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Tuesday, 13 September 1983
Page: 712

Mr FISHER(10.30) —The grape spirit tax introduced by the Hawke Government is the categoric breaking of an election promise and, if not withdrawn, threatens not just the viability of thousands of grape producers supplying grapes to wine makers but also the very future of the wine industry itself. The supply of dried grapes for packing far exceeds the demand in Australia at present as our industry has to export its surpluses each year into a world market-place which is over-supplied. As you, sirs, would no doubt be aware, world prices for dried fruit are presently severely depressed and returns to our growers from the sale of exported fruit barely covers the cost of production. This new excise on grape alcohol will cause a fall in the production of fortified wines. This in turn will cause the diversion of many thousands of tonnes of dual purpose grapes from wine making into drying. A large wine maker in my electorate has already indicated that his intake of gordo grapes next year for winemaking will be substantially reduced if the excise on grape alcohol remains in place. If the tonnage of gordo grapes which is dried next year is allowed to increase substantially, the impact on the dried fruit industry as a whole and on growers' incomes in particular will be devastating.

The principal effects of this measure introduced by the Government will be that there will be increases in excess of 40 per cent in the retail prices of some lower cost wines with more expensive ports and dry sherries rising by about 37 per cent. Lower sales will result in substantially decreased intakes of grapes in regional areas such as the Riverland, the Riverina and Sunraysia which supply the bulk of Australia's multipurpose grape material. Price increases in Australian fortified wines will also result at least partially, if not totally, in substitution by lower priced imported fortified bulk wines for bottling in Australia. The financial effects of the requirement that duty be paid within seven days of usage cannot be sustained by Australian winemakers. Even if this payment is deferred until just prior to sale, the effect of the impost will be disastrous.

Of a total of 294 million litres of Australia wine sold in 1982-83, almost 50 million litres, or 17 per cent, were fortified wines, flavoured wines, and vermouth. However, because a bottle of fortified wine contains twice as much grape material as a bottle of table wine, makers of fortified wine use more than 34 per cent of all grapes crushed for wine. The maintenance of adequate consumption levels of fortified wines is therefore of particular significance to the Riverland, the Riverina and the Sunraysia grape growing communities.

Another company, one that produces some 24 per cent of all fortified wine in Australia, has informed me that it has already advised its growers that it will reduce its intake by 20,000 tonnes of grapes in the 1984 vintage. At an average of $170 per tonne, this represents a gross loss to the grape growers of some $3. 5m. As I said, in 1983-84 some 50 million litres of fortified wine were sold in Australia. One tonne of grapes yields about 400 litres. On this basis fortified wines would have absorbed 150,000 tonnes of grapes. At an average price of $170 a tonne this represents a gross income across Australia to grape growers of some $25.5m. For every 10 per cent drop in sales these grape growers, predominantly independent in the regional areas, would lose a gross income of $2,550,000.

I am also concerned that because of this tax and under present circumstances it is unlikely that many Australian winemakers will continue to produce ports, sherries and other fortified wines if they can only satisfy the market more profitably with imported wines. If this occurs the financial effects on wine makers will be negligible. On the other hand, it could well mean that the loss of all grapes presently grown for making fortified wines will occur throughout these particular regional areas. Over recent weeks the honourable member for Riverina (Mr Hicks), other members of the House and I have asked the Government to drop this totally destructive tax. I reject as a gimmick the suggestion by the Minister for Primary Industry (Mr Kerin) that he will consider a different form of excise collection. The Australian grape industry is going through an extremely difficult period. Grape growers cannot cope with the additional impost . I call on the Hawke Government to admit its gross error and to withdraw this tax and any thought of a general tax on the industry.