2016 Federal Budget Summary

2016 Budget Summary from Winemakers Federation of Australia’s Acting CEO

From Tony Bataglene, Acting CEO, WFA

“Dear Industry Colleagues,

As you know WFA has lobbied Government relentlessly over more than two years with our common sense recovery plan which has been grounded in expert analysis, legal advice and independent modelling. We are pleased the Federal Government has tonight shown it has listened to and acknowledged the merits of our plan which, as you know, received majority industry support with the backing of WGGA and all state wine associations. This level of unity in itself many have called unprecedented.

I am writing tonight with news fresh out of the Budget lock-up.

Firstly, there will be no changes to the structure of wine taxation. We have staved off relentless attacks by the anti-alcohol lobby and maintained our taxation arrangements under the WET regime. We know Government had seriously considered pulling the WET rebate back altogether and replacing it with an annual grants scheme with a maximum payable of just $100,000. Thankfully that proposal is no longer in play.

Secondly, Government has shown support for the wine sector by allocating a transformational $50 million over three-to-four years in tonight’s Budget. This investment aims to grow demand for Australian wine and accelerate the recovery of our industry. How this money will now be spent is something Government has assured WFA that industry will play an important role in.

While Government has responded to our calls to retain but reform the WET rebate and inject investment into the sector, the pace and form of its planned changes need our further consideration and industry’s input. WFA has two concerns. These relate to Government’s proposed reductions to the WET rebate cap and a delay in introducing tightened eligibility criteria until 1 July 2019 (which includes removal of eligibility for bulk and unbranded).

Government has announced tonight a plan to reduce the rebate cap to $350,000 from July 1, 2017, and then back down to its former $290,000 level by July 1, 2018. This is at odds with WFA’s position and we need to fully assess the impacts these changes may have on our members and wider industry. In our view such a change in Government policy needs more detailed consideration, especially given this is reducing the rebate for legitimate claimants who also need time to adjust. WFA will be asking for your views shortly about these issues and we will be raising them with Government and other parties on your behalf.

Fortunately, we do have time to work with Government to flesh out details about these two areas of concern. Our aim will be to continue ensuring industry’s needs are fully considered and understood by decision-makers, including all parties in the election campaign and the incoming Federal Government. Of course there’s many more steps ahead and opportunities to have input as draft legislation and regulatory changes will need to be prepared to effect Government’s proposals. Industry rightly should expect to be actively consulted and WFA will be making sure both our members and the wider industry are involved in these processes.

The Government announced the definition for eligible producer will be tightened and the Government has flagged that a wine producer must own a winery or have a long term lease over a winery and sell packaged, branded wine domestically. The government has said this requirement to own an interest in a winery ensures that the rebate can only be accessed by wine producers who have a stake in the wine industry and that this approach addresses stakeholder concerns about ‘virtual winemakers’ accessing the rebate. However, the Government will conduct a consultation process with industry to resolve these definitions (for rebatable wine and for eligible producer), including the definition of a winery. These new eligibility definitions will not take effect until 1 July 2019. This means there’ll be no changes to WET rebate eligibility for some years which delays the important levers we need pulled to deliver structural change to correct the supply-demand imbalance and restore profitability to our industry. We will advocate for this to come into play much earlier.

On New Zealand, while Government has not taken action at this time, we will maintain our position that the preferential treatment for New Zealand producers should be abolished in the interests of creating a level playing field for all claimants, irrespective of nationality. We will continue to work with Government on this matter.

Please find attached our Budget Summaries outlining key areas in the Treasury Papers pertaining specifically to the WET rebate and other matters. For our news release click here.

Regards, Tony

TONY BATTAGLENE
Acting Chief Executive
Winemakers’ Federation of Australia”

Budget Night Summary – General & other Portfolios

Budget Night Summary on WET Rebate

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