By Andy Young
The Senate Rural and Regional Affairs Transport Committee commenced hearings in Adelaide yesterday with winemakers appearing and backing Wine Equalisation Tax (WET) rebate reform.
The committee heard from Accolade Wines, Angove Family Winemakers and the Yalumba Wine Company on the state of the wine industry.
Anita Poddar, head of corporate affairs at Accolade, told the committee: "The Australian wine industry is currently suffering a prolonged downturn following the longest sustained boom in an industry, which like many other agricultural industries, is subject to a long history of boom and bust cycles.
"We would suggest that low grape prices in some wine regions in Australia are not the result of market failure, but are in fact the result of an efficient market, in economic terms, reflecting changes in demand and competing sources of supply.
"The loss of export markets, and the diversion of wines from export markets into the domestic market and the lack of alignment between demand and supply, we believe are at the heart of many of the issues facing the industry and raised in submissions to the inquiry.
"As such we suggest that the inquiry’s recommendations will have to address both push through – that is mechanisms to help grow demand by reinvigorating Australia’s exports and pull through – better systems of signalling demand to the industry.
"As part of this approach we support the Winemakers’ Federation of Australia’s proposal that the government provide additional support to the promotional efforts of the Australian Grape and Wine Authority, to help lift the profile of Australian wine in selected markets, and take advantage of the recent Free Trade Agreements."
The WFA has said that it does not want the WET to be scrapped, just reformed, with bulk and unbranded producers excluded from the scheme. The WFA has also said that money saved through reforms should subsequently be used for international marketing of Australian wine.
Podder added: "We also align with the Winemakers’ Federation of Australia in advocating the retention of the existing Wine Equalisation Tax system as we believe massive changes such as the introduction of a volumetric tax would fundamentally alter the structure of the industry and have a devastating impact particularly on warm climate regions such as the Riverland and Sunraysia.
"We support the Winemakers’ Federation of Australia’s position that the WET Rebate scheme should be brought back into alignment with its original intent, shutting down trading schemes. We support the Federation’s proposal to address the production of bulk and unbranded wine, and short-term speculative ventures and instead focus on supporting strong brands that command consumer loyalty and support greater margins that can be reinvested back in regional Australia."
Angove Family Winemakers' executive director Victoria Angove, told the committee: "I think the industry's in a fairly dire state. Australia has a brand and marketing issue.
"We have never known business to be so tough. If we don’t see urgent WET rebate reform we have considered helping our growers set up as producers to access the rebate; that is not the intention of what the WET rebate is all about."
Angove added that the company had struggled to make a profit during the past three years.
The committee's chair, Western Australian Labor senator Glen Sterle, said he recalled hearing these issues at a previous inquiry and added that the wine industry has not been very forthcoming with solutions to the problems it is facing.
"I could shut my eyes and go back 10 years and it's all sounding the same to me," Sterle said. He added: "I can't pre-empt what the recommendations will be, but I'm not hearing many solutions.
"I'm hearing some small wish list items, but this is horticulture, it is agriculture, the challenges are the same, but when all is said and done there is absolutely nothing that I can see as a quick fix for the situation."
Today the inquiry is taking place in Launceston and then heads to the Swan Valley in Western Australia on Sunday.