Govt to pay growers to dig up vines

Press, 18 December 1985, Page 7

Govt to pay growers to dig up vines

Wellington reporter

Winemakers will receive cash subsidies from the Government to help their industry out of its oversupply crisis.

An assistance package announced on Monday includes payment of $6175 for each hectare of grape vines extracted before next year’s harvest. The grants are conditional on a minimum of 1200 ha being extracted and will be paid on up to 1600 ha.

The package includes also a proposal to re-examine the standard value system for wine, brandy, and whisky. The Government says that standard values have encouraged the buildup of wine stocks and so

contributed to the industry’s problems. The tariff quota for wine imports will be abolished and all imports from sources other than Australia will be subject to a normal 20 per cent duty from July, 1990.

Details of the programme will be announced after discussions with Australia, whose wines are due to enter New Zealand dutyfree from July, 1990.

The new policies are the Government’s response to the wine industry crisis which has been such that last week, the quality winemaker, Delegats, announced that it would go into receivership.

The Ministers of Finance and Trade and Industry,

Messrs Douglas and Caygill, said yesterday that the problems were a direct result of the policy of the previous Government The Wine Industry Plan, started in 1981, had generated unrealistic expectations of the growth of wine consumption in New Zealand.

The industry had received high levels of protection. The Ministers said that their intended tariff changes would require amendments to an existing agreement under closer economic relations with Australia. Commercial decisions on stockholding had been distorted by the tax concession which existed under standard values, the Ministers said.

They said that the tax

treatment of development expenditure had also encouraged growers to plant what were clearly excessive acreages. Messrs Douglas and Caygill said that the package would improve the stability of the wine industry. However, the Leader of the Opposition, Mr McLay, asserted that the package would do nothing to help wine growers and winemakers, and would simply result in a flood of cheap, imported “gut rot” wine. The policies applied the same philosophy as last Thursday’s economic package for farmers, Mr McLay said.

“AU it does is encourage people, particularly growers, to get out of the industry by paying them to dig up their vines.” He suggested that the present standard value system for wide should be retained for product more than one year old, which would assist the retention of particular wines “needed for ageing purposes.” Mr McLay said that the basic problem for the industry was the level of sales tax, which was the highest of any winemaking country in the world. That was Labour’s mistake, originating in the 1984 Budget.