House debates

Wednesday, 23 November 2022


Wine Industry

7:55 pm

Photo of Tony ZappiaTony Zappia (Makin, Australian Labor Party) Share this | | Hansard source

A combination of the COVID-19 pandemic and exorbitant tariff increases by China of around 200 per cent have left many South Australian wine growers and winemakers in despair, with many growers left with no buyers for their grapes. South Australia produces around 50 per cent of Australian wine and accounts for around 64 per cent of all Australian wine exports. It produces around 80 per cent of all Australian premium wines. In normal times, the wine sector contributes well over $2 billion to the South Australian economy. It is also a major tourism driver for the state. However, right now the sector faces a bleak future, confirmed by a recent report by the South Australian Wine Industry Association and Bentleys SA. Of the respondents to the survey of 116 wine companies, two-thirds had experienced negative impacts due to the wine duties imposed by China and, of those, 57 per cent had quit the Chinese market altogether.

It has been reported that, in the last financial year, Australia's wine sales to China had plummeted to $25 million compared with $1.1 billion two years prior. This takes Australia's wine exports to China back to pre-2007 levels, wiping out more than a decade of growth. The impact of COVID-19, which caused labour shortages and greatly reduced visitor numbers, compounded the collapse of the wine exports to China. With the Chinese market almost non-existent and with excellent vintages in the past two years, the oversupply of red wine is expected to continue into next year. My understanding is that storage tanks are full with unsold wines. Numerous growers have been left with a year's production costs but no buyers for their grapes this year and, very likely, the year ahead. It's a grim outlook for South Australia's wine sector. There is talk of finding new markets—this is easier said than done. Whilst the domestic market has been fairly static and seems unlikely to deliver significant growth, the US and Singapore markets have been a bright spot. However, other markets have not been able to even come close to replacing the massive drop in exports to China since the punitive duties were imposed in 2020.

It is not only the businesses and their families but also their employees who face a tough time, with around 8,400 people in South Australia directly employed in the wine industry. A recent discussion I had with a Barossa Valley wine producer confirmed for me the bleak future facing growers. Adding to the woes, Riverland wine growers, who reportedly account for about 50 per cent of South Australia's total wine crush and 32 per cent of the national crush, now face Murray River flooding problems. To his credit, the South Australian Premier, Peter Malinauskas, only this week took his cabinet to the South Australian Riverland to hear firsthand about the region's struggles and to announce state government assistance measures under a $51 million, wide-ranging initial relief package. Among the assistance measures, including jointly funded Commonwealth and SA government measures, are personal hardship emergency grants and assistance for local businesses. But more needs to be done.

South Australia's wine industry spans several regions, and decades of investment have gone into vineyards and wineries. Further investments were made and encouraged on the back of the free trade agreement with China in 2015, after which sales to China skyrocketed. That's why rebuilding Australia's trade relationship with China and securing new markets with other countries is crucial. In that regard, I commend the Prime Minister, the Minister for Foreign Affairs, Penny Wong, and the Minister for Trade and Tourism, Senator Don Farrell, for their efforts in making inroads into repairing our relationship with China and with other countries where the relationship had badly deteriorated under the Morrison government. It is rebuilding those relationships that offers hope and a sustainable future for South Australia's wine industry. Wine growers are predominantly family enterprises with ongoing annual overheads, financial loans to repay and rising freight, energy—

Photo of Scott BuchholzScott Buchholz (Wright, Liberal Party) Share this | | Hansard source

I thank the honourable member for his contribution. It being 8 pm, in accordance with the resolution that was agreed to earlier today, the debate is interrupted.

The House transcript was published up to 20:00 . The remainder of the transcript will be published progressively as it is completed.

The DEPUTY SPEAKER ( Ms Claydon ) took the chair at 09:30.