Smith Lockwood: Taxation (Annual Rates and Urgent Measures) Bill — In Committee 
Smith Lockwood: Taxation (Annual Rates and Urgent Measures) Bill — In Committee 
[Volume:628;Page:779] 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 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 $1000 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.