Mr RICHARD TORBAY (Northern Tablelands—Speaker) [5.19 p.m.]: One of the best unkept secrets of the Henry tax review is a plan to impose higher taxes on the wine industry. The plan is to replace the current wine equalisation tax and related rebate with an alcohol content volumetric tax similar to that for beer and spirits. I am sure that representatives of the wine industry have contacted many of my parliamentary colleagues to point out that the tax adjustment would raise an estimated $237 million for the Commonwealth, but that the wine producers would suffer a loss in sales revenue of around $830 million. This proposed tax change would be particularly devastating to the small local producers who are the backbone of the boutique wine industry. In the Northern Tablelands electorate, which I proudly represent, virtually all 40 vineyards, with their 25 cellar door outlets, would struggle to survive: I am told that many would go to the wall.

Currently, under the wine equalisation tax, known as the WET tax, small wineries producing less than $1.72 million in domestic sales can claim a full rebate. These wineries already pay GST and other taxes associated with their industry. If they were required to pay the volumetric tax, based on alcohol content, there would be no provision for a rebate of any kind. In my region the cool climate wine industry is still in its early stages. All the vineyards produce boutique wines, which sell for upwards of $15 a bottle; no cheap, bulk wine is produced. In January 2008 after four years' hard work the geographic indicator "New England Australia" became the world's newest officially recognised wine region.

The Southern New England Vignerons Association [SNEVA] and the New England Wine Growers Association in the northern part of the electorate joined forces in a mammoth effort to overcome many hurdles to achieve this important status. However, the amalgamation has made a difference and the future is looking promising. The high quality of New England wines is making an impact and many are taking out major prizes and establishing a reputation within Australia and overseas. The implementation of the wine equalisation tax system was a government initiative that supported the development of sustainable small business in regional areas. It encouraged the New England wine industry to a point where it now adds some $32 million a year to the regional economy. The region's small operators undertook significant levels of long-term investment to achieve this result. For some this investment is in the millions of dollars. Currently around two million bottles of regionally branded wine are produced each year.

The local industry provides 250 to 300 part-time jobs and seven vineyards have winemaking facilities. At present the two wine industry groups are putting together a marketing and branding strategy that not only will promote their products but also will promote the entire region. A consultant has been chosen for the project to ensure that the strategy will complement other food, wine and tourism activities undertaken in the region. The multiplier effect from the local wine industry is an enormous bonus for local tourism. Small boutique wineries with cellar doors and restaurants have become a major attraction. They promote the region and encourage other producers to take initiatives. Wine lovers always are seeking new experiences and the wines produced in the New England are unique and of special interest to an increasing number of visitors.

This evolution does not happen overnight. It requires time, patience and expertise to develop. Axing the wine equalisation tax with its rebate system to encourage the growth of smaller wineries would negate many years of hard work and place a growing industry on the backfoot. A united industry, where people work together towards a common goal and which includes other groups wanting to promote the region, is to be encouraged. It does not happen by chance and should be supported by governments. I note the support of the New South Wales Government in promoting the geographic indicator in the New England area. Wine producers in our region gratefully acknowledge the assistance they have received from government departments and agencies in their push to put their industry on the map. This assistance has been crucial to their success. The State Government is to be commended for offering its strong support to achieve such positive results.

Now is the time to ensure that all the work is not wasted through a poorly considered tax. I urge the relevant Ministers and the Premier particularly to raise this issue at the Council of Australian Governments as other New South Wales wine regions and the industry generally will give their strong support to prevent the introduction of this regressive tax, which would decimate the popular and burgeoning boutique wine industry in New South Wales.