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Thursday, 14 November 2013
Page: 257

Mr JOYCE (New EnglandMinister for Agriculture and Deputy Leader of The Nationals) (09:42): I move:

That this bill be now read a second time.

The Grape and Wine Legislation Amendment (Australian Grape and Wine Authority) Bill 2013 creates the Australian Grape and Wine Authority, which will commence operation on 1 July 2014. The new authority will be the result of a merger of the Grape and Wine Research and Development Corporation and the Wine Australia Corporation. It will take on the roles and functions of these two corporations to become the single statutory authority for the wine industry.

The reform has come about at the request of industry, following discussions raised over the last 20 years. It is finally being made a reality following a proposal submitted by the industry peak bodies, the Winemakers' Federation of Australia and Wine Grape Growers Australia.

The Australian wine industry is a wonderful success story for our agricultural know-how and initiative. The industry is valued at approximately $3.4 billion annually and is a major contributor to the economy of rural and regional Australia. The industry suggests that more than 22,000 people are directly employed in grape growing and winemaking activities, with many more employed in associated industries such as tourism and hospitality.

There are more than 2,500 wine producers in Australia, and almost 6,000 wine grape growers. Wine grapes are grown in all states and territories of Australia, except the Northern Territory.

The Grape and Wine Research and Development Corporation had revenue of $22.8 million in 2011-12, of which the Australian government provided $10.4 million through its matching funding arrangements.

With these funds the corporation was able to produce key outcomes that deliver real productivity gains for the industry. This has included partnering with the CSIRO to develop new rootstocks with characteristics including the ability to tolerate drought and salinity and to be resistant to phylloxera, a potentially devastating pest. Its investment in water use efficiency has contributed to the level of water use per hectare in the wine grape industry dropping from nine megalitres at the end of the 1990s to well under six by the mid 2000s.

The research and development program continues to invest in vineyard sustainability and production techniques that look to continually improve the consistency and quality of Australian wine, while at the same time improving the bottom line for our wine grape growers and wine producers.

The Wine Australia Corporation had revenues of almost $12 million in 2012-13 from industry levies and contributions. These funds underpin a sophisticated marketing and export compliance regime that promotes the quality and reliability of Australian wine across the world. Australian wine holds significant market share in countries such as the United Kingdom, the United States, Canada and our premium wines are gaining an ever-growing foothold in the important Chinese market.

With the help of Wine Australia, the premium, higher profitability segment of the wine market continues to grow in key East Asian markets, like China. The Chinese market has grown from $57 million in 2007 to $250 million today, to be our third biggest by value. Australian bottled wine exports into the United States at the higher, above $7.50 a litre, segment grew by 16 per cent in the year ended 30 September 2013. This is an exciting new growth opportunity for the industry. Wine Australia also continues to engage internationally, through groups like the World Wine Trade Group, to deliver sensible trade reforms that make exporting wine simpler and more cost effective.

The wine industry is a great example of a progressive Australian agricultural industry and the wide support industry has shown towards the proposed merger is yet another example of this.

The proposed merger is consistent with the government's deregulation agenda and will ultimately result in efficiencies through combining the administrative resources of operating two statutory bodies into one. This will consequently result in improved service delivery to industry. The opportunity has also been taken to reduce red tape where possible, such as removing the requirement for ministerial approval of annual operational plans under the new authority.

A single wine industry statutory authority will support the industry by providing links between the investment initiatives and functions of the Grape and Wine Research and Development Corporation and the Wine Australia Corporation.

This bill proposes amendments to the Wine Australia Corporation Act 1980 to establish the new authority and renames the act as the Australian Grape and Wine Authority Act 2013. Although the bill amends the existing Wine Australia Corporation Act, these amendments are significant and the merger is not a takeover of the Grape and Wine Research and Development Corporation by Wine Australia. This is a strategic merger of the two statutory corporations on an equal footing.

This bill is divided into two schedules.

Schedule 1 amends the Wine Australia Corporation Act to create the authority.

Schedule 2 covers matters arising from the transition from two statutory corporations to the authority. It covers matters such as the transfer of staff to the authority.

Schedule 1 is divided into two parts.

Part 1 of schedule 1 commences on the day after royal assent. This part amends the Wine Australia Corporation Act 1980 to establish a selection committee to select and nominate to the Minister for Agriculture, possible directors of the board of the authority. The bill gives the Minister for Agriculture an alternative option of appointing a first board of the authority for a 12 month period without reference to the selection committee.

Part 2 of schedule 1 commences on 1 July 2014. This part provides amendments to the Freedom of Information Act 1982 and the Wine Australia Corporation Act 1980. This part establishes the authority and provides the governance framework for its operation.

Schedule 1 provides the research and development functions, including provisions for the Commonwealth to match research and development levy funding dollar for dollar.

The authority will be required to spend research and development levy money and government matching funds on research and development activity. Industry has highlighted the importance of this issue for the new authority and I want to make it clear to the industry that its R&D levies will be spent on R&D purposes only. It is also important to the government to ensure that Australian government money appropriated for research and development is used for this purpose.

The bill does not include any changes to the structure or the amounts of the levies that currently fund both statutory corporations, or to the existing regulatory, marketing and compliance roles of the Wine Australia Corporation.

The bill transfers definitions of research and development from the Primary Industries and Energy Research and Development Act 1981.

It establishes an authority with a skills based board of five to seven directors selected and nominated by a statutory selection committee and appointed by the minister.

The board is led by a chair appointed by the minister following consultation with industry.

The authority is required to prepare a five-year corporate plan to outline the authority's strategies, policies and priorities to achieve the objectives.

The authority is also required to prepare an annual operation plan but, unlike those of the two statutory corporations, this plan is not required to have the minister's approval.

Schedule 2 provides for the transition of the Grape and Wine Research and Development Corporation and Wine Australia to the authority, including that the operations, assets, liabilities and staffing conditions are transferred to the authority.

The bill allows the Minister for Agriculture to select the first board directors after royal assent. The board will commence on 1 July 2014. Between the date of appointment and 1 July 2014, the minister can engage the future board directors as consultants to assist with preparations for the authority's commencement, including making preparations to appoint a chief executive.

The boards of the two statutory corporations will continue to exercise their powers and meet all statutory responsibilities until 30 June 2014.

Before 1 July 2014 the future directors, in their role as consultants, could not make decisions that would bind the authority. However, it can be expected that any recommendations they make would be considered for ratification by the board at its first meeting.

The costs of the consultants will be met by the Commonwealth through the Department of Agriculture. Once the authority commences, any and all Commonwealth funding provided for the purpose for engaging consultants will be refunded by the authority. As the consultants are the future board directors acting in the interests of the authority, it is reasonable for the authority to reimburse the Commonwealth for the costs of the consultants.

The bill ensures that all employees of the Grape and Wine Research and Development Corporation and Wine Australia are transferred to the Australian Grape and Wine Authority along with all employee entitlements.

The bill also provides for a number of amendments to be made to outdated sections of the Wine Australia Corporation Act 1980, and introduces modernised language to bring it up to date with current terms.

The wine industry has a unique regulatory structure with the Wine Australia Corporation enforcing the Label Integrity Program, licensing exporters and maintaining Australia's wine geographical indications system. These important roles are not affected by the merger.

The Australian Grape and Wine Authority will therefore have a strong focus on controlling exports and developing domestic and international markets for Australian grape products, along with investigating, coordinating and funding grape and wine research and development. The authority will be responsible to report its progress on these matters to the parliament or minister and representative organisations.

Two companion bills are being introduced alongside this bill that propose minor amendments to the Primary Industries (Excise) Levies Act 1999 and the Primary Industries (Customs) Charges Act 1999 to enable levies collected to be paid to the new authority.

The creation of the Australian Grape and Wine Authority is a natural progression by the industry in continuing to reform to meet future challenges. The benefits of replacing the existing two statutory bodies with a single authority will come at no additional cost to winemakers or grape growers. Instead, this reform will deliver efficiencies while enhancing links between the industry's research and development and marketing activities—which are the key to future industry competitiveness and profitability. Through this reform the government wants to ensure that the levies and fees that industry contributes to these efforts has the best opportunity to keep delivering for the industry in the future. It is with great pleasure that I introduce this bill to make this important reform a reality.

I commend the bill to the House.

Debate adjourned.