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innovation not assets for WET

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Lend your support for the Small and Emerging Winemakers of Australia

As a group of wine industry professionals committed to the viability and future of the Australian wine industry

we applaud many of the measures adopted by the federal government in this year’s federal budget announcement. We acknowledge the thought and hard work undertaken by members of the industry to achieve reform and return the sector to a sustainable, profitable footing.

Within this overwhelmingly positive suite of changes announced in the budget, there was a particular point of concern for many small winemakers in Australia – the decision to emend the eligibility criteria for the Wine Equalisation Tax Rebate to include only those producers who own a winery or have a long-term lease over a winery and sell packaged, branded wine domestically.

These particular criteria have arisen against the wishes of many small producers who campaigned against similar asset-based eligibility criteria in WFA’s original ‘Proposed Industry Actions for Sustained Profitability’ policy document (2014). Concern from small producers about the impact of asset based eligibility criteria lead to WFA removing this provision from its official recommendations to Government, up to and including the pre-budget submission in February 2016. Contrary to this, a consultative group to Government on the WET rebate added the asset test back to the other recommendations mirrored in WFA‘s budget submission.

The Small and Emerging Winemakers of Australia are disappointed that this group has disregarded the wishes of smaller winemakers and the agreed policy of WFA.

We are opposed in principle to any measure that attempts to require wine producers to own or lease major infrastructure assets in order to be eligible for the WET rebate.

Asset based criteria will only reward the established, at the expense of those with modest resources, particularly the young winemakers of this country who dream of one day making world-class wines under their own label and contributing to the future of Australian wine.

The WET rebate has enabled many quality new brands to emerge and contribute positively to the Australian wine landscape. These are the innovators, the ones who have been able to take risks with new styles, new varieties and new packaging. They are the trend makers, and they have created a fertile and vibrant wine market that is necessary to capture the imagination of the next generation of educated wine consumers.

Many of these producers could never have survived beyond the first few vintages given the ‘perfect storm’ of adverse market conditions seen in the wine industry over the past five years. Yet several are now among Australia’s brightest stars, championed by domestic and international wine journalists and the world’s hottest restaurants and bars. They are the future of our wine industry, and if nurtured will themselves invest back in the industry, be it in vineyards, wineries, or other links in the supply chain.

Innovation in the wine industry should be encouraged and supported, yet asset-based eligibility criteria for the WET rebate will stifle innovation and reward the status quo, at a time when the industry desperately needs to shed its ‘commodity’ image and instead be known for quality, uniqueness, and driving new wine trends.

The market conditions and barriers to entry are high enough for emerging winemakers to gain a foothold as it is, without adding a 29% tax to their aspirations before they are able to develop the economies of scale or market position of their established competitors.

We believe that reform of the WET rebate is essential to ensuring the long term sustainability of our industry, and we agree with many of the proposed changes. Independent modelling has shown that the increase in tax revenues recouped by treasury will be almost entirely from the removal of bulk and unbranded wine from the rebate. Eliminating those smaller and emerging producers will create no net revenue. Yet doing so could destroy many small businesses and the hopes of those who aspire to one day own and develop their own.

We want the WET rebate to help support those who are passionate and committed to not just making great wine, but making Australian wine great; now, and into the future.

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