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Wednesday, 16 November 1983
Page: 2829

Mr ANDREW(8.00) —I support my colleague, the honourable member for Indi (Mr Ewen Cameron), and compliment him on the very appropriate and apt thumbnail sketch he has given of the dilemma facing the wine industry. I also pay a tribute to my colleague, the honourable member for Riverina (Mr Hicks), for the very supportive way in which he has assisted the honourable member for Indi and me to alert the Government to the dilemma it is forcing on the Australian fortified wine industry.

I am speaking to Bills that would normally be accepted by the Opposition and passed as budgetary measures but tonight I must protest about the attack on rural Australia that comes as part and parcel of these measures. The first attack comes from the decision of the Government that from now on rural Australia will pay excise on distillate. That is quite unprecedented in the history of rural Australia. The second, as has been outlined by the honourable member for Indi, is the fortified wine tax that is now to be levied against the industries in the electorates that he, the honourable member for Riverina, and I represent. I hope that all honourable members are familiar with the fact that the Prime Minister (Mr Hawke) on 20 February of this year in Griffith made the following statement:

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

What does the Prime Minister suppose we make fortified wine from-bananas? What he did, effectively, in the Budget statement that was handed down in August was run counter to his pre-election promise and impose a tax on the wine industry. Why does he show so little regard for the grape growers of Australia? Is he not aware that they are primary producers who must face all of the supply variations that go with climatic conditions-with drought, flood, fire, frost and hail? Does he not know that in a year of surplus a grape grower has but three choices? First, he can make brandy. Secondly, he can instruct his wine maker to make '2J' grape spirit for use in fortifying wine. Thirdly, he can produce dried fruit. If we consider those options we see what the fortified wine impost is doing to Australia's grape growers. Alternative No. 3, the production of dried fruit is no longer an option. To begin with, it applies only to dual purpose grapes. Also , the excess of subsidised dried fruit in the European Economic Community has spoilt much of Australia's export market. The first option was that of making brandy. Rather, it was an option until we last elected a Labor government. The Whitlam Government very successfully ensured that there would be no future Australian brandy industry; so that option has gone.

Do honourable members realise that during the years 1973 to 1983, principally as a result of the Whitlam Government's impost, the proportion of total domestic brandy consumption supplied by the Australian brandy industry fell to 20 per cent? Again, the proportion of imported whisky rose to 70 per cent of total consumption. That is a reflection of what the Whitlam Government did to the brandy industry in the years 1972 to 1975. It has never recovered; so the first option open to wine grape growers has gone. With the brandy industry went at least 17,000 tonnes of surplus grape production per year. At least we must compliment the Government on being consistent. It has levelled precisely the same attack against the '2J' spirit industry, the one industry that is left to soak up surpluses when there are too many grapes and drain them off when there are too few. Much of the $13m that the Treasurer (Mr Keating) said he planned to collect from this impost on fortified wine he will collect from '2J' spirit that was laid down in 1983 for use as fortification. Effectively, of course, it will be retrospective taxation. I have news for the Treasurer. It is that the Australian fortified wine industry has at least three years stock in hand. What that industry is saying right now is: 'Why bother to crush at all; why bother to produce fortifying spirit at all, why bother to produce fortifying wine at all when we can sell the existing untaxed stock that we have on hand or import cheaper fortified wines from overseas?' The threat of imports is a very real one . Let me quote from yesterday's Adelaide Advertiser the remarks of Mr Allan Preece, the Chairman of the South Australian Wine Grape Growers' Council. Mr Preece is reported to have said:

When I was over in Griffith in N.S.W. recently, I was told by one of the big winemakers that he could buy fortified wine cheaper than he could make it or pay for the spirit at this present moment.

Mr Preece went on to say that he felt more major wine makers in South Austraia and in the Riverina district would import fortified wines from Portugal, Spain and Cyprus, which offered inexpensive subsidised wines. He added:

The actual tax on one winery in the Riverland in one vintage could be as high as $900,000 to $1m . . .

The reaction to the tax has only just started.

The result of the impost being debated by the House tonight, the result even of the move from a tax of $2.61 per litre of alcohol to $1.50 per litre, will be that there will be no home for the surplus grapes in the electorates of Wakefield, Riverina and Indi; that the fortified wine makers will responsibly choose not to crush this year. So grapes will be left hanging on the vines. There will be no pickers. There will be bankrupt growers and there will be unemployment. Worse than this, if we want to be kind to the government, there will be no revenue, because nothing will be crushed. What then will the Treasury get out of this fortified wine impost? Honourable members will recall my earlier illustration of making wine from bananas. The Treasury will get two-thirds of four-fifths of one banana.

If I have not spelt out clearly enough for the Government the dilemma that the fortified wine impost will place on the industry, let me put it in simple terms. Let me say to those on the other side who have principally been employees rather than employers during their lives that it is just the same as saying to the employees of Australia, the pay as you earn taxpayers, 'Pay the tax today and get paid in five years' time'. That is what the Government is saying to the fortified wine industry of this nation. The industry, which has enormous lead times which must invest five years in advance, is being faced with an impost that it simply cannot meet, an impost that will soak up what little cash flow is left in the industry. Some have said: 'The impost is small; we have dropped it from $2.61 to $1.50. Compare it to brandy at $16.69'. I prefer not to compare it to brandy. Look at what has happened to the brandy industry. I say to those who allege that it is a small impost that they should remember, first, that it has to be paid within seven days of blending, which might be eight years from point of sale. Secondly, it has to be paid on spirit, including spirit lost during bottling, during handling, or by evaporation during maturation. The loss could be as high as 15 per cent. All that the Opposition has done in the fortified wine debate is alert the Government to the perilous state in which Australia is placing an essential industry.

Mr Ewen Cameron —They do not want to hear.

Mr ANDREW —There has been no effort to play politics-simply a plea for an act of responsibility but, as my colleague says, no one wants to hear. Where was the Minister for Primary Industry (Mr Kerin), where was the Treasurer, where was the Minister for Finance (Mr Dawkins), where was the Minister for Trade (Mr Lionel Bowen) or the Minister for Industry and Commerce (Senator Button) when this decision was taken? It was a decision that effectively changed the protection given Australian fortified wine against the threat of imports. I ask the Minister for Industry and Commerce or the Minister for Trade why this change in protection was not referred to the Industries Assistance Commission? They will have ensured the death knell of an essential Australian industry unless they are prepared to change direction.