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30/04/2015

Wine industry ignored as NZ rebate set to stay

The government is expected to maintain tax rebates for the wine sector in the budget — including $45 million going to New Zealand — rebuffing industry calls for urgent reform that is predicted to save the government $253m.


Australian winemakers and grapegrowers have been pushing for a shake-up of the Wine Equalisation Tax to encourage a restructuring of the sector beset with low grape prices and a glut of cheap, bulk wine.


But amid internal divisions about the Winemakers’ Federation of Australia proposal, Joe Hockey is understood to have told the industry at a meeting on Tuesday that the plan was not supported, despite it delivering significant budget savings.


Under the plan being pursued by the WFA, $45m in WET rebates given to New Zealand producers would be scrapped, plus $202m rebated to bulk and unbranded products.


A further $31m would be saved from consolidating winemaking businesses currently claiming rebates. The package would be offset by $25m for marketing Australian wine exports.


In a rare instance of unity, the WFA submission is supported by Wine Grape Growers Australia and every state wine industry association.


The group argues that the New Zealand rebate should be abolished because of the commercial advantage it gains over Australian producers.


The sector’s position has been backed by MPs from winemaking electorates, but South Australian senator Sean Edwards, who has wine interests, has warned of the political risk of removing $253m from the regions.

“It does not demonstrate anywhere how this will provide the panacea for profitability in the Australian wine industry,” Senator Edwards said in a letter to Assistant Treasurer Josh Frydenberg.


Tony Pasin, MP for the South Australian seat of Barker, which covers most of the Barossa Valley, said “governments should always consider seriously industry-led reform, particularly in a constrained fiscal environment when … savings (are identified)".

Written by political reporter Sarah Martin and originally published in The Australian.

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