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Thursday, 23 August 1984
Page: 269

Senator JESSOP(3.54) —We have become accustomed to the tirades of the Minister for Resources and Energy (Senator Walsh) and his references to discredited Treasurers. I suggest that the Senate is now debating a matter that points clearly to the broken pledge of the discredited Hawke Government. I do not think the Minister has answered that criticism at all, nor did he refer to the Labor Party platform on agricultural policies enunciated by the Minister for Primary Industry, Mr Kerin, in February 1983. In dealing with the wine industry, the Australian Labor Party policy was to the effect that the wine industry was beset with problems and was faced with the need to make bold decisions at a time of low profitability if the industry was to be in a position to meet the opportunities of the 1980s. However, the Labor Party document went on to state: 'Labor will not impose a sales tax or an excise tax on wine'. However, as soon as the Labor Government came to power it decided to introduce a levy on fortified spirits. That had a considerable effect on the production of wine and brandy and meant that grape producers were unable to dispose of the quantity of grapes surplus to the wine industry's requirements in other areas.

At Griffith the Prime Minister (Mr Hawke) said the same thing. He pointed to the difficulties experienced by the industry and pledged that he would not impose a sales tax on wine. The wine industry has been under attack by Labor governments for years. I recall that the Whitlam Government levied a brandy excise and removed section 31A of the provisions affecting the wine industry. That put wine producers in serious financial difficulty and some of them are still paying for that impost. Senator Walsh said that economic illiteracy was not confined to Liberals and referred to the Western Australian Parliament. In other words, he is saying that Mr Bannon, the Labor Premier of South Australia, and Mr Burke, the Labor Premier of Western Australia, are economic illiterates. I am sure that will not go down too well in South Australia. I wish to refer to comments made by Mr Allan Preece, President of the Australian Wine Grape-Growers Council, soon after the impost on wine was announced. The Australian reported that statement under the heading: 'Gloomy forecast for wine industry'. The article reads:

The new sales tax on wine will result in some sections of the Australian wine industry disappearing, the President of the Australian Wine Grape-Growers Council, Mr Allan Preece, said yesterday. Mr Preece said the tax would force up to a third of the independent grape-growers in New South Wales, Victoria and South Australia out of business.

I believe that statement is true and that Labor Party senators representing South Australia failed our State in not pursuing the matter more aggressively. I believe the people of South Australia, the Riverland area in particular, the Barossa Valley and the south coast grape growing region will remember that in the election campaign which is not far down the track. They will demonstrate their view with their votes. They will also remember that Mr Bilney, the member for Kingston, said that a wine tax was inevitable.

The Minister for Resources and Energy referred to papers presented by Mr Demitri Tsolakis of the Bureau of Agricultural Economics, who made forecasts about the probable chain of events for a given tax on wine. Mathematical models put up in the past have been amazingly accurate. The report to which I refer says that such a tax will force a long term decline in wine sales, a price rise, according to Mr Tsolakis's assessment of about 15 per cent-which is what the 10 per cent impost will ultimately mean-and a forecast decrease in sales of 21 per cent. This means that in the long term wine makers will not be encouraged to buy more grapes and in fact, the eventual decrease in grapes bought will be about 21 per cent, reflecting the trend in sales.

A 10 per cent sales tax on wine will automatically lead to a decrease of about 21 per cent in the grape crush of growers. Senator Messner said that the number of tonnes of grapes that would not be crushed is 65,000. My figure is about 80, 000 tonnes. However, between 65,000 tonnes and 80,000 tonnes of grapes will be left to hang on the vines to rot. This, in my opinion-and its substantiated by what Mr Allan Preece has said-will inevitably result in unemployment, and a downturn in the economy of the industry with a consequent significant loss of revenue to the Government. It seems to me that at today's average price if 80, 000 tonnes of grapes are to be left on the vine-the price today is about $170 per tonne-that would amount to about $13.6m taken out of the fragile economies of the grape growing areas of Australia. I think that even Mr Hawke will now be wondering why he turned his back on the pledge that he made last year in Griffith when he referred to the times of low profitability. This tax will make that situation even worse.

The price of imported wines such as those from France, Italy and Portugal will remain steady because the mechanics of the impost on these wines has only been shuffled around. There is no increase in the total tax on imported wines-the Australian wines having been taxed 10 per cent relative to the imports. However, while the price of Australian wines has been pushed up by Government imposts- remembering that Australian wines are in the main already unprofitable-this tax is pushing consumers into the open arms of heavily subsidised, low quality imports.

Some members of parliament, the media and some sections of the community have an erroneous picture of the typical Australian wine drinker. The Australian wine drinker is pictured as a silvertail who drinks expensive premium wine. However, the best selling wines which were listed recently in the Bulletin are all under the $5 a bottle bracket. I imagine that most wine in Australia consumed on the domestic market would be cask wine. In other words, the majority of bottle wine drinkers would be drinking low priced wines, not the $7, $10 or $15 a bottle wine. It is also a well-known fact that this range of consumers who account for the majority of wine sales have a palate which is in the label. These people will buy French wine because it is French and because it has a French label, not because of its quality. They are buying an inferior wine. This budgetary measure will encourage more of the cheaper French wines to be consumed.

I recall when in Europe last year, drinking a very poor and cheap bottle of French wine which someone referred to as Chateau Vespasienne. Anyone who understands French will know what I mean. The point is that the quality of cheap imported wines is immaterial to the average Australian drinker. As a matter of fact I rang a certain retailer today to discover how cheap these French wines are. I discovered that a bottle of French wine can be bought for about $3.99. I am also aware that some of these retailers have strongly advocated a tax on Australian wines. I would be surprised if some Australian winemakers did not refuse to use these particular retail outlets for their wine considering that they successfully advocated a tax on Australian wines, knowing full well the damage it would do to the Australian industry and the resultant beneficial effect it would have on their business of selling cheap imported wines. People in the industry and people who leech off the industry will know full well the serious damage that a wine tax will cause to the industry all the way back to the grape grower.

Of course, these are the people I feel very sorry for. My relations were among the pioneers of the Murray Riverland area. After the First World War they pioneered and developed properties and an industry which has become of major significance to South Australia. I still have cousins who work in that part of South Australia. I know very well their feelings on this matter. I know that the impost in the present Budget will have an effect on employment in that area. As Senator Messner quite correctly pointed out it is not only the wine industry we are concerned about; we are also concerned about the related industries, for example, the tourist industry and other service industries that depend on the grape growers and the wine producers of our State.

Senator Messner also quite properly pointed to the fact that the wine industry is certainly not confined to South Australia. There is a growing wine industry in Western Australia. The quality of the wine there has improved immensely over the past 10 years or so. Even Tasmania is producing good wine. This could be a growth industry if we concentrated on helping the industry itself and not making these imposts on it.

A newspaper article headed 'Amber lobby aims to exorcise beer excise' was drawn to my attention by Senator Townley. The article states:

Australian Associated Brewers chairman, CUB's Mr Lou Mangan, said he welcomed the Government finally listening to the AAB's submissions on the 'chronic imbalance of alcohol taxation'.

'The industry has continually highlighted the extremely unfair treatment of the Australian beer consumer . . .

'The decision to introduce a 10 per cent sales tax on wine takes an important first step--

I repeat, 'first step'--

in the direction of real equity.'

If this is the first step I hate to think what the second step will do to this significant industry, particularly in South Australia.