to be a successful regionally based business. I also want to recognise the opportunity for my region in becoming the Australian home of prosecco and the role the Australian government can play in this opportunity.
We've covered well in this debate the amendments and how important they are, and how they will allow the Australian Grape and Wine Authority to facilitate and administer programs for cider and in relation to international wine tourism, to administer grant programs in relation to wine and to formally change the name of the authority. So it's an important piece of legislation, particularly for my electorate of Indi—and I'm absolutely delighted to acknowledge two of my constituents here tonight; I reckon you understand the wine industry and how important it is. For those of you in the chamber who don't know Indi, which is in north-east Victoria, viticulture and tourism are two of our biggest industries. Of the 21 official wine regions in Victoria, six are in my electorate. We're well endowed with beautiful country and glorious wine.
In addition to producing high-quality wine, these vineyards provide high-quality vineyard dining, behind-the-scenes tours and cellar door experiences, and they're a major attracter—in the Murray Valley, the Mitta Valley, the King Valley, the Ovens Valley and then further down south in Broken Valley and around the Upper Goulburn area. We have beautiful fertile soil, mountains and hills, and these fantastic businesses that produce beautiful wine and glorious places to have lunch, but also tourism. Central to the whole wine industry—its agriculture and manufacturing—is that the food and wine, cider and beer visitors spend an estimated $142 million in my electorate. That's tourism.
Central to this whole success story are Brown Brothers. I think many of you would know and appreciate Brown Brothers wine. Brown Brothers are located in Milawa, which is just to the east of Wangaratta, in the King Valley. They're a third- and fourth-generation regional business, which is fantastic. Founded in 1889, Brown Brothers employ 320 people, of whom 200 are located regionally. They've developed a terrific export market that turns over $110 million. They are hugely important for my region.
Brown Brothers cover the full spectrum of what it means to be a successful regionally based business. They've got a base. Their agricultural product starts in the vineyards. They move to manufacturing through their winemaking, their bottling and their packaging. They do research. They market their product and then they trade domestically and internationally, resulting in frontline and executive staff across a really broad range of disciplines. So, it is fantastic working with Brown Brothers, because you've always got a good career path. One of their key tourism and marketing initiatives is their cellar door, not only at their home in Milawa, which is really important, but also at their Devil's Corner and Tamar Ridge wineries in north-east of Tasmania—and I have to acknowledge the member for Lyons, Brian Mitchell, and his electorate—and the Innocent Bystander brand in the Yarra Valley, in the electorate of the member for Casey, Tony Smith. In total, they draw more than 400,000 visitors to their cellar doors. That's 400,000 people visiting our regions. To quote Ross Brown, every bottle of wine exported is equivalent to an Australian postcard inviting visitors to come to regional Australia.
So, it's a terrific industry for us. While Brown Brothers are a very clear example of how the Australian wine industry drives tourism, creates regional employment and generates sales of lifestyle products in Australia and overseas, they don't do it in isolation. I want to share some of the thoughts of Ross Brown, executive director of Brown Brothers. A couple of weeks ago he appeared at an inquiry of one of the committees I'm part of, into regional development. The committee came and heard evidence in Wodonga, and Ross gave evidence. He said:
It's very interesting to think about why the tourist goes to an area. I've spent a lot of time on tourism bodies over the years, and I've coined a one-liner called 'co-opetition'. The concept of bringing people to a region is not about coming to Brown Brothers to buy wine. Twenty years ago, that occurred. People would come to Milawa to buy wine. They go to Dan Murphy's now. Consequently, the offer has to be a regional offer. That means the whole of the region has to be cooperating collectively. When they get into the region, the co-opetition is to build a bigger pie. If you've got a bigger pie and a bit more to go around, we'll be absolutely relentless in making sure we get—
that's Brown Brothers—
the biggest share of that pie. But if the pie is small, nobody gets very much. Collectively we have to create a destination for tourists by bringing the best opportunities of all the tourist aspects together, and that means people make a choice where they'll go. They don't go to a region for a single property or a single occasion. They really want a very large generous offer of lots of things coming together, such as the cycling—
to which I would add scenery, wine, food—
We're seeing in north-east Victoria that this is changing the whole demographic of the visitors to this region.
I know fashions come and go in the wine industry. If you're not aware of it, the eighties was a time of people drinking red wine; the nineties was a chardonnay era; and for the last 20 years it's been sauvignon blanc, mostly from New Zealand, which, sadly, has meant that 40 per cent of the white wine consumed in Australia at the moment comes from New Zealand. But I'm told—you heard it here first, members of parliament—that the next wine fashion is prosecco. Prosecco is a wine grape variety that came from Italy 20 years ago to the King Valley. Since then the King Valley has become the home of prosecco in Australia. The prosecco market is booming domestically and internationally, and it's supported by millions of dollars of production and marketing investment by Australian wine producers and grape-growers. Currently the Australian prosecco market in total is $60 million, and the King Valley has about $25 million of that production. There's an opportunity for the category to grow to $400 million in the foreseeable future. We believe the King Valley could have $200 million of that—certainly growing our pie. Over the last 12 months the Australian crush of prosecco grapes increased by 78 per cent. It has tripled since 2015. Similarly, Australian prosecco exports by value grew 77 per cent in the last year and have quadrupled in the last three years. So, truly, we're onto something. While only six per cent of the sparkling wine drunk in Australia is prosecco, evidence from the United Kingdom tells us that this is set to change. Historically, sparkling wine in the United Kingdom has been dominated by French, but it's now dominated by the Italians. Fifty-six per cent of all sparkling wine drunk in the UK is prosecco.
So, where does that get us? It is an opportunity and a gap. Mr Ross Brown has told the regional development committee:
Therein lies the opportunity and the problem, because the growers in the King Valley are totally focused on getting grapes in the ground and getting production, which they're also very good at. But at the end of the day, the success will be about marketing and taking this wine to market. Therefore, there's going to be a financial gap between opportunity and capability because the producers in the King Valley have done it very tough. They are short of capital and all that capital's going into production. In the future there needs to be the capacity to invest in the marketing.
There are all sorts of opportunities that Brown Brothers and others are addressing. I want to talk a little about how growers of prosecco are working together in my community, individual small businesses, and have developed the concept of the Prosecco Road, which is actually King Valley Road. It's gorgeous. So we have Brown Brothers in Milawa, the Dal Zotto and Pizzini families in Whitfield, All Saints in Rutherglen, Chrismont in Cheshunt and Sam Miranda in Oxley. They've all joined together to get this Prosecco Road idea going.
But there is a real fear that the use of the name 'prosecco' could be compromised by commercial demands of the Italians. They don't want us to use the name 'prosecco'. They think it's theirs. So over this last week, collectively, the wine-growers of north-east Victoria have been in parliament, talking across the political divide and lobbying to ensure that free trade negotiations don't, in the immediate sense, act as a threat to export arrangements to China and Asia broadly or in the mid-term limit the potential of adding $500 million to the Australian wine industry, and in the long term address the risk of huge loss and industry disruption that will be felt by many of our regional communities.
In summary, it is a fantastic change that has happened here with the WET, this investment and the amendment tonight. But what has worked so well is that industry has worked with government. We've had the minister, Senator Ruston, doing a fantastic job in bringing everybody to the table, getting all the negotiations happening and working with Treasury and Finance. That has been really good. Now we've got a huge opportunity to grow a particular type of wine in our regions. Again, I'm calling on the government to provide that same sort of leadership to help us do the trade negotiations, manage the WTO and the geographic indicator problem that has been presented and get the investment in the region so that we can do the marketing that we need to do. If we get all that lined up then we get regional development, we get jobs, we get value-adding like the cycle paths and summer tourism to the mountains and we get a fantastic tourist, agricultural and manufacturing package that is sustainable in the long term. We have got a superb opportunity here.
I would like to acknowledge the leaders of the wine industry in my community and say what great respect I have for your vision, for your really hard work, for working together as a team, for understanding the politics, coming to Canberra and for being ahead of the issue. I thank my community very, very much for that work. It gives me great pleasure to give this talk in parliament, because I think we are ideally placed now to do the work that needs to be done. We've got the leadership, with the government onside. We've got the leadership in industry. We've got the vision. We know that we've got the product that is going to give us economic opportunities. I know from other members of parliament that we like prosecco ! It's a lovely drink and we want to drink more of it.
In closing, I say to the government: the key to ensuring the negotiations that my industry want to do, with optimal results for our wine industry, is strong leadership and a commitment from the government to genuinely engage with industry. We know it is something that the government can do, and Anne Ruston in particular has demonstrated that it can do it really well. I thank her for her work and her staff for their work with the wine equalisation tax and with the amendment. I look forward to working with the government; but, in particular, I look forward to the networking job of bringing my industry together with government and working on opening up trade opportunities.
Thank you, Mr Deputy Speaker Coulton, for your interest. There is an invitation for you to come to north-east Victoria. I don't think you've been there recently, and we would love to show you around and introduce you to King Valley and the beautiful cool-climate wines that are growing there. We'll put you on a pushbike and let you do a bit of adventure holidaying. Thank you very much, and I appreciate the opportunity to make this contribution.
Western Australians are spoilt for choice when it comes to wineries. We have hundreds of wineries throughout the state, across six distinct wine regions, including the world-famous Margaret River region and the Swan Valley to Perth's north-east. I am fortunate that my electorate of Burt is surrounded by wineries, including Jadran Wines, Raeburn Orchards, Rocksgate Estate Winery, Millbrook Winery and Fairbrossen Winery. I look forward to one day when the Armadale Hills and surrounds are known as the 'Swan Valley of the south'.
Western Australian winemakers are a highly decorated bunch—that's an intended pun—who are known in particular for creating some of Australia's greatest cabernets and chardonnays. It took some time for Australian wine writers to acknowledge that cabernet and chardonnay grown out of WA's premier wine region of Margaret River were some of the best in the land, but these wines have now achieved unparalleled ratings from the world's most influential wine sources.
This bill will enable the newly named wine authority, Wine Australia, to administer grant programs, including the Wine Tourism and Cellar Door Grant program. This sounds great, and as a lover of wine I think it's fantastic that we are debating the Australian Grape and Wine Authority Amendment (Wine Australia) Bill 2017, which will support Australian winemakers. However, I had a look at the make-up of the Wine Australia board, and I noticed that only South Australia, New South Wales and Victoria seem to be represented. I absolutely support this program but do hold serious concerns that Western Australian winemakers are going to have a hard time getting recognised by a supposedly national body that, like so many others, is essentially run by the eastern states. The cellar door grant program represents $50 million of taxpayer money. I would be doing the Western Australian wine industry a great disservice if I did not to raise my concerns early in the piece in this regard.
The Export and Regional Wine Support Package will allow entities with an annual turnover below $20 million to claim 50 per cent of their promotional activities, up to a cap of $50,000. The object of this grant is to reduce the transaction costs of exporting for wine exporters and, in doing so, to increase opportunities to grow exports from Australia to China, Hong Kong, Macau and the United States. The pool of money this will be drawn from is limited to $1 million but is non-competitive and can be used to claim on all manner of export related costs, including travel to any of those countries or areas; providing free samples; the cost of trade fairs, seminars and in-store promotions; and marketing and advertising. Strangely, however, this funding is going to be provided on a first come, first served basis. So we will wait to see the efficacy of the distribution.
I think it is important that we support our wine industries, particularly that of Western Australia in its export markets and a capacity to grow the market it can sell into. I know there are many Western Australian wines already being served on the tables of restaurants and available through the bottle shops and liquor stores in many parts of the globe. In fact, I make it a key point whenever I travel not only internationally but even when I am here in Canberra or other states—if I can, depending on the wine list—to make sure that I and, of course, those that are with me get the great opportunity to sample some of Western Australia's finest wines.
Both of these initiatives were introduced to assist the wine industry transition to reforms of the wine equalisation tax, including a reduction in the annual rebate from $500,000 to $350,000 from July next year. While I am supportive of the bill, I am conscious of the impact that the wine equalisation tax will have on Western Australian winemakers. Reform to the WET rebate was long overdue. The system was being rorted by big chains and unbranded operators in creative entity structures. When I looked into the history of this, I found, like many other issues I find myself speaking on in this place, the GST was again at its core.
When the GST was first introduced, there was a great deal of angst amongst the winemaking community about the impact of the 10 per cent on their products and the consequences of that. The glimmer of consolation was that pulling a cork out of a wine bottle might hopefully be a lot cheaper, as GST would also see the abolition of a raft of other taxes. As part of the GST, former Prime Minister Howard introduced a 29 per cent wine equalisation tax to account and to offset the overall reduction in the amount of tax paid on wine. The then Labor opposition proposed a cellar-door exemption from the WET in order to boost the cellar door sales of smaller producers. While this specific amendment proposed by Labor was not adopted, the then government eventually did propose and pass something very similar to it. The Howard government's exemption, though, ended up being used and abused by larger bulk operators.
Unfortunately, the Turnbull government attempted to turn reform of the WET into a revenue grab at the expense of our wine producers. The government planned to pocket $300 million from the first reform proposal it put forward. Following significant industry backlash and expressions of concerns from Labor, the government backed down and went back to the drawing board—as with so many other pieces of legislation it has brought forward of late. However, the government still plans to be $160 million better off as a result of the reforms that it is putting forward here, and the implementation of this industry support package.
In Western Australia, last year, close to 400 wine producers participated in a survey seeking to measure the economic and social consequences of the proposed wine equalisation tax reforms. Wines of Western Australia chairman Redmond Sweeney said that, while there were some positives to come from the reforms, Western Australian producers would be disproportionately impacted by the lowering of the cap. Western Australia has the highest proportion of small to medium sized wineries in Australia. Those are the ones that will suffer the most should the cap be lowered.
What's worse is that the grant schemes that are meant to be helping out all of these smaller operators are being administered by an east coast run body that has seemingly no Western Australian representation, despite Western Australia being an absolutely critical part of the Australian wine industry and, in many respects, leading the charge in the varieties in which we excel. In reality, these grants will do very little to offset the impact of the government's larger agenda. Of course, we support the grant schemes. I think we should be doing what we can to support these businesses. They are critical not just to employing many people across regional Western Australia directly but also to making sure we have a vibrant tourism industry throughout the south-west of Western Australia which provides even more jobs to the young people in that area.
But we know that this is really a savings measure for the government, and it's at the expense of the small businesses that it says it likes to champion. More should be done. Margaret River winemaker Vanya Cullen has said that, while parts of the reform were needed to clean up certain parts of the industry, the blanket approach of lowering rebates presents a danger in outweighing the benefits of the reform in toto. Many winemakers in WA are dependent on rebates to compete with larger producers.
To say that this is about savings would be disingenuous on the part of the government. It has just handed big business a huge corporate tax cut and it intends to provide that to even bigger businesses and, of course, the banks. I support reform in this area, I support the overall package and I support the grants in particular that will support the small- to medium-sized enterprise in the wine industry in Western Australia. But I think the critical point that needs to be made here is that the reforms in themselves are just not enough.
Now that I've addressed the detail of the reform package that we're dealing with here, I'd like to say a few more things about the wine industry. The wine industry is not just about those who like to have a tipple on a Friday night over dinner. It is bigger than I think most people realise and it is one of our leading brand ambassadors for the Australian export industry. There are not many products that come branded in a way that so clearly and precisely demonstrates not only that they are an Australian product but the region within Australia from which they come. They, therefore, provide not just the opportunity to market Australia and Australia's produce but also the opportunity to market tourism. It's not just about tourism to the wineries and the cellar doors, which these grant programs will hopefully continue to support. Of course, every time someone in a classy restaurant in London, New York or anywhere else in the world picks up a bottle of, say, Vasse Felix and sees that it is from the Margaret River region, they are immediately transported to seeing the opportunity to visit Margaret River, to find out more about Margaret River and to find out more about Western Australia. I am sure the same can be said for the Clare Valley, for McLaren Vale and for many different wine regions around Australia. I think this is a crucially important aspect of our wine industry, because it is a brand leader for Australia across the world. It is one of those sectors that value-add.
I come from a state which exports a lot of dirt—often referred to as iron ore—and has precious minerals as well. But, at the end of the day, the wine industry is a truly value-added industry. It is a shining light for what Australia can do. That is evidenced by the way in which Australian wines are referred to through international wine sources that acknowledge the impeccable standards of the wines we produce. We have some unique factors that come into play, because we have been able to take grape varietals out of many different parts of Europe and transport them to Australia, where we have soil types that match but different weather climates. Then we have the same weather climates that go with different soil types. From the varietals we have inherited from our European heritage we have been able to create unique Australian flavours—the full-bodied flavours that have put our wines so prominently on the world stage. That has allowed us to talk not only about our wines but also about the foods that match with them, which we can export as well. It's important that we remember that.
I mentioned this before and I'll come back to it in closing. It's not just about the people employed in making the wine in the wine industry, who are very skilled at what they do. Of course, there are also the hundreds and thousands of people that come into our country to help with picking the grapes in small vineyards, where it's not in any way economical to do that mechanically. It's the money they bring in, the tourism dollar—they earn money and then redistribute it throughout our economy by consuming our goods and services. It's the way in which many Western Australians, from Perth, from my electorate and around, will travel down south, as we call it—some have referred it as 'Douth'—to visit the Margaret River region, to visit the wineries, to have lunch and share meals and have fun, to experience the great wine and even some of the beers on offer in the south-west region of Western Australia—as I'm sure they do in other parts of Australia—and to spend that tourism dollar, which is so vital for keeping our regional communities alive. These are the things that should not be overlooked. It's why we need to continually support our wine industry, because it is a huge brand ambassador for our nation around the world. It's why I support this grants program. I do have reservations about the make-up of the board. I say to the minister: make sure you get some Western Australians on it pronto. We'll all feel more comfortable if you do.
Federation Chamber adjourned at 19:30