In 2015 the Federal Government responded to consistent calls by stakeholders in the grape and wine industry for the government to investigate how to make the industry more profitable.
The Senate Standing Committee on Rural and Regional Affairs and Transport (‘the Committee’) was charged with the investigation and on 12 February 2016 the Committee released its report.
The report includes key findings and results in 12 recommendations. These recommendations deal with various issues including that:
- the Wine Equalisation Tax (‘WET’) rebate be phased out over five years
- the Wine Industry Code of Conduct (‘Code’) be independently reviewed and a mandatory code of conduct be reconsidered if insufficient participants volunteer
- the Government significantly increase international marketing funding for wine
- the Government give further consideration to the roles of AGWA and ABS in wine industry data collection and allocate funding for the Vineyards Census to resume
While the WET rebate was initially intended to support small wine producers in rural and regional Australia, the Committee found that it actually:
- distorts the market
- subsidises bulk wines
- is accessible by the major retailers
Rather than attempt to reform the rebate, the Committee intends to end the program and allocate the savings to a structural adjustment assistance program.
Wine Industry Code of Conduct
There is concern in the industry that the Code, as a voluntary system, has had low uptake. This low uptake feeds the inconsistency and unfairness in transactions between winemakers and growers.
While the Committee was disappointed with the Code’s performance, it recognised the value of a voluntary and industry-owned code of conduct.
Australia invests far less than competitor nations in marketing its wine internationally. The Committee considered that this lack of promotion has had a negative impact on the sales and reputation of Australian wine and therefore recommends greater investment.
Many contributors to the Committee highlighted the importance of better access to improved data. While many suggested industry-owned data collection through the Australian Grape and Wine Authority (‘AGWA’), the Committee found that the Australian Bureau of Statistics generally conducted data collection to a high standard.
If you have any questions about this or would like any assistance please contact Rebecca Halkett, Head of our Food & Agribusiness team.
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