Cellar Door Subsidy Scheme

Tonight I inform the House about an incredibly important issue in my electorate—namely, the Cellar Door Subsidy Scheme. The Cellar Door Subsidy Scheme, which ceased on 30 June 2012, provided a subsidy to wineries that sold in excess of $500,000 worth of product directly to the public. It allowed wineries to offer wine tastings at the cellar door at comparable cost to bottle shops such as Dan Murphy’s or Liquorland. The subsidy has a long and convoluted history. In the past the States levied a tax of about 15 per cent on point of sales for alcohol other than at cellar doors. In the 1990s a decision by the High Court deemed that inappropriate. The Howard Government then offered to increase the Federal Government wholesale sales tax on alcohol from 26 per cent to 41 per cent—this would include the 15 per cent previously collected by the State Government. This was done on the condition that the money would be returned to the State and the State would then return that money to the cellar door. It was acknowledged that cellar doors played an important role in the wine and tourism industry economies and no-one wanted those industries affected.

In 2000 the goods and services tax [GST] was introduced and the wholesale sales tax became impractical. The Howard Government then introduced the wine equalisation tax, which was set at 29 per cent—because under the GST the sale of alcohol would be caught at 10 per cent and the taxation for both levels of government would be impacted. The State Government, led by Bob Carr, and the Federal Government, led by John Howard, agreed that cellar doors needed to continue to be subsidised in order to compete with the larger liquor outlets and that the wine and tourism industries needed to be protected from the sales tax to be imposed on all other points of sale for alcohol—that has been the case since the introduction of the GST in 2000.

In New South Wales $3.5 million in subsidies are provided, $3 million of which goes directly to the biggest cellars in the Hunter Valley vineyards. Some may ask why the big cellars need to be subsidised when they are doing so well. For example, Tyrrell’s Wines is entitled to about $600,000 of that subsidy—Bruce Tyrrell gave me that number—but it costs Tyrrell’s $600,000 to operate its cellar door. To make that $600,000 Tyrell’s has several options: it could shut the cellar door completely, shut it on slower midweek days, charge for tasting or not replace staff. It also makes Tyrrell’s less competitive in bidding for premium juice. None of those options is as palatable as the cellar door subsidy. Where to next? We are trying to get Treasury’s decision overturned. The Cellar Door Subsidy Scheme should be reinstated to protect the tourism industry and jobs in the Hunter.