Primary Industry Funding Schemes (McLaren Vale Wine Industry Fund) Regulations 2017

McLaren Vale is defined by a map in Schedule 1, being the area outlined in bold on that map. McLaren Vale grapes means any variety of grapes grown in McLaren Vale and used or intended to be used for wine. McLaren Vale grapes winemaker means a person who carries on a business of making wine and who processes McLaren Vale grapes for that purpose. A grower is not separately defined but is clearly the person who cultivates the grapes. Delivered has two meanings: where the winemaker and grower are different, delivery occurs when the winemaker takes possession of the grapes; where the winemaker processes its own grapes, delivery occurs when the grapes are placed in a container to begin processing (including fermentation or preparation for crushing or pressing). This distinction matters because the contribution rates differ: when the grower and winemaker are separate, both parties pay (grower $8.30 to $9.20 per tonne during fixed periods, winemaker $11.00 to $12.20); when the winemaker grows its own grapes, only the winemaker pays the higher rate. The prescribed period is a 12-month period starting 1 June each year (or a transitional period from commencement to 31 May 2018, or a period under the revoked regulations). Prescribed maximum contribution caps the total payable per person per period: amounts were $31,500 (2018-2019), rising to $34,730 (2022), and from 2023 onward set by the Minister. Default occurs if within the immediately preceding two prescribed periods a person has not paid all contributions due or has been refunded contributions. This definition is notable: claiming a refund (the opt-out mechanism) itself triggers default status for the next two periods. The Fund is the McLaren Vale Wine Industry Fund, administered by the Minister, consisting of contributions, investment income, and any other sums paid into it. Refund period is 12 months for periods up to 31 May 2021, and six months for subsequent periods. The official cash rate is the RBA cash rate prevailing on the date of lodgment of the refund claim, used to calculate interest on refunds.

The regulations directly affect every person who grows McLaren Vale grapes and every person who makes wine from those grapes within the defined region. This includes small family vineyards and large integrated wine companies such as Treasury Wine Estates or Pernod Ricard that source fruit from McLaren Vale. Winemakers are the primary compliance point: they are required to deduct the grower’s contribution from the purchase price and remit both portions, keep detailed records of tonnage and growers, and furnish annual financial statements within 30 days after the end of each prescribed period. Growers bear a direct per-tonne levy deducted at source, reducing their effective selling price. The representative body that receives fund payments - likely the McLaren Vale Grape Wine and Tourism Association - is affected as recipient, but must comply with information requests from the Minister. Consumers of McLaren Vale wine are indirectly affected insofar as the levy raises production costs, which may feed through to prices, though the per-tonne amounts (around $8-12 per tonne) are modest relative to grape values. The refund mechanism allows growers and winemakers to opt out of supporting the fund’s purposes, but doing so triggers default status for two periods, barring them from receiving direct benefits or services funded by the fund. This creates a coercive element: the cost of opting out is loss of access to industry services funded by the collective levy. The compliance burden falls most heavily on small winemakers who may lack sophisticated accounting systems; they must calculate contributions correctly for each grower, apply caps correctly, and submit returns on time. The state government’s Primary Industries and Regions SA department administers the fund and bears the cost of collection and enforcement. Imported wines or wines from other Australian regions are not affected, potentially creating a competitive distortion: McLaren Vale producers pay a tax that competitors do not.

Winemaker’s duties. A McLaren Vale grapes winemaker must: (a) keep proper records relating to growers and tonnage of McLaren Vale grapes delivered to the winemaker, and the contributions required (on its own behalf and on behalf of growers); (b) make those records available for inspection at any reasonable time by a person authorised by the Minister; (c) within 30 days after the end of each prescribed period (except those defined in paragraph (a) of the definition), furnish the Minister with a financial statement in the form and containing the information required by the Minister, and in electronic form if the winemaker has the necessary equipment; (d) forward the required contributions with that statement; (e) pay the grower’s contribution on behalf of the grower, deducted from the amount payable to the grower for the grapes. Where the winemaker grows its own grapes, the winemaker must still pay the winemaker rate on those grapes. The winemaker is thus an unpaid tax collector for the state, bearing administrative costs.

Grower’s duty. The grower must pay the prescribed per-tonne contribution, but the obligation is discharged by the winemaker deducting it from the purchase price. The grower does not have a direct payment obligation to the Minister under the regulations.

Right to refund. Both growers and winemakers may claim a refund of contributions paid (growers in respect of contributions paid on their behalf, winemakers in respect of contributions paid on their own behalf) by notice in writing to the Minister within the refund period (12 months for periods up to 31 May 2021, 6 months thereafter). The claimant must supply evidence acceptable to the Minister and, if required, a statutory declaration verifying the evidence. If satisfied, the Minister must refund the amount plus interest at the RBA cash rate from the date of payment to the date of lodgment of the claim. This refund right is the formal opt-out, but exercising it triggers default status for the next two prescribed periods.

Default consequences. A person in default of contributions (including having been refunded) is not entitled to receive direct benefits or services funded by payments from the fund under regulation 6(b). This means the person cannot access industry promotion, research, or other benefits paid for by the fund, which is a classic free-rider penalty.

The only specific penalty stated in the regulations is a maximum fine of $5,000 for making a false or misleading statement in any information provided or record kept for the purposes of the regulations (regulation 9). This applies to winemakers, growers, or anyone else supplying information under the scheme. The penalty is relatively modest by contemporary standards, though it can be applied per statement. The regulations do not prescribe penalties for late or non-payment of contributions, nor for failure to keep records or provide statements, though the enabling Act (Primary Industry Funding Schemes Act 1998) may contain general enforcement provisions (not reproduced in the regulations). Enforcement is primarily through the exclusion mechanism: a person in default of contributions (defined as unpaid contributions within the preceding two prescribed periods, or having been refunded) loses entitlement to direct benefits or services funded by the fund. This provides a strong incentive to pay on time, because a winemaker or grower who withholds contributions cannot later benefit from collective promotion or research. The Minister may also vary contribution amounts by Gazette notice and may set maximum caps, giving executive flexibility but also potential for unilateral changes. The Minister may require the representative body receiving fund payments to provide financial statements, annual reports, business plans, and other information reasonably required. The Minister may also provide that body with information identifying growers and winemakers who have paid or been refunded contributions, which raises privacy considerations but is authorised by regulation 7. Enforcement of record-keeping obligations relies on the power of an authorised person to inspect records at any reasonable time; refusal to permit inspection could constitute an offence under the Act.

These regulations are made under the Primary Industry Funding Schemes Act 1998 (SA), which provides the enabling framework for compulsory industry levies in South Australia. The Act would contain provisions about the establishment of funds, collection mechanisms, appeals, and general offences that apply to these regulations. The regulations replace the 2003 regulations and include transitional provisions preserving liability for contributions payable from 1 June 2017 up to the commencement of regulation 5. The scheme coexists with other wine industry regulation, including the Wine Australia Act 2013 (Cth) which imposes a separate national grape research and development levy and export charges. The state levy is additional to Commonwealth levies, compounding the regulatory burden on McLaren Vale producers. The refund mechanism may interact with taxation law: contributions deducted from growers are likely a business expense for both parties, but refunds with interest may have tax implications. The requirement for winemakers to deduct the grower’s contribution from the purchase price resembles a statutory debt-collection mechanism; it may affect contractual relations between grower and winemaker. The exchange of information provision (regulation 7) may intersect with privacy legislation such as the Privacy Act 1988 (Cth) and the South Australian Information Privacy Principles, though the regulations expressly authorise the Minister to provide identifying information to the representative body. Competition law may be relevant: the fund supports industry promotion and possibly R&D, which could be pro-competitive, but compulsory levies can facilitate anti-competitive conduct if the representative body uses funds to restrict output or fix prices. The exclusion of defaulters from benefits may raise concerns about restraint of trade, though it is a common feature of statutory marketing schemes. The map in Schedule 1 defining McLaren Vale is legally binding; boundary disputes could arise if growers question whether their land falls within the region.

The regulations were originally made on 12 December 2017 (Gazette 12.12.2017 p5025) and commenced immediately. They revoked the Primary Industry Funding Schemes (McLaren Vale Wine Industry Fund) Regulations 2003. Since then there have been two variation regulations. In 2021 (No 131, Gazette 2.9.2021 p3463, commenced 2.9.2021), significant changes were made: a new subregulation 5(2a) was inserted allowing the Minister to fix contribution amounts for prescribed periods ending on or after 31 May 2023 by notice in the Gazette. Previously all amounts were specified in the regulations. The amendment also inserted subregulations 5(5a) and (5b) giving the Minister power to vary amounts fixed by notice even after a prescribed period has commenced (applying only to the remainder of the period). The definition of prescribed maximum contribution was varied to include an amount fixed by the Minister from 2023, and a new definition of refund period was inserted reducing the refund window from 12 months for periods up to 31 May 2021 to 6 months for subsequent periods. The schedule of fixed contribution rates for 2022-23 was deleted (former paragraph (e) of subregulation 5(2)). In 2023 (No 15, Gazette 30.3.2023 p629, commenced 30.3.2023), the definition of prescribed period was amended to include the period from 1 June 2017 up to the date of commencement of the regulations, combined with the prescribed transition period, and to include periods of 12 months commencing on 1 June 2018 or any subsequent year. The legislative history also notes that regulation 2 (which was a placeholder for expiry or other matters) was omitted under the Legislation Revision and Publication Act 2002 as at 2.9.2021. The original 2003 regulations were revoked by these 2017 regulations, with a transitional provision preserving liability for contributions from 1 June 2017 to commencement.

The source text contains no reference to any litigation concerning these regulations or their predecessor. The regulations are subordinate legislation and have not been the subject of reported judicial decisions in South Australia, at least as of the date of the legislative history. This likely reflects the relatively narrow geographic scope (McLaren Vale region) and the modest amounts involved per contributor. However, the compulsory nature of the scheme could in theory give rise to challenges on constitutional grounds under section 92 (freedom of interstate trade) if the levy were used for purposes that burden interstate trade, or under section 51(xxxi) (acquisition of property on just terms) if the compulsory payment were characterised as an acquisition. The opt-out refund mechanism with attendant default status may also be challenged as a restraint on trade or as an unreasonable condition on a statutory right. The fact that no litigation history appears suggests that the industry has broadly accepted the scheme or found it less costly to comply than to litigate. Practitioners advising on comparable schemes should nonetheless be aware that the High Court has considered similar compulsory exactions under state marketing legislation (e.g., Homebush Flour Mills and related cases), and the constitutional validity of such schemes is not beyond doubt. Any future challenge would likely turn on the characterisation of the levy as a fee for service (potentially defensible) or as a tax (which a state may impose with limitations). The refund mechanism might be argued to sever the compulsory element, but the default penalty complicates that.

The most significant trap is the interaction between refund claims and default status. Regulation 3(2) defines a person as being in default if within the preceding two prescribed periods the person has been refunded contributions. This means that a grower or winemaker who exercises the statutory right to claim a refund will be automatically excluded from receiving direct benefits or services funded by the fund under regulation 6(b) for two full years. This undermines the voluntary character of the opt-out: you can get your money back, but you lose industry services that may be valuable. The trap is compounded by the reduction of the refund period from 12 to 6 months for periods after 31 May 2021. If a winemaker or grower misses the six-month window, they lose the right to claim a refund entirely for that period, yet they are still liable for the contribution. Another trap relates to the winemaker’s obligation to pay the grower’s contribution out of the amount payable to the grower. If the winemaker fails to deduct or misjudges the cap, the winemaker remains personally liable to the Minister for the full amount. The cap on contributions (prescribed maximum contribution) applies per person per prescribed period, but it is not per tonne. Once a grower or winemaker reaches the cap, no further contributions are payable for that period. However, the winemaker must still know when each grower hits the cap and stop deducting; failure to do so could lead to overpayment, which the grower could only recover via the refund process (triggering default). For winemakers processing their own grapes, there is no grower deduction, but they pay the higher single rate per tonne. The refund period truncation from 12 to 6 months for periods after 31 May 2021 means that for the 2021-2022 period, the refund period expires 30 November 2022 (six months after 31 May 2022). Anyone accustomed to the old 12-month window could lose the right. The Minister’s power to vary contribution amounts by Gazette notice (from 2023 onward) introduces uncertainty: a winemaker cannot reliably budget for contributions more than a year ahead, because the Minister may change the rate mid-period under regulation 5(5b). However, any variation after a period begins applies only to the remaining part of that period, so it is not fully retroactive. Finally, the default definition catches not only non-payment but also refund claims; this may dissuade contributors from legitimately challenging contributions they believe were wrongly assessed.

For winemakers. The first step is to determine whether you are a McLaren Vale grapes winemaker - that is, you carry on a business of making wine and process McLaren Vale grapes. If so, you must establish a system to record, for each delivery of McLaren Vale grapes: the grower’s identity, tonnage, date of delivery, and whether the grower is a different person from you. For each tonne of grapes, you must calculate the contribution: if the grapes come from a third-party grower, you must collect $8.30-$9.20 (or the amount fixed by the Minister from 2023) from the grower by deducting it from the payment, and you must also pay your own share of $11.00-$12.20 (or the Minister’s fixed amount). If you grow the grapes yourself, you pay only the winemaker rate per tonne. You must apply the prescribed maximum contribution cap per person per prescribed period. That cap operates per grower and per winemaker separately; you need to track each grower’s cumulative contributions in the current period to know when to stop deducting. The cap for 2022 was $34,730; for later periods it is fixed by the Minister. After the end of each prescribed period (1 June to 31 May), you have 30 days to prepare and submit a financial statement to the Minister in the required form and format. With that statement, you must forward all contributions (your own and the growers’) for that period. You must also keep proper records and make them available for inspection on request. At the end of your first year, watch for the transitional provisions: contributions for grapes delivered from 1 June 2017 up to commencement of the regulations (12 December 2017) may still be payable under the revoked regulations; you must consult the transitional provision in Schedule 2.

For growers. You are not required to file anything with the Minister. Your contribution is automatically deducted from your grape sale proceeds by the winemaker. You should verify that the winemaker is applying the correct rate and the correct cap. If you wish to claim a refund, you must do so in writing within the refund period (12 months for periods up to 31 May 2021, six months thereafter). You will need to provide evidence of the contributions paid on your behalf, and potentially a statutory declaration. Bear in mind that claiming a refund places you in default for two periods, meaning you cannot receive any direct benefits or services funded by the fund. Given that the fund supports promotion of the McLaren Vale region, this could harm your own marketing interests; many growers may choose not to claim a refund for that reason.

For the representative body. If you are the body receiving payments from the fund, you must comply with any request from the Minister for financial statements, annual reports, business plans, or other information. You may also be required to keep records of how the money is spent for the permitted purposes (promotion, R&D, communication). You should not use funds for purposes outside regulation 6(a) without ministerial approval under regulation 6(b).

General compliance steps. Keep copies of all returns, receipts, and correspondence with the Minister. Monitor the Gazette for any changes to contribution amounts or maximum caps from 2023 onward. If the Minister varies an amount mid-period, you need to apply the new rate only for deliveries after the variation date. Ensure winemakers’ staff are trained on the refund period deadline. Regularly reconcile contributions deducted from growers against the caps to avoid over-deduction. Seek legal advice before challenging any contribution assessment; a refund claim triggers default, but a proper dispute may need to be handled separately.