Wine Bill

I move, That the Wine Bill be now read a third time. This is a good bill, initiated at the request of the industry. It cleans up the mess left by the previous National Government, a regime under which a few rogue winemakers were emboldened to misrepresent the contents of their bottles, thereby endangering the reputation and future of an entire industry.

This bill will ensure that the excellent international reputation of New Zealand export wine is maintained. It will ensure that consumers of our products, both locally and internationally, are totally confident that what they are drinking is not only safe, but is what they want to consume. The bill strikes a good regulatory balance—not so heavy as to stifle innovation, yet not so light that confidence in New Zealand wine is diminished.

The industry has expanded rapidly and now brings in $281 million in export earnings. The Labour Government recognises the importance of this sector for New Zealand’s prosperity. The industry faces a worldwide glut in wine, and the New Zealand grape wine industry is forecasting significant growth in the volume of wine produced here. Such competition only increases the industry’s need for strong legislation to facilitate exports. The Government has provided the platform for industry growth. It does not tell winemakers how to make wine, but simply ensures they have the base on which to grow exports.

The bill makes consultation a central focus, which is one of the objectives of clause 3. This will require the regulator and the wine industry to work together for win-win outcomes under the Act. This, in turn, should help ensure that the bill better facilitates the industry’s continued ability to compete on the international stage.

I appreciate that it will take winemakers time to become familiar with what the bill does and how it works. This is one reason why the bill provides for transition periods, and during those times and thereafter requires the regulator to consult winemakers, and their industry bodies, about regulation of the industry. I note that many of the elements that will make up wine standards management plans are already in industry codes of practice. These will require only minor modification to fit within the new regulatory framework.

This bill deserves the support of the House, as it delivers appropriate legislation to govern the making and export of wine. The Government has delivered what the wine industry sought from it. I commend the bill to the House.

The Minister has not been responsible for delivering what the industry wanted. The Primary Production Committee did the work that the Minister should have done, and that select committee should take pride in finally delivering legislation that the industry finds acceptable. After 4 long years the Labour Government finally has this legislation before the House, and I do not think for 1 minute that the industry will be fooled by the speech that has just been delivered by the Minister, who claims that this process has been a good one.

The industry was shocked into submitting 115 submissions when the bill was presented to the select committee, because it felt that the consultation process it had been promised had totally betrayed it.

What a mess it was that was presented to us. The Minister should be ashamed to think that he allowed the process to go through his office and be finally ticked off—a process causing consternation to the industry and involving it in hundreds of hours of submissions. Philip Gregan of New Zealand Winemakers came on board to work with the select committee as a special adviser, as the committee worked to tidy up the mess that was delivered by the Hon Jim Sutton. After listening to the Minister’s contribution, which has just concluded, I think the most telling statement he made was: “This bill does not tell winemakers how to make wine.” It is very telling, indeed, that even tonight, in the third reading, Mr Sutton says that this bill does not tell winemakers how to make wine.

R Doug Woolerton: He would like it to.

Exactly! As Mr Woolerton interjects, it suggests to me that that was considered. Helen Clark probably sat up on the ninth floor of the Beehive, thinking that she knew how to make wine—that she knew better than the industry that is about to deliver $750 million of export dollars to this country. The Labour Government, which tells us how to lead our lives, how to bring up our children, and whether we are allowed to smoke, was about to tell the wine industry how to make wine. So thank God, on this occasion, that did not get into the legislation.

In my earlier contribution to the second reading, I paid tribute to the wine industry. It is a remarkable industry that is held in high esteem around the world.

💬 Hon Dr Michael Cullen: Unlike the National Party.

The Minister of Finance interrupts and suggests that the National Party does not hold the wine industry in high esteem. We might not be known as Chardonnay socialists, but I assure the Minister that we do appreciate the contribution the wine industry makes to New Zealand, and we do appreciate the $250 million worth of export earnings the country has received from it in the last financial year. I am very disappointed that the Minister of Finance interrupts with such a silly, inane comment.

I want to talk about the reason why the select committee faced such an angry submission arena. It was because the industry felt so totally betrayed in respect of the sherry tax. The industry had been told—in fact, it had been promised—and Mr Anderton had written to the industry, saying that under no circumstances would there be any surprise taxes and increases in excise. That was the wording. The letter was presented to us at the select committee. Within weeks of Jim Anderton signing that letter out, the House went into extraordinary urgency to pass the sherry tax—after that promise had been made. I note that Government members hang their heads in shame, and they ought to.

💬 Phil Heatley: Taxing my grandmother!

Phil Heatley’s grandmother was affected. I think lots of grandmothers were affected. What was most galling about that tax was that speaker after speaker on that side of the House, amongst the Labour Party, listened to Jim Anderton and accepted his argument that the tax was being advanced in the House because we had to curb youth drinking. I say to Jim Anderton that he should get a life. He should get down to the strip in Christchurch, or go with Winston Peters to Courtenay Place on the odd occasion, and have a look at what young people are drinking. They are not drinking sherry or port. I say to the Government that it should not advance a large tax increase, when it will not make any difference to the level of alcohol being consumed by young New Zealanders.

In turning to the process by which the select committee heard the submissions and then decided how best to proceed, I want to welcome the decision we made to ask New Zealand Winegrowers to allow Phil Gregan, its chief executive, to work on the issues with us, and with the officials servicing the committee, to see whether we could find some consensus on them. It was a process that I think worked very well. I thank Mr Gregan for his contribution. I think that the committee, by having his expertise and contribution, has presented back to Parliament a bill that is far more substantial and far more robust than the one advanced to it in the first place. There was the issue around cost compliance and cost recovery. We listened and understood that the industry was concerned about, or felt betrayed by, the previous tax that had recently been passed, but at the end of the day most parties in the select committee accepted the need for the industry to be prepared to meet the costs associated with the implementation of this legislation. Only one party saw fit to advance a minority report in that regard. I appreciate the comments made by that particular party, but I think that it was perhaps unaware of the need for the legislation—the original request for the legislation having come from the industry.

All in all, the process has meant that a very credible piece of legislation is being passed here tonight. I take the opportunity to thank members of the select committee for working with me through the issues and for advancing legislation that I think is credible. The National Party has pleasure in supporting the Wine Bill in its third reading.

In spite of what the Hon Jim Sutton said, I would like to congratulate the wine industry, or more particularly the farmers, the viticulturalists, and the people who make up that industry, because it is they who all those years ago started to make an industry that now contributes substantial funds to New Zealand. I particularly remember, when growing up in my district, the Milicich family—a family whose business has now turned into Vilagrad Wines. It has become all upmarket. I want formally to thank that family for helping out a very hard-working young man who worked for very low wages and for very long hours, and who, unfortunately, was not allowed into the establishments that sold liquor. I want to thank the Milicich family for extending its service to this young man, in days of extreme hardship.

💬 Dail Jones: Who was this bloke?

R DOUG WOOLERTON: This guy was a young fellow called Doug Woolerton. The family extended the hand of friendship, as I remember, from out of the back bedroom window of Mrs Milicich’s house. It helped us out of trouble in the middle of summer, when things were very desperate indeed. That family introduced me to wine. I have never been able to drink modern boutique wine, because it is far too sour. The wine I grew up on was 90 percent sugar, 9.5 percent water, and 0.5 percent grapes. I am extremely thankful to the Milicich family for introducing me to that nectar when I was 17 years old. I remember the family with fondness. I want to extend my thanks to Ivan, who is probably flogging his guts out, ample as they are, in his restaurant on the highway between Hamilton and Rukuhia—even though he was the recipient, the same as I was. His parents, when providing their little illegal help, did not know that Ivan was in the car with me. Although they would deny him his share of the grape, they were happy to sell it to me, out of the back bedroom window, and I, being the good-hearted person I am, shared it with him. That was my introduction to the sweet wines of the early days. That family establishment has gone on to be a very, very good operation called Vilagrad Wines, situated just out of Hamilton.

So the industry worked very, very hard. It did what it had to do, and, in a fairly short time, it has established a remarkable record amongst the sophisticated winegrowers of the world. This industry gives New Zealand agriculture a level of sophistication—not to mention the selling of one heck of a lot of pine trees in the form of tanalised posts; so it does more than the consumers of the grape would realise.

I was somewhat disappointed at the ramblings of the National Party in the debate earlier. I was disappointed, because to me National members took on all the aspects of ill-bred and ill-trained dogs, barking at everything within their purview, including the Government. That was not the right way to carry on, especially when what they were going on about was the sherry tax that was put in place by this Government, wrongly so, in my view, and especially when, at 5 o’clock in the morning, I believe it was—although I was not actually looking at the time—New Zealand First was still voting at full strength, with 13 votes, and the National Party, which I know has reduced numbers these days, was voting 10.

💬 Martin Gallagher: How many?

R DOUG WOOLERTON: Ten. I do not know, and I have no way of knowing, whether its members had gone to bed or had fallen over, but I do know that they were not in the Chamber. It is those who are here to vote who count. The rest do not matter. Although National members make a big fuss about the issue, on that night they were not here, so they do not matter. I am not surprised that they are in a spot of bother at this time with leadership problems, and heaven knows what else.

💬 Martin Gallagher: What sort of bother?

R DOUG WOOLERTON: Great bother. They have leadership problems. It does not surprise me, because once they start doing that sort of thing and start taking this House lightly, they will end up in trouble.

The wine industry is providing for New Zealand something I think we will see much more of in the future. It is a niche industry supplying a niche market in competition with the best in the world. That is why I congratulate the founders of this industry and the present players within it. They have taken on the best in the world and have not been satisfied with what I jokingly called the sweet wines of the past. They started there, but they quickly matured, and they understood one thing that we in this country should all understand and take notice of—we have to aim for the top level. We have to aim for the highest barrier, and we have to compete and win in the toughest markets in the world. It is those markets from whence we will get the highest return. Commodities, even though they play a huge part in the export industries that we are so successful in, are the lowest end of the market, and the wine industry has shown the rest of us that we must aim for the top end. In striving to do that, we will take not only the growers and the industry personnel but also the living standards of this country to a higher point.

I have never seen a kiwi at night, not even in captivity, but I will be able to tell my grandchildren that I had pleasure of the rare sight of Doug Woolerton speaking in the House—a rare sighting indeed. I do not think I learnt a lot from it, apart from the fact that in the end New Zealand First will vote for the bill, yet there are significant criticisms. From the National speeches I did not learn much either, but I congratulate Jim Sutton on a bill that is the very model of a modern, major piece of legislation. The Labour-Progressive Government has delivered an industry-specific bill, and that is another promise delivered on. National Party members certainly have problems and I think we heard them tonight, with all the red herrings they were floating about this bill.

As to the question of the grandmothers’ tax, they know all about grandmothers because most of them have sold them to get here. That is the only thing I got out of that. The sherry tax, of course, is an anti – drink binge tax. That is what it is for. [Interruption] If they are interested at all in the health of young people, they might be interested in the statistic that between April 2003 and July 2003 there was a 90 percent decrease in the sale of light spirits. But they are not serious about that. What they are serious about is trying to see who is top dog, and that was the battle between New Zealand First and National tonight, as the great Prebble plan of bringing together National, New Zealand First, and ACT is clearly falling apart. I wish them well. They will all need wine to get over the fight they are having. I congratulate Mr Sutton on a very good bill and the work done on it.

Tonight we have heard, I think, every party support the wine industry, and I join them. I think the wine industry has shown the way to many of our agricultural industries. The wine industry is innovative, it knows its market, it goes out and sells to the top of the market, and it knows exactly what it wants to do. It is focusing on quality. If there is any suspicion that somebody might be not playing the game, it lands heavily on them. That is what this bill is all about. It is putting in place the structure the industry has been wanting to have in place.

This industry is very important to this country, but it is vulnerable. One need look no further than to what has happened in California and Florida to see that a wine industry can collapse, virtually overnight, though biosecurity problems. In California and in Florida they have the glassy-winged sharpshooter—I had to get that in—which is a vector for Pierce’s disease. If we had that infestation, which is fatal to grapevines, in New Zealand, then the wine industry would go down the gurgler virtually overnight, because it is an incurable disease. The wine industry does have the option of protecting against that sort of thing. In the United States they are looking at genetically engineering their grapevines to prevent any kind of infection like that. But the wine industry in New Zealand has quite specifically and repeatedly said that it will not embrace genetic engineering, for the reason that its markets will not accept genetically modified wine. These people are not rabid “greenies”. They are not rabid, longhaired, jandal-wearing, tree-hugging, mung-bean munching “greenies”. These people are basing their decision on cold hard economics. They are saying that they do not want to embrace that technology because it is bad for their business. They do not even want genetic engineering for other forms of agriculture in this country, because it will harm their business. That is the reason that this industry is doing well—these people know what its market is. They know that if they go to the top end of the market and provide high quality, they will never regret it. Yet that is what this Government is going to impose on them.

💬 Rodney Hide: What Government?

That 4½-year Government over there. It is going to introduce genetically engineered organisms into our wider environment, and what is going to happen to our market? It is going to go down the gurgler, aided and abetted, I might add, by the National Party, and ACT, and United.

It is a shame. Why do we not learn from the people who are playing the game properly—the people who are actually in touch with the realities of economics and of growing things in this country? We are always going to be a minnow in agricultural terms. We can only ever go for the niche market. The niche market that is best suited to this country is the quality end of the market, which is where the wine industry goes and where a lot of our other industries go.

Zespri is another industry that is right at the top of its game. What does it do? Does it want to embrace GE? Not on your nelly! It does not want it. It knows what its market is. Zespri knows that its consumers in the UK rejected it absolutely, as did consumers of wine in the UK and Europe. Not only will they not buy it; they will go out of their way to avoid buying it. They will pay a large premium to avoid buying it. What on earth are we doing?

💬 Rodney Hide: God knows what the Greens are up to.

God knows what the country is up to.

We are a market-driven economy. For better or for worse, that is the reality for us. We are a market-driven economy. It is incumbent on us to produce what the market requires. The market has made it very, very clear that it does not want genetically engineered products. The wine industry knows that, the kiwifruit industry knows that, and the meat industry knows that. Most industries know that. When will the Government pick it up? We are not talking rocket science, I say to the Government; we are talking common sense. We are talking economics. We are talking markets.

Another aspect of this bill that I find very positive is the aspect of labelling.

💬 Simon Power: This is hopeless.

The labelling is not actually hopeless.

💬 Simon Power: No, this is hopeless.

Is it? Well, it is better than the National Party with its secret meetings and its desire to collapse the debate at the moment. At least we do not have the internal problems that the National Party has. Perhaps the member’s interjections might be better placed—[Interruption]

One of the aspects of this bill that the industry wanted was—to pick up an ACT phrase—to have truth in labelling. It wants to have country of origin, the vintage, the variety, and the provenance of the grape on the label. I support that. Why on earth do we not have that with genetically engineered food coming into this country? What is so difficult about putting on a label the words “This food may, or does, have genetically engineered ingredients”?

💬 Ron Mark: They can’t write that small.

That is about right, too. There is no reason why that labelling cannot be put on. If labelling on all food said: “This food may include genetically modified organisms”, then it would immediately lose its impact. The label may as well not exist. The wine industry knows what its market is. It is saying that the consumers and the producers want to know the history, the traceability, the accountability of the production of wine, and that is what the consumer wants.

💬 Hon Marian Hobbs: So why doesn’t the European Union label its wine?

The Minister for the Environment is all very keen to interject, but we are talking about reality here. We are talking about markets. I was accosted by that well-known left-wing radical in the street the other day, Doug Kidd—a former National member and Speaker of the House. He accosted me in Lambton Quay, and said: “I’ve just come back from England.” He put his arm around my shoulder, and said: “Ian, what you guys need to do is tell the country that all the trucks that are supplying the supermarkets in England—the Sainsburys, the Tescos, the Icelands—have big signs on them, saying: ‘All our food is GE free’.” I said: “Doug, that is exactly what we’ve been trying to tell the country, the Government, and the National Party for the last 5 years. But will they listen? Will they what!” So I suggested to Doug Kidd that maybe the National Party might like to take up GE free as its policy. I think that is a pretty good idea. We might get the National Party back as a real Opposition if it actually took on a common-sense policy such as that, and said: “Why don’t we support what 70 percent of the population want?”. People want a GE-free New Zealand. That is a bit like the nuclear ships issue, is it not, I ask Mr Power. New Zealand identifies really, really strongly with being nuclear free, and we identify really, really strongly with being GE free.

💬 Simon Power: Take a science-based approach.

I am a scientist. I do take a science approach. I pride myself on my scientific approach. There is good science and there is bad science. Take nuclear bombs. That is science, but it is bad science, and there is really bad science associated with GE. I do not put aside the possibility that in future it will be good science, but let us keep it in the lab until such a time as it is good science, until it is predictable, and until we know the outcomes and the long-term consequences of introducing alien species into our environment. We do not know those consequences. We cannot know them. The Greens do support this bill, and we look forward with pleasure to its becoming law.

I am very pleased to take a brief call in support of my colleague Jim Sutton on this bill. This is a bill that is being considered at a peculiarly appropriate time in the history of the New Zealand Parliament and New Zealand politics, because, at this very time, the National Party is considering what wine it wants to choose to be drinking up to the time of the next election. Does it stick with that little Southland bottle, “The English”? It was a wine that gave great promise of something when it was young. It seemed to show some promise at that time, perhaps even some complexity. But the truth is that it just has not aged in the bottle, at all. It has now gone extremely flat, and every bottle that is opened turns out to be corked—and so he ought to be by the National Party caucus at the next available opportunity. So what does National have instead? It can go to “The Brownlee”, a sort of mid-Canterbury wine—a very big, full wine, one could say, but somehow lacking in substance and body, despite the fact that it is a very big, full wine. And there is a bit of a suspicion that although it claims to be a “white”, there is something slightly pink about it from the perspective of the National Party. Finally, of course, there is the alternative, “The Brash”, an Auckland model now. It has certainly been aged in Reserve Bank oak for a very, very long time. It is the only bottle of wine I know that has on it: “Do not drink more than two glasses, or the price may go up.” That is “The Brash”. Its problem is that it is a very flinty wine that leaves a kind of sour aftertaste on every possible opportunity. So we will watch to see the wine tasting going on in the National Party in the near future. In the meantime, this bill will pass, and the wine industry will carry on.

I would like to bring the House’s attention back to the Wine Bill. We have heard about genetic engineering, we have heard Michael Cullen show off in front of his Council of Trade Unions mates, and now we are going to get back to the Wine Bill. I want members to know that when we first received this bill from the Government it was twice as thick and twice as long as it is now, and it was full of bureaucracy and compliance costs. The Primary Production Committee, as a responsible select committee, took the knife to it and cut out copious quantities of regulation and legislation—powers that would have come, no doubt, in the future—simply because we do not believe that the wine industry at this time needs to be burdened with more and more compliance costs, which certainly would have happened had the committee not done the work it did on the bill.

I would like to acknowledge the chairman of the committee, David Carter, who worked hard in keeping us focused and keeping Labour Party members focused. I acknowledge Janet Mackey, a responsible deputy chairperson. I acknowledge other members of the committee. The “MP for Helsinki”, Harry Duynhoven, was on the committee. Also there was the member of Parliament who abstains, Ashraf Choudhary, and Ian Ewen-Street, who from time to time is on the committee. He is an occasional member of the Primary Production Committee, and we welcomed him back for that particular part of the bill. There was also Dover Samuels and, of course, Doug Woolerton, and others. I certainly acknowledge all of them and the good work they did in cutting out the bureaucracy and compliance costs that many of the submitters brought to our attention.

The select committee received 115 submissions, and we talked about that earlier but we did not mention that by far the majority of them were concerned primarily about the compliance costs I have mentioned. We heard 26 submissions, and the majority—just over 17, I think—of them were concerned about those compliance costs. Some believed that innovation would be stifled within the industry and development would not happen as quickly as it has in recent years. We heard about the inflexible bureaucracy within the European Union, and about how the Minister Jim Sutton was going to bring that bureaucracy into our industry in New Zealand. Submitters expressed concerns that what happened over there and what has hurt the industry over there was going to hurt the industry here. They understood there had to be a degree of regulation. They appreciated the fact that the wine industry is underpinned by this legislation, but they did not feel that the amount of compliance cost brought about by the original Government bill—Jim Sutton’s bill—was necessary. So the select committee carved out many clauses. They will not be missed. The wine industry, I know, is grateful to the National Party and others on the committee for recognising that and making those changes.

Too many compliance costs have hit this industry in recent years. Members will be aware of rising accident compensation costs, the costs of employing people, and the difficulty of employing people within the industry. Members will be aware of transport costs escalating and all sorts of indirect taxes. Members will also be well aware of the extraordinary urgency that went on several months ago. On 6 May 2003, as I recall, the Customs and Excise Amendment Bill, otherwise known as the sherry tax, was debated until the early hours of the morning, under extraordinary urgency in this Parliament. That bill raised the excise tax on alcoholic beverages, 14 to 23 percent alcohol by volume, I recall, netting the Government 18 million bucks, and we debated that until the early hours of the morning. That affected the industry indirectly, but not as much as it affected all those elderly people in the provinces and the cities who purchase sherry and other products with those alcohol volumes. It did not affect them that much but it certainly affected them.

I was intrigued, I must say, by the Hon Matt Robson’s comments that that legislation, which was rushed through the House, was intended to curb youth drinking. I think most of us see that as ridiculous, a stupid concept; about as stupid as the “fart tax”, and when his Labour Party colleagues discovered that he and Jim Anderton were actually taxing the elderly of this country with the sherry tax, they were under tremendous pressure. No youth in this country drink sherry. They never did. They are not taxed. This tax has not put them off drinking, but I can tell members that a lot of responsible adult drinkers, who have earned the right to have a sherry after dinner, after work, or after bowls were hurt by that. I still hear about that throughout the country as I visit elderly folk who are concerned about the way this Government is going. The unexpected imposition of that further excise tax on fortified wines, the sherry tax, hurt and disappointed the industry, and we heard a lot about that during the submissions, interestingly enough. The submitters were quite suspicious, when they came to the select committee, about the Government’s agenda over wine excise and where it was heading. They were concerned that 6 May earlier this year was actually a flag for further interference within the industry and further stifling of the industry. We listened to those concerns, and we made a lot of changes.

The Wine Bill, as members will be aware, introduced cost recovery for services provided to the industry—that is, by the Government—including activities such as recordkeeping. A number of submissions related to increases in compliance costs. The committee worked quite hard to ensure that there was a minimal impact on the industry in respect of these regulations, and, of course, the levies. Certainly, this industry is levied enough. Certainly, it is taxed enough, both directly and indirectly, and I do not need to go over those issues. Those compliance cost matters were the issues that came up time and time again. I can only say with some pride that I was able to work with David Carter and members such as Janet Mackey, Doug Woolerton and others to see those compliance costs carved out of the bill, or kept to a minimum, so that this industry can continue to do well in the future.

Certainly, the bill still requires all winemakers to operate under a registered wine standard management plan situation. But that is to enforce food safety and labelling provisions. That is all about market access, which, they recognise, needs to be maintained and, of course, increased. We are happy with those provisions. There is some regulation coming out of this legislation. There will be some compliance costs, but I can assure members that there is not the compliance-costs content in this bill that there originally was when it came to the select committee. So we support this bill. We support the extensive changes that were made to make sure that the industry does not face the bureaucracy it could have faced, and we happily support the passing of this legislation.

It is with pleasure that I stand in the House to speak to the final reading of this bill. It is a bill that came to the Primary Production Committee at the behest of the industry. The industry wanted access to the European markets, and New Zealand needed to show that it met certain standards, in order to achieve that.

The select committee worked well. It always surprises me when members say the bill we got was shocking, and the committee had to change it. That is what the select committee process is about. We hear submissions and then we apply that information and input to the bill before us, and then return it to the House in a better shape. I would have thought that every select committee would aspire to work in that way. It sometimes appears that “You’re damned if you do, and damned if you don’t.”

I acknowledge the contribution made by Doug Woolerton. He always has a lot to say on bills before the select committee. I was interested in his contribution tonight claiming that when he was 17 he first encountered the Miliciches and wine. I have to say that the East Coast electorate probably has claim to being the home of the grape in New Zealand, given that the botanist on the Endeavour actually sketched the wild grape growing in Poverty Bay. So I think it is appropriate that the East Coast should have an input into this legislation.

I thank all those people who made excellent submissions. I certainly thank the officials we had. I suspect they are still convinced that some winegrowers will submit their returns on tablets of stone. We have persuaded them that we should leave it up to the various winegrowers to decide how they keep their records, as long as they are readable.

I also thank Philip Gregan from the Wine Institute, who was both a submitter and an adviser to the committee and worked alongside the officials. As a result of that sort of cooperation, and the cooperation of members of the committee, I believe we have produced a bill that meets with the approval of the industry that asked for it. It is a bill that will enhance the industry’s opportunities in the future.