Bills Digest 139 1996-97 Wine Export Charge Bill 1997


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WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History

Wine Export Charge Bill 1997

Date Introduced: 19 March 1997
House: House of Representatives
Portfolio: Primary Industries and Energy
Commencement: Royal Assent

Purpose

To impose a charge on exports of Australian wine.

Background

Rationale for Bill

The imposition of a charge on exports of Australian wine proposed by the Bill was announced by the Government on 13 February 1997. In announcing the decision the Minister for Primary Industry and Energy stated:

The purpose of the charge is to raise funds from the industry to continue the export promotion program managed by the Australian Wine and Brandy Corporation.(1)

The export promotion program is currently funded by by Commonwealth and State grants.

The Government states in the Second Reading Speech to the Bill that the proposed export charge is being imposed at the request of the wine industry (the industry) and that the rationale given by the wine industry for requesting the imposition of the charge was:

[B]ecause it was concerned that the corporation (the Australian Wine and Brandy Corporation (AWBC)) would have to wind down its generic export promotion program for Australian wine as the grant funding came to an end. The industry strongly supports the corporation's export promotion program, and regards it as an essential component of its export growth strategy. It does not believe that a voluntary scheme would be effective.

The industry voted for a charge on wine exports to fund AWBC generic marketing programmes at the AWBC General Meeting held in Adelaide on 7 December 1995.(2)

The author of this Digest has been unable to find any current adverse industry reaction to the proposed imposition of the charge.

Industry Performance

Australian production of grapes for all purposes from the 1996 harvest totalled 1 062 167 million tonnes.(3) This production was achieved from a grapevine bearing area of 63 132 hectares.(4) A total of 883 318 tonnes of fresh grapes was crushed for the 1996 vintage and the volume of beverage wine produced totalled 620.1 million litres.(5)

The Australian wine industry is currently experiencing rapid growth in exports. Total export approvals for March 1996 to February 1997 were 151.2 million litres, 27% up on the previous year.(6) Total exports for the period were valued at $565.8 million, up 32.9% on the previous year.(7)

The United Kingdom is Australia's principal export market. For the period March 1996 to February 1997, exports totalled 73.6 million litres, 32% up on the previous years.(8) By value, exports increased 30% to $254.6 million.(9)

Exports to the United States increased substantially for the period March 1996 to February 1997. Exports totalled 20.3 million litres, up 36.7% on the previous year.(10) By value, exports totalled $104.3 million, up 51% on the previous year and surpassing $100 million for the first time.(11)

Major Issue Facing the Industry

While the current state of the Australian wine industry can be said to be nothing short of brilliant, their are however a number of negative issues which face the industry in the future. For example, it is reported in The Weekend Australian of 9 November 1996 that wine-making identity Mr Wolf Blass said:

[T]he wine industry's goal of $900 million in export sales by 2001 was "a little to ambitious" and that a more realistic target was $1 billion by 2005. It would not be possible for the industry to keep growing at 25 per cent a year, especially with increasing competition from South Africa and Chile, he said.

This together with increased planting's in recent years, meant Australia was facing the prospect of a substantial over supply of white grape varieties by the end of the decade, amounting to 25 000 tonnes or the equivalent of 15 million litres of wine. "Any thought that we can simply push this excess on to the export market is wrong," Mr Blass said.

This was because the local surplus would coincide with a world-wide oversupply of chardonnay, the image of which was set to deteriorate rapidly.

It is reported in The Australian

of 11 March 1997 that the closure of three CES offices in South Australia were attacked by the federal Opposition, which argued that their closure would hurt the State's $250 million wine industry. The Opposition spokesperson on employment, Mr Martin Ferguson, is reported as saying that the closure of the Berri, Gawler and Noarlunga offices would have a sever impact on recruiting for the region's wine grape industry. Mr Ferguson said the three offices played a key role in the industry, helping pickers for the few weeks of the year they were needed. In response, a spokesperson for the Minister for Employment, Senator Vanstone, is reported as saying that the transfer of public services to a private model of service delivery would not affect recruiting in the industry and that there are no plans to shut the offices during the phase-in of the new arrangements.

It is reported in The Australian of 18 June 1996 that the president of the Winemakers' Federation of Australia, Mr Len Evans, branded the Federal Government's role over the past 30 years a disaster for the Australian wine industry. Mr Evans called for a range of government sponsored programs including a revived export incentive scheme and a vineyard improvement program. The Australian wine industry is also reported as supporting a goods and services tax.

Environmental concerns are being raised about the clearing of land and the felling of trees to expand the area planted to grape vines. For example, it is reported in The Canberra Timesof 34 October 1996 that a stop-work order had been imposed by the director of planning for Yass Shire on a project to clear a paddock of old native trees to expand an area planted to vines.

While Australian wine exports are forecast to rise to a record 213 million litres in 1997-98, Australian wines can expect to face increased competition in overseas markets particularly when planting's of premium varieties come into production in the United States, Chile and Argentina.(12)

Main Provisions

Clause 3 provides that the principal object of the Bill is to ensure adequate funds are raised for the export promotional activities of the AWBC.

Clause 6 imposes a charge on exports of Australian produced wine.

Clause 7 deals with the rate of charge. The rate of charge on exports of Australian produced wine will be an amount prescribed by regulation. The rate must not exceed 0.5% of the free on board sales value of the wine.

The charge will be payable by the producer of the wine (clause 8). It is stated in the Explanatory Memorandum to the Bill that regulations to be made under the Primary Industries Levies and Charges Collection Act 1991will provide that for the purposes of the charge the 'producer' is the exporter. The use of the term 'producer' in this Bill is said to be for purposes of consistency with the Primary Industries Levies and Charges Collection Act 1991.

Clause 9 provides that the regulations may exempt from the charge wine exported by a specified class of persons, or specified classes of wine.

Endnotes

  1. Press Release, Minister for Primary Industries and Energy, 13 February 1997.
  2. Australian Wine and Brandy Corporation, Annual Report 1995-96, p. 22.
  3. Australian Bureau of Statistics, News Release No. 19/97, 27 February 1997.
  4. Ibid.
  5. Ibid.
  6. Australian Wine Export Council, February 1997 Wine Export Approval Statistics, 5 March 1997.
  7. Ibid.
  8. Ibid.
  9. Ibid.
  10. Ibid.
  11. Ibid.
  12. Australian Commodities, Vol. 4, No. 1 March 1997.

Contact Officer and Copyright Details

Ian Ireland
2 June 1997
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1328-8091
Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 5 June 1997



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