Tania Lawrence (Hasluck, Australian Labor Party) Share this | Hansard source

I need to begin by declaring that I have a conflict of interest in this field of policy. I am a founding shareholder and was until recently a director of Beelu Forest Distilling Company. My husband is now a director of that establishment. I thank the member for Cowper. This is an issue close to the heart of my own electorate of Hasluck, which features the Swan Valley and Perth Hills tourism regions and has the largest concentration of breweries, distilleries and vineyards in the Perth greater metropolitan region.

This is not, however, just an issue of great importance to Hasluck. We have world-class wine, brewery and distilling sector that adds over $11 billion in total value to the Australian economy. While much of this is in wine, there has also been great growth and recovery across all the other products since the pandemic. According to DFAT, in 2022, we exported $41 million of whiskey, $31 million of liqueurs and cordials, $24 million of beer, $19 million of gin and $15 million of vodka. It means wealth and jobs at the farms that grow the grains, grapes and sugars, and it means jobs in transport, infrastructure, construction, retail, hotels, pubs, cellar doors and tourism precincts. Of course, on the home front is an abundance of high-quality beverages made by businesses that come from and add to our neighbourhoods. It is important to acknowledge that, in many respects, industry is thriving, with over 800 small distilleries and over 600 independent breweries as testimony to that. I'm sure we can all agree that we want them to grow into sustainable, medium and large exporting businesses.

Clearly, however, there have been mixed consequences of the excise regime and also of the $350,000 refund remission scheme introduced by the coalition under Scott Morrison, who on the election trail in 2022 made policy on the fly with little consideration to the consequences. Fast forward to today, and there are claims of excise avoidance, 'craftwashing' and shadow factories. Worse than that is the disincentivising of growth, particularly for the mid-tiers. The Labor government is working to understand these issues across the sector, hence the present inquiry into food and beverage manufacturing by the House Standing Committee on Industry, Science and Resources. The challenge before us is to chart a course that encourages healthy growth and competition.

I'd like to briefly share some illustrative examples and perspectives from the mid-tier manufacturers in my own electorate. Tony Williamson is the CEO of Bailey Brewery Co., a medium producer based in the Swan Valley tourist region. He points out:

… the current excise tax structure is complex and assists small breweries in the short term. The $350,000 excise rebate is a great help; however, it hinders growth. Raising it to $1 million would very much assist growth and employment.

He also suggests:

… the increase twice a year of the excise is counterproductive, as consumers don't understand the tax system. When beer prices go up every six months, they tend to think that we are gouging. It is the complete opposite. They pay more while it eats into our small margins.

Another successful medium-sized distiller, James Young from Old Young's, points out of the excise remission scheme:

… the intention was to create conditions that would allow small distilleries to grow and create more jobs and investment. Unfortunately, it is having precisely the opposite effect. A producer can sell 11,666 bottles per year excise free. The result is that our cohort of medium-sized manufacturers is now competing with hundreds of small distillers that can undercut our pricing by up to $30 a bottle.

Paul White is the managing director of the medium-sized West Winds Distillers. Paul describes the steady growth of excise pressures over their 12-year journey and says:

… the current excise rate of $101.85, up from $71.67 in 2010, combined with the rebate system, is killing our ability to grow and compete profitably.

He also points out that in a new trend, at least in WA, any company with a tavern licence can produce their own spirits or beer. Some of these tavern distilleries don't even produce onsite but, instead, purchase from local producers and avoid paying the excise. Paul notes:

We cannot compete against distilleries that are now charging as little as $17 per bottle …

He says:

… the Liberal (coalition) government and the ATO created this mess, it would be great if the current government and the ATO at least tried to help us find a way out of it.

Fortunately, the review that is underway will provide an evidence based approach. Of the 121 submissions received to date, the majority, 68, are from wine, beer and spirits producers and businesses impacted by the excise. I'm confident the review will frame their recommendations—and get them right—to lead to strong and sustainable growth and to add value to the economy for Australian consumers and businesses of all sizes.

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