E-mail from Tony D’Aloisio

Statements from the WFA, Corrina Wright and Frankland Tate

After weeks of urging the Winemakers’ Federation of Australia (WFA) to make a statement about the wine equalisation tax (WET) and what might define a winery, I received an email from WFA president Tony D’Aloisio:

“In this week’s Key Report [June 16] you run a headline and article titled ‘WFA silence is deafening’.

“Please go to our website in Notice Board where you will find three updates (3 May, 13 May and 15 June) to our members on the WET rebate issues. I have copied the third one below for your convenience. These provide our members with our response to the Budget announcements, plus our responses since in getting the messages to Government on the cap reduction and the eligibility test.”

I am far from incapable of making a mistake, indeed several mistakes. But I looked at that website at 9am on June 16 and didn’t spot the June 15 statement. After I raised this with D’Aloisio, he said the June 15 statement was posted on 15 June at 11am.

Anyhow, point scoring isn’t the issue. At last the WFA has showed leadership. It was slow in coming, but better late than never.

There was also a rap over the knuckles for TKR that can be read here. A post at the end of the story accuses me of vitriol towards the WFA. It’s not vitriol, but I expect the WFA to show leadership to the whole industry, not just its paying members. It may be unfair, but the little guys need guidance. The big can look after themselves.

The post ends, “the negative is getting all the oxygen”. Ironically, that was my criticism of the WFA, whose silence was creating negativity.

The lack of full understanding regarding WET issues was exemplified in an article in The Australian Financial Review by Simon Evans on June 17:

“Corrina Wright, the owner of McLaren Vale winery Oliver’s Taranga Vineyards says it beggars belief that NZ wine producers are still able to access taxpayer-funded wine tax rebates in Australia. It’s a view shared by WA wine producer Franklin Tate.”

Both Wright and Tate know, or should full well, that the fault that enables New Zealand wineries to claim WET is embroiled in larger trade agreements. The first came about in 1922. In 1933 the Australia New Zealand Trade Agreement came in to being, in which the two countries gave each other preferences and some special rates of duty. The New Zealand Australia Free Trade Agreement (NAFTA) entered into force in 1966. This led to the removal of tariffs and quantitative restrictions on 80 per cent of trans-Tasman trade by the late 1970s.

Since July 1, 1990, all goods meeting the Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) Rules of Origin criteria can be traded across the Tasman, free of duty and quantitative import restrictions. The 2014-15 total trade (goods and services) was valued at $23.7 billion.

  • New Zealand is Australia’s eighth largest trading partner.
  • The level of Australian investment in New Zealand was $99.93 billion in 2014.
  • New Zealand investment in Australia (our 12th largest source) was $38.52 billion in 2014.

That is a lot of history to unravel, and people like Wright and Tate should be working with it rather than whining about it. The $25 million worth of WET rebates that NZ receives each year is not a lot in the total trade of $23 billion.

Nor is it anywhere near the NZ$362.1 million ($344.88 million) worth of wine that New Zealand shipped to Australia in 2015. When Wright can replace the consumer love of New Zealand sauvignon blanc with fiano, or Tate with chardonnay or a semillon-sauvignon blend, that will be a day to celebrate and that is what they should be working on.

At the WFA Outlook Conference in 2014 a presentation hinted that there was a way in which WET rebates to NZ producers could be curtailed. Two years on, the WFA makes this cautious statement:

“The Government believes there is still no legal avenue to exclude New Zealand from obtaining the rebate beyond developing eligibility provisions that can be applied equally to Australian and New Zealand producers. While this is not in line with legal advice WFA had received, the Government is following its own advice.”

TKR has published the information below before, but I think it worth repeating:

In 2012 Australian Tax Office data showed just 214 entities received 70 to 100 per cent of the full WET rebate. That was out of a total of more than 2500. In the same year the data shows 1411 entities received less than $100,000.

This shows that most are not producing enough wine or sales to claim the full rebate. Taking out the odd 14 as being the largest companies, the focus must be on the 200 and how much the reduction will hurt them. Perhaps Wright and Tate are in this bracket, and indeed removing $150,000 from their bottom line in the 2017 financial year, increasing to $210,000 in 2019, would hurt them.

The West Australians have commissioned a report, Wine Equalisation Tax Reform Consequences. The TKR take on it can be found in Australian Wine News. One part of the report that ties in with this article is this: “The many ‘free hand’ comments to the survey demonstrate the uncertainty that currently exists with the very limited information that has been released so far.”

Misinformation is rife, and the situation is not helped by silence from official bodies or scaremongering statements from people who really should know better.

Good karma.

Tony

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