The Hunter Valley Wine and Tourism Association is worried about the impacts of the federal government's plans to slash a rebate which the wine industry has come to rely on .
As much as $500,000 can currently be claimed as part of the Wine Equalisation Tax rebate, however the amount is set to be cut by more than $200,000, leaving many wine makers out of pocket.
The WET rebate was introduced in 2004 to support small wine producers in rural and regional Australia, allowing them to be price competitive with larger producers and imported wine. The rebate was initially set at $290,000, but this was increased to a maximum of $500,000 in 2006.
However, the industry says the rebate has contributed to excessive wine grape production and low value wine.
The government has moved to tighten the eligibility criteria for the WET rebate to prevent so-called "virtual wineries" from claiming the benefit. It's found some larger wineries are operating under complex business structures which can lead to multiple claims for the rebate, while "virtual winemakers" are buying grapes and contracting out the manufacturing process solely in order to claim the rebate.
Under the changes, a wine producer must own an interest in a winery and sell packaged, branded wine domestically in order to claim the rebate.
From 1 July 2017, the WET rebate cap will be reduced from $500,000 to $350,000 with a further reduction to $290,000 from 1 July 2018. This is expected to raise $300-million over 4 years.
In it's place, the government will provide $50-million over 4 years to promote Australian wines overseas and wine tourism in regional wine producing communities such as the Hunter Valley.
However, growers and tourism operators in the Hunter are worried the changes could lead to job losses and force smaller boutique wineries to increase prices to stay viable, making it difficult for them to compete against the big wine producers and imported wines. They're meeting at Pokolbin tonight to discuss the impacts of the changes.
