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Thursday, 23 August 1984
Page: 271

Senator ELSTOB(4.08) —I wish to comment on what Senator Messner has said. He called some of us disloyal to our States. That is not the case. I have always believed as a senator from South Australia that I have a responsibility to the whole of this nation. I have not come here entirely to represent South Australia. Any Federal parliamentarian doing his or her duty has a responsibility to the whole of this nation. That should be taken into account. In looking at the ramifications of not taxing wine we can see that many rural people, for example, those supporting the barley industry, the sugar industry or the hop industry have suffered because there has been no tax at all on wine. I think that has to be taken into account by any responsible government.

I say that this is a very responsible government. We govern the whole of Australia correctly. We are far better economic managers than the Opposition was when in government. It would be disastrous for the barley industry, the sugar industry and the hop industry not to take account of that fact. The sugar industry in Queensland is in trouble. It produces rum. People today are not drinking, beer, rum, whiskies or brandies. They are drinking table wines. To make wine so attractive is to destroy other industries. That should be taken into account by responsible government. This Government has taken it into account.

Let us look at the wine industry over the years. To the end of June this year 308 million litres of wine were consumed in this country. The production of beer is continually decreasing as is the production of brandy and whisky, simply because those industries are taxed but wine is not. Senator Messner mentioned a speech I made in the Senate some months ago during which I said that it would benefit the wine industry to go to the Treasurer (Mr Keating) and come to an agreement to have a sales tax rather than an excise tax imposed. I believed that then. Senator Messner, Senator Jessop and I met with industry representatives less than three and a half months ago at Waikerie. I told them exactly the same thing. I said that it was in their interests to go to the Government and come to an agreement about sales tax that would last for five years. Senator Messner said that it would take seven years for the industry to readjust. I believe that that estimate is a little high. I think it would take five years for the industry to readjust as it takes about five years for the grape plantings to come into production. Six years ago, when Senator Teague first came into the Senate, he said: 'I will stop any tax or excise being put on brandy'.

Senator Teague —I didn't say that.

Senator ELSTOB —He said excise. It is all in Hansard. He voted for that excise. Increasing the excise at that time had disastrous effects on the brandy and wine industries. At the last meeting I had with industry representatives I told them that it was a great shame that in those days they did not put up a proposition for the imposition of a sales tax instead of an excise.

I believe that there is a case to be put for the imposition of a sales tax on wine and brandy. It is probably not too late for that to be done. I think that the Government should look at it. One should not say that the wine industry cannot survive because of the imposition of a tax as low as the one that has been put on it-a tax of 10 per cent on the wholesale price of wine. It is not a tax on the bottling, the corking, the labelling or the transportation of wine. It is a tax on its wholesale price.

Senator Walsh said that there is about a 20 per cent mark up from the wholesale price to the retail price. That is not quite correct. Cask wine has about a 20 per cent mark up. Overall there is about a 50 per cent mark up on the whole range of bottled, higher class wines. The retail price takes into account the cost of the bottling, corkage and transportation of the wine. The present tax is not on bottling, corkage or transportation which means that the increase in cost of a cask of wine, which is very cheap-it sells for under $5 and has a 20 per cent mark up on it-will be about 33 cents. It is ridiculous to say that a four litre or five litre cask of wine can not take that increase.

There is a 20 per cent tax on soft drinks and on every other beverage. Not to do anything about this situation-and I told industry representatives this when I met them-would be unrealistic.

Senator Messner of the Liberal Party said: 'We will not impose a tax'. I said to him: 'I do not believe that any government can withstand that pressure'. It is not good to leave the wine industry untaxed to the detriment of all the other industries I have mentioned. It is wrong to destroy certain industries and allow others to flourish. There is a responsibility in this country to pay taxes. It is wrong to have a great difference in the taxes being paid.

Senator Hill —Why didn't you say that at the election?

Senator ELSTOB —I have defended the wine industry. Every honourable senator and member who knows the wine industry knew that the situation was coming to an end. At the last meeting I had with the industry at Waikerie some people said: 'We believe what you are saying', but the industry as a whole would not face its responsibilities, go to the Government and say that it would accept a sales tax for a period of, say, five years. That would have been responsible of the industry. I have told its members that and I shall continue to do so. This measure will not damage the industry. It will help other industries. It would be wrong to say to the primary producers who produce barley, sugar, hops, or any of the other ingredients that go into beer, rum, brandy and whisky, that their profitability will fall and that there will not be a market for their supplies, but that the grape industry will not be taxed; it will have a free go. That is not the way to run a country and it is not being responsible.

The wine industry knew what was coming. Those in the industry who paid the tax imposed on fortified wines and spirits will have it returned to them. I believe that that is correct. I said that the tax was not a good thing and told the Treasurer so. I told the industry, however, that it would eventually have to pay either an excise or sales tax and that sales tax was the best way to go. It is less damaging to the industry. I will still fight for the imposition of a sales tax on wine and brandy. I think that it is possible.

Senator Messner —We have a sales tax on brandy.

Senator ELSTOB —But the main income is derived from excise. I believe that a tax at a higher rate could and should be considered. The industry would be better off.

Senator Hill —You are putting the rate up on wine too?

Senator ELSTOB —I believe that the present rate is sufficient. It is very low when one takes into account the wholesale price of wine. It is far less than the tax on soft drinks. Wine is the cheapest drink to consume today, even with the 10 per cent sales tax on its wholesale price. It has been let off very lightly. I maintain that the industry will survive. It can survive. It is about time that the industry started exporting. Production is continually increasing. Some areas are already exporting.

Senator Messner —But you have lowered the tariff as well.

Senator ELSTOB —The tariff will not affect the industry whatsoever. Australian wines are the cheapest in the world. In quality they are as good as any product anywhere in the world. They can compete and they should be doing so. There is no doubt about it. The tax will not affect the industry's production and to say so is being ridiculous. It will bring it into line with other industries. It most certainly will not damage it.

Senator Teague —It happens for cars, for shirts, for shoes-for every other product.

Senator ELSTOB —If one looks at the results of surveys that have been done one sees that in the past the majority of people thought there was an excise on wine . Many people were quite surprised to learn there was no excise or tax on wine. One study revealed that 46 per cent of the people surveyed were drinking less beer than they were a year ago, that 24 per cent had increased their wine consumption relative to beer and that about one in five peope who had shifted from drinking beer to drinking wine had nominated price as the major factor. The only reason price was the major factor was that there was no tax at all on the wine industry. The wine industry has been a cinderella industry. It has very good management. The tax will mean an additional cost of well under 30c to 40c a bottle for the majority of wine that is drunk.

Senator Messner —What about in a restaurant? How much do you reckon they will add for that?

Senator ELSTOB —Restaurants buy casks at wholesale prices, at less than $4 a cask. The majority of wine drunk at restaurants is from carafes. One could not calculate the tax imposed on a cask of wine. One would have to add about 1c to its price. The tax on high priced wines will be about 50c to 60c. As I said, the tax will be imposed on the wholesale price of wine, not on the bottling, corking or transportation of it. That is what honourable senators opposite are not taking into account. When we come down to it, it results in a very small increase in the price of wine. It will have hardly any effect at all.

I believe the Government has been responsible. It has a responsibility to all the other industries. Should we tell the people who represent Queensland that its sugar industry should not be taken into account or say to the barley growers on Yorke Peninsula that they should not be taken into account for taxation purposes? I support the imposition of a tax on wine.

The DEPUTY PRESIDENT —Order! The honourable senator's time has expired.