WET: DUDLEY BROWN CLEARS THE WATER

DUDLEY BROWN AT WORK AT INKWELL WINES ... CLICK IMAGE TO SEE A VIDEO OF HIS PRESENTATION AT TedX DUBBO

Wine Water Tax And Politics
Dudley Brown At TedX Dubbo
Pity He Didn't Mention Religion

Below is the full text of the former Chairman of the McLaren Vale Grape Wine and Tourism Association's speech at the recent TedX Dubbo conference

My name is Dudley Brown. I am a wine grape grower and winemaker in McLaren Vale, South Australia. Please ignore the accent, its Australian. I’m just a bit confused. In fact, I’m a lot confused. That is how I ended up speaking at Tedx. They actually invited me to share my confusion with you.

Before I became a farmer, I was in recruiting for start-ups in California. As my business education was in wealth creation and not wealth redistribution, I was poorly prepared to understand the politics of agriculture in Australia.

I moved to Australia in 2003 not long after I realized that my three biggest expenses in California were my mortgage, property taxes and wine. The idea was to raise my kids in a beautiful place and eliminate my biggest expenses by buying a vineyard and drinking my own wine. What could go wrong?

I considered three wine regions in California and five in Australia. I hired a viticultural expert and researched grape and wine quality, soils, climate and water before choosing McLaren Vale above all others.

My plan was to eke out a living selling grapes and building a very small high-end wine brand to support my family.

After arriving, I worked as a laborer in my vineyard for three years improving so-so vines into some of Australia’s best using principles we now call sustainable farming.

In 2005, the risk of water shortages resulting from the drought made me realize that I could be driven out of business and lose my life savings. Mains water then cost about $900 per megalitre. It’s now approaching $2500 per ML – high enough to have put me out of business.

The good news was that I had an alternative – a privately owned reclaimed water system was nearby. The bad news was that it would cost $100,000 just to connect to it.

Reclaimed irrigation water has two advantages for the world:

1) It decreases demand for drinking water

2) It reduces the amount of pollution that flows into the ocean.

I helped start a plan with other small farmers to ask our governments to match investments made by us to substitute our irrigation source. Our approach was market based – the government’s investment would be about the market price for permanent river water rights at the time. The pollution we prevented was a bonus.

We pitched state and federal politicians on the idea but our plan became a “policy issue” to be studied by the bureaucracy. In short, it went nowhere.

In the lead up to the 2007 election, Anthony Albanese’s advisor called me out of the blue one day to ask for a meeting with Anthony the next day. After the announcement that Labor supported our plan, a political bidding war broke out that resulted in $4 million in funding from the state and federal governments for our plan. That was when I learned something big.

Big idea #1 – Politics matter more than policies. Policies don’t change until politicians need to win an election.

Four years on, we have permanently substituted around 500 million litres of drinking water – enough for 2000 households - per year and we are only halfway done.

This little project initiated my un-holy descent into the politics of agriculture in Australia.

Hopefully, you’ll understand why I was slow to catch on to my Big Idea #2. It may come as a serious shock to some of you too.

Big Idea #2: Wine is not Food.

Australia does not need more wine. It does need more food.

These two Big Ideas inform my view of three policy areas that impact the wine and grape industry – water, tax and land use.

My confusion is local in nature but has national importance. As Tip O’Neill famously said, “All politics are local.”

The wine grape industry is in long-term oversupply. Approximately 1/3 of the wine grapes grown in Australia are not required by wineries for wine. Because most grapes are substitutable for grapes from other regions, the effect of this is to drive down grape prices in all regions.

As a guy with pretty strong free market beliefs, I know that low prices drive out inefficient and unprofitable producers. But confusingly, in Australian, they don’t. Why?

In discussing this problem with those in government, their stock response is: “we’re not in the business of picking winners.” This led me to big idea # 3:

Big Idea #3:

Government policies pick winners - whether they do something new or not and whether they mean to or not.

Current taxation of wine in Australia is done on the basis of the value of the wine, not on the amount of ethanol it contains.

The rest of the ethanol industry – beer, spirits, etc - is taxed on the amount of ethanol it contains. The effect of the current tax policy is to make low priced wine – particularly cask wine - the cheapest way to get drunk in Australia.

Ethanol is a dangerous and addictive. Those with the least money and biggest thirst for ethanol logically buy cask wine. Despite their logic, these folks need help, not cheap booze.

The outcome of current policy can be most visibly seen scattered across the outback in the form of empty casks, ruined lives and decimated communities – particularly Aboriginal ones. However, the costs are spread across the entire population in the form of healthcare costs, broken families, crime, drunk driving deaths and homelessness to the tune of many billions per year.

While the wine industry isn’t solely to blame for this, it insists on maintaining its tax-advantaged status as Australia’s low cost provider of ethanol. On the other hand, it asserts that wine is a hedonic product – that we buy and drink wine because we enjoy its flavor and alcoholic properties and that overwhelmingly, we do so responsibly. Fair enough. My confusion is this: if wine tastes better and is taxed the same as other forms of ethanol, why is the wine industry worried about competition?

The second aspect of the current tax is the 31% WET rebate. The intent of this policy is to refund taxes paid by small wine producers – who generally produce higher priced wines – to compensate them for the high expense of the value based rate of tax they pay. Yea, I know – it’s confusing!

As growers have found winery buyers of grapes vanishing, they are increasingly lending their grapes to middlemen who offer the grower the proceeds from making their grapes into bulk wine a few months later less the cost of production. What could go wrong?

But, crucially, the middleman then pockets the 31% WET rebate on the sale price. This money is earned with almost no capital invested and no risk while the people who have invested their lives in their vineyard just get even lower prices the next year because the wine glut grows.

The net of this is that the taxpayer is funding middlemen who have no capital at risk and grape growers with unviable businesses to make our very worst grapes into wine to be sold around the world with “Made in Australia” stamped on every bottle for as little as 50 cents per litre. Which winner has the government picked? Do they even know?

In the 2011 vintage, it is believed that about 900,000 tonnes of wine-worthy (this means disease free) grapes were harvestable for table wine this year. Despite this, Australia processed over 1.6 million tonnes of grapes. This means that as much as 45 million cases of truly awful wine was made and added to the oversupply.

The only “demand” for bad fruit in 2011 was from rent seeking middlemen who made common cause with desperate farmers to take taxpayers’ money legally. Unintended consequences are called unintended for a reason. They’re unintended! Is this outcome what taxpayers’ want?

In the grape growing industry today, inland regions use seven to ten times more irrigation water to grow one dollars worth of grapes than coastal regions like the Barossa or McLaren Vale. If you factor in reclaimed water usage, inland regions today use up to 25 times the amount of drinking water to grow one dollar’s worth of grapes as in McLaren Vale.

Twenty years ago, McLaren Vale produced similar yields of grapes with similar amounts of irrigation to many inland regions today. But, we realized we were destroying our aquifer in the process. To protect our long-term sustainability, we limited water extraction in the nation’s first managed basin. The effects were:

1) Prices for McLaren Vale grapes rose as quality rose

2) Growers suddenly owned water rights worth $15,000 per megalitre instead of nothing

3) Our aquifer is re-charging, even in drought years

4) Water restrictions wrecked our lower value almond growing industry

This step change in water management led me to:

Big Idea #4:

Regulatory changes can be a good thing as long as they are applied broadly and equally.

The saying on the River Murray is “if you’re downstream, you are dirty with everyone upstream.”

To understand inland water usage, up to 1000 litres of river water are required to produce one litre of wine that sells for less money than one litre of bottled water in the UK or the USA. Confused yet?

Here’s a silly idea - why don’t we cut out the winegrower and make some real money selling a thousand bottles of water?

The peak bodies of the wine industry have defined the industry in terms of cool climate coastal regions vs. warm climate inland regions. But, the consumer doesn’t care about the climate of the region of production – they value price and quality.

But, if we extend this industry definition to the analysis of serious data, what we discover is that the highest value coastal regions create 4.3 times as much economic value and 5.5 times as many jobs “per grape” as low value inland regions.

Now, I want you to think like a business owner for a minute - if you owned Australia, would you want to invest in those that create more value, jobs and trade from wine or less? Would you use your scarcest resources to grow food or un-needed wine?

As it stands, SA Water is entitled to extract 200 GL – that’s two billion litres - of water from the River Murray for free every year. Even in drought years, Adelaide didn’t need a lot more than this because of local catchments.

Now, SA Water is building a 200 GL desalination plant to “drought proof” Adelaide for $1.8 billion plus annual operating costs in the hundreds of millions, whether the plant is in use or not. On top of that, South Australia has had to build new gas fired generators to make up for the expensive “green energy” that the de-sal plant bought. Most folks up the river think these are responsible ideas.

Instead of a de-sal plant, the government could have invested the same amount by buying water licenses totaling 200GL from unprofitable grape farmers in the Murray Darling basin by paying them above market rates of $2500 per megalitre for their permanent water entitlements.

Under this approach, these farmers would have been able to retire in dignity with their mortgages paid off or been able to purchase annual water to grow food on their land.

The entire national grape surplus of 500,000 tonnes of annual production could have been wiped out and the wine industry restored to a profitable level of production.

Australia would not have lost one calorie of food production.

And Adelaide’s water needs would have been met in perpetuity.

Now, here’s the pointy bit – after buying these water rights and solving the wine industries problems, the government would have still had $1.3 billion left over. This is almost enough to build the new Royal Adelaide Hospital without Macquarie Bank’s assistance. But, governments would have had to pick a winner.

So, whether you care about the wine industry, CO2 emissions, inland communities, the water supply, the health of the river, banker’s profits, better health care or your tax dollars, these choices matter.

The truth is that there has always been plenty of water in the river – we’ve just let the government allocate it very poorly. As Ronald Reagan once said, “if we put the government in charge of the Sahara Desert, in five years we’d have a shortage of sand.”

Which leads me to:

Big idea #5 - let the government do what it does best – collect taxes – and let the market do what it does best – allocate resources.

For instance - what if we put a $50 per megalitre levy on all water extracted from the Murray Darling system and put the money into a trust fund? If this seems like a lot of money, remember in Adelaide we pay $2500 per megalitre for city water.

Then the government could hold auctions where water license owners voluntarily tendered their water entitlements to be bought by the fund until permanent environmental flows were guaranteed on the river.

The levy would immediately drive the most inefficient and unprofitable water users to sell entitlements for the most efficient price, while those who stay on the land would have a permanent guaranteed water supply as well as incentives to invest in efficiency and quality.

The caveat to this would be for flood based crops like rice and cotton - we could give them free water in flood years. And, because water would be in the river all the time, floods would be more frequent and more water available for annual purchase.

This approach offers pain and gain for everyone. Everyone would have an equal incentive to be more efficient while guaranteeing Australia’s long-term food supply and the health of the river.

The reactions to proposals for step changes to current policies are predictable: “we’ll bankrupt farmers and destroy communities” and “we don’t pick winners.”

The short answer is this - we’ll get these outcomes anyhow – just more slowly and less rationally and with worse outcomes for taxpayers, the rest of the agricultural industry and the environment.

In Australia, the best regions for agriculture are mostly near the coast because they have more rainfall. This is also where it is cheapest to dig mines or drill for gas because of access to transportation. Unfortunately, this is also where 90% of us live.

Our best land and food security is being sacrificed for housing estates and mining because:

1) The government is usually the owner of the land and needs the money to fund infrastructure for bigger cities and mines

2) The government earns stamp duties and royalties from these projects, which it uses to fund infrastructure for bigger cities and mines

Does anyone else see a pattern here?

In McLaren Vale, the Labor government just sold land for a 1000 house estate on some of the best cropping and viticultural land in the world despite furious local opposition. An adjoining property grows grapes that end up in wine that sells for $250 per litre – 500 times the price of the drek produced by our tax incentivized middlemen.

The new housing estate will be on land classified as “low value” because the government only share-farms grain on it. The fact is that if agricultural land isn’t in highly valued use, it gets sold for housing.

The only serious solution is to embrace denser, smarter cities where the best agricultural land is ring-fenced in perpetuity from urban sprawl.

DUDLEY BROWN (LEFT) AT LAST YEAR'S TRACTOR ACTION DEMONSTRATION OPPOSING THE SA LABOR GOVERNMENT'S PROPOSED SUBURBAN DEVELOPMENT ON PRICELESS AGRICULTURAL LAND AT SEAFORD HEIGHTS, McLAREN VALE. ALSO PRESENT (LEFT-TO-RIGHT) ARE LAURA JACKSON (WE OPPOSE SEAFORD HEIGHTS), GRAPEGROWER JOHN HARVEY, PHILIP WHITE, AND PETER DAWSON (CHAIRMAN, AUSTRALIAN WINE RESEARCH INSTITUTE) photo LEO DAVIS

Having lived in California, I’ve seen the best and worst models for protecting valuable land in Los Angeles and Napa Valley. We have a choice.

In McLaren Vale – agricultural land has risen 30 times in value in the last 40 years. We have prodded the current government to embrace a long-term protection strategy for our best land after a five-year campaign. It isn’t law yet bit it’s a Big Idea we stole from the Napa Valley where agricultural land has increased in value by 300 times in 40 years under a similar protection model.

The nexus of interests between treasury departments, developers, engineers, construction companies, miners, unions and “planning departments” may be too strong for this to change. Maybe.

This leads me to revise Big Idea #1: Politics matter. But, politics - and politicians - could matter a lot more if we make Big Ideas political ideas.

Tedx is a brilliant forum to air the Big Ideas governments find unthinkable - taxing alcohol rationally, building denser cities, ending the dream of endless sprawl, putting levies on irrigation water, spending the proceeds to future proof our food and water supplies, protecting people without means from cheap ethanol, picking real winners, whatever.

This will only work if you leave Tedx and start thinking the unthinkable, saying things your neighbors won’t agree with, calling your MP every week (ask mine, I call him at least three times a week), building new kinds of community groups, blogging, writing, talking, and generally upsetting people. This also means bypassing traditional industry and policy structures.

Politicians, not bureaucrats, need to know that they need to change their policies or that they will be changed out at the next election. Voting for the party you have always voted for ensures that you keep getting these same crappy results because of:

Big Idea #6:

Politicians take you for granted and your silence as permission.

The truth is that you own this country. You are the person who can turn Big Ideas into political ideas. Politicians and bureaucrats are your employees. Its your job to make it clear what you want and to keep Big Ideas in the air and on the table.

It’s no fun figuring out whom to upset every day but neither is running out of great land, clean water or healthy food.

Or, good wine. Now, that would be disaster. Thank you.

PEAK OZ BODY REEK: WINE BIZ ON THE NOSE

GREENOCK CREEK ROENNFELDT ROAD VINEYARD AT HARVEST: BUGGER-ALL IRRIGATION; NEVER MORE THAN A TONNE PER ACRE; HAND-MADE; ONE OR TWO BARRELS A YEAR; $190 A BOTTLE; HUNDREDS OF PARKER POINTS; ALWAYS SELLS OUT - SUSTAINABLE? INDUSTRIAL? LEO DAVIS PHOTO

Australian Wine Industry Goes Off In Summer Break
Sudden Sicko Revelations On New Year's Eve

by PHILIP WHITE

“Wine industry grapples for new hook” croaked the Sydney Morning Herald on December 31.

Precisely who it was that decided to run this piece of deep misery on the last day of the year, when most readers are too full of the fruits of the wine biz to remember anything, let alone read, remains to be seen.

I’m sure it was dumped, like the unseemly crock it is, by somebody who hoped it would just sort of gradually break down and dribble through the many levels of the business nice and easy over the summer holidays, so’s not to cause too much of a stink all at once.

Reminds me of John writing in The Holy Bible, King James Version, in chapter 3, verse 13 of his gospel: “And this is the condemnation, that light is come into the world, and men loved darkness rather than light, because their deeds were evil.”

Good enough reason to keep the stink under a tin until dark falls on New Year’s Eve and the whole nation gets maggoted, eh?

Having sat watching this nefarious business for thirty years, I feel vaguely qualified to respond to this article, bit by bit.

The wine industry was exposed to some unpalatable truths this year, as the Australian Wine and Brandy Corporation acknowledged that vineyards and winemakers would need to make major changes if they are to survive an ever growing plethora of challenges.

Well, yes. This is the body that has overseen the dumbest broadscale rooting of the Australian countryside, local economies, public health, families, environment and water during the last decades. Its board includes nobody who grows grapes; nobody with actual investment in the wine industry; nobody I would call a particularly talented hands-on winemaker. (There is one winemaking director who is on the board for his marketing skills, according to the original press statements). Two of its small number work for huge transnational companies (Pernod-Ricard; Louis Vuitton Moet Hennessey) which are direct rivals of the Australian wine business. Its members change in about one quarter the time it takes a responsible winemaker to decide upon a flavour, find the land, prepare it, plant it, harvest it, convert it from primary to secondary product in the winery, mature it, package it as something gastronomically attractive, market it, promote it, sell it, distribute it, and see it winning respect.

Major changes indeed.

With the preceding "boom time" party now well and truly over, 2009 could prove to be a major turning point for the consortium as small and large operations alike look for innovative measures to help the Australian wine industry recover from what has been a long-running hangover.

Yes. As I have consistently written for thirty years, there is no point in the driest country on Earth buggering arid land and wasting precious water to make cheap rotgut bladder pack quality wine which is two or three times the strength of your average beer for sale to the world at the price of imported water.

2009 IS the major turning point. Things have already changed, and admitting this on New Year’s Eve will not make the facts go away.

This industry is cactus whether these geniuses look for innovative measures or not.

The confronting reality for Australia's wine industry is actually a cautionary tale for all producing countries, says the Australian Wine and Brandy Corporation.

Well, yes. The Australian wine industry should immediately advise the world to drop the Australian winemaking recipe immediately. It is Australia’s duty. Through its great publicly-funded halls of academe, like the University of Adelaide, this industry trained thousands of winemakers and sent them out like apostles around the world to advise our rivals how to do things our way. We never seemed to realise that because they had the equivalent of slave labour, no environmental restrictions, and either plenty of water or plenty of water which could be procured illicitly, we never seemed to realise that these countries would be able to make cheaper wine than Australia could.

So before their environments fail like Australia’s, before their water dries out, before their communities drink themselves to oblivion and ruin, of course we should be out there, telling them to stop.

The University of Adelaide should quickly knock a course together, offering a doctorate in how to undo what we’ve just taught these hapless copyists to do.

The people who have encouraged the Australian wine industry to develop to this sickening delusion should all be on the road, at their own expense, apologising, and helping put things right. In Georgia, Romania, China, India, Argentina, Chile ... wherever it’s necessary.

The corporation's market development manager, Paul Henry, says the industry will in all likelihood face production without profit and diminishing bargaining power in the face of attritional retail dynamics caused by the global financial crisis.

Well, yes, and all the above. Has anybody sat down and considered precisely how much wine the world should be expected to drink? That would a handy number to have before we encounter tricky difficulties like the global financial crisis, which wasn’t really much of a surprise to those of us who live moderately and watch.

Despite the ongoing drought, wine production went up this year, according to the Australian Bureau of Statistics (ABS), but lower domestic sales and a drop in exports led to a surplus in wine stocks.

Yes. But this was no surprise. The whole business was looking forward to a bumper harvest until the Lord smote the grapeyards with withering heat. The heat was the surprise. The export slump was predicted; the increase in yields per acre and total tonnes harvested was exactly what the University of Adelaide and the Australian Wine and Brandy Corporation have been struggling for decades to achieve. This oversupply – two billion litres in tank at the moment, and another good vintage looming – is the direct result of everything everyone’s struggled for. Just how this industry could justify the use of the extra water required to achieve these enormous increases should confound and enrage the entire community.

"Global financial crisis aside, Australia has manoeuvred itself into a situation where innovation and efficiency in production has outstripped the sector's own ability to manage that capacity," Mr Henry said.

What did I just say?

Exports of Australian wine fell by nine per cent to 715 million litres and the United Kingdom remained the largest importer of Australian wine, taking 268 million litres valued at $895 million. However, Mr Henry says Australia's competitors should be mindful of being hubris.

I think that should be hubristic.

I’ve only met Paul Henry once, and on that short occasion he impressed me. He seemed to understand that he was on his donkey, riding into a seething Jerusalem. But I got the feeling that the only eternal life he could see was the history he’d leave behind. There are not many successful liquidators remembered down through the years.

"These current market and structural challenges are not exclusive to Australia ... they are common to the development cycle of all wine producing countries," he said.

Well, yes, apart from the fact that this country seems to be withering, bleaching and cracking rather faster than those with snow-peaked mountains providing them with ongoing life.

There are no environmental scientists on the board of the Australian Wine And Brandy Corporation, either.

Remaining optimistic the industry will return to its former days of glory, Mr Henry said the real judgment call should not be based on how Australian viniculturists got themselves into such a difficult supply and demand situation, but rather, how and when the industry will get itself out.

Yes, of course. Savoury though the notion be, there is little point in stringing the whole roadside with crucifixes. But what should happen immediately is the old guard, who got this amazing industry into this decrepitude, should never, ever be given another chance. They should take their money and the remnants of their glossy gastroporn fame, and retire, planting native vegetation as they go. They should have no further influence over our own great public institutions, like the University of Adelaide. They should never be permitted to represent or influence this country anywhere, ever.

Which brings us to the question: is there sufficient hot young blood hiding in the hallways and annexes of the Universities and the great glimmering refineries of this country to come out and lead? Have we trained any? If we did, would we recognise them? Are they brave enough to speak? Do they have the intellectual and moral exactitude to do this awful job?

If we haven’t trained any such leaders, then those in charge should in fact be crucified on the roadsides after all.

"The stated aim of the industry is to identify a credible premium to be paid for Australian wine and to move our production and marketing platform towards a quality vision that celebrates sustainable value above unprofitable volume growth," he says.

Doesn’t that mean make better wine at better prices if indeed the environment permits, the market desires, and government tolerates?

Although at the end of 2007 there was concern there would be a mass exodus from viniculture in Australia, experts now say the removal of several vineyards is necessary if the industry is to remain on a sustainable footing.

Several vineyards? The whole mentality of the current “industry” – and that’s it’s own word – is to continue planting enormous broadacre monocultural grapeyards the like of which continue to be planted, lickety-split, right up the Murray darling Basin into Queensland, and all over the bits of the south-western corner of Western Australia which aren’t already dying under intensive bluegum plantations.

The whole mentality of the current “industry” is to keep the grape prices down by forcing out of business the specialist families who’ve hand-worked environmentally-responsible vineyards with modest expectations through drought, bushfire and flood, for generations.

The Australian wine “industry” is about as smart as the American corn industry, which must over-produce to succeed. There are no fences anymore, no plants, no insects, no shops, no townships, nobody with dirt on their hands. Plenty of petrochemicals; plenty of poison. But no flavour.

Despite earlier gloomy predictions, ABS statistics show the total area of grape vines this year was slightly higher than last year at 166,000 hectares and, with production up, yield rose from 9.3 to 11.8 tonnes per hectare.

See? From whence came that water? Eh?

Winemakers Federation of Australia chief executive Stephen Strachan says it is because of the success of the industry in recent years that so many challenges have arisen.

Exactly. We’re so goddam clever – remember hubris? – that we fucked it completely. Greed comes into mind, too.

"We saw a lot of people come into the industry expecting the phenomenal growth to continue and we've got a job to do to try to keep that market share, rather than continue to grow," he says. "Australia, I think, is now the fourth largest wine producer in the world."

There’s a lot of stuff in that par.

The likes of Strachan talked the business up for years, encouraging increased investment. Every extra tonne of grapes grown in Australia sees the Wine And Brandy Corporation budget swell. The money comes from a levy on tonnes harvested.

Which has nothing to do with market share. Share of what? The biggest wine oversupply in history? The biggest recreational drug racket fiasco ever? Share of what?

The ABS says the total grape crush for the 2007-08 vintage came in at 1.8 million tonnes, up by about 30 per cent on last year, and produced 1.2 billion litres of wine.

Giving us two billion litres of very ordinary plonk to sell into a world market that’s already overflowing.

Australia's largest winemakers accounted for 71 per cent of the total crush, while the smaller winemakers averaged 97 tonnes each. Mr Strachan said although the drought continued to ravage the country, the high quality and size of the 2008 vintage surprised a lot of people.

And delighted those big four companies with the 71 per cent, as their costs were delightfully low. Two of those four, half, of course, are not Australian companies, and you needn’t be a cynic to realise Foster’s won’t be Australian for very much longer.

"It was a very challenging vintage because of the size of it and if we have another vintage of that magnitude, then there is a fairly high likelihood that a significant amount of fruit won't be processed," he said. "The bottom line is there needs to be an adjustment downwards in terms of our vineyard capacity in Australia and that will probably happen at a greater pace now because grape prices are going to be very low this year. From an industry perspective we need to see some vineyards removed so we get back on to more stable footing in terms of sustainability."

Okay, Mr. Strachan, we get your drift. We need to lose a quarter of our vineyards. If you like, I can make available thirty years of tasting notes, with say, two to six thousand wines assessed each year. Let’s say we sort them in ascending order of scores, and tell the producers of the bottom quarter that they obviously don’t know what they’re doing and should simply eff off.

That would provide this industry with its biggest ever international marketing message.

If we also locked in a ratio of water used per dollars profit per tonne of grapes, and native vegetation planted to counterbalance the environmental damage inevitably incurred, that would be another incredible marketing message that would be of enormous assistance in notifying the world that we’ve been leading them in the wrong direction, too.

In fact, their drinkers might even forgive us. People might begin to trust us again.

Mr Henry agrees there is an urgent need for rationalisation and downsizing required within the industry. "But there was little consensus about where and who that corrective measure would come from," he said.

Try my suggestion above, Paul.

And while some might expect a limited amount of water to restrict the number of hectares covered in vines, the corporation reports that the physical availability of water is not likely to be a serious constraint on the size of the 2009 harvest. The ABS says nearly all vineyards in Australia were forced to irrigate this season, bringing the average water consumption to 3.2 megalitres per hectare, with drip and micro spray the most common forms of watering.

So?

"About 65 per cent of all wine grapes are grown in South Australia's Murray Darling Basin and even if drought breaks, the issue is not so much how much rain we have but more so how much irrigation there is," Mr Strachan said. "The river is going to take a number of years to fill up after the drought breaks, so the water outlook is not terribly promising."

Does that mean growers should steal water? How does he know this is a drought and that it will break?

He said federal reform was needed in regards to water trading allowed between irrigators and universal allocations.

Oh. Gotcha. Put him in charge of the River.

Wine consumers are proving to be "unforgivingly Darwinian", says the Australian Wine and Brandy Corporation. The peak industry body says the market place is showing "little or no interest in any attribute other than volume at low cost".

"The most likely effect of the credit crisis is more conservative spending by consumers and gravitation to lower price points," the corporation's information and analysis manager, Lawrie Stanford said. And Mr Strachan agrees.

"We've got a global financial crisis that's leading to either a reduction in demand or consumers trading down to lower priced wines," Mr Strachan said.

Right. Let me think aloud. Forget most of our export. It’s neither profitable nor sustainable. Half the wine Australia drinks is in bladder packs, right? Mothers’ little helper. The silver pillow; the chrome handbag. Then we have, say, Greenock Creek, or Wendouree, which never makes more than fifty tonnes and never sells a bottle below, say $50.

The chrome is begat by chrome. The glittering refineries; the monoculture; the efficiency; the reliability; the science; the University of Adelaide; the salination; the alcoholism; the health costs; the full jails across the outback.

Wendouree is begat by Wendouree: by its hard dirt; its meagre climate; its humble expectations; its honesty with its customers; the way it decided against releasing any wine this year because it wasn’t good enough.

What do these businesses have in common?

Nothing.

So why are they lumped into one big cuddly “wine industry”?

Because the refineries need some modest honesty to ride upon, that’s why. Some quality, some reality, some gastronomic achievement. Some nuts and berries.

With domestic sales dropping by five per cent, Mr Strachan predicted the figure would continue to grow, particularly if the government introduced a tax on all alcoholic beverages in the new year.

I think he means “continue to fall”.

And the tax issue? Easy. Tax all alcoholic beverages on the amount of alcohol they contain.

Combine the resultant effect with that – cheaper, stronger, higher-volume packs will increase in price; winemakers will be encouraged to make wines of lower alcohol – with the results of my culling process above, and you have a happy, sensible, profitable, sustainable business.

Currently undertaking a review of Australia's tax system, and having already introduced a tax on pre-mixed alcoholic drinks, the government says "it is sometimes possible to improve overall welfare by taxing the consumption of particular commodities that cause social harm".

If government didn’t find these geniuses so easy to shove around then the twisted and arcane tax system the industry has already earned itself would never have been imposed in the first place.

As for pre-mixed alcoholic drinks? All the biggest wine companies have them. The wine industry invented them. In the ’sixties and ’seventies they were called Vin Spa or Pineapple Pearl, in the eighties they were West Coast Cooler and the like. Orlando (Pernod-Ricard) even had one called “e”, obviously hoping that a fair few bit of e would be dropped by the kiddies. The wine industry has always been in the business of selling alcohol any way it can. That is its nature.

But Mr Strachan says he is yet to see evidence that wine plays a big part in Australia's problem with alcohol abuse.

Then Mr. Strachan has never stood in the bed of the Todd River with his eyes open. What began with the gun is being finished by complacency.

With the government having signed an agreement with the European Union last week conceding the use of region-specific names such as champagne, Mr Strachan said Australian consumers might also steer away from their favourite drop for a short period once it was given a new classification.

Boo hoo. No more passing off.

He said wine lovers might be frustrated initially due to products formerly known as champagne, port, sherry and tokay being more difficult to locate on bottle shop shelves.

"It's just more a matter of working through a process where people become aware of a different set of descriptors," he said.

Mr Strachan said the new deal conceding the use of European names would mean less constraints on the way wine was made in Australia, allowing it to be more easily exported.

A different set of descriptors? Has Mr. Strachan ever read the claptrap, codswallop and balderdash that’s written on Australian wine bottles?

Mr Strachan said he expected large scale exporters would survive the economic downturn as a result of the deal, but that he was worried how the smaller-scale premium vineyards would fare.

"Consumers tend to trade down in a time of uncertainty, so they still continue to consume as much wine, but they tend to trade down, so those who are selling premium products are going to find the going pretty tough until we work through all the economic uncertainty."

This suits perfectly the perpetrators of the whole racket, right from the beginning. Trade down, and you support the refineries that have buggered the Murray and the Todd, and their inhabitants, you support the mentality of continual oversupply regardless of its effects, and you will need desperately to maintain status quo, with its morality, its experienced players, and its utter, overwhelming destruction.
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LONG DRY ROUTE TO THE KING OF THE RIVER

The author waits for Tony Bilson's magnificent repast at Trevor Knaggs' La Dolce Vita lunch at King River Estate

by PHILIP WHITE - A version of this story appeared in The Independent Weekly on 28 NOV 08

Horsham, drought, late afternoon. The sky is spectacular with thunderclouds: thousands of tonnes of water, stubbornly refusing to fall. Well-dressed farmers sit at footpath tables, glimpsing up, drinking coffee. There’s not much else to do. For hundreds of kilometres, every farm gate has a tractor or two for sale; a harvester; a favourite ute. There is no stock other than the odd scrawny sheep gnawing at what was supposed to be wheat, and a few bony cattle.

The roads have run down. Every village building needs paint. All those Wimmera streams that run north into the Murray are bone dry. I ask for more chilli on my chook burrito. The disbelieving lass produces a bowl of slightly mustard-coloured powder which rips the nose apart. Monosodium glutamate sprayed with Mace. It takes two beers to erase. Where’s the butcher? I ask, dreaming of edible food. Where’s the fruitaveg? “Coles”, she says.

Shops which once housed the butchers and greengrocers now brim with bric-a-brac: home-made artworks, trinkets, and useless caucasian artefacts that householders have chosen to live without.

On the hilltop west of St Arnaud, a quick thunderstorm has left one puddle. I report this to the nearest publican. “Fair dinkum”, she says. “You shoulda took a photograph of it. We coulda used it on a postcard!”

Further east, the Goulburn looks almost hearty. And so it should, if Melbourne’s new pipeline is to deliver. Across the Hume Highway the countryside turns lush green. We wind up the King Valley to Edi, where the tobacco farmers were, but now spread shooting vineyards, ash trees, oaks; creeklines thick with willow and hawthorn. Out of the car at King River Estate. “Jeez mate, this country’s looking good”, I say to winemaker Trevor Knaggs. “We get forty inches”, he says.

Perversely, the purpose of this journey is the annual La Dolce Vita Lunch. Trevor’s beautiful King River Estate wines, and a repast cooked by the great Tony Bilson, who makes the annual pilgrimage from Bilson’s at the Radisson in Sydney to King River, where he cooks for 120 in an old cowshed.

“Talk to Tony”, Trevor says. “Choose the wines. We’re proud of them. We’re going biodynamic.” A sexy tenor sax tootles away as the first diners arrive; waiters don shirts that say “Conserve water. Drink wine”. The first dish is from ancient Rome: almond gazpacho beneath a thin layer of oil. It comes with a croüton smothered in foie gras. Trevor’s 06 verdelho does it perfectly, with its faint hints of kernel supporting rather than contrasting. The duet’s ravishing.

“Now” says Tony. “This lobster tail will come out with fresh shelled oysters and seawater jelly”. The fumé, fennel and cream cheese of the 08 sauvignon blanc does the oysters and salty jelly perfectly, once again supportive rather than contrasting, just as the carambola and drying tannins of the 08 vermentino wrap that hearty lobster.

Somebody had promised to shoot some deer. No deer volunteer, and the 40 kilos of fillet Tony rattled up at the last minute in Sydney gets lost, so local venison turns up anyway. Tony roasts it and serves it in a sauce poivrade with chocolate, foie gras and juniper berries, with asparagus and a purée of potato and celeriac. The mighty King River Reserves, an 06 cabernet sauvignon and 05 merlot nail that dainty: in their different ways, both wines are chocolaty to some extent, and while the maturing chicory greens of the cabernet suit the celeriac side of the dish and the asparagus, the mossy, earthy, merlot nearly brings that Bambi back to life.

The Milawa Cheese Company presents a cheeseboard that just a decade back could be found only in Burgundy or Champagne. So we serve two unusual reds: a sweet 06 merlot, the result of a stuck ferment and some inspired tidying up, and the dry, unfortified - but tawny - 99 Nancy’s Shiraz, named after Trevor’s deceased Mum. “We gotta have this” Trevor says. “Mum’d love this”.

Tony’s mousse of chocolate with walnut cream, red berry salad and balsamic vinegar is a dryish, very adult affair, so we throw the dry 05 barbera at it. You oughta hear ’em slurp. This is one of the most utterly beautiful meals.

Coming home along the River, we first traverse hundreds of open channels gushing with water. They’re about the same width as the roads, and they’re using the new government grants to rubber-line them, but not enclose them. The chandlers are doing well in the drought: every fifty metres, there’s a neat little steel cable mariner’s ladder so critters can climb out if they slip on the rubber. But there’s only a glum puddle of a River at Echuca. From there to Swan Hill the anabranches are all dry, and there are millions of dead trees. There are no birds left on the road to Ouyen, and at Pinnaroo they’re irrigating potatoes with overhead sprinklers.

Labor suicides by water-boarding

by PHILIP WHITE - This was published in The Independent Weekly in July 2008

It was politicians who put the soldier settlers up the River. Poor buggers would just get back from the battles and horrors they’d never forget and they’d send ’em straight up the river with a shovel, a bundle of cuttings and an irrigation permit. Mine the Mallee for sugar; turn the water into wine, export it at the price of Coca Cola. Since then, until now, nobody’s had a second thought about the River. Anybody’d think the Chaffey Brothers still ran the entire basin.

Kevin Rudd certainly isn’t running it. COAG isn’t running it. Mike Rann’s not running it. Karlene and Penny aren’t in the race. Jock Harvey might just as well run it. He’s the chair of the McLaren Vale Grape, Wine and Tourism Association.

Having just left a meeting with the Federal Minister for Agriculture, Forestry and Fisheries, The Hon Tony Burke MP, Jock had a big spray, like most of the rest us did, anywhere we could, after the COAG collapse.

“There widespread support for the Federal Government taking control of the entire Murray River system through the compulsory acquisition of all water entitlements and then re-allocating water on a sustainable basis similar to the approach advocated by the Wentworth Group and scientist Mike Young”, was Jock’s first salvo.

Then it just kept coming:

“We are specifically concerned that instead of acquiring water entitlements, investing in infrastructure and efficiencies upstream will ultimately result in expanded plantings upstream and less or no water in the river downstream”, he said.

“The imminent collapse of the Murray River system is a national emergency requiring immediate federal government action”, he said.

“The Coorong is designated as a World Heritage Area because of its importance to the world’s ecology, not just the ecology of SA”, he continued.

“As the southern reaches of the Murray River system die, so to will the Coorong. As one of the richest countries in the world, how Australia solves this crisis will have a dramatic impact on SA and Australia’s standing in the world community, and on our leverage in making and keeping international commitments.

“The Government has the power to take these actions under the Corporations Act and we believe they must act now', he concluded.

Former Labor Party Senator Chris Schacht was at the meeting too. He should be running the River. He’s smart enough to warn that “every Federal Labor seat in South Australia except one was vulnerable to falling at the next election if the federal Government did not take immediate steps to take complete control of the river system”.

Paul Clancy, Chairman of the Wine Grape Council, should be running it. He’s ballistic about the amount of new vineyard planting still underway, in the face of gross oversupply and dwindling water resources.

“These damned Managed Investment Scheme plantings are continuing apace!”, he said last week. “200 plus new acres at Loxton. 200 plus at Lake Cullulleraine. 1200 plus in the Barossa. 200 plus at Wentworth. 200 plus at Ballarat. That’s only the start. Where’s the water coming from?

“This drought and the irrigation restrictions are simply masking the massive over-supply of grapes”, he said. “This industry needs 1.6 million tonnes of grapes to meet current demand and projected growth. We grew 2.1 million tonnes in 2006 and the prices collapsed. How much water will be wasted growing another 500,000 plus tonnes of grapes we can’t sell?

“There is, pure and simple, no potential for the industry to absorb this over-supply. The whole world is awash with oversupply, and the exchange rate is dead against Australia selling into that full market. Industry and government can no longer turn their backs on the grounds that this is free enterprise at work and that market forces will address this problem.”

While the big companies are still urging further plantings, they admit there’s a big glut of chardonnay: big enough for the price of those grapes to fall to $300 a tonne. So what’s the new deal? Now they want people to plant pinot noir and pinot gris because they’re the new buzz words. Apart from a tiny proportion of the Adelaide Hills and the Southern Fleurieu, there is no land in South Australia suitable for these difficult cool climate wine types.

Calling for mass plantings of such varieties, as Foster’s seems to desire, is about as dumb as taking fresh water from Tailem Bend and piping it to Langhorne Creek. Given one full day of stiff sou-easterly, the brine and sulphuric acid waters of the lakes will be well beyond Wellington and slurping neatly into the intake of the new pipe. Another twenty four hours of wind and the lakes shandy will reach Murray Bridge, where the Mount Bold pipe does its slurping. Another day of wind will see the same poisonous muck entering the intake of the Mannum Adelaide pipe. Duh!