Wine Makers Amendment Bill — Second Reading 
Wine Makers Amendment Bill — Second Reading 
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Wine Makers Amendment Bill 
Second Reading 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
 on behalf of the 
 Minister of Agriculture 
: I move  
That the Wine Makers Amendment Bill be now read a second time 
. The bill was introduced as Part 5 of the Wine Bill on 14 October 2002 and was referred to the Primary Production Committee for consideration. The submissions on the bill clearly supported early enactment of Part 5 of the Wine Bill now the Wine Makers Amendment Bill to reinforce the current export regime pending passage of the full Wine Bill. The Wine Makers Amendment Bill facilitates the export of grape wines reinforcing the current wine export regime which is made up of the export provisions of the Wine Makers Act and an administrative official assurance system. 
The industry of course is a rapidly growing and highly successful one but the European Union passed legislation last year that requires other countries exporting wine to the European Union such as New Zealand to regulate conditions of use statements commonly made on wine labels such as vintage variety and traditional terms. The passage of the European Union regulation has created commercial uncertainty for exporters as it is not clear how it will be implemented. The passage of that regulation has created the need to press forward with particular provisions from the more comprehensive bill. That is because it clearly requires other countries that export wine to the European Union to regulate conditions of use statements commonly made on wine labels. The New Zealand Food Safety Authority does provide official assurance to facilitate the export of wine to the European Union and other countries. 
 Currently the issues that are required to be addressed under the regulation are not provided for in the Wine Makers Act and New Zealand’s current official assurance system for wine exports is administrative. Therefore New Zealand wine might face import restrictions from the date that the European Union regulation first applies to imports. That date was to be 1 January 2003 but on 25 November last year the European Union deferred application of its regulation to imports until 1 August this year. This bill is still necessary to overcome the hiatus that would otherwise occur from 1 August 2003 through to the commencement of the Wine Bill which is intended to commence on 1 January 2004. 
I thank the Primary Production Committee for very rapidly considering Part 5 of that bill because initially it was thought necessary to pass it before the end of the year to meet the 1 January deadline. As it is we have had somewhat longer to address the matter. I think it is still very desirable to pass this bill as quickly as possible to give a lead-in time to the new regulation coming into force on 1 August this year. 
Hon DAVID CARTER (NZ National) 
: 
 It seems tonight that the Government has finally realised who the people are who create the real wealth in New Zealand. Having just dealt with a bill that will dramatically change the Wool Board we now move to another bill that has been sitting around for some time—the Wine Makers Amendment Bill. I say at the outset that this is one of those strange pieces of legislation that New Zealand has little choice but to enact if we want to continue sending our superb wines to Europe. That just goes to show the sorts of constraints we are up against in exporting our produce. We have to be prepared to meet the rules and regulations imposed on us by other countries. 
The history of this amendment bill is intriguing in the sense that it was presented to the Primary Production Committee as part of a far wider bill. Because of the requirements at that stage to pass it we thought by the beginning of this calendar year Part 5 was split off and handled very rapidly but with the support of the wine industry. I know that our senior whip Mr Carter is working to make sure that this legislation is passed with alacrity. He realises its importance and on this occasion the National caucus is only too happy to cooperate with the Government and see this legislation passed as quickly as possible. That will allow our superb produce to continue to be marketed throughout the world and doing something great for “New Zealand Incorporated”. 
DAIL JONES (NZ First) 
: 
 New Zealand First supports the passing of this bill and equally supports its being passed with alacrity. The bill arises as a result of the European Commission’s new labelling regulation 753/2002. We want to see the New Zealand wine industry protected as quickly as possible and we will support this bill through all its stages tonight if necessary. 
IAN EWEN-STREET (Green) 
: 
 The Green Party will support the speedy passage of this bill through the House. I want to make a couple of very brief points. First we note that New Zealand wine exports have not suffered any lack of demand overseas even at the premium prices we receive. Compare that with some of the prices being fetched by American and South American wines which I believe are now as low as $2 a litre. It is interesting that the demand for high quality remains and that should be an object lesson for all our primary production. That lesson is that we should stick with quality. 
The second thing I want to mention briefly is the idea that as Mr Carter said we are basically doing this for the European market and not for ourselves. We are being compelled to do it. We constantly seem to be looking for free-trade agreements yet this is the very antithesis almost of a free-trade agreement. This is a market that is putting non-tariff trade barriers in place. We need to get away from that. Look at what is happening in America as well. It has $400 billion worth of subsidies. Hello! Do they want free trade? Do the Europeans want free trade? They talk about it but when it comes down to it they do not do it. We need to be very cautious about what we are doing there. I think that is all I need to say. 
GERRARD ECKHOFF (ACT NZ) 
: 
 The wine industry is a relatively young industry in this country although I think Mr Assid Corban was one of the first. In a real sense it is a young industry although there have been those who have been involved in this industry for a heck of a long time. But we have got to the stage where exports are now absolutely essential for this burgeoning young industry. And of course we know that in most countries the bureaucratic structures that abound constantly demand that we comply with those structures. In many cases they are construed more as tariff barriers than being concerned with the content of a particular food or wine or whatever other product it happens to be. But we have to comply and that is taken as read. If we cannot export our product we are indeed troubled and Europe is such a hugely important market to us. 
Europe of course is the home of wine. The French wine industry is the one that most countries aspire to reach. The level of most of its wine is absolutely first rate. Perhaps not many members of this House are aware that most of the wine one drinks in France actually comes from Italy where it is much cheaper. It is sent over in casks and when one is strolling down the Champs Elysées and enjoying a glass of wine at a roadside café it is dollars to donuts that one will actually be drinking Italian wine. Now that is just an interesting little aside that I thought the House would be terribly thrilled to hear about. 
But I think it is important that we have truth on the labels of our wine in this country—that is that a Riesling is a Riesling or a blend is a blend. Many like Mr Ian Ewen-Street and myself have sophisticated tastes. Mr Ewen-Street comes from that rather interesting wine-growing area of Marlborough. I of course come from Central Otago where some of the finest Riesling that I have ever drunk comes from. It is very important for somebody from overseas to know that he or she is buying Central Otago wine or Marlborough wine or Hawke’s Bay wine or wherever it might come from. But what happens if we get to the stage where we cannot blend? That is happening too. We are getting wine from Hawke’s Bay and Gisborne and down into other areas. We are putting 10 percent in with the local product just to up the sugar or add a bit of flavour or whatever it might be. That is necessary for the wine as well. 
When this bill was before it the select committee recognised that it was essential to maintain the ability of exporters to ensure that the requirements placed on them by the European Union were on the label so that they could carry on with the business of exporting our quality wines right through Europe and to the Americas as well where our products are becoming increasingly respected for their excellence. That is why as I mentioned earlier we must have some sort of truth in the labelling of our wines. 
As I mentioned earlier many would argue that tariff barriers are the reason behind why we have to comply with these bureaucratic structures. I remind this industry that we were guilty of doing the same thing to Chilean wine some years ago when the wine industry was hugely concerned about the flood of very cheap and in many cases very good Chilean wines coming into the country. Somebody found some additive he had heard of or read about that caused some sort of problem so he rang the Ministry of Health and Chilean wines were taken off the shelves. It was nothing to do with the quality of the wine or a safety issue. It was everything to do with a tariff barrier that we placed against Chilean wine. At the stage that happened the wine industry in New Zealand was still struggling to get a good base for itself so we are not as squeaky clean as some would have us believe. So we are guilty as well as I said earlier of those non-tariff trade barriers. 
When playing a round of golf with the Chilean Ambassador at the diplomats and MPs match just recently I was delighted to discover that he was a wine drinker. During that round we discussed the pleasantries of a wine called Cousino Macul which he knew very well. It is an excellent wine and he was delighted that he could buy it in New Zealand. A free-trade agreement—which I am sure is supported by the Minister of Finance—would ensure that such opportunities abound into the future so that we can all enjoy those wonderful wines. 
I mentioned earlier and I say again that problems do exist if we become too constricted too constrained and too bureaucratic. The burgeoning young wine industry got there without the help of Jim Anderton’s $100 million—or I should say the taxpayers’ $100 million. In recent times no taxpayer input has gone into the wine industry. It has developed extremely well by itself and it does not need the plethora of bureaucratic structures it will get. The submissions that the select committee has received in recent times have expressed huge concern that the Wine Makers Amendment Bill is going from about three or four pages long to 100 pages long. That will place some real compliance costs on the industry and the industry has a very real concern that it cannot afford them. 
New Zealand does not just have huge wineries like Montana or Corbans—which are some of the well-known ones—it also has little boutique wineries. Many accountants will tell us that much of the industry is actually struggling. One cannot make a fortune selling wine at $10 or $12 a bottle; one has to get right up to $30 or $40 a bottle and beyond to be profitable so the compliance costs within that industry are of major concern to small wineries that produce not much more than 2000 or 3000 cases a year. That output does not give them the large volume that would ensure some sort of economy of scale so it is very important that compliance costs are kept to an absolute minimum. We look forward to addressing that issue in the near future when the full bill is considered by the select committee. 
LARRY BALDOCK (United Future) 
: 
 I begin by stating that New Zealand can be proud of the achievements of its wine industry and the recognition it continues to get around the world for producing high-quality wines. United Future supports this legislation because while there is opposition to the imposition of European Union regulations there is an acceptance of the need to meet the requirements of those regulations in order to maintain continued access to the important European market. 
United Future supported the first reading of the Wine Bill from whence this bill came and which has now received 111 submissions. We look forward to the select committee process that will deal with the major issues confronting the wine industry but this particular bill should proceed expeditiously through the House. We therefore have pleasure in supporting it tonight. 
Bill read a second time.