McGuigan: The WET Rebate should be cut

By Andy Young

The CEO of Australian Vintage Limited, Neil McGuigan, has called on the Government to continue its reforms to the Wine Equalisation Tax (WET) Rebate and remove it from bulk wine immediately. 

As part of his Budget in May, Treasurer Scott Morrison announced some changes to the WET Rebate, including a tightening of the eligibility criteria and a stepped reduction in the rebate cap.

However McGuigan has told TheShout, that while he supports the rebate for boutique producers it should be taken away from bulk wine straight away.

“The WET Rebate for the true boutique is very important and I support the WET Rebate for the real boutique, whether it is at $500,000 is a question mark, maybe it should be $290,000. So tick, you’ve got to look after the real boutique,” McGuigan said.

“Secondly, the thing that I have a real problem with is where it is being used by the entrepreneur in Australia, where it gets into bulk wine prices and those bulk wine prices end up in the market place in Australia and also overseas.

“I maintain the sooner it goes the better it is for the whole wine industry, because what it will do is it will have wine prices being sustainable which will mean the grower is going to get a price for his grapes which is fair and reasonable and not underpinned by a government subsidy. 

“The WET Rebate should go on bulk wine today.”

AVL’s CFO Mike Noack added: “What [the WET Rebate] is doing, is supporting an unsustainable price, so the sooner they get rid of that rebate the better. We can claim one lot, but each grower can claim one if they set it up right and register themselves as a producer. 

“What that means is you are getting bulk wine prices in the market place that are not sustainable. These are being weighted through schemes that are between the winery and the grower. It’s arguable rorting. So the sooner it goes the better.”

The Government’s Budget reforms to the WET Rebate were met with a mixed reaction in May, with some mid-size wineries expressing “total disbelief” at the rebate cap reductions as many factor in the rebate to stay operational.

Mitchell Taylor, the managing director of Taylors Wines and chair for medium winemakers for the Winemakers’ Federation of Australia, expressed concerns over the time frame for reform and that no action was taken regarding the rebate going to New Zealand winemakers.

However, Angus McPherson, TWE’s managing director for ANZ welcomed the WET reforms, saying: “TWE welcomes the Government’s decision to reform the WET Rebate and to strengthen the integrity of the tax. These reforms are consistent with the Rebate’s original intent and will help address the distortionary aspects of the current system which have done so much damage to the Australian wine industry.”