Taxation (Annual Rates and Urgent Measures) Bill

All of this part relates to the wine equalisation tax issue. I just want to repeat again my earlier thanks to all parties—and all members of the House, individually, indeed—for allowing, by leave, these matters to be inserted in the bill, because it is, of course, controversial in its other parts. I think we can take some pride in the fact we can actually work sensibly, recognising that it is very important to get this particular part of the bill through in order that our wine producers are not penalised by the wine equalisation tax that the Australians introduced in their Budget.

In legislation such as this, I guess there has always got to be one bit that the Opposition, or at least the National Party, can support, and, indeed, we do support Part 4. As the Minister of Finance has just explained, this part provides for the implementation of the policy to enable New Zealand wine producers to claim back the wine producers’ rebate that is paid to Australian wine producers, and so put New Zealand wine producers on the same footing as their Australian counterparts. I must make it very clear that we oppose every other part and every other measure in this bill, but it is important that everyone here understands that National supports this part.

I think it is quite important that members understand exactly what is being done here with this provision. It is an unusual provision, one must say. What happens is that if a New Zealand wine producer sells wine to Australia, the Australian wine importer has to pay a wine equalisation tax on it. It is not the New Zealand wine producer who pays it, the Australian wine importer has to pay this “wet” tax, as they call it. It is a 29 percent tax so it is a significant tax.

One of the concerns, if this measure had not been put in place, was that over time the Australian wine importers would start to screw back the price they were prepared to pay for New Zealand wine, because they would need to be able to cover this tax one way or another, and Australian wine producers would be at a competitive advantage because they were able to claim back a rebate for this tax. So over time, wine wholesalers in Australia could start to get a more competitive position out of Australian wines. So it is really important that this issue is dealt with. Because the way it works is that a New Zealand wine exporter sells wine to Australia—the importer in Australia has to pay this 29 percent tax, but then, interestingly, it is the wine producer here in New Zealand who, under this provision, claims back the rebate. It is not the wine importer in Australia, it is the wine producer in New Zealand who claims back the rebate.

The officials kindly provided figures to the Finance and Expenditure Committee to make sure people understood the measure being implemented. If a New Zealand wine producer sells $1,000 worth of wine to an Australian wine importer, the Australian wine importer has to pay 29 percent tax on that, say $290. The New Zealand wine producer, under this measure, can claim back a rebate for that A$290, which is what the Australian wine producers have been able to do. In Australia, where that wine equalisation tax is being paid, the wine producers could claim that back, so this measure does put New Zealand wine producers on the same footing as Australian wine producers.

It is an unusual measure, and Part 4 provides for the necessary administrative requirements. Members will note that the amendments in Part 4 are amendments to our Tax Administration Act to enable New Zealand and Australian authorities to communicate effectively to allow this rebate. The rebate has to be paid back by Australia, of course, to New Zealand wine producers, so it requires the exchange of information, and this part provides the necessary exchange of information. Members will note the disclosure of information in new section 85J in clause 20 that will be inserted into the principal Act—the Tax Administration Act.

It is important because, without this, New Zealand wine producers would be at a real disadvantage. It took the Government a little while to provide for it. It should have happened almost immediately under the CER provisions. The Australian Government should not have been able to provide for Australian producers to be under any more favourable terms and conditions in the Australian market than the New Zealand exporters to that same market.

So it should have been dealt with pretty quickly. It took a while. The Government, in my view, took too long to get this sorted out, but I acknowledge that at least the Government has got it sorted out now, and this part implements the necessary provisions to enable quite an unusual provision in our tax law to be implemented. National certainly supports that, and we will be voting in favour of just this part of the bill.

I will take a short call to pick up on Minister Cullen’s point. I also extend my congratulations to all members supporting this part of the bill, and also members of the Finance and Expenditure Committee who saw the absolute common-sense of pushing and assisting this part of the bill in the best way possible. Congratulations must also go to the New Zealand Grape Growers Council, which lobbied very hard, very quickly, and went straight to the top and managed to make some material change to a proposal from Australia that would essentially have seen many New Zealand wine producers actually go out of business.

But the interesting point to note, as I pointed out earlier, is that so many of those New Zealand producers are already partially or majority owned by Australian winemakers anyway. So there is a bit of a circular argument going on here. It is great for wine growing in New Zealand. It is great for my province, the glorious Hawke’s Bay. I thank everyone who is supporting this part of the bill, and I fully endorse our support of it.

One more quick point though: as I referenced before, I am constantly concerned about the Australianisation of New Zealand—of many things New Zealand, be it food safety, be it banking regulation, or be it tax law such as this, and I do wonder whether we are taking on board some Australian tax laws and tax policy, etc. I note that Mr Howard recently pointed out that Australians will be enjoying the benefits of tax cuts forthcoming, so I look forward to New Zealand adopting some of those parts of Australian fiscal policy as well.

As I said, it was only a quick call, and congratulations to those assisting with this part of the bill.

Like my Hawke’s Bay colleague, and being from Marlborough myself as the member for Kaikoura, may I thank those who worked long and hard. We must not forget about our sauvignon blanc, which, of course, is a very fresh, beautiful, lemony-tasting wine that is very enjoyable, and I have great pleasure in referring to that. We should bear in mind that at the moment in Australia there is still a lot of pressure upon the wine industry; a lot of vines are being pulled out, and there will be ongoing pressure; so I say, in congratulating the committees and the Government that have worked hard on this legislation, that it will be appreciated by the winegrowers in Marlborough. However, we should not forget that we must keep scanning the horizons for any Government that does try to impose embargoes and obstructions to the importation of our products. So I am also very pleased, on behalf of all the winegrowers in Marlborough, Hawke’s Bay, and elsewhere in New Zealand, to say “thank you” for this, and we will be supporting this legislation when it comes to the vote.

Part 4 agreed to.

Schedule agreed to.

Clauses 1 and 2