South Australia's wine industry supports additional Federal Government funding, wants further tax reforms
Updated
South Australia's wine industry has expressed mixed feelings to the Federal Government's budget.
The sector welcomed $50 million for wine marketing but said the proposed tax reforms represented a missed opportunity.
Until now, wine makers have been able to claim back as much as $500,000 paid out in the wine equalisation tax (WET).
That cap will be lowered to $350,000 from July 1 next year, and lowered again to $290,000 from July 1, 2018.
Winemakers' Federation of Australia acting CEO Tony Battaglene said while he wanted the change to happen sooner, he understood why the government was taking a phased approach.
"We must remember that these have been legal provisions and people have their business structured legally around this," he said.
"Obviously we'd like to see these in action as soon as possible, but we understand that people who are legitimate now, to make them illegitimate tomorrow could have a detrimental effect, so we understand the government's position."
The WET rebate was introduced in 2000, with the aim of supporting small regional wine makers.
The scheme changed in 2006, when the rebate rose from $290,000 to $500,000.
A recent senate inquiry found the WET rebate wasn't operating as it was originally intended.
Wine Grape Growers Australia CEO Andrew Weeks said the changes announced in the budget would be beneficial for wine grape prices.
"There will be those that are adversely affected by this, maybe those that are claiming the rebate at the moment as part of their business plan," he said.
"But there is some comfort in the government saying they'll take a steady as she goes approach to make sure the practical application of this doesn't have unintended consequences for genuine producers that add value to our regional industry.
"It's very positive having something done about this issue, which has for so long been having such a negative impact on our industry, in particular for grape growers in the form of its depressed impact on wine grape prices."
Reforms not going far enough
But some sectors of the wine industry were hoping the government would announce measures to stop New Zealand wineries claiming the WET rebate.
New Zealand wine makers are eligible to the WET rebate thanks to the free trade agreement it has with Australia.
Coonawarra Grape and Wine deputy chairman Peter Balnaves said it was an issue that needed further reform.
"New Zealand has got different levels of cost of production through their wage rates, compared to Australia," he said.
"Their average wage is something around $14 an hour and we're paying $22 an hour plus super.
"We're not comparing apples to apples.
"For New Zealand companies to be further subsidised by claiming the WET seems ironic.
"We'd sort of hoped that was going to be sorted out, but obviously free trade agreements are very complex documents and maybe that can be sorted out in the future."
Topics: viticulture, agricultural-policy, agribusiness, agricultural-prices, federal-government, budget, adelaide-5000, clare-5453, coonawarra-5263, renmark-5341
First posted
