Winegrowers baulk as MPI looks to claw back testing costs

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, under legislation 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 percent to 320 million litres in 2014.

MPI's proposed changes would recover $2.1 million from the wine sector in the 2015 to 2016 year, from a forecast $170,000 forecast for this financial year. The changes include the introduction of a levy to recover the cost of domestic standard setting and compliance, a further 1 cent 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 the industry $2.9 million annually, adding to the $200 million it pays the government, via the New Zealand's Customs Service, in excise tax each year.

"From our perspective requiring the industry to pay an additional $2.9 million to MPI every year is manifestly unjustifiable," Steven Green chair of NZ Winegrowers said. "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 some $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.

New Zealand's primary exports sector is worth $38.3 billion annually, and the more than 250 proposed changes to fees and levies would increase the amount recovered from industry for biosecurity by $6 million to $36.4 million, while lifting the amount recovered from food safety by $6.8 million to $62.1 million.

Submissions on the consultation paper close on Feb. 20.

(BusinessDesk)