The Winemakers’ Federation of Australia and Wine Grape Growers Australia (WGGA) have welcomed a major injection of funds – $50m over the forward estimates – to grow demand and accelerate recovery of the nation’s grape and wine industry.
The Federal Government Budget responded favourably to industry’s detailed recovery plan which outlined changes to the Wine Equalisation Tax (WET) rebate and a substantial global investment strategy to restore confidence across the industry.
“We are pleased government has listened and responded to our industry recovery strategy and the need to provide these additional funds,” Federation President Tony D’Aloisio said.
The two peak national organisations supported by all state wine bodies also lobbied government and support the measures announced to Introduce stronger anti-avoidance provisions to remove access to the rebate from contrived arrangements, and tighten the eligibility criteria in line with the rebate’s original intent of supporting producers of branded product who have a stake in the wine industry and removing the rebate for bulk and unbranded wine.
However Mr D’Aloisio highlighted that just as important for the industry as the injection of funds was the change to the eligibility criteria and this change should come into effect immediately and not wait three years as proposed.
The anti-avoidance measures should also come into effect immediately.
“The industry sees removing the claims for bulk and unbranded wine as important drivers to industry’s restructure and we believe these changes need to happen now rather than later to assist in returning the industry to profitability,” Mr D’Aloisio said.
The Government did not accept that the rebate cap remain unchanged.
It proposed a progressive reduction to $350,000 and then $290,000 from July 1, 2019.
This reduction will have an economic impact of removing some $300 million over the forward estimates for businesses with significant investment in regional Australia.
With only $50 million back in funds for marketing this reduction needs much greater scrutiny.
It is not clear how the proposed reduction in the cap will aid the industry in its recovery after years of declining profits.
“With a more favourable exchange-rate environment and the benefit of Free Trade Agreements with our major trading partners in Asia, the investment of $50 million over the forward estimates to grow markets could have a significant impact on demand,” Mr D’Aloisio said.
“However while we are pleased government has listened and responded to industry’s recovery plan and the need to provide much-needed additional funds for marketing, promotion and regional development, significant questions remain over reducing the rebate cap and the delay in removing eligibility for bulk and unbranded wine,” he said.
Wine Grape Growers Australia Chair Joanna Andrew welcomed government support for the grape and wine sector but echoed Mr D’Aloisio’s concerns.
“Doing nothing was not an option and government has begun a reform process that we hope will translate into better returns for growers and across the supply chain,” Ms Andrew said.
The Budget has not removed New Zealand producer eligibility from the separate WET rebate.
While the announced changes will also apply to New Zealand claimants, this is another area the Australian industry will continue to pursue with government.
Both organisations said they would be consulting their members and state and regional associations on these proposals and continue to engage with the government.
