CANBERRA: Australian winemakers are fuming that their New Zealand counterparts receive $18 million in tax rebates funded by Australian taxpayers.
As part of the Closer Economic Relations trade deal between the two countries, New Zealand winemakers are entitled to rebates from a system originally set up in 2004 to boost regional employment in Australia.
The Australian Financial Review has reported that winemakers were expecting that following an overhaul of the Wine Equalisation Tax (WET), the rebates would end for New Zealand producers, who have up until now been claiming $25m a year.
The rebate has been reduced to all winemakers, lowering the New Zealand take from now on to $18m a year. Corrina Wright, the owner of McLaren Vale wine company Oliver’s Taranga Vineyards, is angry that New Zealand competitors are still being given a “leg-up on local producers”.
She said she understood there was a free trade agreement, but having Australian taxpayers helping rivals in New Zealand was “absurd”.
Joel Fitzgibbon, the opposition spokesman on agriculture, said it was never the intention of the original structure of the WET rebate to help New Zealand wine producers.
“Certainly those of us who participated in the Parliamentary debate on the WET bill never envisaged New Zealand producers being eligible,” Mr Fitzgibbon told the AFR.
Wine New Zealand chief executive Philip Gregan said Australian winemakers could not take advantage of a similar rebate in New Zealand because the country did not have a similar scheme to support its winemakers.
New Zealand wine exports to Australia account for about 15 per cent by value and 10 per cent by volume of wine sales, led by sauvignon blanc.
By contrast with Australia, New Zealand has positioned itself at the premium end of the international wine market.
In the United Kingdom, for example, the average price per bottle of New Zealand wine is now $16.94, according to Nielsen, above the overall UK average which is $12.55. In all price categories over $14, New Zealand is now second to France in both volume and value.
On the other hand, bulk wine exports now account for some 60 per cent of Australia’s total exports, compared with just 10 per cent in the early 2000s. This has significantly impacted on margins and the brand positioning of Australian wine over the last 15 years.
