Jacinta Collins (Victoria, Australian Labor Party, Shadow Cabinet Secretary) Share this | Link to this | Hansard source

Labor will be supporting this Treasury Laws Amendment (2017 Measures No. 4) Bill 2017. Schedule 1 amends the A New Tax System (Wine Equalisation Tax) Act 1999 to improve the integrity of the wine equalisation tax producer rebate. Labor supports the WET integrity measures. Labor wants to give producers certainty about the wine equalisation tax regime. The WET producer rebate, as it currently stands, has distorted production in the wine industry, contributing to the increased supply of wine and wine grapes and preventing necessary adjustments that would improve the long-term strength of the industry.

The rebate was introduced in 2004 and currently provides up to $500,000 in tax relief to producers of wine. The intent of the policy was to benefit small wine producers in rural and regional Australia. As my colleagues, the shadow Treasurer, Chris Bowen, and the shadow minister for agriculture, fisheries and forestry, Joel Fitzgibbon, noted in 2015, the intent of the policy is not being met, and there is consensus from the government, the opposition and the industry itself on the need for change. It took some time for the legislation to make its way to parliament, despite clear signals from the opposition that we would engage with the government on the issue and support sensible proposals.

Reform of the WET producer rebate would better target the rebate and improve its integrity. It would also ensure consistency with the original policy intent of benefiting small wine producers who are making a genuine investment in the wine industry, many of whom are in rural and regional Australia. If left in its current form, the WET producer rebate will continue to create a perverse incentive for businesses to structure themselves so as to maximise rebate claims. The result would be excess wine production, exacerbating challenging market conditions for growers.

The measures in this package are welcome and supported by many stakeholders, including most industry participants. As the Winemakers' Federation of Australia noted:

Schedule 2 of the bill amends the Income Tax Assessment Act 1997 to provide income tax relief to superannuation funds who are transferring the account balances of their members as they transition to the MySuper rules. Labor was proud to introduce the MySuper reforms, which brought in new low-cost superannuation products with a simple set of features to allow members to more easily compare between products and to ensure that members do not pay for any features that they do not need or use. Superannuation funds have been able to provide MySuper products since 1 July 2013.

As part of the transition to the new rules, funds were required to transfer the existing balances of their default members to MySuper-compliant products by 1 July 2017. When superannuation funds are transferring these balances and the assets which support these balances, tax liabilities could arise on the transfer. This tax payable would reduce the balance of the member. Tax relief is currently available for those superannuation funds that transfer their default members to a different fund. However, this tax relief has not been available where the member transfers to a MySuper product with their existing superannuation provider. This legislation will extend the tax relief, providing an asset rollover for mandatory transfer of balances and assets to MySuper products within the same superannuation fund. Labor supports this change as it will make sure that members' balances are not negatively impacted by tax liabilities when their balances are removed. It will also ensure equity between those members who moved to a new fund provider and those who take up new products with their existing provider.

Labor supports the bill.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Very briefly, I understand the Treasury Laws Amendment (2017 Measures No. 4) Bill 2017 is a non-controversial bill, but I just want to make a couple of brief statements and get on record that the Greens have been very involved in the process over the last couple of years of looking at the wine equalisation tax. I sat on the Senate references inquiry that looked at this and went all around the country and heard from wine producers. I myself have previously been a wine producer, having a small vineyard. I've manned my own cellar door and pruned my own grapes. I understand that this WET has been a very difficult tax, especially for a lot of smaller vineyards. It's been very complex, it's been rorted by a number of players in the industry and it needed to be fixed.

I'd just like to say that I have worked closely with stakeholders in my state and I wanted to get on record today that I recognise that a number of them are disappointed with the changes to the wine equalisation tax in the bill that we have before us today. There are some that, with the changes to the threshold, will lose $150,000 a year. These producers are by no means large producers; in fact, by Australian domestic standards, they're still very small producers. So that money is still very important to them, and I know they're bitterly disappointed with some of these changes.

I also want to recognise that we need to keep a very close eye on how the cellar door rebate system works. The rebate's critically important for small vineyards such as the one that I used to run. It helps employ people in regional areas and it helps bring tourism to regional areas. I'm not sure that we've got the balance exactly right on that.

Overall, though, we felt like putting this in contro and taking it to committee stage and trying to move amendments wouldn't get the support of the Senate, but I want to get on record today that I recognise the disappointment of some producers in Tasmania. But, to be fair, I also recognise there are a number of small producers that are happy with the changes. Unfortunately, it's a zero-sum game: some win and some lose. I'm not sure that the government's actually going to raise much revenue out of this at all, so I'm not quite sure what the purpose of changing the thresholds is, if it's not raising revenue. Nevertheless, it is what it is, and we will be supporting this today.

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

I would like to make a couple of quick comments. I would like to thank the senators for their contributions. In terms of how the WET rebate currently operates, it applies to 29 per cent of the value of the last wholesale sale of the wine. The rebate currently provides producers a rebate of 29 per cent of the wholesale value of the eligible domestic sales of up to half a million dollars per year. The eligibility for the rebate is broad, with the rebate able to be claimed on bulk and unbranded wine. The rebate can be claimed multiple times on the same wine throughout the production chain where it is subject to blending or further manufacturing before being sold.

The current system allows the rebate to be claimed and the WET liability to be deferred through the supply chain to the last wholesale sale. This can result in the rebate being claimed and no corresponding WET paid when the wine is subsequently exported. The tightened eligibility criteria will remove rebate access from bulk and unbranded wine, which contribute to structures that exploit the rebate. It will stop the rebate from being claimed multiple times on the same wine through the production chain where it is subject to blending or further manufacture, and will strengthen the link between the rebate being claimed and the WET being paid. I thank senators for their contributions and I commend the bill to the Senate.

Question agreed to.

Bill read a second time.