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June 07, 2006

Too Much Wine

So too many people leapt into wine making in Australia, egged on by tax breaks:

Hundreds of Australian vineyards are facing ruin amid a glut of grapes that has left the industry producing far more wine than it can sell at home or overseas.

The problem is so severe that the industry said yesterday that it will take a multi-million pound government bail-out to save smaller producers from going out of business.

The popularity of Australian wine in Britain and America, coupled with generous government tax breaks, encouraged a craze for establishing vineyards from the late 1990s. The Wine Grape Growers' Council of Australia said that years of over-planting of vines and two recent bumper crops meant that up to 40 per cent of grape growers would lose their livelihoods unless urgent action was taken.

A problem created (in part) by tax breaks and subsidies should be solved by tax breaks and subsidies?

Give me a break. Let ’em go bust to bring the industry back into balance.

June 7, 2006 in Economics | Permalink

Comments

Sell us the wine cheap.

Posted by: EU Serf | Jun 7, 2006 10:33:27 AM

Maybe they should have sold ahead on the futures markets.

My sympathy meter is reading zero.

Posted by: AntiCitizenOne | Jun 7, 2006 11:07:37 AM

When we first lived in Oz in the late 80s, they were recovering from a govt scheme that had subsidised the ripping out of vines of varieties that no-one had liked - chardonnay and shiraz, IIRC.

Posted by: dearieme | Jun 7, 2006 12:32:52 PM

The article doesn't mention the "tax breaks" involved does it? If the tax system is unfair to wine producers in the first place and is then amended to allow them to get back to even, I wouldn't exactly call it a "tax break".

The wine industry has been subject to punitive taxes because it is in the "evil" alcohol business. Tax "breaks" that allow it to operate on the same basis as any other business is not really a tax break at all.

I would suggest a bit more caution in accepting things in the MSM at face value. Should I declare that I'm an Australian tax accountant and wine consumer?

PS Dearieme, the vinepull scheme didn't affect Chardonnay, precious little of the stuff around in the early 80's. However, it did cause the destruction of a lot of old vine (50 yr plus) Shiraz, Grenache and Mataro.

Posted by: Pete D. | Jun 7, 2006 1:35:02 PM

Thanks, Pete.

Posted by: dearieme | Jun 7, 2006 2:14:05 PM