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Wednesday, 16 November 1983
Page: 2831

Mr HICKS(8.10) —The purpose of the Excise Tariff Amendment Bill (No. 2) is to amend the Excise Tariff Act 1921 to introduce new provisions into the Act which will have the effect of automatically indexing certain traditional excise duty rates at six-monthly intervals. The first of the increases took effect on Budget night and reflected the 4.3 per cent increase in the consumer price index during the March and June quarters of this year. A number of matters have been raised in regard to the excise increase and, more particularly, the indexing of that excise which can only add to Australia's inflation problem by building in a contribution to that inflation.

Another matter I am concerned about is the increase of excise duty on avgas and avtur by 2c a litre. The aviation industry, particularly in the smaller commuter aircraft area, is presently struggling, not to mention those charter and private operators of light aircraft. Many Australians depend on aerial transport to carry out their everyday work and if rural Australia is expected to lead in Australia's economic recovery this type of impost is unreasonable. I particularly draw honourable members' attention to clause 6 which refers to a number of items. The one to which I would like to refer especially is the excise in respect of fortifying spirit which has been reduced from $2.61 a litre-as first announced on Budget night-to $1.50 a litre. I certainly do not oppose this move to reduce the excise but I regard it as a token gesture only.

Although I have previously condemned the Government both inside this House and in other places for its action in imposing the $2.61 excise, I am now modifying my language because I believe, on good authority, that the Government has realised its mistake and is trying to find a way out of the mess it has created. The Government has, I hope, realised that if it continues on its present path it will destroy Australia's fortified wine industry. Not only will we see the demise of an industry that produces some of the best fortified wines in the world but also the effect on the livelihood of wine grape growers and their families will be devastating.

It may be timely to remind members of this House of the events of the past 10 months in relation to this matter. On 20 February, the then Leader of the Opposition, the honourable member for Wills (Mr Hawke), pledged to a capacity meeting in Griffith and, of course, to all those employed in the wine industry of Australia, that no tax or excise would be placed on wine. I am not referring to a speech to an Australian Labor Party branch meeting or any other small lunchtime gathering. I am referring to the Labor Party's rural policy speech that was unveiled to the Australian people in Griffith on that fateful day. I believe that the present Minister for Primary Industry (Mr Kerin) was in attendance, as were Labor senators and a number of State Labor Ministers who, by the fact that they were present, were co-sponsors of that pledge.

The honourable member for Wills, in his Griffith speech, said that he realised that the wine industry was faced with the need to make bold decisions. Unfortunately, the person who made the bold decisions was the honourable member for Wills after he was elected Prime Minister. The main bold decision was to place a $2.50 a litre indexed excise on grape spirit. After the announcement in the Budget of the imposition of the excise, a number of Labor Party politicians in both State governments and the Federal Government praised the fact that the Government had not placed a tax on wine, obviously not understanding what the Government had done. This is what leads me to believe that the Treasurer (Mr Keating) had received bad advice and was not aware of the potential damage that the excise would cause. Since the Budget announcement, wine grape growers, winery representatives, the honourable member for Indi (Mr Ewen Cameron), the honourable member for Mallee (Mr Fisher), the honourable member for Wakefield ( Mr Andrew), Senator Messner and I have been writing and presenting submissions and generally wearing out the carpet leading to the various Ministers' offices. As a result, the excise has been reduced in this Bill before the House. However, as I said before, this is a minimum token gesture and does not make the future of the industry look any brighter.

One of the main difficulties of this excise is that the impost has to be paid within seven days of the mixing of the spirit with the wine. This means that the excise must be financed for the duration of the maturation period. For some fortified wines this may be as little as 12 months. However, for a premium port or sherry the maturation period can range from four to 15 years and sometimes longer. Those honourable members who were fortunate enough to attend the protest wine tasting in Parliament House last week, which was hosted by the honourable member for Indi, the honourable member for Mallee, the honourable member for Wakefield, Senator Messner and me, would have had the opportunity to sample ports up to 17 years of age. Imagine paying a tax on a product from which one was not to obtain any income for 17 years. Apart from the initial tax, maturation and other losses by fortified wines on which duty has been paid must also be taken into account. Racking and fining may account for 11 per cent to 15 per cent while maturation alone may account for 2 per cent to 2.5 per cent a year.

The reason originally given for the introduction of this excise was to lessen avoidance possibilities, simplify administration and yield revenue. No member of the Government has yet been able to give any example of people or companies in the industry which have been avoiding taxation. The strangest remark was that of the Treasurer (Mr Keating) in his Press statement of 21 September in which he said that alternative methods of collection of the excise canvassed in discussions with the industry were found to involve considerable administrative problems. Could any reasonable person accept this as a reason for destroying an industry? Surely if a difficulty exists in collecting revenue this difficulty should be overcome not by beheading the goose that lays the golden egg but by making it comfortable for the goose to lay the egg.

I could go back to a Press release of the then shadow Minister for Primary Industry, the honourable member for Werriwa, dated 7 July 1982. In this release, the honourable member for Werriwa said:

Growing rumours of the anti-rural Fraser Government introducing a wine tax in the Budget are causing alarm and dismay in Australian wine grape growing areas. The Australian Labor Party is opposed to either a sales tax or excise on wine.

Mr McGauran —It is dishonest.

Mr HICKS —That is right. I tell honourable members that this is the part that riles me:

Such a tax would particularly cripple the Riverland in South Australia, and the Murrumbidgee irrigation area in New South Wales, where most independent small growers operate.

The Minister said this and then attended the meeting at Griffith. I think the responsibility is fully on the shoulders of the Minister for Primary Industry to convince his colleagues in the Labor Party and also the Treasury that this excise should be lifted. That is particularly so as he went on to say:

If the Liberal and National parties decide to attack the wine industry in the Budget they will be spelling disaster for hundreds of farm families throughout Australia.

Mr Groom —What hypocrisy.

Mr HICKS —That is right.

Mr McGauran —He does not care.

Mr HICKS —He could not care less.

Mr Groom —No one has fought harder than you on this issue.

Mr HICKS —Thank you very much. In a Press release dated 14 February 1983, the honourable member for Werriwa said:

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

These are the words of the honourable member for Werriwa. I would like to congratulate the honourable member for Werriwa and Minister for Primary Industry in his absence on his elevation to the Cabinet, a move that should have been made in March of this year. Those engaged in the wine industry no doubt will be interested in this move and they will now be looking for some favourable action from the Government due to this promotion.

Mr McGauran —Can they expect any?

Mr HICKS —Let us hope so.

Mr Groom —Where is he now?

Mr HICKS —He is overseas, I believe. Never mind; let us hope that they are not disappointed.

Another effect of this excise will be to encourage the substitution of lower priced imported fortified bulk wine for bottling in Australia. Several wine makers are already investigating the availability of Portuguese, Spanish, South African and New Zealand sherries in bulk which, given the oversupply in Europe and elsewhere, should be available at very competitive prices. In present circumstances, therefore, it is unlikely that many Australian wine makers will continue to produce ports, sherries and other fortified wines if they can satisfy the market more profitably with imported wines. If this occurs, the financial effect on wine makers will be negligible. On the other hand, it could well mean the loss of all grapes presently grown for making fortified wines.

The imposition of the excise on grape spirit will place a burden on all grape growers, and the dried vine fruit growers are no exception. This industry will tend to be the recipient of many grapes diverted from the production of fortified wines. The dried vine fruit industry is already experiencing a severe recession and any extra pressures on the industry cannot be tolerated. All of us in this House have had experience of people who do not wish to pay fair and just taxes. Madam Deputy Speaker, I can assure you that people in the fortified wine industry are not in that category. I am one who considers that the Labor Party, having pledged that there would be no tax or excise on wine and now being in government, should stick to that promise.

Mr McGauran —It is hurting good people.

Mr HICKS —It certainly is. If the promise, as with many others, were only a means towards the end of getting into office and the Government feels it can now tax the wine industry, for goodness sake, let it do it in a way that will not destroy the industry. I and other members know on a personal basis many of the wine grape growers we represent. They are men like Charlie Belardo and Ray Pagano--

Mr McGauran —A well-known good man.

Mr HICKS —He truly is. They came here last week to put their case. Those people, and others like them, may of whom came from overseas and have built an industry from nothing but guts and determination, now see the possibility of all they have worked for disappearing before them, through no fault of their own. As proud Australians they want to work for the prosperity of their families and for the regions which they and their parents have developed. I ask the Government to give those families a chance. I ask it to look at the unfair excise it has imposed. It if feels that it cannot bring itself to withdraw the excise, as by all moral standards it should, at least it should modify the excise so that the families of those people in the wine industry will be able to accommodate that tax and still have the opportunity to obtain fair reward for their investment and toil.