AUSSIE PLONKMONGERS LOSE THE PLOT

Ethanol Floggers Flog On ... Oz Pollies Taken For Suckers Again ... Forensic Enquiry May Shake These Dangerous Tendenciesby PHILIP WHITE - a shorter version of this appeared in The Independent Weekly


There is no better metaphor for the Australian wine industry than its National Wine Centre, which has finally become a busy pavilion for weddings. It lies there, ribs poking skyward, its drying gizzards wriggling with brides.

I have no statistical evidence to suggest the success of these marriages is any different to the national average: one in three generally ends in divorce.

It's all tiresomely suburban.

The Wine Centre’s biggest publicity – ever - followed the incident when Rick Phillips went in there and whacked our Premier, Mike Rann, about the face with a rolled-up Winestate magazine.

Phillips pled guilty, while his ex-wife, Michelle Chantelois, who’d been a barmaid in Parliament House, repeatedly claimed she’d maintained a sexual affair with Rann who repeatedly denies this, while publicly apologising for any distress it has caused her or her family.

And now, as if to complete its transformation from National Wine Centre to wedding and celebrity divorce factory this troubled facility is even flogging its wine collection.

Smart observers knew, when $50+ million of taxpayers’ money snuck that corpse into our sacred Botanic Garden a decade back, that this industry, its august councils, and the politicians it seduced, all deserved forensic scrutiny.

Who are these people? The hairdos have gone from Brylcreem combovers to spiky and shooshed, but the mentality is as constant as the suits.

They cannot halt the wine industry holocaust. For their shareholders, they encouraged it to fester, at the expense of our water, our environment and civic amenity, the salinity of our soils and aquifers, our public health, and our economies: national, town-sized, familial and individual.

The glittering refineries they inflicted on our rural vistas frankly reflect the chrome pillows blowing like leaves about aboriginal lands.

They built an industry that - by vast chemo-mono grapeyards - mines the arid Mallee for sugar, which is used to make ethanol, a highly-dangerous depressant and recreational drug. Over half the Australian business depends on this formula, and in bladder packs or cleanskins sells sweetened ethanol - which is three times the strength of your average beer - at about the price of bottled water. Or less.


They built an industry in the Australian desert which depends upon endless supplies of virtually free water, an international clientele with a constantly-intensifying addiction, and a pathetic Aussie dollar.

It also lacks basic gastronomic intelligence, expects the same of its clients, and presumes the absence of any smart competition from other countries.

Like, say the countries adjacent to the Andes, which happen to be full of snow which melts to make irrigation water. These grape regions are populated by peasants who work for almost nothing, and whose laws lack the scant environmental restrictions which somehow survive in Australia.

A telling gauge of how this industry’s authorities are respected is the advent of the Family First Winemakers. As this new coalition of the great wine families – Peter Barry, Hill Smith, Taylors, Tyrrells, Brown Brothers, d’Arenberg, McWilliams et cetera – barges forth to promote the “heart and soul” of the Australian business internationally, they attempt a task which the bodies they were implicit in creating have obviously failed to perform.

Who else gets a gong? Oh yes. On February 7th, Dr. Brian Croser AO (left) made a hissy speech blaming the big companies for mucking everything up. This was reported widely.

The Australian Winemakers Federation Croser established helped shove the Wine Center upon us, only to see it slide two years later, virtually bankrupt, into University of Adelaide hands for $1 a year.

When he was determinedly pushing the Wine Centre into the Garden, I questioned Ian Sutton, then Chief Executive of the Winemakers’ Federation of Australia, Wine Australia Pty. Ltd., Australian Wine Foundation and the Australian Wine and Brandy Producers' Association. I asked about the strangely optimistic business plan, and just how much consulting had been done to get the true feeling of the industry, much of which seemed a tad embarrassed about the whole thing.

"My job's not to consult the wine industry”, Sutton snarled. “My job is to represent the wine industry".

Croser was the University’s deputy chancellor at the time, determinedly pushing his agenda to have what was the fusty old winemaking school at Roseworthy fully absorbed by the glittering Adelaide campus. "Technologising", I heard one boffin describe it at the time.

Big companies? To the tune of hundreds of millions, it was Croser’s Petaluma group that slid through Lion Nathan into the hands of the mighty Japanese Kirin Brewery under the caress of his Petaluma accountant Andrew Cheeseman (right), who now heads the Australian Wine And Brandy Corporation.

Just days after his spray at the Big Guys, Croser made another speech: he’d suddenly discovered that Jacob’s Creek Chardonnay was much better than he’d previously considered.

His initial blast at the big companies would have infuriated people like Phil Laffer of Pernod-Ricard, the French families who own Jacob’s Creek, whose company secretary, Kate Thompson, sits on the board of the Australian Wine And Brandy Corporation. Along with Dr. Tony Jordan, antipodean lieutenant of Louis Vuitton Moet Hennessey.

Croser made the Adelaide Hills wine region. He planted the Piccadilly Valley with Jordan, and set forth preaching his gospel for decades, adding great value to his Petaluma. Over endless lunches at his Bridgewater Mill, he encouraged Dr. Ed Tweddell of Fauldings to invest massively in the hills, by setting up the Nepenthe viticulture company that planted vast swathes of vineyard whose fruit ends up now in Jacobs Creek or the carcass of McGuigan’s Australian Vintage. If Kirin doesn’t want it.

The latest top yarn concerning this lot is the Rabobank report of senior analyst Marc Soccio (left). It says the industry’s crook, although he thinks it’s not so much the buggered Riverlands, but cool places like the Adelaide Hills which are far too slow to uproot.

Like the river grapeyards, too much of this upland planting was committed by the wrong people in the wrong places for all the wrong reasons, like tax advantage, or fashion. Many of these doctors, lawyers, and wealthy retirees who dared, with the persuasion of people like Croser, to compete directly with seasoned generational growers in McLaren Vale and the Barossa, should never have entered the industry.

Tragically, we can't ask my good friend Dr. Ed Tweddell about this, as he committed suicide in 1995 (CORRECTION : 2005; not 1995). His son James, who ran the vineyard development company, now runs a nightclub in Queensland.

Rabobank seems confused about gradings of wine quality. Like the freshly-re-enlightened Croser, it obviously regards Jacobs Creek as premium. You can’t blame them: as Croser and his Petaluma chairman, Len Evans, ran the Australian wine show system for decades, megabulk brands like Jacobs Creek won bounteous bling.

Croser would never enter Petaluma in the wine shows. There are still people who remember his rage when he discovered his marketing manager, Bob McLean, had quietly entered Petaluma red in the Melbourne show. While the Petal was notably failing to win the Jimmy Watson Trophy inside, where Croser vented his feelings, ace Wolf Blass red man, John Glaetzer, was crawling around the bushes out the front, yelling “Where’s the dummy? Where’s the dummy?”

Glaetzer could afford to joke: he’d already won a record three Jimmies, and went on to win a fourth.

Individuals aside, this crazy amalgam of savagely competitive ethanol dealers needs a new sheriff. Those responsible for the current carnage should be forced to withdraw, never to play with such power again.

But the blithe refusal of the Rudd government to accept treasury official Ken Henry’s perfectly logical and fair excise regime for all alcohol taxation is crisp evidence that the ancien regime still rules: its lobbyists have been very hard at work reinforcing the constipating inertia extant. Henry’s proposal would have finally and sensibly rendered most of the unsustainable arid land grapeyards unprofitable, but bolstered the chances of small, premium producers.

The frisson of delight at the dribble now oozing down the big rivers proves there is no change, and no change likely. The same old suits sniff a new wave of dirt cheap Riverland premium. Maybe the piddly prices the National Wine Centre gets for its wine collection will best reflect just how premium all this premium really is.

While they’re saying twenty per cent of the national vineyard must go, it’s time somebody admitted the figure should be more like thirty or forty per cent. In lieu of any smarter method of devising the number, they could follow the success rate of the weddings in their National Wine Centre, loaded with an index locked to the tumbling prices of that premium wine collection.

But with all dread seriousness, the vine pull formula should be based on the number of jobs and dollars each litre of irrigation water creates. In places like Barossa and McLaren Vale, this ratio is normally exponentially ahead of any part of the Murray-Darling Basin, which now seems to extend to include the Limestone Coast. Not to mention the Adelaide Hills.

The glut these industrialists created sees professional growers, some four to six generations strong, suddenly being paid $300 a tonne instead of $3000. You don’t need so much premium fruit at $3000 now that you’ve decided the desert produces premium at $300.

Anybody taking water from the Murray-Darling should be forced to pay real prices for it. A litre of water should have a price. Period. Irrigators should pay a price a helluva lot closer to the amount that an Adelaide resident is expected to pay for what manages to ooze from the mains.

If you’re growing truly premium grapes in a unique place like McLaren Vale, where much of the irrigation water is recycled waste from coastal housing estates, you should be encouraged to remain in the business.

But the percentage of vineyard currently for sale in the Vale simply serves to prove that in the eyes of these industrialists, true quality, continuity and professionalism, let alone the environment, simply do not matter. The casual investor, the shareholder, is king.

The politicians are simply inept in addressing this. The only one to poke his head up with a sensible suggestion was Leon Bignell, the Labor member for Mawson, which includes McLaren Vale. The great Rudd/Wong/Rann triumvirate has failed to convince anybody. Tellingly, against all the pundits’ great wisdoms, after his statement, Bignell actually increased his margin in the recent South Australian election. Much greater egos saw their margins shrivel, and seats disappear.

When the wool business, the miners, or the wheat board makes a mess like this, there’s a very prompt independent enquiry. Heads roll. People are stood up and expected to explain their actions. Heros emerge.

Before Croser comes back to save the wine industry, there should be an independent judicial enquiry.

EXCISE IDEA COULD DESTROY BLADDER BIZ

AN EXCISE WOULD SEE THE PRICE OF EXPENSIVE WINES LIKE THESE TUMBLE WHILE BLADDER PACKS WOULD DOUBLE. photo LEO DAVIS

Rudd Money Man Wants Excise WET Rebate May Dry Up Lobbied Pollies In Abject Panic

by PHILIP WHITE - a shorter version of this story appeared in The Independent Weekly

Treasury wallah Ken Henry has thrown a very tricky handful of marbles under the feet of the wine industry with his recommendation that the current scramble of alcohol taxes be replaced with a simple excise. For seasoning, he’s thrown another handful under the political dries who want to tax kiddylikker - and spirits - to oblivion. With state and federal elections brewing, we’re in for a spat of extreme panic in Pollyville, as the mighty grog lobbies get to their nefarious work.

Henry is a favoured apparatchik of Labour Prime Minster Kevin Rudd, who faces an election soon, in the midst of insurmountable difficulties in attempting to manage the dimishing waters of the Murray Darling Basin. Two Australian states also face elections, six quick weeks from now. One of these, Tasmania, which is sinking in good water, has a premium wine industry but no discount bin plonk production; South Australia produces the most of both types of wine, with much of the business dependent on Murray River water, of which there is none.

Although general political commentators have so far failed to realise the full implications of Henry's proposal, State Labour leaders like South Australia's Mick Rann will soon be forced to announce the attitude they'll take when lobbying their federal counterpart.

WHILE THE TAX WOULD BE A NATIONAL IMPOST, SOUTH AUSTRALIAN PREMIER MICK RAM HAS ONLY DAYS TO MAKE A STAND ON THE EXCISE WHICH HIS FEDERAL COUNTERPARTS ARE CONSIDERING.

Wine is currently taxed on the value of the unit sold, be it bottle or bladder. Under an excise, which is a tax on the total alcohol each unit contains, the cost of a $14 bladder pack would double, to $31.07, while a $30 bottle would fall to $27.53. These KPMG figures would see your favourite boutiques boom, and the Murray-Darling Basin wine industry collapse.

HARD LIQUOR PRICES WILL TUMBLE UNDER THE EXCISE PROPOSAL

Never before has the gap between the polarised wings of the wine business looked wider. But industry bodies, like the Australian Wine And Brandy Corporation, which is partly funded by the taxpayer, are obliged to represent everybody in the business, so will have to protect the bladder boyos, who produce half the wine consumed, if not made, in Australia.

These two ends of the business have always been at war. It was Brian Croser who went to Canberra at the onset of the GST and current messy regime and organised the Wine Equalisation Tax, which offered newly disadvantaged small producers an annual rebate.

This writer argued contentiously at that time that an excise was the only clean, logical manner of taxing alcohol. It was a classic Aries vs. Virgo reposte. Croser came home touting his deal as a great victory for the entire industry. I argued that it was terribly messy, and would only postpone the inevitable collapse of the discount bin business.

WINE AND BRANDY CORPORATION BOSS ANDREW CHEESEMAN WAS BRIAN CROSER'S ACCOUNTANT AT PETALUMA

Croser’s band-aid would simply keep the huge irrigating industrialists on side with the tax-dodging doctors and lawyers with ill-conceived hobby vineyards. No doubt he had discussed this at great length over many Bridgewater Mill lunches with the likes of Alexander Downer, the former Liberal government's Minister of Foreign Affairs. Not to mention folks like Amanda Vanstone (Immigration Minister under the same conservative regime) and Robert Hill (Defence Minister who became Ambassador to the United Nations), who co-owned the relatively tiny Amicus brand with Walter Clappis. These guys had a very heavy pull on John Howard’s wine taxation philosophy.

An open, far-sighted mind might see Henry’s proposal as the perfect opportunity to cleanse the big rivers of the scourge of an industry which is in such gross, nay, grotesque, oversupply to the extent that it’s collapsing anyway. This would release water to the Murray Mouth, and remove the source of much of the grog consumed as an alternative to sniffed petrol in aboriginal communities.

HENRY'S EXCISE WOULD SEE A BLADDER PACK SOAR FROM $14 TO $31, AND THE COLLAPSE OF THE IRRIGATING DISCOUNT WINE BUSINESS, LEAVING A LOT MORE WATER TO RUN DOWN THE MURRAY. GOOLWA IMAGE BELOW BY KATE ELMES.

It would also, according to the Winemakers’ Federation of Australia, result in the loss of 12,000 jobs.

Whilst the cynic might argue that these jobs are going anyway, the idea of the new tax will fill many country electorates with even more fear and depression. The milder sceptic could suggest that the discount wine industry is in permanently deep merde as long as the international wine glut continues, and that any movement which might lead to its dimunition is something healthy which much be addressed.

Apparently Henry has stepped his excise numbers: the brackets would be 3.5 per cent alcohol and below, then up to 5 per cent, 7 per cent, 10 per cent, 15 per cent, and above 22 per cent.

This would also favour the premium wine lover who has spectacularly, internationally, turned away from the sorts of dead-head alcohol bombs we’ve been rotely making in the twelve years since one American critic, Robert Parker Junior, began to tout them. While the wine blog explosion has seen Parker lose some power, the notion of an increased tax on wines above 15 per cent would surely be a strong incentive to Australian winemakers to return to healthier alcohols. Sales of more modestly balanced alcoholic wines should increase internationally.

In the meantime, a relaxing of the stifling tax laws and regulations on distillation could see a great deal of the wine glut converted to industrial alcohol, the income from which could perhaps be devoted to funding the next vine-pull scheme, which seems increasingly imminent, and would be likely to see a permanent cessation of irrigating to produce wines which sell for less than the price of bottled water.

As for the price of alcopops falling from $3.30 per unit to $2.42, well. At the risk of adding complexity to Mr. Henry’s pristine simplicity, perhaps the excise should be extended in the case of premixed drinks to include an extra charge on sugar and other sweeteners when mixed with alcohol. If caffeine was also included in this kiddylikker, another hike could be imposed. Banning such cocktails is futile: anybody can whup down three or four stiff short blacks between sessions in the boozer.