Scoping the Impact - Removal of the State Cellar Door Rebate

After significant engagement with industry, Wines of WA has determined that this is a critical issue directly affecting over 80% of the state’s wine production.  Indirectly, all WA producers are affected by the impact the removal of the rebate will have on resourcing of regional wine tourism.  Other businesses (tour providers, accommodation providers, and those who service businesses within wine regions) reliant on regional wine tourism will also be affected.

That Minister for Racing Gaming and Liquor, Colin Holt, would publicly state (Augusta Margaret River Times 20/05/2015) “given the subsidy applies to a small percentage of wineries … the impact on wine drinkers is likely to be minimal”, shows a clear lack of understanding of the intended purpose of the rebate.  This also demonstrates that there was no engagement with the WA wine industry before the decision was made.
 
In the budget papers, the justification for the abolishment of the scheme is stated thus: “given the limited scope of the scheme, the Cellar Door subsidy is to be abolished from 1 July 2015. A number of other States have also abolished their subsidies.” 

Both points are inaccurate and misinformed.  Wines of WA research suggests the subsidy is accessed by businesses that represent 86% of production (which means 86% of employment and value adding in region).  Only NSW has abolished the scheme.  SA and Victoria maintain theirs, albeit at different levels.  In fact, the Victorian state government considered abolishing the scheme in 2013 but after industry consultation demonstrated the value of regional wine tourism determined not to do so.

The reality is, the scope of the decision adversely affects every producer in WA either directly or indirectly.  The businesses directly affected operate significant wine tourism facilities that attract visitation to regions.  They have a positive effect on the regions in which they operate.  All other businesses within the region benefit from their efforts.  If investment in operating and promoting these major drawcards is reduced, all within the region will be negatively impacted across the value and employment chain.

An estimate of the investment by WA wine producers into regional tourism facilities over the past five years is around $20 million dollars.  All of this investment was implemented during a period of low profitability for the industry.  It is critical to the industry’s future success to remain internationally competitive in the wine tourism space.

Given there was no prior consultation with industry, Wines of WA will request a 12 month moratorium on the abolishment of the scheme.  In this time, an industry and government led review should determine how to improve the implementation of the scheme.

For further information, contact Wines of Western Australia

CEO – Larry Jorgensen
T – 9284 3355 E – ceo@winewa.asn.au