Primary Industry Funding Schemes (Langhorne Creek Wine Industry Fund) Regulations 2016

The regulations define a closed geographic area as “Langhorne Creek” - four specific hundreds (Bremer, Brinkley, Freeling, and Strathalbyn). Only grapes grown within that area and used or intended for wine are “Langhorne Creek grapes”. A “Langhorne Creek grapes winemaker” is any person who carries on a business of making wine and processes Langhorne Creek grapes for that purpose. A “prescribed period” is a 12-month period ending on 31 May each year, which is the levy period. Contributions are calculated per tonne of Langhorne Creek grapes processed during that prescribed period. The regulations distinguish between grapes grown by a person other than the winemaker (i.e., a separate grower) and grapes grown by the winemaker itself (vertically integrated operations). For third-party grapes, the contribution is split: a specified amount per tonne payable by the grower and a separate specified amount per tonne payable by the winemaker. For self-grown grapes, the winemaker pays a single combined amount.

The contribution rates for each prescribed period up to 31 May 2022 are set out in a fixed schedule in regulation 5(1). The amounts increase modestly each year; for example, for 2015 the grower paid $5.15/tonne and the winemaker $3.60/tonne (combined $8.75, which equals the self-grown rate). For 2022 the grower paid $6.15 and the winemaker $4.31 (combined $10.46). From 2023 onward, regulation 5(1a) replaces the schedule with a ministerial discretion: the Minister fixes the amounts for each period by notice in the Gazette. The “prescribed maximum contribution” serves as a cap per person per period. Up to 2022 it was fixed at $30,000; from 2023 the Minister sets the cap. The Minister may vary any fixed amount or cap by Gazette notice published before the payment due date, and the variation can apply mid-period but only to grapes processed after the variation takes effect.

“Default in relation to contributions” is a defined concept: a person is in default if, within the immediately preceding two prescribed periods, they either have not paid all or some of their contributions, or have been refunded contributions from the Fund. Note that obtaining a refund automatically triggers default status for the next two periods. A person in default is excluded from receiving direct benefits or services funded by the Fund. The “refund period” is the window within which a refund claim must be made: 12 months after the prescribed period for periods up to 2021, but only 6 months for periods from 2022 onward. Refunds are paid with interest at the official cash rate from the date of payment to the Minister until the date the claim is lodged, which is a relatively short interest period (not from payment to actual refund). The “official cash rate” is defined as the rate fixed by the Reserve Bank of Australia prevailing on the date of lodgment of the claim.

The regulations directly affect two primary groups: growers of Langhorne Creek grapes and Langhorne Creek grapes winemakers. Growers are the persons who cultivate wine grapes within the defined Langhorne Creek area. They are liable for a per-tonne contribution deducted from the payment they receive from the winemaker. They also have the right (subject to timing) to claim a refund of contributions paid on their behalf. Winemakers are the collection and reporting intermediaries. They must calculate and deduct the grower’s contribution from the purchase price, add their own contribution, keep detailed records of growers and tonnages, furnish an annual financial statement to the Minister within 30 days after each prescribed period (i.e., by 30 June), and forward the total contributions with that statement. Winemakers who also grow their own grapes face a single combined contribution per tonne. The regulations also affect any industry body that, in the Minister’s opinion, represents both winemakers and growers. That body can receive payments from the Fund for its operating expenses, promotion, research, and other purposes. The Minister has discretion to choose which body receives funds, which creates a potential for rent-seeking or capture by one organisation. Indirectly, the regulations affect consumers and other market participants through the cost of the levy, which ultimately increases the cost of Langhorne Creek wine production or reduces returns to growers and winemakers. The compliance burden falls almost entirely on winemakers, who must maintain records, prepare financial statements, and remit contributions on time. Growers bear the deduction but have limited administrative obligations unless they claim a refund. The Minister and presumably departmental staff administer the Fund, decide on contribution rates, and assess refund claims. Persons in default lose access to direct benefits funded by the Fund, which creates an incentive to either pay contributions on time or forego refunds if they want to remain eligible for industry benefits.

The regulations impose a set of duties primarily on winemakers. Regulation 5(5) requires every Langhorne Creek grapes winemaker to keep proper records relating to the growers and tonnage of Langhorne Creek grapes processed and the contributions required to be made, both on their own behalf and on behalf of growers. Those records must be made available for inspection at any reasonable time by a person authorised by the Minister. This is an ongoing duty with no sunset. Regulation 5(6) requires the winemaker to furnish the Minister with a financial statement within 30 days after the end of each prescribed period (by 30 June). The statement must be in the form and contain the information required by the Minister, and if the winemaker has the necessary equipment, in an electronic form acceptable to the Minister. Accompanying that statement, the winemaker must forward the total required contributions for that period. Regulation 5(4) mandates that the grower’s contribution must be paid by the winemaker “out of the amount payable by the winemaker to the grower for the grapes.” This implies the winemaker deducts the contribution from the grower’s proceeds. If the grower’s cheque or payment is less than the contribution, the obligation to remit the full contribution to the Minister remains on the winemaker; the regulations do not provide a defence for non-payment if the grower’s proceeds are insufficient. The winemaker also must not make false or misleading statements in records or information provided (regulation 9).

Growers have the right to claim a refund of contributions paid on their behalf under regulation 5(7), by notice in writing to the Minister within the applicable refund period. They must supply evidence acceptable to the Minister of the contributions paid. If the Minister is satisfied, the Minister must refund the amount plus interest at the official cash rate from the date of payment to the Minister until the date the refund claim was lodged. Winemakers similarly may claim refunds of the contributions they paid on their own behalf. Rights to refund are, however, qualified by the short 6-month window for claims for periods from 2022 onward. The Minister has the right to set contribution amounts and caps from 2023 onward by Gazette notice, and to vary those amounts mid-period (regulation 5(1a) and 5(4a)). The Minister also has the discretion to decide which industry body receives Fund payments (regulation 6(a)) and to exchange information identifying payers and refund recipients with that body (regulation 7). A person in default has no right to receive direct benefits or services funded by the Fund (regulation 8).

The only monetary penalty explicitly prescribed in these regulations is under regulation 9: a maximum fine of $5,000 for making a statement that is false or misleading in a material particular in any information provided or record kept for the purposes of the regulations. This is a relatively modest penalty, especially for an offence that could involve significant sums if a winemaker underreports tonnage. The regulations do not set out penalties for failure to pay contributions on time, failure to keep records, failure to furnish financial statements, or failure to make records available for inspection. However, the Primary Industry Funding Schemes Act 1998 (the Act under which these regulations are made) likely contains broader enforcement powers - for example, powers to recover unpaid contributions as debts, powers to enter and inspect premises, and general offence provisions for non-compliance. The regulations are silent on these matters, so practitioners must look to the Act for the full enforcement framework. The most immediate consequence of non-payment of contributions is not a fine but exclusion from benefits under regulation 8: a person who is in default (including having unpaid contributions within the preceding two prescribed periods) is not entitled to receive direct benefits or services funded by the Fund. That is a soft penalty, as the benefit exclusion may be irrelevant if the person does not seek industry-funded services. For winemakers who fail to deduct or remit contributions, the default definition would apply to them, potentially barring them from receiving promotional or R&D assistance. The $5,000 penalty for false statements is a criminal penalty, but the regulations do not indicate whether it is a summary offence, nor do they provide for continuing penalties per day of non-compliance. The Minister likely has administrative powers to suspend or revoke approvals, but there is no such mechanism in these regulations. The enforcement picture is therefore incomplete without reference to the parent Act, which may provide for interest on late payments, recovery of unpaid amounts as a debt due to the Crown, or other sanctions. The lack of explicit enforcement in the regulations themselves may create compliance uncertainty, as winemakers may not face clear consequences for late payment beyond the risk of being in default.

These regulations are made under the Primary Industry Funding Schemes Act 1998 (SA). The Act is the parent law that establishes the legal framework for industry funding schemes; the regulations operate within its parameters. Any powers, enforcement mechanisms, or procedural requirements not specified in the regulations are to be found in the Act. The regulations refer to the Act for the definition of “Act” but do not otherwise cross-reference specific provisions. The Fund is administered by the Minister “under the Act” (regulation 4(2)), so the Act’s provisions on fund management, investment of moneys, and reporting likely apply. The regulations revoke the earlier 2001 regulations but continue the Fund in existence, so any rights or obligations accrued under the 2001 regulations are transitioned. The regulations interact with contract law: the winemaker’s obligation to deduct the grower’s contribution from the amount payable to the grower operates as a statutory direction that modifies the contractual payment obligation. The grower’s net proceeds are reduced by the levy. If the grower disputes the levy or the deduction, the regulations do not create a private right of action, but the grower could challenge the ministerial decision via judicial review or the Act’s internal review mechanisms. The refund provisions interact with the law of restitution and statutory entitlements; the Minister’s discretion to accept evidence of contributions is subject to administrative law principles of reasonableness. The regulations also potentially interact with taxation law: contributions paid by a winemaker may be deductible as business expenses, and refunds may be assessable income. The official cash rate used for interest on refunds is a commercial benchmark, but the interest period is truncated (only from payment to lodgment of claim, not to actual refund), which differs from typical tax refund interest provisions. The regulations do not interact with Commonwealth industrial relations or competition law directly, but the Fund’s application to promotion and research could affect trade practices if it facilitates price-fixing or market sharing, although the Minister’s oversight reduces that risk. The information exchange provision (regulation 7) permits the Minister to provide identifying information to the industry body, which interacts with privacy laws; however, the regulations do not specify any privacy protections or limitations on use of that information. Practitioners advising Langhorne Creek winemakers should consider both the Act and these regulations as a package, and be aware that the Act may contain additional obligations such as annual reporting to Parliament or audit requirements for the Fund.

The 2016 regulations revoked the earlier 2001 regulations and were themselves amended on multiple occasions. The first amendment, 2017 No. 237 (Gazette 8 August 2017), omitted regulation 2 (the commencement provision, as that became unnecessary under the Legislation Revision and Publication Act 2002) and substituted a new regulation 5(8) concerning evidence for refund claims. Later in 2017, amendment 2017 No. 333 (Gazette 12 December 2017, commencing 12 April 2018) varied the definition of “prescribed period” in regulation 3(1) and varied regulation 5(1) to add further contribution rates for later prescribed periods (likely extending the schedule). The most significant amendment came in 2021: amendment 2021 No. 130 (Gazette 2 September 2021, commencing 2 September 2021). This amendment deleted regulation 5(1)(h), which had set out the fixed contribution rates for the 2023 period and beyond. In its place, the amendment inserted new regulation 5(1a), which shifted from a fixed schedule to ministerial discretion for periods ending on or after 31 May 2023. The amendment also varied regulation 5(2) to reference the new ministerial-set prescribed maximum contribution; substituted a new regulation 5(4) to clarify the winemaker’s deduction obligation; inserted new regulations 5(4a) and (4b) to allow the Minister to vary contribution amounts by Gazette notice, even mid-period; varied regulation 5(7) to adjust the refund claim rules; and varied regulation 5(10) to insert definitions for “prescribed maximum contribution” and “refund period”, thereby creating a shorter 6-month refund window for periods from 2022 onward. Finally, amendment 2023 No. 14 (Gazette 30 March 2023, commencing 30 March 2023) amended regulation 3(1) regarding “prescribed period”. The legislative history table shows various provisions amended, substituted, or inserted, and notes that earlier historical versions (from 8 August 2017, 12 April 2018, and 2 September 2021) are available. Notably, the shift to ministerial discretion for contribution rates from 2023 removed the last element of parliamentary control over the levy amount, granting the Minister the power to set both the per-tonne rates and the cap without further legislation. This represents a significant delegation of taxing power.

The source text does not name any cases, and no litigation history is recorded in the regulations or their legislative history. As subordinate legislation under an Act that has been in force since 1998, it is possible that disputes have arisen over contribution liability, refund eligibility, or the definition of default, but the source is silent on any such litigation. Given the relatively small geographic scope and modest contribution amounts (a maximum of $30,000 per person per period under the pre-2023 cap), the cost of litigation would likely exceed the sums in dispute, so few court challenges are expected. However, the 2021 amendments introducing ministerial discretion to set contribution rates could generate legal challenges on administrative law grounds - for example, if a rate is allegedly set for an improper purpose or without proper consideration. The definition of default, which includes being refunded contributions, is unusual: a person who claims a lawful refund is automatically in default for two periods and excluded from benefits. This could be challenged as irrational or contrary to the purpose of the scheme. The requirement that winemakers pay contributions on behalf of growers even if the grower does not deliver sufficient grapes to cover the deduction might also lead to disputes. No reported decisions are available in the source, so practitioners should be aware of the potential for future litigation, particularly around the Minister’s exercise of the new discretionary powers and the consequences of the refund-triggered default rule.

Several traps await unwary winemakers and growers. The most significant is the refund-triggered default rule: if a grower or winemaker claims a refund, they are deemed “in default” for the immediately preceding two prescribed periods and are excluded from receiving future direct benefits or services funded by the Fund. This means that claiming a refund can be a self-defeating act if the person later wishes to access industry promotion, research, or other benefits. The refund is not a clean opt-out; it carries a penalty of benefit exclusion for two years. Second, the refund period has been drastically shortened: for periods ending on or after 31 May 2022, a claim must be made within six months after the prescribed period (i.e., by 30 November of the same year). Missing that deadline forfeits the right to a refund entirely. Third, the interest on refunds runs only from the date of payment to the Minister until the date the claim is lodged - not until the refund is actually paid. If the Minister delays processing the refund, no additional interest accrues. Fourth, winemakers must pay the full combined contributions (their own and the grower’s) regardless of whether the grower actually pays for the grapes or whether the grower’s proceeds are sufficient to cover the deduction. The winemaker’s obligation to pay “out of the amount payable” is a direction, but if the amount payable is less than the contribution, the winemaker arguably must still remit the full amount. Fifth, the Minister may vary contribution rates and caps mid-period by Gazette notice, with the variation applying only to grapes processed after the variation takes effect. This creates potential for mid-season rate changes that disrupt pricing contracts between growers and winemakers. Sixth, the definition of when grapes are “delivered” differs for third-party sales and self-grown grapes: for a grower selling to a winemaker, delivery is when the winemaker takes possession; for self-grown grapes, delivery is when the grapes are placed in a container for processing. A winemaker growing its own grapes must be careful to record the triggering event correctly. Seventh, the maximum penalty of $5,000 for false or misleading statements may be inadequate as a deterrent, but it applies to any statement in any record or information provided, including tonnage declarations - an intentional understatement of tonnage could save many thousands in contributions but expose the person to only a modest fine. Finally, the regulations do not specify a grace period for late payment of contributions; the winemaker must pay by the last day of the month following the prescribed period (30 June). Late payment may result in default status even if the amount is later paid, because default looks at whether contributions “have not been paid” within the preceding two periods - not whether they are outstanding at the time of assessment.

Compliance obligations fall almost entirely on Langhorne Creek grapes winemakers. The first step is to determine whether any grapes processed are Langhorne Creek grapes - that is, grown within the dozens of Bremer, Brinkley, Freeling, or Strathalbyn. The winemaker must maintain accurate records for each grower, including the tonnage of Langhorne Creek grapes delivered each prescribed period (1 June to 31 May). The winemaker must calculate the per-tonne contribution due for each type of supply: for grapes bought from third-party growers, the winemaker must calculate the grower’s share and the winemaker’s own share separately; for self-grown grapes, a single combined amount. For periods ending on or before 31 May 2022, use the fixed rates in regulation 5(1); for periods from 31 May 2023, use the rates set by the Minister in the Gazette. The winemaker must then deduct the grower’s contribution from the amount payable to the grower for the grapes. The winemaker must ensure that the total contributions paid (grower plus own share, or self-grown share) for the prescribed period do not exceed the prescribed maximum contribution (fixed at $30,000 before 2023, or as set by Minister thereafter). The winemaker must prepare a financial statement in the form required by the Minister, containing all required information, and must submit it in electronic form if the winemaker has the necessary equipment. The statement and the payment must be forwarded to the Minister within 30 days after the end of the prescribed period - that is, by 30 June each year. The winemaker must keep all records for an indefinite period and make them available for inspection on demand by an authorised person. If the winemaker or any grower wishes to claim a refund, a written notice must be given to the Minister within the applicable refund period: 12 months after the prescribed period for periods up to 2021, or 6 months for later periods. The refund claim must be supported by evidence acceptable to the Minister of the contributions paid. The winemaker must monitor the Gazette for notices from the Minister setting or varying contribution rates and caps, and adjust calculations accordingly. The winemaker must ensure that no statement made in any record or information provided is false or misleading in a material particular - an intentional misstatement risks a $5,000 fine. If a winemaker is also a grower, they must pay the self-grown rate but still file the same annual statement. Growers have no direct compliance obligations beyond ensuring their winemaker deducts the correct amount and, if they wish to claim a refund, providing evidence to the Minister. However, growers should be aware of the refund-triggered default rule and plan accordingly. Both winemakers and growers should seek legal advice on their obligations under the parent Act, which may contain additional reporting or audit requirements.