WINE INDUSTRY

Mr VENNING (Schubert) (15:37): Today I rise to give the house an update on the state of the wine industry. We know that it has been through a difficult time, with overproduction, poor prices, drought and uneconomic yields. The single biggest problem for our wine industry is the level of the Australian dollar. It is still a major industry in South Australia, second only to grain, and it was our top industry from 2000 to 2002. The Australian wine industry is a $5 billion plus industry, exporting over 65 per cent of its production, with half of Australian wine exports coming from South Australian wineries. Almost half the grapes grown in Australia come from South Australia, so it is not difficult to see how the exchange rate of the Australian dollar has the whole industry on a knife edge and could have particularly disastrous implications for South Australia. Today's level—88.4¢ to the US dollar—is a massive hike from 65¢ only three years ago; last week, it reached a staggering 93.2¢.

Our exporters are really battling hard to maintain their export markets. You can understand the resistance of a person overseas, who is a lover and buyer of Australian wine, if the same wine is 50 per cent more expensive. Sales in certain segments of the market have taken a big hit. If the Australian dollar continues to rise on its value over the last 12 months (and predictions indicate that further increases are likely), and if the current levels of profitability deteriorate, a significant section of the Australian wine industry will fall over. We now really do depend on our local domestic market for stability, but we have far too much overproduction to avoid flooding the local market.

About two years ago, a Senate inquiry came up with four recommendations, one of which Mr Leo Pech of Angaston and I have been pushing for, that is, for the federal government to set up a grape and wine consultative committee, made up of eight to 10 members from across Australia, to advise the federal minister for primary industries on matters of grapes and wine. The committee should be made up of an equal number of grape growers and wine companies. There has been quite a bit of conflict between the two, especially now that many of our larger wine companies also own large vineyards, and there has been conflict with the independent family growers.

This has been made worse with the recent further amalgamation of large wine companies, especially Southcorp's large empire with Fosters. Fosters crush 410,000 tonnes annually; Hardys, 363,000 tonnes; and McGuigan, 250,000. This equates to 54 per cent of the total national crush being undertaken by just three companies for the 2005 vintage. There are approximately 7,000 growers across Australia, and they need to be assured that there is a sustainable return to them and that the winegrowing industry remains viable in the future. A grape and wine consultative committee would report directly to the federal government through the minister, and would assist the government in making educated policy decisions regarding the wine industry when required. Such a committee would report on the state of the industry, the likely future of the industry, and what corrections or incentives are required from time to time in order to deal with industry fluctuations.

The establishment of such a committee would have a flow-on effect and aid growers by providing more relevant and timely information to assist wine grape growers investing in Australian wine to have better and more sustainable businesses. Many plans, strategies and inquiries relating to the wine industry have been undertaken in the past at great expense; however, they have all failed to take into account the speed of change that can occur within Australia and internationally in a world of wine oversupply.

A grape and wine consultative committee would provide balance and leadership from industry to the federal government and back the states and wine regions. For future development of the wine industry to be sustainable it needs to be based upon a better awareness of the global dynamics affecting the wine sector as well as an improved understanding of the Australian domestic market environment. A clear understanding of all levels of the relativity between supply and demand in the industry is also imperative to the future success of the Australian wine industry.

As the member representing the Barossa and as a proud Barossa baron, I am privileged to receive a lot of advice on matters such as these. One vigneron, Mr Leo Pech, as I said, is one such person who gives me such advice. He has been a state-of-the-art grape producer over many decades and is heavily involved in wine politics. He has been lobbying me for years to get the federal government to lift its vine planting tax incentives under section 75AA. Section 75AA was in a federal act of parliament set up by the federal Labor government in 1993 to encourage the planting of vineyards, with the goal being to reach 40,000 hectares by 2025.

This act came into effect in 1993 and was agreed to by the industries for a period of four years. However, the act was only abolished in September 2004, and Mr Pech said that even though it had been removed it should have been removed after the four-year period ended in 1997. Between 1993 and 2004 when the act was in place, 98,239 hectares of vines were planted when only 18,000 hectares were required. This equates to an excess of 80,000 hectares being planted under the scheme.

Time expired.