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Thursday, 14 June 1984
Page: 3054

Senator MESSNER(5.30) —This omnibus Bill, which refers to changes, in part, to the Distillation Act 1901 and the Spirits Act 1906, has particular relevance to my State of South Australia as it touches the area of brandy excise and the quality of brandy as well as the quality of wine. For that reason I have risen to discuss this matter on behalf of my colleague Senator Rae who, as the shadow Minister for Industry and Commerce, would otherwise do so. This legislation follows a detailed review of legislation relating to wine and spirits undertaken jointly by the Food Standards Committee of the National Health and Medical Research Council and Commonwealth government departments. The changes will bring both Acts into line with new National Heath and Medical Research Council standards for wine and spirits which have been adopted by State governments.

These matters have caused considerable concern within both the brandy and wine industry in South Australia in particular. The concern is based mainly on the speed with which the Government has moved to introduce these new standards. The Minister for Industry and Commerce, Senator Button, foreshadowed the legislation on 4 May 1984 in his news release No. 32. In that release he referred to changes in the definition of brandy and wine as well as foreshadowing changes to abolish the excise duty on wine made with added sugar. No timetable has been given for the enactment of that last change. We recognise that these changes have resulted from a consultative program conducted by the National Health and Medical Research Council which has involved all State governments and the industry. However, the fundamental concern of industry on this matter is the quality of the product. Quality, obviously, is absolutely vital to the continued viability of the brandy and wine industry. Australia does produce fine quality wines and brandies but needs to be able to continue that way in the future in order to ensure its viability and to continue its expansion, particularly on the overseas markets.

In the past a considerable number of matters have troubled the brandy industry in particular. I do not exclude the wine industry from that. However, we recall the activities of the Whitlam Government between 1972 and 1975. That Government reduced the differential between Australian and imported brandy by increasing the excise on brandy. The figures speak for themselves. In 1974 Australian brandy accounted for 29 per cent of the market whereas imported brandy accounted for 7 per cent. By 1983 Australian brandy had fallen to 19 per cent of the market while imported brandy had risen to 26 per cent. In other words, there was a total reversal of the position. That was as a direct result of the increase in excise. In effect, a very substantial and important industry in South Australia has been largely destroyed as a result of government activity.

In the 1983 Budget the Hawke Government levied a new wine tax through the excise legislation which was expected to produce some $13m by March 1984. That has produced less than $500,000. That has been raised at the cost of crippling the fortified wine industry. This has been exemplified in recent days by the announcement by Yalumba Wines that it will no longer make fortified wines, therefore giving away some of its great port industry. Names such as Galway Pipe will go by the board in future. Only in the last few days or so another winery in South Australia, Hoffman's wines of Tanunda, has also announced its intention to close its fortified wine section.

People engaged in the wine industry recognise the dangerous position into which the Government has thrust the industry and the hardship that has been caused, not so much to the wine makers or their employees but to the grape growers, the small block owners in the Riverland and other parts of South Australia, particularly in the Barossa Valley, who rely on the fortified spirit and wine industry for the sale of their surplus products. That has been the traditional way in which the industry has taken care of its surplus products over the years. By turning its surplus grapes into spirit it preserves it in a form that can be utilised for later production of brandy and fortified wines. In that way the industry has been able to maintain its stability without having to rely on government support by way of social security or otherwise when times are hard.

It is no doubt quite obvious that there is great concern in South Australia about the current position of the industry. That has been exemplified by a great deal of newspaper editorial comment and other matters that have been raised in the media in South Australia. Even the Government has given some acknowledgement to the nature of this problem. In the March edition of the Stock and Land newspaper, the Minister for Primary Industry, Mr Kerin, was reported as having said:

The wine decision was out of my control.

It sure was-

To some degree it is not a wine tax; it's an excise levy--

he should explain the difference to me-

which particularly affects the most vulnerable end of the wine industry. I think it was a wrong decision.

It certainly was a wrong decision and the people of South Australia understand just how wrong it was. About 7,300 growers and labourers are employed in those two industries in Australia. There are as well 5,600 employees in the distilling and winemaking industry. There is some misapprehension that the wine and brandy industry pays very little taxation. A lot of it, of course, goes to the State governments as distinct from the Federal Government and perhaps that is where some of the misapprehension comes in. But even by the 1982-83 estimates of brandy excise that was paid, an amount of $36.5m came into Federal coffers. The excise on grapes also raised another $6.2m. But the amounts paid to the State governments by way of liquor taxes reaped $62.1m, while it is estimated that sales tax on brandy will bring in $15.9m in the current financial year. All in all State and Federal governments reap some $120m a year from the wine and brandy industries. These matters should be brought home, as there is some kind of misapprehension and common view in the community that these industries do not pay their way in taxation.

Turning to the legislation that is before us, and the amendments to the Spirits Act, Mr Acting Deputy President, I draw your attention to the use of the term in the definition of brandy. The changes that have occurred by way of this amendment lead us to the conclusion that products other than wine made from fresh grapes will be used in the future manufacture of brandy and will be acceptable according to the health standards. That is the major point at issue in this legislation. I foreshadow that I intend to move an amendment during the committee stage which will seek to redefine brandy as a spirit which is distilled wholly from wine which is the fermented juice of fresh grapes, so as to make it quite clear that this product is derived from wine and is not adulterated by other products. It is a vital quality issue, as I have stated earlier.

The concern of the industry, which has been made quite clear, I believe, to the Government as well as to the Opposition, follows a meeting of the Australian Wine and Brandy Producers Association in Adelaide about a fortnight ago when this matter was raised. Certain views were put as to the amendments which I believe would be satisfying to the industry if they were carried in the form that I have mentioned. I ask the Minister for Education and Youth Affairs ( Senator Ryan) whether she would give us an undertaking that, with regard to the argument that I have raised here today, she would be able to take the matter forward on behalf of the Opposition to the National Health and Medical Research Council in order to see whether it is possible to re-think this position. I seek her assurance to that effect. I hope she may be able to satisfy us when she winds up the debate, otherwise I will be forced to move my amendments.

Some sections of the wine industry have also expressed concern about the definition of wine under changes to be made to the Distillation Act and, as well , the foreshadowing of changes to the Excise Tariff Act. It is felt that those changes may lead to the possibility of wine being made from dried grapes through the addition of water and sugar. While this may not seem a terribly important matter, I point out to the Senate that this is particularly important when we consider the quality of Australian wines and the desire of the industry to further develop its markets on the world scene. It is fairly clear that if Australian wine loses its reputation, which is very high in terms of quality, consequently our opportunities on world markets will diminish.

Other people in the industry have pointed out that State government provisions allow only for the addition of 3 per cent of water to wine. Concern about that matter is not so great, but it is also argued that the liberalisation of definitions will possibly allow greater use of technology in the methodology and production of wine. That is a matter of great concern. If one refers to wine in relation to fresh grapes, the term 'fresh grapes' would have to be defined. Some winemakers prune their vines and leave grapes hanging for some time before picking them. Would they be technically classed as fresh grapes? I believe we need to make that point clear. Mr Acting Deputy President, I believe you have heard enough from me on this matter. I know other senators wish to speak on this matter which is of very great concern to my State. I reiterate in conclusion that it is a matter of very great concern to the industry, as it is vital to the question of quality of our wine.