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Thursday, 23 August 1984
Page: 273


Senator HILL(4.24) —The Senate is debating a most important matter of public importance which is in the following terms:

The imposition by the Hawke Labor Government of a tax on wine and the disastrous impact such a tax will have on the Australian wine industry.

When introducing the 1983-84 Budget the Treasurer (Mr Keating) boasted that this Government had 'shown the Australian people that their trust in us was well founded'. For those Australians whose livelihoods depend directly or indirectly on the continued economic health of the Australian wine industry the Treasurer's statement is indeed bitterly ironic. For the second Budget in succession this Government has broken its solemn pledge to wine producers in February 1983 that a Labor Government would not impose a tax on wine. Australian Labor Party honourable senators have heard today, and they will hear again, the terms of that pledge made by the Prime Minister (Mr Hawke) on 20 February 1983. The Prime Minister, to use one of his favourite expressions, unequivocally committed a Labor Government to a no wine tax policy. We know that the Prime Minister, a man who is highly sensitive to attacks on his credibility, stated:

Labor is pledged not to impose a sales tax or an excise tax on wine.

It is not surprising that the very moderate Peter Arnold, shadow Minister of Agriculture in the South Australian Parliament, a man who lives in the Riverland and is deeply devoted to and involved with the Riverland, said of the Prime Minister yesterday in the South Australian Parliament:

I can only describe the Prime Minister as a disgustingly dishonest little wretch.

One week before that pledge was made, I remind the Senate that the Minister for Primary Industry, Mr Kerin, then shadow Minister for Primary Industry, said at a meeting of grape growers and wine makers at McLaren Vale in South Australia:

The wine industry will welcome Labor's pledge not to contemplate a wine tax.

Mr Deputy President, Mr Kerin had the nerve to underline the word 'not' in the Press statement on that meeting. He concluded:

The industry is obviously in strife. A Federal Labor Government will assist it over the problem period, with an eye to measures that will give it a long term, stable future.

I invite honourable senators to compare that with the words we just heard from Senator Elstob in his speech. Mr Kerin, the now Minister, said then:

The industry is obviously in strife. A Federal Labor Government will assist it-

this tax is its form of assistance-

over the problem period, with an eye to measures that will give it a long term, stable future.

Given such unconditional assurances the Australian wine industry would have rightly expected such promises to be adhered to. We know how empty and cynical those promises were. Within six months of assuming office the Government had imposed an excise tax on fortified wine and spirits which we now know-we said it would happen at the time-threatened to send many producers to the wall. Although that excise was subsequently lowered it soon became apparent that the tax was having serious effects on many wine makers, in particular those in the Riverland of South Australia. I am pleased that the previous speaker spoke of the Riverland. I want to get back to talking about that area. Even in March this year it was reported that due to the tax on fortified wine major wine makers were indicating that they could no longer afford to make the volumes of port and sherry they used to make. Workers had been laid off and at least 100,000 tonnes of grapes were expected to be left to rot on the vines. Yet it was not until June that the Government decided, in the face of the harm that was being done to the fortified wine industry, to abolish the tax.

The Government now, twelve months after breaching its election promise to the Australian wine industry the first time, has returned for a second go. For $49m in revenue this year the Government has imposed a tax burden on an industry which can least afford it. I remind the previous speaker that even Mr Kerin in his election statements said it was the type of industry which could least afford it. The impact of this tax, if it goes ahead, will no doubt be scathing. The Australian Wine and Brandy Producers Association Incorporated expects the tax impost to result in about a 4.2 per cent fall in sales in the short term and up to a 13.5 per cent fall in sales in the longer term. The Association bases those estimates on calculations for price elasticity of demand made by the Bureau of Agricultural Economics. Such figures imply, according to the Association's President, Mr Geoff Nettlebeck, a loss in sales to wine makers of 40 million litres per year in the long term and reduced grape intake from growers of 65,000 tonnes. In dollars this is the equivalent to a $15.6m loss to growers a year. The impact of such projections are horrific, and they are particularly so to the South Australian industry. In 1983 South Australia produced 203,160 kilolitres of a total Australian production figure of 340,076 kilolitres of wine. Therefore it produced approximately 60 per cent of the national total. Furthermore, it processed about 55 per cent of all grapes used in Australian wine production. That is why we believe that the previous speaker, a senator from South Australia, should be concerned about the impact of this impost on the South Australian economy. Moreover, as the South Australian Premier, Mr Bannon, pointed out in State Parliament yesterday, close to 60 per cent of the wine produced in South Australia is produced in the Riverland, an area which, as all honourable senators would be aware, has serious economic problems.

Speaking of Mr Bannon, what an embarrassment this impost must be for him. It is just another example where he and his Government have shown that unfortunately they do not have the intestinal fortitude to stand up to Prime Minister Hawke.


Senator Messner —No clout.


Senator Teague —No clout.


Senator HILL —No clout at all, as my colleagues from South Australia have said. We saw it with the Alice Springs-Darwin railway, we have seen it in this exercise and, no doubt, we will soon see it with respect to the submarine project. Unfortunately, the Bannon Government is not serving South Australia well in its relations with the Federal Government. Members of the Government should take note of the comments of the embarrassed South Australian Labor Premier yesterday regarding the impact that this tax will have on the economy of South Australia. I quote from the Hansard of the debate in South Australia yesterday. He said:

It is certainly true that by imposing a sales tax on wine the Federal Government has discriminated against South Australia.

That is why we expect Labor senators to be having something positive to say for their State on this issue because it is a tax that is discriminating against South Australia. Mr Bannon went on to express his attitude to the manner in which this decision was made. He said:

I think the way in which the Federal Government has dealt with this matter ( which is not very different from the previous approach of the Hawke Government) is quite scandalous.

The Labour Premier in South Australia, clearly embarrassed, is saying that the way in which the Hawke Government has handled this matter, which is similar to the way in which it has handled other matters, is quite scandalous. Scandalous indeed! The Federal Labor Government has obviously bowed to the eastern States' dominated brewery lobby without a thought as to how its decision might detrimentally affect the South Australian economy. It appears that it did not give a thought to the place of wine production in the South Australian economy. It is a classical case of political cynicism.

Did Mr Hawke give a thought to the levels of unemployment that we have in South Australia, to the recent history of small wineries starting to spring up and the fact that each of these small wineries is an employer of labour? Was a thought given to that? Clearly, no. Not only did he fail to consider the direct employment opportunities within these wineries but also the employment of the grape growers themselves, again small businessmen who have struggled in recent years, as we know. Did he consider how long it takes to establish wine grapes, the capital involved in trellising and irrigation and the years of no return- that is the distinction having regard to the previous speaker's attempted analogy with barley growers-which occur in relation to grape growers? How many of these small businessmen will be forced over the brink by this inpost? We have yet to see. It is something that is obviously of deep concern to all Liberal senators from South Australia.

Did the Hawke Government consider the role played by wineries in the tourist industry in South Australia? Again they are small businesses, offering accommodation, food and other services; small businesses that are employers of labour; small businesses that we would have thought, in the current economic circumstances, the Hawke Government would be wanting to encourage rather than discourage. But again it appears that there was a failure to give consideration to the employment opportunities that they provide. Around every small winery in South Australia we have found these ancillary small businesses springing up. How will they suffer as a result of the impost of this tax when small wineries fall by the wayside?

What can be more scandalous than a decision that will cost up to 4,000 jobs in South Australia and cost South Australian wine grape growers $15m in lost income , with $5m of that lost revenue being borne by growers in the Riverland where they can least afford it. Mr Acting Deputy President, you would know that the Riverland is an area of comparatively low income. It is an area which has struggled in recent years. We know what has happened with the dried fruits industry. We know of the series of redevelopment proposals that have come by. That is the area of South Australia which will suffer more than any other area. It is the area of South Australia which can least afford it.

Let me conclude by touching on the role of South Australian Labor senators in this matter. We all know that it is difficult for small States such as South Australia to have their voices adequately heard in Canberra. That places a considerable onus upon senators. When a Labor government is in office it places a considerable onus upon South Australian Labor senators. Those senators have let us down in relation to the Alice Springs-Darwin railway and they have let us down again in relation to this issue. We know that this matter will be brought to the attention of the South Australian voters at the forthcoming election and we trust that they will act accordingly and return Liberal senators who are prepared to come to this place and fight for the interests of South Australia rather than make the type of disappointing contribution that we heard from Labor Senator Elstob whose speech immediately preceded my contribution.