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Monday, 16 June 2003
Page: 16425

FRAN BAILEY (Parliamentary Secretary to the Minister for Defence) (4:47 PM) —I rise this afternoon to bring to the attention of the House the attitude of one of this nation's largest banking institutions towards the viticulture industry in Australia. The National Bank is circulating an internal alert, warning its banks to beware of lending to the wine industry. This warning is based on a series of dire predictions in a four-page, in-house document known as an `industry risk alert' on the Australian wine industry.

The National Bank has deliberately targeted the wine industry for close scrutiny because it claims that the industry is at significant risk due to a softening world wine market. In real terms, this means that our winemakers may find themselves without the financial backing they need to carry them through these tough times. Growers of red grape varieties are being particularly punished because, according to the National Bank, there is an oversupply of lower-end red wines in Australia. The threat of global oversupply, the maturing of overseas wineries and intense domestic competition are other reasons given for this strike against our winemakers. But this is the very environment in which our wine industry has made its mark so successfully. The National Bank is effectively saying that future lending cannot be guaranteed, because our wine industry is a player in the world market. Family and boutique vineyards that have invested significant sums over the past few years, at the urging of their bankers, are most likely to find themselves without backing.

The document highlights wineries in the $10 million to $20 million turnover range as being most likely to experience a tightening of profit margins and therefore to seek to increase their borrowings. Bankers have been told to look out for customers exhibiting signs of stress and to assess `as best they can' any financial hardships that customers may be having. According to the National Bank industry risk alert, customers requesting increases without clearly indicating a reason is the type of behaviour that should be ringing alarm bells. Further, the bank is determining support for loan applications based on the perceived value of a wine label or whether or not a winery has won any awards.

The National Bank is compounding the concerns of the wine industry by also warning its banks about lending to operators in the tourism industry, because of the expected downturn as a result of the Severe Acute Respiratory Syndrome—known as SARS. A National Bank industry risk alert identifies the tourism industry—particularly places of accommodation—and requests that all relationship managers within its branches review their portfolios and identify clients who may be affected by the outbreak. Based on the National Bank assumption that visitor arrivals over the next few months will be down by around 20 per cent—which it recognises could also be a result of the ongoing war on terrorism—local tourism operators in established regions, such as the Yarra Valley and Macedon Ranges, could be severely affected.

The drought has already had a profound effect on the agricultural sector in my electorate and, while we are now seeing federal funding helping our local farmers, the last thing we need is for another major rural sector to bear the brunt of factors they have no control over. The National Bank approach undermines not only the tourism industry but also associated industries. The wine industry relies just as strongly on a successful and buoyant tourism industry as it does on successful harvesting and production.

I represent an electorate in which vineyards and associated tourism industries inject millions of dollars each year into the economies of my local communities. My colleagues on both sides of this House have no doubt enjoyed a glass or two of the best wines from award-winning vineyards in my electorate—probably the Yarra Valley or the Macedon Ranges. Established wineries are also located throughout the rural landscapes of my electorate in Kilmore, Seymour, the central highlands and the Plenty Valley.

Our wineries are as much a part of our rural make-up today as sheep and cattle grazing, and are responsible for much of the renewed interest in rural lifestyle living. Nationally, exports have been the key driver of growth in the wine industry—so much so that Australia is now the fourth-largest exporter of wine, with sales last year over $2.1 billion. Strong investment, supported by the banks, in grape plantings nationally has increased from 67,000 hectares in 1993-94 to an estimated 148,725 hectares in 2001. Australia enjoys a strong reputation as a winemaking nation because of the distinct quality of our vineyards, our winemaking infrastructure and our marketplace expertise. Austrade's Chief Economist, Tim Harcourt, confirmed this when he recently said that wine exports are strong because of the capability of our producers to provide quality wines. The ability of our winemakers to keep up to date with trends and developments abroad also means that global interest in our wines is set to continue, he said.

This is sound endorsement of an industry that has contributed so much not only to our relaxed country lifestyle but also to the economic viability of our rural and regional areas. Victoria boasts over 350 wineries in 22 distinct wine regions, with an estimated value to our economy of $394 million—up over $100 million from the 1998 figure. Wine regions around Melbourne, such as the Yarra Valley and the Macedon Ranges in my electorate, share in $194 million each year, according to the Victorian Wineries Tourism Council. Visitor numbers to wineries within an hour of our capital city have almost trebled since the mid-nineties, from around half a million to almost 1½ million a year in 2000. McEwen is certainly a major benefactor. Visitors to our region spend many thousands of dollars each weekend on food, accommodation, fuel, cellar door sales and souvenirs. Wineries in my electorate employ hundreds of local people in positions ranging from maintenance to cellar door sales, not to mention seasonal work.

That is why it is so disappointing that a major bank—one that would, no doubt, consider itself an institution in this country—could put such a black mark beside our wine industry. The wine industry has led the way in promoting new industries in rural and regional areas, generating significant investment and employment opportunities for small rural economies. The major banks were interested in getting in on the ground floor for the expansion of these industries, and their bottom lines improved as a result of their investment. But winemakers share a common bond with primary producers: both are reliant on factors beyond their control, such as rainfall and temperature variations. Winemakers could now find themselves sitting opposite hostile bank managers who, only years earlier, signed off on start-up loans for their vineyards' first plantings.

The National Bank has, effectively, stripped the confidence of winemakers and replaced it with an uncertainty that threatens the whole industry. It is laying down the law, warning bankers away from sectors of our wine industry and, worse, seeking out customers to peg as potential bad creditors. This is simply not good enough. They were very keen to get in and support our wine industry in the early days. How dare they now take a sniff at what is happening globally with the SARS epidemic, and cash in on the frustration that has bedevilled so many of our tourist operators and winemakers as a result of a decrease in tourist numbers. It is just not good enough that they are sending out these internal warnings. I condemn them for these actions. I seek leave to table the industry risk alert that the National Bank is sending around to its branches. I regard this as a form of intimidation of the excellent winemakers and tourist operators within my electorate.

Leave granted.