Wednesday, 9 December 2020
Wine Australia Amendment (Label Directory) Bill 2019; Second Reading
Our wine is some of the best-quality wine in the world and brings tremendous economic opportunities in our already-strong agricultural sector. I have a lifelong passion for and interest in the winemaking industry, with my family roots in the proud grape-growing region of Victoria's north-east, which locally some people call 'God's country'. My family have lived there for six generations. The winemaking industry is a major contributor to the Australian economy and is consistently growing, particularly in Asia. We need to raise international awareness of our quality wines in order to grow the industry and safeguard the reputation of our wine producers aboard. The wine export label directory is essential for this. I commend this bill, the Wine Australia Amendment (Label Directory) Bill 2019, which allow a wine export label directory to be established by Wine Australia to assist brand owners to protect their intellectual property rights.
In my maiden speech in this place, I noted that my uncle on my mother's side is the great Mick Morris, of six generations of Rutherglen winemaking fame. He notably produced the first dry red durif in 1954, making him a pioneer of the variety in Australia, which was otherwise known as petite sirah. My uncle once described durif as 'shiraz on steroids'. My cousins and other extended family members continue the proud tradition of winemaking in the Rutherglen region in northern Victoria today. In my electorate of Higgins, there are many great restaurants and bars, as well as wine cellars which stock and serve high-quality wine from all over Australia. With winemaking in my blood and in my constituency, I commend the label directory.
The government wants to support winemakers and that's because we recognise the importance of the Australian winemaking industry and its importance to our economy. It contributes in the order of $45 billion. We've invested $50 million in the Export and Regional Wine Support Package. This money will be invested over four years to grow Australia's wine exports and showcase wine tourism in the US and Asia markets—two key target markets. A key component of this package is to develop wine producers to participate in international wine activities, as well as provide marketing and advertising materials for markets abroad. This allows winemakers to get a jump start on exports to the US and Asia. For example, David Ritchie of Delatite Wines in Victoria says that the funding has allowed his business to conduct tastings and dinners with exporters in Shanghai.
The minister for trade, a proud South Australian and long-time advocate for the Australian wine industry—and I note the member for Sturt is here in the chamber, and he also has a keen interest in the wine industry—was touting the global opportunities that lie ahead for the industry in his recent address at the National Press Club. The Morrison government is currently negotiating an Australia-UK free trade agreement and it is hoped this will directly benefit the winemaking industry.
The label directory builds on the government's commitment to the industry. It will provide a public-facing online database of all Australian wine labels for export that can be used by wine brand owners to search for copycat labels. It will require all Australian wine exporters to submit images of their labels prior to obtaining export certification, and they will be uploaded to a searchable directory. The label directory will be supported by our commitment of $417,000 in funding, plus additional contingency funding. Wine Australia has indicated that the wine directory will be built into their wine export approval system, which is currently being upgraded. This is necessary because growth in international demand has also driven counterfeit Australian and other premium wines around the world. For example, the iconic Penfolds brand, which is very popular in Asia, has some exported vintages that can fetch over $400. This presents a large mark-up for counterfeits. In recent years, we've witnessed a number of copycat wine scams in Asia which have been exposed by police. This has seen thousands of fake bottles seized. It is estimated that counterfeits will cost the global industry and Australian winemakers dearly. According to Frontier Economics, an international research firm, the global economic value of counterfeiting and piracy could reach $2 trillion by 2022.
This bill is critical to allow brand owners to protect their intellectual property rights and the export value of their wine. It will ensure that customers, both here and abroad, can be confident they are getting a safe and genuine product. It means they're going to get what the label on the bottle says. This will help continue to build trust in Brand Australia, a very good brand. This bill will also ensure that Australia is playing a leadership role in the global winemaking industry by spearheading protection for the labels abroad, which will promote trust and confidence in international markets.
In closing, protecting our winemaking industry is an economic imperative. This bill will create a label directory and is a key component of the government's ongoing support for such an important industry. It builds up the Export and Regional Wine Support Package and our pursuit of freeing up global export opportunities for the industry. As a recent member of the Joint Standing Committee on Trade and Investment Growth, I'm very proud of this initiative. It will protect the intellectual property rights of our winemakers and combat the growing market of counterfeit wine abroad. It will ensure confidence in the quality of our wine and will continue to support an important industry. I commend this bill to the House.
I rise today to speak on the Wine Australia Amendment (Label Directory) Bill 2019. I stand in the support of the legislation before the House, which seeks to amend the Wine Australia Act 2013 to enable Wine Australia to establish and maintain a publicly available directory of grape product labels intended for export. I confess that I am a wine lover. I'm no certified expert, but I have no hesitation in saying that Australia produces some of the finest wines in the world. Australia's wine products have become highly sought after globally, and now when people think of notable wine-producing regions, such as the Rhone Valley or Bordeaux in France or Veneto and Tuscany in Italy, they also think of Australian regions, including the Hunter, the Barossa, Margaret River, emerging areas, such as the Orange area in New South Wales, and also Tasmania. Australia's wines are something that we ought to take great pride in, and this viable export market ought to be strengthened at every opportunity. It's important to note that some iconic Australian labels, such as Penfolds Grange vintage and Henschke's Hill of Grace, can fetch well over $1,000 a bottle, and there are others in the Australian market which are very valuable export commodities. But make no mistake: this market faces many, many challenges, and the government ought to commit itself to protecting Australia's wine producers at every opportunity.
The bill before the House primarily and rightfully seeks to assist wine producers in protecting their brand from copycat behaviours. However, it's worth noting that this sector also faces significant challenges that the government appears intent upon ignoring altogether. Climate change, in particular, is one issue that's greatly challenging Australia's beloved wine industry. This sector deserves assurance that the government is adequately protecting their interests by taking the threat of climate change seriously and acting meaningfully to protect and defend our agricultural sector. The devastating 2019-20 bushfire season demonstrates quite clearly that climate change poses great challenges to our wine industry.
The Grape and Wine Association recognised this challenge throughout the crisis, pinpointing a number of regions that are key to our wine production that are at risk of or have already faced devastating impacts from bushfires and from climate change. The Adelaide Hills is one are which was greatly impacted by the fires. A number of grape growers and wine producers were directly impacted by the fires, losing vineyards, buildings, equipment and stores of wine. A significant number of our producers were impacted across Australia. The flow-on effects, in particular, have been devastating through communities. These are losses directly as a result of the fire front. We also cannot understate the effect of the loss of tourism in iconic destinations such as Kangaroo Island, the Barossa Valley et cetera. The drought has also had devastating impacts upon our wine producers, with reports indicating that some vineyards have had yields reduced by as much as 75 per cent as a result of the drought.
One cannot deny the devastating impacts of climate change on this vital sector. Climate change poses a significant risk to the industry on an ongoing basis. The grapes used to produce wine, it is said, need to be grown in an environment between 25 degrees to 32 degrees Celsius. Who could forget the temperatures that we faced last summer and will face this summer from the increasing temperatures due to climate change? That's without considering the devastating effects of climate change-induced natural disasters such as bushfires, floods and drought.
As has been indicated, Australian wines are a high-value product. Their high quality is renowned around the world, and they contribute significantly to our export market. If we are to retain our standing internationally and continue producing high-quality wines domestically, this sector requires meaningful action to mitigate the effects of climate change. I welcome the steps taken by the Australian wine producers to protect their own products, and I encourage the government to listen to the industry and take heed of their concerns on climate change.
I want to also take this opportunity to raise some concerns that I have in terms of health. I have encountered far too many cases of foetal alcohol syndrome in my paediatric career. This is certainly a devastating condition. The reality is that it's more prevalent in some areas of our society than others. Foetal alcohol syndrome arises in children who have been exposed to alcohol in utero throughout their mother's pregnancy. It can result in a number of abnormalities, including central nervous system, cardiovascular, and other changes. It's important that this is recognised by the appropriateness of labelling on wine labels about alcohol content and the risk of foetal alcohol syndrome. As with many social issues, education is the important thing, and I encourage wine producers to take this in hand.
I congratulate the government on these wine label changes. I encourage them to do more to protect our wine industry, in particular in terms of our trade, and encourage them to look for a diversity of export markets. As we know, we've been impacted by the China trade, and it is important that we diversify our markets. But it is also important that we repair the trade relationship with China, which takes a large amount of our high-quality Australian wine. I'm confident this can happen provided we pay attention to the China trade difficulties. I commend this bill to the House.
In 1836 the colony of South Australia was settled. The first European settlement was in 1836. In 1844 Christopher and Mary Penfold arrived in the new colony of South Australia and in my electorate of Sturt. They established their home. They built a cottage called Grange Cottage and they brought with them some vines, which they planted. Of course, that is now the famous Magill Estate vineyard, and Grange Cottage has eponymously given its name to what's now known as Penfolds Grange. We used to call it the Grange Hermitage. Now, of course, it is Penfolds Grange.
In this debate, both speakers that have preceded me have singled out Penfolds as beyond question the great iconic amongst many premium Australian wines that are produced not just for our enjoyment domestically but, of course, to be exported around the globe. A few years ago I was in Thailand, and our ambassador there indicated that Penfolds was the most recognised brand of any Australian brand in Thailand. It was his view that that was probably the case in quite a few other countries throughout Asia. I'm confident it's the case that Penfolds is a very-well-recognised brand in most of the premium wine markets across the planet. So I'm very proud that the winery not only was established in my electorate but we still, in the absolute middle of my electorate, have Magill Estate. A lot of their production now is equally drawn from regions like the Barossa, of course, and most South Australian wine regions—the McLaren Vale, the Adelaide Hills, the Clare Valley; they make wines from grapes sourced from all around South Australia and even Tasmania now and other parts of the country—but their spiritual home beyond question is in the middle of my electorate, which is why I'm so passionately in support of this legislation before the House.
Penfolds have been one of the most significant victims of counterfeiting of their wine in overseas markets. This, of course, is designed to put a little bit more robustness around the intellectual property that brands like Penfolds have, particularly by having such a clear, publicly accessible database. They will be in a position—and Australian authorities such as Wine Australia and others that are in charge of protecting brand integrity in this country and in other countries with markets that we're exporting to will have a much clearer ability now to point out where someone is clearly trying to represent their product, piggybacking off the brand strength and significance of a brand like Penfolds to sell an inferior wine at a much higher price.
That obviously has two impacts. It means that someone can take an inferior wine—a much cheaper wine—and, if they're successful in tricking the consumer, sell it for a much higher price. That's one issue. The other is, of course, that, when someone consumes this inferior wine and they think it was, for example, a Penfolds Grange, a Henschke Hill of Grace or a Rockford Basket Press and they have a disappointing experience, that has the secondary damage to the Penfolds brand. Potentially, if this is going on fairly significantly and widely, which we understand it is, then that is going to have a significant impact on the brand integrity and the brand value that's been built up, in the case of Penfolds, over almost 175 years. Clearly, the, we have to do all we can to protect these great, iconic Australian brands, this great, iconic Australian product that we're sending around the world, and do all we can to make sure that the value they rightly deserve is protected not only in this market here in Australia, where we don't have these issues, but of course in other parts of the world.
It's important because it is quite difficult, particularly in non-English-speaking countries, for people to be expected to discern between something that's a Penfolds and something that's a 'Penbolds'. You'd have to be quite sophisticated with the English language and you'd have to be looking for the trickery. Particularly at the consumer level, I don't think you could reasonably expect that most people are going to assume that what they are receiving has to be validated or needs some kind of certificate of authenticity to make sure that they're purchasing what they think they are.
I'm not suggesting that consumers in some of the major Asian cities are going to start going onto the Wine Australia website when they're in the bottle shop and checking off labels. At the next level up—for example, the people who are importing, the people who are selling the product, the people who are running the retail outlets, the people who are in charge of distribution in these markets et cetera—if they value their reputations and they want to make sure that what they're passing off as a genuine product can be confirmed to be so, I think this would be a very valuable tool. Obviously it also puts Wine Australia in a much stronger position to be out there proactively looking for breaches.
We have an enormous number of wine labels in this country. Penfolds is fairly straightforward. I don't think many of us who know the brand well would struggle to identify a counterfeit or fraudulent label. But of course there are so many—which is a great success story—Australian winemakers who are exporting. It's very difficult, without a proper, centralised, publicly accessible database, to know what's accurate and what's fraud, so this is a very important reform.
It couldn't have come at a more important time for the industry. Of course, we've had some issues in recent weeks with our major export market, being China. This underscores the need for us to diversify into other markets even more and find growth in markets we were already exporting into—India is an excellent example. There are other parts of the world that we have barely entered whatsoever, so we want to broaden the number of markets we're sending our product to. That's going to increase the risk of counterfeit even more and the difficulty in policing it.
I know the industry has been calling for this register and is strongly welcoming and looking forward to having it up and running. I'm grateful that we're passing it through the chamber now, because the sooner we can get this adopted and Wine Australia can put this in place the sooner we're going to have great outcomes and integrity around the wines that we're so proud to export around the world. I commend the bill to the House.
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.
I'm very happy to rise to speak on the Wine Australia Amendment (Label Directory) Bill 2019. It's quite timely. It was only last week that I was speaking with John Cassegrain of Cassegrain Wines, a fairly well-known winery, particularly in my electorate but across Australia. They are doing some wonderful things and exporting to many countries around the world. In fact, a couple of years ago, I was on holidays in Japan on the Shinkansen, and, lo and behold, they were serving Cassegrain Wines in the little bottles—chardonnay and pinot noir. It's a second generation family business that has done exceptionally well. John's son Alex has taken over the reins and is going great guns.
But it'd be fair to say the conversation with John was, indeed, a difficult one. They've had 18 months from hell. They really have. They were facing the drought. Then we had the bushfires, and—particularly in Port Macquarie—they suffered substantially because the smoke was there for six months because of a peat pit that burnt and we were unable to extinguish it. It was that deep, and it was that fierce. The council was dousing it with water day after day after day. It made no difference. Some days, they closed the schools because the smoke was so heavy.
All their grapes had to be destroyed—gone—so they couldn't produce wine to export. They were bringing in more grapes from areas that weren't smoke taint affected. So they had the bushfires. Of course they had a large tourism and cellar door, and then we had the coronavirus, and everything shut down, so they couldn't trade there. Now, of course, they have the tariffs from China of up to 217 per cent. John was telling me that he has a number of containers sitting on wharves that were going to China that were cancelled. So it's been the 18 months from hell.
Then you talk about somebody who has worked for decades and decades to produce a product that has respect not only in Australia but around the world. For somebody to come in and ride on those coat-tails—that's not an accurate description—to lie and cheat and copy, and then be able to profit from decades of work is just unscrupulous. That is why it is so important that the Australian government protects our winemakers and our industry through this bill.
The bill will do two things: it will protect our producers, and it will protect their identity, their intellectual property, and ensure that they know that they're not going to get ripped off or have their reputation damaged by somebody who's trying to make a quick buck. The member for Sturt in his contribution said that reputation can be damaged because you believe that it's a real product—you believe that it's a true product—and you have a bad experience. Therefore (a) you won't buy it again, but (b) you'll tell somebody. We all know that if you have a good experience you will tell one person, but if you have a bad experience you will tell 10. So it's the reputation that is damaged.
Part 2 of the bill protects the consumer so you know what you're getting. You pay for what you get, but you'll know what you're getting. Again, the member for Sturt referred to Penfolds. Penfolds Grange goes for $800, $900 and above. When people are paying that kind of money for wine they want to know that they are getting what they paid for. So I'm pleased that this bill does that and I'm pleased that we're able to step up, as a government, and protect our industries.
In addition to doing that, the bill will enable Wine Australia to establish a label directory which is publicly available on a database. It will also help control the export of grape products, see the establishment of the label directory and its maintenance, include digital colour images of grape product labels and other information and give Wine Australia more assistance to control the export of grape products.
I'm pleased with this bill. I'm pleased that it helps our producers. Hopefully, in the future, for people like John Cassegrain things will turn around and we will resurrect relationships with other countries so that, in the future, they can see their profit margins increase and we can all enjoy a good wine knowing that it is an original wine.
In my electorate of Indi, grape and wine production is a major industry, employing hundreds of people directly and thousands across our broader tourism sector. Our five wine regions of King Valley, Alpine Valley, Beechworth, Rutherglen and Glenrowan are some of Australia's best and well known. With fires and then the pandemic shutting down the restaurant and tourism trades, they have had a very tough year.
This bill makes a straightforward and welcome reform to protect the integrity of our wine exports sector. I support this legislation because it will help secure the future of the wine sector in Indi. This bill establishes a wine export label directory, a public-facing online database of all Australian wine labels for export. It empowers Wine Australia to establish and maintain a directory of labels that are attached to great products such as wine intended for export from Australia. This is a response to calls from the sector to strengthen our export regulatory system to stop the proliferation of copycat labelled wines. The directory will allow winemakers to search the database to easily see where other labels may be seeking to trade-off their intellectual property so they can pursue civil action against copycat exporters.
Indi's winemakers know that protecting our hard-earned reputation for quality is critical for the sector to continually prosper. But they equally know that this issue is not the biggest issue facing them and that, if we are to continue to make the world's best wines in north-east Victoria, we need a concerted strategy from our government. Two key challenges to the long-term viability of the sector stand out. The first is the increasing risk of bushfires. In the 2019-20 fires, the north-east wine sector suffered $140 million worth of damage from smoke taint. We've heard other speakers today talk of this, and in my region it was an enormous problem. Of the 25,808 tonnes of grape on the vine prior to harvest, only 69 per cent of that was picked. The farm gate value of the harvest prior to the bushfires was $36 million and, as a result of the damage, that fell to $13 million—one-third of the original value. The bushfire royal commission found that, in the future, Australia will face increased frequency and severity of bushfires as a result of a heating climate. This climatic disruption poses a significant threat to the viability of viticulture in our region. If we see catastrophic smoke taint events every 10 years or even five years it fundamentally changes the business model and viability of our producers.
The second key challenge is the uncertain trade outlook. I want the use this opportunity to sound the alarm about the impact of China's tariffs on our grape growers and wine producers. Last week, I emailed all the grape growers in Indi asking them how the announcement of significant tariffs on Australian wine from the Chinese government would affect them. Some of the responses I received are cause for serious concern. One winemaker near Mansfield told me:
We've had a couple of orders cancelled over the last 3-4 weeks as a result of the trade war. Our importer was told in face-to-face meetings with officials in Shanghai that they would not be able to import any more wine from Australia—they were given 2 days' notice of this ban being put in place. This happened in early November. We don't expect to sell any more wine into China for the next 12 months and it was looking like we would sell wine worth around $120-150k this financial year.
Another grower near Violet Town told me:
We have had a long-term relationship with a winery in the Macedon Ranges which has purchased the majority of our grapes each year. On Monday, following the tariff announcement the winery informed us that they can no longer purchase any of our Shiraz grapes as the majority are exported to China. This will significantly impact our business as it our main grape variety and there is little chance of finding a new home for the grapes as there will be many other growers in the same position. Our Shiraz are now likely to be left on the vine to rot and we will have to make a decision to either keep maintaining the vines until a market is available or pull them out.
From a winemaker in the King Valley:
We could be severely impacted by the tariffs if those that cannot get their wine in to China are not able to find new export markets and have to sell their wine back in the domestic market. One way for these companies to move their excess stock would be for them to offer very good prices to the chain outlets and restaurants—two of our biggest markets and I would suggest for most wineries in Indi, this would be the case.
This situation would cause increased competition for shelf presence and could cause a situation where we would have to fight on price to keep shelf space going forward. Not ideal after the year we have just had or for future sales at usual pricing.
Finally, from another King Valley winemaker:
As we are all aware, the impact of this on the wine sector broadly will be very significant. Due to limited China exports the local sector will be less directly impacted in the short-medium term, however I expect the knock on impacts on the local sector to be more significant.
Many producers who do export to China will now find that with tariffs their product will be priced out of that market and will therefore need to look at shifting product into alternative markets - both export and domestic.
Given China export volumes, this will inevitably result in a large oversupply, which in turn will place significant downward pressure on prices, this too has short and longer term impacts. Whilst the industry will simply need to ride out the short term price pressure, in the medium term if access to the Chinese market takes years to resolve then the risk is we will see a wholesale devaluing of Australian wine.
Australian producers, through a focus on quality have been very successful in growing both volume and price point into China and achieved a shift in the perception of Australian wine more broadly - it would be devastating if this is reversed.
Quite clearly, these responses show the seriousness of the challenges our wine sector faces on the international trade front, and I'm using this opportunity in this House to call on the government to move quickly to help our grapegrowers and winemakers to respond to these fast-moving challenges on the climate and trade fronts.
One way we could do this would be to fund a proposal submitted by the North East Wine Zone for $1.6 million in bushfire recovery funding to set up a world-first regional smoke-taint sensor system. The North East Wine Zone, or NEWZ, was set up in the wake of the summer fires to provide a forum for the five north-east wine zones to coordinate their responses to their shared challenges. I'm so pleased to see the emergence of NEWZ as an effective body to advocate for this critical sector in our region, and I'm even more pleased to back their bid for bushfire recovery funding. NEWZ is proposing to set up a system of sensors across the region that can, in the event of a bushfire, automatically test smoke levels in the air and conduct real-time predictive analysis of smoke composition, so that grapegrowers can understand the likely impact of smoke taint on their crop and make early on-farm decisions to manage crop risk. This project is a world first and has the potential to be scaled up across the state and other Australian wine regions. As we look towards a more uncertain climate future, knowing that north-east Victoria is already one of the most bushfire-prone environments in the world, this is precisely the type of climate resilience investment we should be making.
On the trade front, I'm calling on the government to put forward a serious plan to support the sector to diversify its export markets. In a more uncertain world, it is critical to our national interest that we are not reliant on a single market. Supporting our world-class wine sector to break into new markets is a sage move as we enter this period of global trade uncertainty.
So I will be supporting this bill tonight in the House, and I'll continue to work with our wine sector on a long-term resilience plan. Wine has been a linchpin of our economy and community in north-east Victoria for a century and a half. At a time of great challenges, we must be making the investments and putting the supports in place to keep it that way for many, many years to come.
This bill, the Wine Australia Amendment (Label Directory) Bill 2019, is timely, as wine producers and exporters across this country have been slapped with eye-watering antidumping duties of up to 212 per cent on their very fine exports to China. These tariffs are a result of unfair and unsubstantiated claims of the dumping of cheap Australian wine into China, a claim that has been refuted by experts around the world. As we all know, on average Australian wine is among the most expensive available in China.
Labor is deeply concerned about Australia's rapidly deteriorating trading relationship with China. We know the Australian wine industry has long benefited from a productive and respectful relationship with that country. Australian wine exports to China were worth $1.1 billion in the year to 30 June, according to Wine Australia figures.
In the midst of a crisis, the agriculture minister, sadly, has not been able to get in contact with his counterpart, in the entire time he has held that role. The same might be said for the minister who is reported to be the hopeful next trade minister, the current Minister for Education, who also has not reached out to his counterpart in China, their minister for education, which seems shocking, given the hundreds of thousands of Chinese students who are entrusted to this country for their education.
Back onto the wine. That the agriculture minister is not able to speak to his counterpart certainly doesn't bode well for our significant wine industry in this country. It is in the interests of both China and Australia to have a productive trading relationship. It is important that the government show leadership on managing this relationship at this critical time. Producers, quite frankly, feel abandoned by this government, and that is what they have told me. The message they are getting is, 'Look, it might be a bit rough right now. Pack up your wine crates and perhaps think about sending them somewhere else,' or, 'Here, look at these agreements. We've got for you about 14 ratified FTAs', as if that means a winemaker can suddenly change overnight where those creates of wine are going. This is simply not possible. To think that it is just demonstrates that the government is entirely out of touch with how a trading relationship works.
Australian producers across all industries spend years—literally years; most of them decades—building relationships with importers in those destination countries. Those are decades of on-the-ground relationships to make sure that they are trusted, that the right price is paid, that the people who want the product get the product and they get the product that they want. You cannot turn on the tap of demand for Australian goods. You have to work at it. It's not like walking up to a tap and getting a glass of water. It takes time, hard work, commitment and dedication, and it is what this government has failed to do.
Labor is concerned that the threat to wine exports follows China's technical suspension of imports and its boycotts of other Australian exports such as red meat—now lamb—coal, international education and tourism, cotton, sugar, timber, seafood and wheat as well as the imposition of 80 per cent tariffs on Australian barley exports to China, most of which ships, of course, from my electorate of Brand from the CBH silos that have been there for many years. Like with barley, the assertion that Australian wine producers are dumping their product into the Chinese market is simply ludicrous. In fact, as Jeff Wilson of the Perth USAsia Centre has rightly pointed out, data shows that Australian wine gets a much higher price in China than other top export markets.
But we really shouldn't be too surprised by this. We know that the government has been at loggerheads with China for some time, especially since the foreign minister needed an announcement and decided to make an announcement on a television program on a Sunday morning, calling for officials like weapons inspectors to go into another nation to look for the reasons for the emergence of the COVID virus. Labor does support an international inquiry into the origins of the virus. It's a very important scientific inquiry that is required for, quite frankly, the benefit of the whole world. We all want to know how this happened so we can prevent it happening again. But to turn it into an announcement for political purposes—again, on a Sunday morning program—is just inexplicable.
I return to discussion about the wine industry. It's long benefited from a productive and respectful relationship with China. Australian wine exports, as I've said, are worth $1.1 billion, and I agree that winemakers should spread their risk and diversify their export markets. Unfortunately, a lack of leadership from the government on the diversification issue has left a policy vacuum, leaving business, stressed from bushfires and drought as well as a pandemic, to pick up the pieces.
As we know, this government is ready to sit back and shift the blame rather than show leadership. We've heard the catchphrases, the get out of jail free cards: 'This is a state issue', 'I don't accept the premise of your question', 'Could someone else do that, please'—not to mention the minister for agriculture's extraordinary statement that 'the government has provided up to 14 free trade agreements around the world so you can go and spread your risk. Access one of those.' That's patently absurd. You do not access the benefit of FTAs simply by packing up your wine on a crate and sending it off to some unknown destination. You have to apply to access an FTA, and even before you would want to do that you have to have the relationships on the ground even to have buyers. It's not as if you can go to a signing ceremony for one of these FTAs and expect that, magically, there will be a market for you to sell into.
Given the current state of play with our trading relationship with China, the Prime Minister and the cabinet are now demanding export diversification. Well, it's seven years too late. I found it a bit rich when the government itself commissioned a report aimed at building our economic relationship with India and let it sit there in the PMO simply gathering dust. In fact, it has been entirely shelved. Two years ago, former Department of Foreign Affairs and Trade secretary, Peter Varghese AO, handed a landmark 500-page report to the government with 90 recommendations on how to improve our trade and investment relationship with India. Would anyone like to guess how many recommendations have been implemented?
One. That's one out of 90. I thank the member for Bruce. He's read the report; I know he's read the report. I've read the report, but no-one in the government seems to have done so.
An honourable member interjecting—
Impressive? It's not impressive at all. There were 90 recommendations. One out of 90 is just over one per cent. It's a report that was issued 2½ years ago and this is all they've managed to do. And now they call for export diversification. Well, I ask: what have the government been doing? What have they been doing? It seems like it is: job done, feet up, get on a Zoom, put a couple of flags behind yourself and then pop it out on Instagram.
The Varghese report found that no single market over the next 20 years would offer more growth opportunities for Australia than India in areas as diverse as education, agriculture, energy, resources, tourism, health care, financial services, infrastructure, science and sport. As Varghese said, 'The opportunities will not fall into our lap.' Now, here's a tip for the government: that wasn't one of the recommendations; that was a warning. If you do sit back and accept a report such as this and then do nothing about it, the opportunities will not fall into our lap. You have to go and work and get it done. You have to start implementing recommendations. He even identified 20 priorities. He made the list shorter. It's a road map. They paid for the work. The government paid $1.5 million for this report. I think it's good value for money, quite frankly. It's an excellent report. The true waste is that they haven't looked at it. They haven't read it. They haven't even sought to implement, beyond one, any of the 90 recommendations. It was intended as a blueprint to boost our economic ties with India and to diversify our trading relationships, but it was buried upon its release in 2018 and it has gone nowhere. In fact, early this year the government admitted to Senate estimates that it had done remarkably little. That's where we found the confirmation that only one of the 90 recommendations had been looked at.
Underlying the Morrison government's failure to deliver on this plan to boost Australia's economic ties with India is fresh trade data showing India's share of our exports has fallen to a 17-year low. Official data released earlier this year underscored the dangers of the government's lax approach to India and its longer-term failure to adequately seek to diversify Australia's trading economy. According to the ABS, India's share of Australia's merchandise exports fell to $10.98 billion over the 12 months to 30 June. That's 32 per cent below the 2018 level, when Mr Varghese released his report. It's getting worse and worse. There is a blueprint. You haven't used it. In the meantime, our trade with India gets worse. India's share of Australia's total merchandise exports is now below two per cent. That's the lowest level since 2003. Meanwhile, China's share of Australian exports has risen to a record 48.8 per cent, highlighting our heavy reliance on a single trader and probably demonstrating the laziness of the government.
Tomorrow, the long-awaited Australia economic strategy report will be launched, led by respected ambassador Anil Wadhwa. This is a response from the Indian government to the Australian government's Varghese report. The Indian government is responding to a report that this government has entirely failed to implement or to even seek to implement. It has put it on the shelf. Frankly, this is embarrassing. I know the Minister for Trade, Tourism and Investment is speaking at this launch. How he will explain his failure to adopt the Varghese report, in light of Ambassador Wadhwa's report, will be, frankly, a sight to see. Obviously, I'm not invited to the launch. I wish I were. I know people who will be there and I really look forward to the report. I have met with Ambassador Wadhwa. He has high hopes for the continuing relationship between Australia and India and high hopes for our trade relationship, but I'm afraid he might be met with stony silence from a government that has refused to accept its own advice.
I will conclude shortly. I will just briefly mention Peel Estate, one of the vineyards in my electorate of Brand, which was established in 1979. As you might know, Mr Deputy Speaker Rick Wilson, being a Western Australian, Peel Estate has the oldest sangiovese vines in Western Australia; that is true. They make fine wine. They have magnificent evenings there on a Sunday—the jazz evenings. I regularly visit Will Nairn and his fantastic vineyard down at Karnup, in the south of the city of Rockingham. It is a hidden treasure of the electorate of Brand. They don't export. They're a smaller vineyard. Western Australian vineyards don't export to China as much as our South Australian friends do, so they are not as affected at this time, but those that do are very greatly affected by the very unfortunate tariffs that are imposed on their product.
I urge the government to take its feet off the table and start the hard work of the true national effort that is required to diversify. It takes years and years. It takes every minister thinking every day about what they can do in their portfolio to truly diversify what we export and who we export to. I thank the House.
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.
Regarding the Wine Australia Amendment (Label Directory) Bill 2019, the label directory can be established by Wine Australia to assist brand owners to protect their intellectual property rights. By supporting brand owners to better protect their intellectual property rights, this bill will not only ensure consumers can be confident that they will be getting a safe and quality product but also ensure that what the bottle's label says is what they're actually getting. This additional control will assist in safeguarding the reputation of Australia's growing wine export market, which directly employs over 69,000 people and is worth $2.87 billion per year.
The label directory will be a public-facing online database of all Australian wine labels for exports that can be used by wine brand owners to search for copycat labels. Industry asked for a label directory to better protect their intellectual property rights from potential copycat exporters who seek to take advantage of the good name of Australian brands overseas. While Wine Australia's role does not extend to regulating intellectual property rights, this bill will assist wine brand owners to better protect their own interests. With the Wine Australia Amendment (Label Directory) Bill 2019, we are adding one more tool to Wine Australia's export control toolkit. The bill will make maintaining a label directory a part of Wine Australia's existing export controls to deter exporters of wine and other great products that seek to mimic Australian brands for commercial gain. This bill is important to Australia's wine exporters, as well as the wine industry more broadly, and it ensures that Wine Australia is equipped with appropriate regulatory mechanisms for maintaining Australia's reputation for quality and integrity in a growing international market for Australian wine. I commend the bill to the House.
I thank the minister. The original question was that this bill be now read a second time. To this, the honourable member for Chifley moved, as an amendment, that all words after 'That' be omitted, with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.
Question agreed to.
Bill read a second time.
Ordered that this bill be reported to the House without amendment.
Federation Chamber adjourned at 19:09