Wine Makers Amendment Bill

I move, That the Wine Makers Amendment Bill be now read a third time. This bill was introduced into the House on 14 October 2002 as Part 5 of the Wine Bill, which had its first reading on 17 October 2002, and which was referred to the Primary Production Committee on that same day. The select committee divided Part 5 out of the Wine Bill and reported it back to the House on 2 December 2002 as the Wine Makers Amendment Bill 2002.

New Zealand’s wine industry is a highly knowledgable, high-value, added-growth industry. Its competitive edge is based on two unique New Zealand attributes: one is physical—our soil and our climate—and the other is Kiwi innovation. It is an industry that contributes to the identification overseas of New Zealand as a producer of products of sophistication and excellence. The amendments in this bill reinforce the current export regime for grape wine, through providing for the Director-General of the Ministry of Agriculture and Forestry to notify the industry of overseas market access requirements and provide official assurances. The bill also provides for regulations to be made to impose duties on winemakers and exporters so that they comply with the notified overseas market access requirements. It also provides a system for the provision of official assurances.

The amendments are a truncated form of the export provisions in the Wine Bill, and are a temporary measure. The export and supporting provisions of the Wine Bill are necessary for the longer term, because this bill does not introduce the compliance regime associated with New Zealand wine standards under the Wine Bill, which would further reinforce and support the export requirements. Indeed, the Wine Makers Amendment Bill is intended to be replaced by the export and supporting provisions of the Wine Bill, which is intended to be passed later this year.

The need to press forward with those particular provisions from the more comprehensive Wine Bill arose from the passage of a European Union regulation last year, which created commercial uncertainty for our exports. That regulation requires other countries that export wine to the European Union, such as New Zealand, to regulate conditions as to the use of statements commonly made on wine labels, such as “vintage”, “variety”, and traditional terms. It is not clear how that regulation will be implemented.

The New Zealand Food Safety Authority also provides official assurances to facilitate the export of wine to the European Union. Those issues are not currently provided for in the Wine Makers Amendment Bill, and New Zealand’s current official assurance system for wine exports is administrative. New Zealand wine might therefore face import restrictions from the date that the European Union regulation first applies to imports. That regulation was to apply to wine imported into the European Union from 1 January 2003, but as a result of representations by New Zealand and other countries, the European Union has deferred its application of the regulation to 1 August 2003. However, as the Wine Bill is not scheduled to commence until 1 January 2004, a 5-month gap remains, and passage of this shorter bill is still necessary.

I believe this bill deserves the support of this House, as it is aimed at supporting our wine industry by facilitating its exports. I thank the officials for their efforts in bringing all this information together, and I commend this bill to the House.

I will start by thanking the Government for finally advancing some legislation that is of use to the Primary Production Committee. We seem to have spent many, many hours in this Chamber passing stuff that will not be of much use to primary production at all. Finally, Dr Cullen has acknowledged that this bill is important, and that it must be passed with some urgency. I thank the Government for that.

I will also very briefly note that amongst the packed public gallery we have two of the most superb industry lobbyists in the form of Philip Gregan, and Nicky Stewart of the Beer, Wine and Spirits Council of New Zealand. I take this opportunity to thank Philip Gregan for the superb advice he gave to the select committee. We will need his further advice and support as we progress to the next stage of the original Wine Bill.

The National Party is pleased to cooperate with the passing of the Wine Makers Amendment Bill. We wholeheartedly support the legislation, which is designed to support our wine industry. Of all our industries, the wine industry is one that does New Zealand extreme credit right around the world. We have wines that are recognised internationally for their excellence, and I take this opportunity to congratulate the industry on the role it has played in that respect.

I assure the House that National is not in a position to say that it will be able wholeheartedly to support the balance of the Wine Bill when it comes back to the House. There is a lot of water to go under the bridge in that regard. There is a lot of discussion to occur, and at this stage I take a very reserved position as to whether that bill will assist winemakers throughout New Zealand to continue their excellence in production and advancement of the name “New Zealand Incorporated”.

The bill we are debating today has had a most interesting history. It was introduced to the House on 17 October last year in a huge rush, and the Primary Production Committee was given—

💬 Brian Connell: Huge rush!

That is right. It sound likes another incursion!

The Primary Production Committee was given only about 3½ weeks to hear submissions, in the hope that we would be able to get the bill back to the House—I think there was a very short report-back time, but the details slip my mind. Then when it was realised that the bill, as originally introduced, would cause great consternation amongst the winegrowers of New Zealand, and considering the fact that submissions poured in—in 3 weeks I think we got over 100 submissions—it was suddenly acknowledged that the select committee would need to take some time to sort out the mess that the Government had got us into. On that basis, we split out Part 5 of the Wine Bill, and that is the part that is before us today in this Wine Makers Amendment Bill.

The point I made in my last contribution on this bill is that unfortunately the New Zealand Government does not have much choice as to whether it advances it. This is a requirement put on us if we want to continue to export product to that market. As a New Zealander, I want winegrowers to continue to export to that very valuable market, so having split off Part 5, we all acknowledge that it is important to get this bill through.

The final point—because I realise the House is keen to break a little earlier than normal tonight—is that it is important that this bill is passed as quickly as possible. There is a deadline now in the legislation of 1 August, but for people unfamiliar with the industry that date is not the important one. That is the date by which any wine that reaches its market in Europe, England, etc. will have to assure the importing countries that it does comply. The point I am making is that that would require perhaps 6 or 8 weeks of shipping time, so there is not a lot of time left by which this Wine Makers Amendment Bill must proceed through all stages in the House.

It is with pleasure that I therefore have this opportunity to make a contribution on the Wine Makers Amendment Bill. The National Party supports this bill wholeheartedly, and looks forward to a more interesting debate when Parts 1 to 4 of the Wine Bill come back to the House after going through the select committee process.

Speaking as the member for Napier, which is in a province that develops many of the fine wines of this country, I favour the passing of this bill because it continues to facilitate producer-driven regulatory and structural reforms. Sector-driven protected minorities are obviously in the public interest. If this bill is passed before August 2003, it will facilitate the meeting of the European Union regulation tests and ease our exports and imports. For those reasons, I favour the passing of this bill.

New Zealand First supports the passing of this Wine Makers Amendment Bill, which essentially is Part 5 of the original bill, the Wine Bill.

New Zealand finds itself in a situation that unfortunately it is quite used to as a primary producer—that is, it is at the mercy of countries that talk the wonderful free-enterprise talk but do not walk the free-enterprise walk. Those countries impose every regulation upon us that they possibly can—essentially to put up what we have come to call “non-tariff barriers” to exports from our country, or imports to theirs. We believe that this regulation is another one of those barriers, and it has precipitated the need for this bill. We cannot do anything about that; what we think has nothing to do with it—the European Union decides, and has the right to decide, what it imports into those countries. It puts these things in place, and we simply have to go along with them.

The current chairman of the Primary Production Committee, Mr David Carter, said that the main Wine Bill would come along some time later, and he referred to a number of submissions that had been made on that bill. One of the things that we have noticed is that a lot of them surround what winemakers see as the excess regulation that is to be imposed upon them. Unfortunately, that is the way of the world. We have lived through a couple of administrations in this country that have tried to tell us that that is not so—that we could do whatever we wanted to do and the market would prevail. But that is not the way it is in the countries we export to, and we are having to fall into line with that. In its formative years many years ago, the wine industry was largely able to get its act together within a reasonably benign environment, but it is when the wine industry expands and comes to exporting that we find ourselves up against the cold, harsh realities of the wide world. That is what has happened here.

I do not want to bring you into the debate, Mr Speaker, but I know that you have an interest in this subject yourself, and are regarded as somewhat of a connoisseur.

💬 Mr SPEAKER: I most certainly do.

R DOUG WOOLERTON: Mr Gerard Eckhoff, who is a member of the select committee, takes exception to any of those nasty commercial imperatives being put upon wine. He believes that the winemakers’ art is just that.

💬 Darren Hughes: He thinks it is spiritual.

R DOUG WOOLERTON: It is almost a spiritual experience. Mr Eckhoff speaks about a lot of wines that I do not know the name of. I am sure they are very expensive and very nice wines, but I do not see this business in quite that light. I am sorry to disappoint the member on that. This is an export business, and like most of our successful export businesses, it is based on the land, it is commercial, it is subject to regulation, and unfortunately that is what is being put in place in this bill. It is not what we perhaps all want, but it is what we all must do. We support this bill.

This is a very important bill, but as I have said in previous contributions, the Wine Makers Amendment Bill is an inappropriate title. This bill should be about the export of wine, and that is what should be in the title. There is nothing more important to this wine industry than the exporting of it. I agree with my colleague Mr Woolerton that while we do not like the bureaucracies and controls that have been placed around the industry, we must do this to comply with the regulations of the European Union. If we must do it, then we must do it.

I look forward, as I am sure we all do, to a day when the New Zealand wine industry has names that are recognised worldwide. To a small degree, some of our wines, like Cloudy Bay, are recognised throughout the world, but French wines like Chateau Lafitte, Chateau d’Yquem, Neuf du Pape, and Chateau Margeaux are names known throughout the wine-drinking world. Everybody knows of their expertise. I note that Mr Keys has obviously sampled a bottle of Chateau d’Yquem—at the appropriate time, I am sure. But that is what we are striving for in this industry—that is, to achieve the excellence and the names that those wines have got. I am not at all certain that we will do so under this bill.

I want to draw the attention of the House to a point that I think is extremely important. It is simply that, as I mentioned earlier, it is the exporting of this wine that is crucial. But I am not at all certain that this bill will allow for a free and full exporting of our New Zealand wines. Clause 147 requires the director-general to make available to winemakers for inspection, free of charge or for purchase at reasonable cost, the requirements of the European Union. That is perfectly fair and reasonable. But how does that help the exporter? How does the exporter of this wine know whether Chateau Cold Creek has actually met the requirements? I do not think that will happen. What we can potentially find is duopolies or monopolies, or even the Wine Institute becoming—

💬 Hon Ken Shirley: Oligopolies!

Yes, oligopolies—an effective export authority. They will be the people who determine whether Chateau Cold Creek can leave this fair land of ours and be enjoyed by somebody in France, Spain, England, or America. I do not think that is appropriate. The strength of the wine industry, especially the wines from France—and that is the standard most should strive to achieve—was as the direct result of the negotiants. They were the people who exported the wine around the world. They put their label on the wine, and one fell or rose on the strength of the quality and ability of that exporter. But this bill does not assist winemakers who are not exporters to allow for the free and full flow of that wine overseas. I have real difficulty accepting that we will have an equivalent, or a wine export authority, determine the future of this wine.

💬 Mr SPEAKER: That has nothing whatever to do with this bill. Will the member come to the bill. It has nothing to do with the wine authority.

I am sure that members who have listened to this debate know that the bill is about the requirements to be placed on labels of export wines, and if that information is not freely available to an exporter, then how on earth will that wine be exported? That is the point that I am making. We all agree that that information must be there on the label. Egg extracts are an important issue. We fine the wine with egg extracts, so are we to put that on the label? These are real issues and we have effectively glossed over them. It is hugely important that whatever information is on the label is something that will help the export of our wine. I am not quite sure whether that particular information must be placed on the label to meet the requirements of the European Union, but it is an important point. If this information is not freely available to all exporters, how on earth will this wine be exported? That is what this clause of the bill is all about. It is not directly about the making of the wine; it is about ensuring that the wine meets the requirements, so that it can be exported. That is the fundamental issue I am trying to draw to the attention of this House, to ensure that we actually do address it.

I am not exactly sure of the number of small winegrowers who will be faced with a significant cost in their export of those wines, especially if significant cost structures are involved in meeting the European Union’s regulations. Maybe cooperatives will spring up as a result of this requirement. But given the opportunity to excel, I am sure that the industry will do so, as long as we do not shoot ourselves in the foot and impose upon ourselves wine authorities that will be the total determinant of whether we can export wine that has met the requirements of the European Union.

The member who spoke before me has perhaps made some excellent points. His experience of wine may be a little deeper than mine, but I trust that the member will make those points when the main wine bill returns to the House—that is, of course, if the 111 submissions that have been made to the Primary Production Committee on that bill do not carry the points that he has made.

This bill, as has been said many times, comes from the Wine Bill, and was Part 5 of that bill. According to the commentary, it “provides interim amendments to the Wine Makers Act 1981 that facilitate continued entry of grape-wine into overseas markets.” The need to enact this part of the reform with some urgency is dictated by the European Commission’s new labelling regulation 753/2002, which outlines the conditions of use of particular statements on labels of wine imported to the European Union. The regulation combines a plethora of current European Union wine-labelling regulations into one, and although many of the criteria are not new, they are expected to be rigorously enforced. The regulation came into effect on 1 January 2003, when the provisions of this bill were originally envisaged to commence.

The labelling regime is very important to the European market. The wine must come from where the label says it comes from, as it is the culture of the Continent to attach some strong affiliations to the wines of different lands. The type of grape is also important. For varietals, the wine must be made of 85 percent of the grape variety shown on the label. If there are two grape varieties mentioned, their names must be listed in descending order. In addition, there is now a need to show a lot number or bottling identification on wine going to Europe, for the purposes of quality control. The concern is to identify wines that have had more than one bottling under the same label. If an earlier bottling or lot has scored a gold medal, is it fair trading to give the impression that the bottling, 9 months later, is the same wine? Although all the submissions to the select committee that commented on Part 5 opposed the European Union regulation, viewing it as a non-tariff barrier to trade, they recognised the need for this bill to be enacted separately and speedily in order to ensure continued access to the European Union.

There are now over 400 wineries in New Zealand, and over 40 percent of sales are in the international marketplace. That is equivalent to 21 million litres, at a return of $300 million. Those exports have tripled over a decade, and, as a party, United Future does not want to stand in the way of future growth.

The Green Party is pleased to support this bill. However, we are not quite so sure about the motivation for the bill in the first place. I think we are being compelled to have this legislation by the European Union; it is certainly not coming from any pressure from within New Zealand, or from the industry.

The messages inherent in the European Union placing these stringent conditions on our exporters are interesting. The first message is that European consumers want country-of-origin labelling. That is a message that our own importers of pork and other food items should take very careful note of. The second point is that consumers want traceability of their product, and the third is that consumers want high quality.

I think it is very interesting that the wine glut being experienced in the United States at the moment—where prices of ordinary-quality wine have plummeted to about US$2 a litre—has not had any impact at all on our exports to the European Union or to other countries. The reason for that is that we are exporting very high quality wine. We are not affected by the glut because that is of wine of lower quality.

We have very clear market signals from our consumers. First of all, they want high quality, and, secondly, they are prepared to pay for it. Inherent in that message is something else for New Zealand. First of all, consumers want low, or no, chemical residue, and, secondly, they want zero genetic pollution. In fact, New Zealand winegrowers have already made it very clear that they will stay GE free because of the market signals from other parts of the world that have been made clear to them. New Zealand is already, very clearly, satisfying a highly discriminating, highly knowledgable market, and I think we can do even better. The market signals are clear. There is a demand, as I said, for nil chemical residue and nil genetic contamination, and a demand for traceability and high quality.

We do that very well with our organic wineries. If members speak to any organic winegrowers and ask them what their market demands are, they will say they simply cannot grow enough to meet the demand. For all their food products, demand is growing exponentially. This is the way of the future for New Zealand. We need to get away from the idea that we put more and more toxic chemicals into our wines, and we need to get away from the idea that we need genetic engineering.

I think the interesting thing about what the European Union is imposing on us is that it is a regulation that is a non-tariff barrier to trade. I think that is a very interesting concept for us. It means that another of our big markets is actually moving away from free trade. It is increasing the barriers to trade. Think about agriculture in the European Union and in America; in both places it is very, very heavily subsidised. For instance, last year the Americans moved to increase subsidies to their agricultural industry by $400 billion over 10 years. That is not free trade. I think what the European Union is doing in imposing its regulations on us is protecting its own. I support it in doing that. The European Union has a right to protect its own, and we have to abide by its regulations because it is a big player, but I think we need to be very clear that what it is doing overall is not free trade.

I am very pleased to say that the Greens support this bill, and I think we join every other party in the House in doing so.

I rise to speak in support of the third reading of the bill, and in doing so I am pleased that we have such good legislation before the House that has been through the select committee process.

💬 Hon David Carter: It’s about time.

The select committee was very ably chaired by the Hon David Carter, with the support of the Hon Damien O’Connor, Mr Clayton Cosgrove, and several other very fine Labour Party people on the Primary Production Committee. The bill has the overwhelming support of the industry, and I think that is the most important thing. We have a Government that knows how to have industry reform in a way that builds support in the community, as opposed to the botched industry reforms of the National Party when it was in Government. It is good to be passing a law that has the support of people who work day to day, building up this important New Zealand industry. I think that speaks volumes for the partnership approach that the Labour-Progressive coalition Government takes. I support the bill.

I rise in the joyful capacity of a member of Parliament. Seldom do we have the opportunity to discuss a topic as important as the Wine Makers Amendment Bill, or a subject quite as pleasant as wine. I join my colleague the Hon David Carter, on behalf of the National Party, in strongly supporting the passage of this legislation through the House.

I want to draw on the comments made by Mr Gerry Eckhoff and, to a certain degree, those made by Darren Hughes, who I think do not understand this bill. Mr Eckhoff spent some time discussing what was wrong with the bill, and saying that our industry may fail in some way to put the correct label on wine, or to do the right thing, and may fail in its internal perception of this bill. That has nothing to do with this bill. This bill is totally driven by what the European Union demands of our industry. Nor, as Mr Hughes said, is this bill about economic or industry reform. This is something driven by the European Union and the demands on our industry. It is an external-looking thing.

But in supporting the passage of the bill, I do so against the backdrop of an already hugely substantial and growing industry. It is worth noting that the purpose of the Wine Makers Amendment Bill—given that I hold the view that not all members of Parliament understand it—is to enable New Zealand exporters to fulfil new obligations that the European Union has announced will be implemented in respect of wine imported from third countries such as New Zealand. In particular, the European Commission is imposing a new regulation, and if New Zealand wine exporters fail to comply, it will prohibit the export of New Zealand wine to the European Union, which represents a huge part of our market—Britain, in particular.

I think it is worth reflecting just for a moment on how substantial the wine industry in New Zealand is, and on its growth. In 1992, just over 10 years ago, there were only 166 wineries in New Zealand; today there are 398. Over 10 years ago, only approximately 50 million bottles of wine were produced in New Zealand; now about 100 million bottles of wine are produced. Ten years ago we earned $34.7 million in export dollars; today we earn about $271 million. So this is a very growing and significant industry. It spans 1,000 miles of our country, and it has grown in 10 districts. The importance of this legislation to the industry is very, very clear, and members who simply drive around their electorates, or any parts of New Zealand, will recognise that.

When researching this speech I came across a fact that I was not aware of, and that is that the growing of grapes covers the largest area of any fruit crop grown in this country. Grapes for wine are grown on 17,400 hectares. When we compare that with 12,200 hectares for kiwifruit, or 11,000 hectares for apples, we see that the wine industry is huge. And it will get better, and it will get better, in some part, because we will be able to export more product. The industry will mature, and we will be able to export more, because of the passage of this bill.

I believe that wine plays a very understated role in the export-led economy of New Zealand. I have heard it said, and I believe it, that wine is a flagship for New Zealand. It represents everything about New Zealand that is great—that we are clean, we are fresh, and we are diverse. It really is wonderful. The swift passage of the bill will help that image.

But I want to make one very important point. In passing this legislation we help collectively to protect the image and reputation of the New Zealand wine industry. In that respect I wish now to disagree with the member of the Green Party Ian Ewen-Street, who said that the industry does not want this bill. I disagree. The industry does want this bill, because it will protect the collective reputation of our wine industry. [Interruption] That is very important; I agree. Parts 1 to 4 of the original bill are a vastly different proposition, and we will come down to the House and debate them at some time.

Our wine industry has a very formidable reputation. One need only look at Sauvignon Blanc as a great example. Prior to Sauvignon Blanc grapes being grown in the Marlborough region, and the production of wine from that area, it was largely an unknown wine. New Zealand has now set the world standard for that wine. That is how important our reputation is.

I think it is also very important to understand one of the very important things about the passage of this bill. The labelling requirements will not only give comfort and assurance to foreign Governments but, maybe most important of all, will give assurance and comfort to the very consumers who will drink this wine. In that respect, I think it is very important indeed.

I do not want to take a lot of the House’s time, but I want to point out one very small part of the bill. I refer to new section 26A, “Director-General may notify or make available access requirements for overseas markets for grape wine”, which is inserted by clause 147. Under this section, members of the wine community are able to inspect the requirements for no charge, and if they purchase them, they have to be available at a reasonable cost. But being the wonderfully diligent member of Parliament that I am sure I am, I looked at subsection (4), which states that there is nothing that prevents the director-general from charging for access to a website. That does not seem right to me. I believe that electronic communication will be an increasingly important way of communicating with our growing wine industry. I do not believe that the director-general should have the capacity, via this bill, actually to charge members of our growing wine industry to access the very information they need to make their businesses more successful.

On that note, I commend this bill to the House.

As a member of the Primary Production Committee, I support this bill. I note the contribution of Mr Carter and others on the committee. I think there was quite a bit of unanimity on this bill. It was efficiently dealt with.

💬 Hon David Carter: There always is.

Absolutely. Given the Speaker’s full endorsement of the industry, I am driven to the point where I think that we should seek leave for the Speaker to take a call. I will not do so because I know it would be inappropriate, but I know that he would probably like to take a call in respect of this industry.

This bill is all about quality. As John Key has said, it is about protecting our international reputation. We have a quality product that creates huge amounts of economic growth and jobs throughout this country. That quality product and its standards must be preserved. This Labour Government has facilitated many reforms in several primary industries, notably dairy and pipfruit. When the Government has been presented with industry-mandated solutions and reforms, it has listened to the industry and enacted those reforms. In doing so, we now have a world-beating dairy industry, as we have in wine, and, hopefully, pipfruit as futher reforms go through.

I endorse the bill. It is a sound piece of legislation. I commend colleagues on both sides of the House who were part of the Primary Production Committee for the way they handled the bill’s dispatch.

I think it is nice that this bill is so widely supported by all the major parties in this House and also by the industry that it concerns. I note that Part 5 of the original Wine Bill is being dealt with separately from the Wine Bill so that we can quickly progress it through the House in order to ensure supply of this New Zealand product to the European Union market. I also note that it is something that is being foisted upon the industry. I do not think for a moment that this industry wants to regulate itself as is being prescribed by the European Union regulators.

There is no doubt, as one sees when one travels all around New Zealand, that the economy is enhanced by this industry, which is developing quickly, and I think it is developing quickly because it has not been highly regulated. I think people have been able to use a fair degree of entrepreneurial flair in creating an industry that is now starting to flourish. My concern, though, is that if we adopt the regulations too rigorously, then we are going to over-regulate, and slow down the growth of an industry that, I think, will play a critical role and make a critical contribution to our economy.

When the Minister spoke on the Wine Bill, he spoke very clearly, and with some pride, about the fact that he had consulted the industry widely. Being the nice, gentlemanly folk that we are on this side of the House, we took him at his word. I think he has established a precedent—if it continues—of wide consultation, and we support that.

I have said that the wine industry is something that is very clearly making a contribution to New Zealand. In my neck of the woods, Rakaia, it is fair to say that the industry is in a fledgling state. It has yet to mature, but it is making a contribution. As we are in a very cooperative mood, I would like to extend an opportunity to members to come to Rakaia and let me host them as we go around some of the vineyards, and they can sample some of the splendid heartland South Island hospitality.

💬 Darren Hughes: Is the member serious?

I am very serious. As I said, I understand the need for regulation, but that leads me to something that really concerns me. How are we going to enforce the regulations? I have a vision of “wine police” looking after our wine industry. What concerns me is that I can see a bureaucracy being developed around our wine industry, because we are responding to regulations that are being imposed on us. I think this is something that we should be very careful of. I can see lawyers and consultants licking their lips as they reach for a glass of our fine product, which they will be in a position to afford.

The issue of regulation is something that really bothers me. The Resource Management Act has an immediate impact on our ability to produce a quality product.

💬 Steve Chadwick: It’s done well for 9 years.

Yes, the industry has done well, but it is now getting to a point where it needs to expand rapidly, and it needs assistance to do that. It will not get that assistance if it is impeded by being over-regulated. I do not want to take too much of the House’s time. I want just to sound a warning that if we over-regulate, we will stifle the development of this fledgling industry. It still is a fledgling industry. It still has a long way to go. It has a lot of opportunity and a lot to commend it. But we must be careful that we do not stifle it.

Bill read a third time.