Hayes John: Geographical Indications (Wine and Spirits)  Registration Bill — First Reading 
Hayes John: Geographical Indications (Wine and Spirits)  Registration Bill — First Reading 
[Volume:628;Page:1033] 
JOHN HAYES (National—Wairarapa) 
: 
 The wine industry is of huge importance to my electorate. It provides employment foreign exchange earnings and outstanding wine for all consumers to enjoy. This situation is replicated throughout New Zealand. 
I did not understand one word of the Minister’s speech so I want to start by focusing on what this bill is about. International demand is changing away from the heavy red wines of Europe towards lighter flavoured wines and our plantings are very important in areas like Martinborough which is regarded as an area that produces the best Pinot noir wine in the world. There is huge room to expand our industry because we are contributing only 0.2 of 1 percent to the global wine bucket each year. If we look at our climate we realise that New Zealand wine yields can vary by 25 to 50 percent plus or minus compared with plus or minus 5 percent in Australia which this morning’s  
Dominion Post  
points out is in vast oversupply of grapes. 
Although production and markets are important New Zealand must ensure that it meshes with our international trade obligations in the World Trade Organization and particularly the Agreement on Trade-Related Aspects of Intellectual Property Rights or “TRIPs”. I feel it is a real pity that the Minister has taken so long to bring this bill to the first reading stage but certainly National supports it. The bill will bring common sense to bear. It is really important that our wine-producing regions have identifiable boundaries and that is what this bill will provide. The consumer and the producer need to know that if a bottle of wine has the words “Martinborough wine” on the label the wine can be proven to have been produced from grapes grown in Martinborough. This outcome from the point of view of Wairarapa electorate vintners cannot come soon enough. 
But let me draw members’ attention to the bill. One area of the bill that looks to me to be weak is where it gives precedence to existing trademarks over geographical indication registrations where they are similar or identical—for example clauses 13 and 14. Clause 15 does provide limited grounds for a geographical indication to be registered where it conflicts with an existing trademark. But a problem that could arise is that if a wine with a trademark similar to a geographical indication—for example Martinborough Vineyard—contains less than 85 percent of grapes from the geographical indication its name suggests then a requirement that wines with a trademark substantially similar to a geographical indication meet the 85 percent content rule would fix that and ensure that the consumer would not have the wool legally pulled over the eyes on origin. Otherwise the bill is better than expected and the sooner it is implemented the better. 
But let me draw the attention of this House to the unreasonable charges being levied on this industry. For example this Government is taking $130 million from the wine industry as an excise tax. 
Mark Blumsky 
: Robbery! 
JOHN HAYES 
: It is absolute robbery. And what is it using the money for? It is using it to give interest-free loans to our students. It is robbing the vintners and giving the money free without any interest at all to students. These same growers who provide this $130 million invest in land and plant. They provide employment and they provide our country with foreign exchange earnings. They generally operate as small businesses that face a plethora of red tape and regulation as well as a disadvantageous exchange rate and high interest rates. 
If one says “$130 million” fast enough it does not register much. Most people do not understand what $130 million actually means because they have never experienced that sort of money. Well I would like the chardonnay socialists sitting across the Chamber to realise that one bottle of chardonnay costing $20 allows the Government to retain $2.20 as GST. That is the first tax. Then there is a retail margin of about $3.78 and a distributor’s margin of about $3.45. Of the $20 retail about $10.55 ends up with the wine producer exclusive of GST. From this residue the chardonnay socialists take $1.69 or about 16 percent of the money the vintner receives. This is after they have paid GST of course and it is after they and their company and employees have paid income tax. The vintner pays about $2.60 for the grapes that go into the bottle which is roughly 25 percent of the price then another $2.49 or 23 percent for winemaking and packaging costs. This leaves $3.77 or 36 percent of the amount the vintner receives—$10.55—to cover overheads freight marketing and a return on capital. 
But a $20 bottle of wine as our chardonnay socialist friends would know is a super-premium wine. Most wine is cheaper so the impact is greater. This excise tax—$130 million a year or $1.69 on every bottle—is a huge money-spinner for the Government which feels it knows better than the vintners how to spend. And who says that a chardonnay socialist knows how to spend the vintner’s money better than a vintner especially when the vintner is struggling to survive? In my view the $130 million excise tax should be left to the industry to decide how to spend. It is the industry’s money. The chardonnay socialists are squandering it. Furthermore the promise of a high dollar—or the economic policy being pursued by the chardonnay socialist resulting in a high dollar—is creating a very dangerous situation in an environment of high interest rates and difficult market conditions and this will impact on New Zealand’s foreign exchange earnings. Foreigners are buying millions of New Zealand dollars every day primarily because of an exchange rate differential. If we take the euro as an example for the first time in 5 years Belgium has this week reviewed its interest rate upwards to 2.5 percent. The economic policies of our chardonnay socialists will cause huge damage to our economy in 2006. This House has been warned. 
Bill read a first time. 
Bill referred to the Foreign Affairs Defence and Trade Committee.referred to Foreign Affairs Defence and Trade Committee