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Tuesday, 28 August 1973
Page: 424

Mr O'KEEFE (Paterson) - The wine industry is one of the shining stars of the rural industries. Through a period of expansion over the last decade it rode comparatively unassailed during the rural slump and has gone from a small to a large industry now using over 350,000 tonnes of grapes a year and selling annually about 30 million gallons of wine. It is an industry that has been characterised by close interdependence between individual grape growers, the wineries and the distilleries. It has been traditionally a South Australian industry although significant wineries have been established in the Rutherglen area of Victoria and in the irrigated area of the Riverina electorate of the Minister for Immigration (Mr Grassby). In the Paterson electorate wineries are being constructed at present by many of the major companies and smaller operators.

Although the individual grape growers are still vital to the industry the wineries in South Australia now own about one-quarter of the vineyard acreage in that State. The industry has spread to the Hunter Valley where thousands of acres of vineyards are established or are being established by wineries. At present it is estimated that the capital investment in the Hunter Valley is of the order of $60m. Marketing is becoming more sophisticated and fiercely competitive. The radical changes in the wine industry that I have mentioned have not been painless and are not complete. Nevertheless, they have transformed the essential character of the industry and have posed some very pertinent questions relating to its general nature and to the specific provisions of this legislation. Is the industry destined to resolve its ultimate structure into a limited number of large wineries, each part of a business empire? What is the future for the growers and co-operatives in South Australia who have traditionally been suppliers of bulk wine to other wineries? What is the future of the small scale grape grower who supplies grapes to the co-operatives and to other wineries? The complete answers to these questions are shrouded by the uncertainties of the future.

It should be clearly understood that the wine and brandy industry has been hit to leg by legislation. Consequently for thousands of grape growers the industry has been hit to the extent of about $20m a year. How ironic it is when reflecting on the Budget figures that the Treasurer (Mr Crean) had previously given an assurance that the wine excise would not be reintroduced. We have heard the honourable member for Riverina castigating the previous Government for introducing a wine excise duty which returned about $10m. We find that legislation which will hit this industry to the extent of $20m a year is going to be enacted. The Labor Party has made much play of its intention to eliminate the wine excise. This legislation will cost the industry many millions of dollars more than the wine excise would have cost it. There is a continual requirement for Government policy to be responsive to the changing nature of the rural economy and one of the most rapidly and fundamentally changing areas is in the wine and grape growing industries.

The Australian Wine Board has a legal responsibility for regulating the export trade of the industry in promoting the sale of Australian wine and brandy in Australia and overseas. It is an old institution dating back to 1929. It is legitimate to ask whether its structure, functions and activities relate meaningfully to the industry as it exists in 1973. Such a question can also be asked about a number of other commodity boards which service industries, in new circumstances and having new problems, with old structures and old legislation. ,1 support the intention of the Minister for Primary Industry (Senator Wriedt) to review the operation of these marketing boards. In this review the nature of the statutory marketing authorities must be assessed in relation to the circumstances of the industry. The leadership must have a dynamic influence on the industry it leads. There is no room for outdated attitudes and sterile thinking. However, amid the fervour of reformist zeal there should be a clear understanding of basic principles. The grower is the owner of the commodity he produces and he should be responsible for the terms of its disposal.

Traditionally statutory marketing boards have embodied a strong degree of grower representation. The concept of grower control on marketing boards may offend the economic purist. There may be more qualified people in a particular 'area of agriculture to deliberate on marketing policy than are available among growers. That, however, is not the point. The point is that the same democratic principles that govern the administration of this nation should govern the administration of these boards and in particular, of course, the Wine Board. Members of Parliament may not be the most efficient, knowledgeable or expert people to deal with the complexities of national legislation or administration. Neither may State politicians or shire councillors or city aldermen. A Minister holding a portfolio may in academic terms be less proficient than his Public Service subordinates. The point is that such people represent those whom they administer. They are responsible to them and responsive to their problems. If they make mistakes they answer to those who elect them. They represent, however inadequately or abstractly, the wishes and aspirations of others. If the Minister for Primary Industry changes grower control or marketing boards he will change more than legislation. He will change a principle that is broadly significant. The objective is efficiency. The overriding concern is democracy. I believe that there should be a reappraisal of marketing boards and they should be upgraded as much as possible but if the price is the ending of grower influence then that price is unacceptably high.

I make these comments because the Australian Wine Board, along with other boards, is being examined by this Government and I wish to state my attitude clearly on this industry and on the structure of this board. I do not oppose this legislation. It is of a machinery nature. But it is important to draw attention to the wider issues involved in consideration of the future role of rural marketing organisations in this country. The wine makers fear the heavy blows which legislation will impose on their industry. Although, apart from the brandy imbibers, the wine drinkers got off scot free in last week's Budget some severe blows are being dealt to the industry. For instance, the method of valuing wine stocks has been interfered with. Brandy wine and wine are commodities which mature over a number of years. The old method of valuing wine stocks was 15c a bottle. This new method will certainly impose very heavy penalties on vineyards, wineries and all those associated with the wine business. It will place enormous financial strains on all established wine making businesses. Wine making and grape growing are not nearly as efficient as seems to be popularly believed. Probably no other business gives such a small return on the funds invested as does the wine making industry. In my own area - I know this goes for most vineyard areas throughout Australia - a lot of small people in the industry will find it extremely difficult to meet this impost. Another slug has been placed on brandy wine, which is a stimulant and is given to invalids. Under this new method there is no doubt whatever that the price of brandy could double. This could place a severe strain on invalids and other people who consume brandy for medicinal purposes.

Mr Fitzpatrick - I do this myself.

Mr O'KEEFE - That is right. The honourable member and I know of people who have to use brandy in this way. They are not inebriates but they use brandy for medicinal purposes. If they have to pay twice the price for a bottle of brandy this will be a very severe additional cost to them. There is great disquiet in the industry despite the Government's insistence that wine stocks are no different from any other product. Few products take as long to make as wine. Wine, through a long period of maturation, could be considered as work in progress. This would be a much fairer method of valuing wine stocks. Work in progress is an accepted method in industry such as the engineering and building industries. Why could not the Government give consideration to the valuation of wine stocks on this basis? This would give the wine growers an opportunity to spread the impost over a period instead of being faced with a sudden method of valuing which will affect them considerably financially.

Over many years brandy has proved to be the only outlet for surplus grapes. However the process makes it a more expensive spirit than that produced from grain or vinegar products. Besides the fact that all spirits will be more expensive and therefore less attractive to the consumer than they have been in the past, the loss of the duty advantage for brandy will make it more expensive again and this will have a disastrous effect on sales. This is particularly so when local brandy is suffering some market disfavour because of cheaper brandies coming in, particularly from France. This will mean an intensity of the problems faced by those engaged in this industry. This could really push the small family winery into severe difficulties. In addition to all the factors I have mentioned the family wineries will have to meet a far higher taxation bill in the future, following the increase in private company tax. We all know that family companies in this industry have received the benefit of the private rate of income tax which is applicable to private companies. Now they will have to pay the same tax as public companies. This is another imposition which will severely affect the small private companies operating in the wine business.

As I mentioned earlier, when we were in government and imposed an excise on wine which brought the Federal authorities something like $10m we were howled down by honourable members like the honourable member for Riverina (Mr Grassby) and by others for this iniquitous tax. We find, when we investigate the efforts of the present Government in the wine and vineyard area, that it has not imposed a charge of $10m but something of the order of $20m. As mentioned earlier, this will severely affect vineyards throughout Australia, it will severely affect our opportunities for exporting wines and of competing with overseas countries in export markets and in Australia it will have an upward effect on the price of wine and brandy products. I bring these facts forward for the consideration of the Government. The Opposition feels that these taxes are excessive and are not in the interests of the wine growing industry which has stood on its feet for many years and has never asked any government for assistance. Any development or any progress that it has made has been entirely by its own initiative and by its own efforts. I deplore the fact that the Government has hit the industry so severely in this way. I commend my remarks to the attention of members of the Government and those who could possibly lessen the burden which has been placed on the vineyards and wineries.

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