Charges to winegrowers 'unjustifiable'

The recovery of biosecurity and safety costs is under review. Photo / NZME.

New Zealand winegrowers say changes to the way the Ministry for Primary Industries wants to recover the cost of its wine regulatory programmes will cost the industry $2.9 million a year and are "manifestly unjustifiable".

The ministry is reviewing how it recovers the costs of its biosecurity and food safety systems across the country's primary industries, after under-recovering for several years as the volumes of exports grew, according to its consultation paper on proposed revisions to the cost-recovery regime.

While taxpayers in part fund it, legislation says the industry which benefits from the work must shoulder some of the cost. This is the first review of the cost-recovery regime since 2008.

Since 2009 the volume of wine exports has increased 56 per cent to 320 million litres in 2014.

The ministry's proposed changes would recover $2.1 million from the wine sector in the 2015 to 2016 year, from a forecast of $170,000 for the current financial year.

The changes include a new levy to recover the cost of domestic standard setting and compliance, a further 1c per litre levy on wine exported, and an end to rebates for laboratory testing.

The department says it started subsidising winegrowers' testing to lift exports when the sector was in its "infancy and the costs to be recovered were small", however, the industry is now mature.

New Zealand Winegrowers calculates the proposed changes as costing $2.9 million annually, adding to the annual $200 million it pays the government, via the New Zealand's Customs Service, in excise tax.

"From our perspective, requiring the industry to pay an additional $2.9 million to MPI every year is manifestly unjustifiable," said Steven Green, chairman of NZ Winegrowers. "Other major primary industries are subject to the user-pays regime. However, unlike the wine industry, none of those sectors also pay a product specific tax."

The wine industry had an estimated turnover of $2 billion last financial year, with $1.3 billion of that in export earnings, according to a survey released by Deloitte and New Zealand Winegrowers.

Last year the government collected $892 million in alcohol excise, which it charges the manufacturer in a bid to deter excessive alcohol consumption.