Gene Technology Bill: Impact on Winegrowers and New Zealand Winegrowers' Response
Genetic modification has long been a topic of hot debate.
The process will conclude later this year with member votes on final proposals, but for the moment we need feedback from members so we can decide which proposals to put to your vote.
Background
At the commencement of the current review process, we had a simple goal – ensuring the future New Zealand Winegrowers (NZW) is fit for purpose. To achieve that we set up a board committee, drafted in three non-board members – Beth Forrest, Steve Smith MW and Lindsay Parkinson – and also involved two non-industry independents – Melissa Clark-Reynolds and Scott Champion. Last year, as a step in the process, nearly 100 of you attended industry workshops where we outlined the options for change. Now we’re at the point where we need your feedback. Many things will remain the same, but we are proposing some important changes, so we want to hear from you before developing the final proposals.
Levies
We’ve examined all aspects of the two levy system – on grape sales and wine sales – that funds Winegrowers. We’ve confirmed the current two levy system is the best option. Basing the levies on sales makes sense as that’s when the revenue is generated to pay the levies. We are not suggesting any changes to the grape levy – it looks good to us. But for the wine levy we are proposing changes. The issue with the wine levy is there are a large number of wineries who only pay a small amount of levy; offsetting that is the very small number of wineries who pay a large amount of levy. How do we get the balance right between these two extremes?
Our approach has been guided by principles of value and fairness. We believe Winegrowers delivers real value to all members through the programmes and services that we offer. A wine levy payment of just $5 or $10 greatly underestimates that value. Fairness – in our view every litre should pay at least some levy, even if the total payment is significant. What we are suggesting won’t impact the large number of wineries selling in the broad range between 15,000 and 18 million litres of wine each year. No change for them but, yes, changes for those selling less or more.
We are suggesting a minimum wine levy payment of $500 per year. Given the services that Winegrowers deliver, we consider that represents value for money. It will also mean small wineries pay once a year rather than the admin heavy, quarterly instalments.
For large wineries, we are proposing to remove the cap on levy payments. Replacing that will be a tiered levy system impacting sales above 18m litres. At the top tier, sales above 27m litres will pay a levy, whereas they don’t now, but it will be at just 10% of the core levy rate.
The proposed levy changes are not about generating more revenue for NZW, rather they are about value and fairness. Together we think these changes will bring better balance to the wine levy system.
The Board
NZW is governed by a board of 12, with 10 elected directors, and two appointed. The review concluded the board would be more efficient if it was smaller. We are following that advice and are proposing to reduce the board from 12 to nine members. To achieve that, the number of industry elected directors will need to reduce from 10 to six, with half elected (as is currently the case) by one member one vote, and half based on $1 of levy payment one vote. The review also recommended more independent directors. We suggest three independent directors on the board, rather than the current two.
This means the balance, in normal circumstances, between industry elected and independent directors will be six to three. An industry majority of course, but balanced with significant independent input. We are proposing one exception to this. Remembering that we have two levies, we suggest, as a protection for levy payers, that at all times at least two levy payers from each of the two levies must be on the board.
So, if there aren’t two levy payers from each levy after an election, then the board must, in the first instance, use the appointed director slots to reach this level. Once that is done, they can move to appoint independent directors.
There are a couple of other changes we are proposing: First, to remove an obstacle for members standing for election, we want to lift the remuneration for directors to a market-based rate, rather than the industrygood rate we are currently paying. In part this cost will be offset by having a smaller board. Ultimately the remuneration for the board will continue to be approved each year by the membership at the Annual Members’ Meeting.
Finally, we suggest that we have one or two associate directors sit on the board. These roles wouldn’t have a vote, and would be reserved for young people in our industry wanting to learn about governance.
Representation
The proposal for a smaller board inevitably raises the question of how we continue to ensure the views of individual members are heard. Noting the proposal to require a minimum of two grape and two wine levy payers on the board at all times, we also want to better use our various committees as a vehicle for member engagement. So, our proposal is to reinforce the requirement for member representation in the Rules of each committee. This will help ensure that as issues arise, members are engaged on the matters of interest to them.
We are also having a look at the relationship between Winegrowers and the regional bodies, to ensure we are as coordinated and effective as possible, working together for members.
As noted, the above are just proposals at this stage. We need member feedback to ensure the proposals we submit for approval later in the year will meet your future needs. So make sure you have your say.
