InDaily

Adelaide's independent news

Support

Taxpayers give $50 million to wine and cider makers

Opinion

Philip White seems unconvinced this week’s big wine industry funding announcement will be spent in the best long-term interests of the needy and deserving.

9 Comments
9 Comments Print article

Two people who are ministerially responsible for managing the water in the notoriously mismanaged Murray-Darling Basin, Australia’s biggest wine region, came to Adelaide yesterday to give $50 million of our money to the wine industry.

One of them, Country Party leader, Deputy Prime Minister and Minister for Agriculture and Water Resources, the Hon. Barnaby Joyce, is a Queenslander with New Zealand citizenship. While he seems to prefer beer, New Zealand supplies Australia’s biggest-selling bottled white wine, Sauvignon blanc.

Many great legal brains suggest the Deputy Prime Minister’s dual citizenship made him ineligible to run for parliament, but here he was, giving away quite a lot of our money. He is a stalwart supporter of the coal industry, which many very fine responsible farmers, like those on the Liverpool Plains, or indeed the winemakers of the Hunter Valley, see as a direct threat to their livelihoods, water resources and precious country.

With him was his offsider, the Liberal Assistant Minister for Agriculture and Water Resources, Senator Anne Ruston. The Senator was previously senior policy advisor to the South Australian Minister for Industrial Affairs, Tourism, Recreation, Sport and Racing, Graham Ingerson, who eventually resigned that ministry over his handling of the racing business, and later resigned also from his position as Cabinet Secretary over his handling of the Hindmarsh Soccer Stadium.

Ms Ruston went on to become chief executive of the financially-disastrous National Wine Centre, which was eventually passed to the University of Adelaide in a peppercorn rental deal and is now sublet and used as offices by wine industry councils and operates as a glorified wedding shack in the Adelaide Botanic Gardens.

She was eventually appointed to fill the Senate position vacated by Mary Jo Fisher who resigned after twice being charged for shoplifting.

With the Deputy Prime Minister, Ms Ruston appeared not at the National Wine Centre, but at Penfolds winery at Magill, where they announced the $50 million handover. Under the stewardship of chief winemaker Peter Gago AOC, Penfolds is singularly responsible for a great proportion of Australia’s most profitable wine export bracket, expensive bottled wine, which is worth nearly $500 million per annum in total, almost a quarter of the $2.2 billion of Australian wine exported.

Having left Australia at the weekend, off on another of his endless international tasting and sales tours, Mr Gago AOC was not at the winery for the announcement.

The $50 million “Export and Regional Wine Support Package” is designed to “transform the Australian grape and wine sector by driving demand for Australia’s wine exports and showcasing the nation’s wine tourism offering”.

Some of the money will go to the cider industry, which competes for shelf space in the “ready-to-drink” canned kiddylikker category.

“Australian Vignerons, the Winemakers’ Federation of Australia and Wine Australia have worked in close consultation with the Australian grape and wine sector to develop the business plan for the package, which will be delivered over three years,” Wine Australia’s statement reads. These bodies “will jointly sign off on the developed plans and campaigns to ensure all Australian wine exporters are supported through the proposed activities”.

The Deputy Prime Minister said the money would be invested “to further expand the market globally for wine. The target now is to go from $2.2 billion worth of wine to $3.5 billion by 2021.”

Some of the money will be made available to cellar-door operators, to improve their facilities.

“With the cellar-door process,” he told ABC’s The World Today, “we have made sure that it’s $350,000 with a possible extra $100,000. Now I know that’s not gonna make much difference to Penfolds, because they’re such a global brand and so exemplary, but with other small wineries, if they’re growing the grapes, if they’re actually producing the wine and they’re selling it at their cellar door, that is a big advantage.”

At a time when Australia produces so much poor irrigated wine that the $3 Murray-Darling bottle is now a standard expectation for many drinkers, this export handout is hoped to make producers of such liquor more profitable, principally in the Chinese and US markets.

If this succeeds, Coles, Woolworths and Aldi, who between them control two-thirds of internal Australian wine sales, will be pressured to import more wine at lower prices.

China, meanwhile, is rapidly expanding its vineyards. Now second in the world for total winegrape plantings, it is already exporting cheap bottled wine into markets Australia has long regarded as its own, like the United Kingdom.

The Deputy Prime Minister stressed producers in the irrigated arid land vineyards, like the Riverland, stood to significantly improve their lot.

As South Australia produces about 60 per cent of Australia’s wine, the $50 million seems likely to prop up, or at least calm down, many of this state’s struggling producers, who are concerned that changes to the Wine Equalisation Tax Rebate will make their financial lives impossible.

There will be a state election in South Australia in March 2018. On July 1 the rebate will be cut from $500,000 to $350,000. Many New Zealand producers of wine sent to Australia will still have access to the rebate.

While the package is wrapped to please many small winemakers, sceptics are quietly suggesting that the majority of the money will go to assist the biggest marginal refinery-style wineries, who enjoy the camouflage provided by the tiny nuts-and-berries ivy-covered cellars.

The expenditure of the $50 million will be overseen by Wine Australia, Australian Vignerons and the Winemakers’ Federation of Australia. A board of marketing experts from Accolade Wines, Fullglass, Kingston Estate, Leeuwin Estate, Pernod Ricard, Taylors, Treasury, Yalumba and Yellowtail will look after that side of the cash.

Just what does $50 million buy? That’s roughly what the National Wine Centre cost the taxpayer. The outfits which will supervise this expenditure enjoy offices there. $50 million is also what Treasury’s insurers will pay its shareholders to settle a class action after it wrote down $160 million of cheap stock in the US, to be accused of misleading the market and breaching continuous disclosure obligations.

But it’s still a lot of money. There will be a campaign of huge tastings and wine promotions in many of Australia’s export markets. Just how the cellar-door grants are spent will depend on who gets them. One presumes the money will be more artfully spent than providing the desperate, unprofitable Murray-Darling irrigators with a string of deconstructed Rubik’s Cubes.

The winegrowers of Australia, meanwhile, could use some viticulture research money pronto if they’re going to fulfil the Deputy Prime Minister’s promise of increased profitability through better-quality products.

The incurable phylloxera vine-killing bug is on the march in Victoria; the newly-imported Pinot gris vine virus – which kills other varieties as well – is little understood and threatening to spread; die-back or dead-arm is spreading in vineyards everywhere, dramatically reducing vine health and yields; and global warming is quickly rendering our warmest winegrape regions very tricky to manage.

The Deputy Prime Minister is famously on the record for saying the climate change reality is “an indulgent and irrelevant debate because, even if [it] turns out to exist one day, we will have absolutely no impact on it whatsoever”.

drinkster.blogspot.com

We value local independent journalism. We hope you do too.

InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to become an InDaily supporter.

Powered by PressPatron

Comments

9 Show comments Hide comments
Will my comment be published? Read the guidelines.

More Opinion stories

Loading next article