Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

I have moved this motion on microbrewing in Australia because I believe that, if we are to promote innovation in Australia, we need to allow microbrewers to compete on an equal footing with boutique wineries. These microbrewers are suffering disadvantage because they have to pay considerably more tax than the equivalent small wineries. I do not believe that they are asking for special treatment. They just need to be treated equally to similar boutique-type alcoholic drink producers. These products are outside the argument on alcopops as they are in an expensive boutique bracket not for bulk buying or aimed at the young.

The main concern of the microbrewers can be considered as being the complexity and the inequity of the taxation system in relation to alcoholic beverages. These businesses are based in rural and regional Australia in the main. There is a high excise burden on those small businesses, which are trying to encourage work and development in these areas. There is an inequity in the taxation on beer produced by small brewers compared with wine production by small wineries.

As far as I know, there are seven microbrewers in Tasmania and they are value-adding to their farm produce. We are asking our primary producers to do more before their produce leaves the farm gate, to add value to their product and this is what these microbrewers are doing in many cases. Some attach their brewing operations to primary production and normal farm activities, including growing beef and crops. There is a honey producer who has been involved in the development of bees and pollination. Another microbrewer has joined in the development of a beer product with an already successful winery. Another is developing a microbrewery along with a tourism activity while another has a brewery, a meadery and a hop garden—all very productive, innovative projects adding to the Tasmanian economy.

Microbrewers also add to the tourist experience of specialised products which can be taken around the world, spreading the word of Tasmania’s excellence in all we put our hand to. Microbrewing is a welcome addition to the tourist push for Tasmanian fine foods and wines and will be just as advantageous as for other parts of Australia well known for their premier fine food and wine. This government is currently providing assistance to a maximum of $10,000 to microbrewers producing less than 30,000 litres. However, most microbrewers exceed this quantity in annual production and therefore do not receive a subsidy.

According to the Association of Microbrewers, 84 breweries currently operate in Australia and the sector is making a $295.5 million contribution to the government through excise tax. This is estimated to rise to $783 million by 2010. I would like to see the government review the excise regulation to work out a proposal for an excise tax refund on the microbrewers’ product so that the current maximum rebate of $10,000 is increased to the same maximum amount as the wine industry producers rebate, a sum of $500,000 per annum, or about 60 per cent of the excise duty paid. The definition of a microbrewer caps production at 30,000 litres, and that should be removed from the regulation. It is worth noting that the wine industry producer rebate has increased on several occasions since 1999 but that the beer excise rebate has not been revisited in 11 years. It is about time to review it again. This would bring equality into the system, would encourage existing and new producers to further develop enterprises involving craft beers and would help rural and regional Australia.

In the five minutes allocated to me, it is hard to fully explain the potential of this industry. It would provide substantial employment growth in rural and regional Australia, as well as allowing entrepreneurs among primary producers to gain a worldwide reputation for their quality beer production, along with, of course, quality wine. I will continue working to get equity for my growers and brewers at this time of belt tightening for our local producers all over the country. (Time expired)

Sophie Mirabella (Indi, Liberal Party, Shadow Minister for Early Childhood Education, Childcare, Women and Youth) Share this | Link to this | Hansard source

I rise to support the efforts and campaigns of microbrewers right across the country for tax reform. Coming from a small business background myself, I know only too well not only the burden that unnecessary government regulation places on small businesses and how that impacts on their bottom line but also how unfair taxation can be. Isn’t it strange that often it is the smallest businesses that are affected by taxation?

The microbrewers industry has developed significantly. My electorate has seven microbreweries—arguably the largest concentration of any electorate in the country. I will list them, for the information of the House. There is the Sweetwater Brewing Company in Mount Beauty, the Jamieson Brewery in Jamieson, the Buffalo Brewery in Boorhaman, the Bright Brewery in Bright, Bridge Road Brewers in Beechworth, Boyntons Feathertop Winery at Porepunkah and Bintara Brewery in Rutherglen.

I would like to inform the House that these breweries have added value in a very real way to the tourist product in the north-east. They have employed people. They have developed the tourist product. They have given visitors yet another reason to come to the north-east. We are blessed with some of the best wineries and wine regions in the country. I know my friend from Mayo would disagree and say that there are significant wineries and wine regions in South Australia, but anyone who has visited the north-east will know that we are blessed with a clean, green environment and we produce terrific wines. Now we produce wonderful beers as well.

The current tax system is a burden on local microbrewers. I support the campaign for change and would like to see a system akin to the WET scheme. Having campaigned for changes to the excise on wine for boutique wineries even before I was elected, I can empathise with microbrewers. They are in the same position as those small wineries were. We had to fight for several years but we were successful in the end, under the previous government. I would hope that, with the efforts of members on both sides of the House who have an interest in rural and regional development and who have a knowledge of the economic advantages that microbreweries are providing not only in their own electorates but around Australia, we can achieve this.

The current definition of ‘microbrewer’ is far too small. It is capped at 30,000 litres. That needs to be removed. The excise tax refund of 60 per cent of excise duty on beer needs to be increased from the current maximum of $10,000 to the same maximum amount as the wine industry producer rebate under the WET, which is $500,000 per annum. That would go a significant way to removing the current restrictions on expansion for microbrewers. It is not going to have a significant impact on government revenue. It is estimated that the proposed changes are going to cost $5 million annually, but that is a very small loss to the revenue compared to the jobs and economic activity that will be generated and the tax revenue that that activity will create.

In the current environment, where jobs are being lost left, right and centre—thousands of jobs—week after week, it is encumbent on us to do all we can to remove the impediments of unfair laws, particularly unfair taxation laws, on an industry that has shown that it does have growth. We have seen in recent times that, at a time when there is a decrease of two per cent in employment in larger breweries and the brewery industry generally, there has been more than a 10 per cent increase per annum in employment in the microbrewing sector. That shows a trend and tells us what Australian consumers are wanting to see.

In the remaining time that is left to me, I would like to thank those entrepreneurs—those young people, middle-aged people and the broad cross-section of individuals—who have taken the risk to establish microbreweries in my electorate of Indi. I do enjoy your product, as do many of our visitors, and I will fight with you and on your behalf to get a fairer tax system for you.

Melissa Parke (Fremantle, Australian Labor Party) Share this | Link to this | Hansard source

I commend the member for Lyons on his motion and I join with him and my other parliamentary colleagues in calling for the craft brewing sector to receive appropriate government support in the form of an excise concessional refund that is the equivalent of the wine equalisation tax producer rebate. I will risk at the outset the prospect of an argument with my colleagues by saying that Fremantle claims the title of both the birthplace and the spiritual home of craft brewing in Australia. It is certainly a very significant part of the social, cultural and commercial fabric of Fremantle, and we are very proud of its historical and contemporary place in our community.

It was in the early 1980s, following the sensational America’s Cup victory by Australia II, that the owners of the Sail and Anchor Hotel decided to commence on-site brewing operations at their premises on South Terrace in Fremantle. This in turn led to the creation of the Matilda Brewing Company, whose signature product, Redback—a wheat beer—became a national sensation. Other Fremantle microbreweries have followed. The Sail and Anchor is now an independent, on-site brewer selling draught beer. Further down South Terrace is the Mad Monk brewery and restaurant, at which I would one day like to get a photo taken with the member for Warringah. Gage Roads in Palmyra is a medium-sized operation with a range of excellent bottled and draught beers. Little Creatures—so named for the live yeast that does all the hard work—is a brewery/bar/restaurant on Fisherman’s Harbour, whose signature Pale Ale was named champion ale in the 2007 Australian International Beer Awards. In 2006 Little Creatures was named Champion Australasian Brewery. Of course, there are now many other microbreweries in Western Australia and indeed across Australia, with 88 known microbreweries operating mostly in regional and rural areas and providing 600 full-time equivalent jobs.

The craft brewing sector is at a critical point in its development. It is a small but growing industry which makes a significant contribution to employment and tourism in Australia, to rural and regional development and to our export profile, and it needs financial encouragement. In the UK, Canada and the US, excise concessions to craft brewers have led to industry growth from one per cent to five per cent market share, with consequent increases in the number of jobs created because of the labour-intensive nature of microbrewing operations. This is a significant consideration in the current economic climate.

The wine equalisation tax producer rebate was introduced in 2004 and has been updated since that time so that the maximum available rebate has increased from its initial level of $290,000 to the current level of $500,000 per annum. Though all wine producers qualify for the rebate, its stated aim has always been to support small and regional wineries, for whom the rebate is of proportionately greater value.

At the same time, support of this kind for micro or craft brewers is limited to the microbrewery excise refund, which allows brewers who produce fewer than 30,000 litres to claim 60 per cent of excise, paid up to a maximum of $10,000. The contrast is stark—up to $500,000 for wineries, compared to $10,000, or one-fiftieth, for microbrewers. And the current eligibility test, based on the quality of beer produced, is set at a level so low that it only applies to a tiny proportion of microbrewers, some of which are not, strictly speaking, commercially viable.

The argument that microbrewers and their representative associations have been patiently making through several budget cycles is that microbrewers operate in the same market sector, have a similar urban and regional distribution, make a similar contribution to the hospitality and tourism sector and to employment and face the same economic challenges as small wineries, and for all those reasons should receive the same degree of support from government.

It should be noted, at this time of increasing concern about alcopops and young people’s consumption of alcohol, that craft beer tends to suit a mature palate. It is hand made, with a focus on quality ingredients and intense flavours, and for this reason the microbrewer clientele tend to be beer connoisseurs rather than beer guzzlers.

I support the Australian Association of Microbrewers, the craft-brewing peak body, in its call for an excise concession equivalent in scale to the $500,000 per annum WET producer rebate to apply without reference to the volume of beer produced. It is my understanding that the budgetary impact of such an excise concession would in the short term be in the order of $7 million per annum, which I believe is a small and fair price to pay for fostering—if you will pardon the pun—the development of a new and promising domestic and export industry and more jobs. Furthermore, in the medium term it is expected that industry growth will result in a revenue-positive budgetary impact. I join my parliamentary colleagues here tonight in supporting this motion and in arguing the case for fair excise treatment of microbrewers in Fremantle and across Australia. (Time expired)

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

The question is that the motion be agreed to. The chair recognises the member for Lyne and welcomes his little friend!

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Political satire was drawn with one particular beer called the Mad Monk, and probably the most popular beer in our area is Wicked Elf! So I am not sure whether it is sitting behind me or it is another member of parliament in this place, but it is certainly a good beer which I am happy to bring down and have everyone enjoy.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Mr Adams interjecting

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Yes, anything for a free beer! The motion put forward by the member for Lyons this evening is good policy and it is sensible, and that is reflected by the tripartisan support of government members, opposition members and Independent members. Having talked on the ground with several of the microbrewers on the mid North Coast, which represents one of the most important tourism areas in New South Wales, where the food and wine trail is one that certainly many in the tourism industry are trying to grow, I know there is frustration that a government policy can inhibit people wanting to invest in small businesses. While we within government—federal, state and local—are comfortable with the concept of food and wine trails, we do not seem to have grasped yet the concept of food and beer trails. We certainly seem to have struggled with the concept of separating big brewers and small brewers just as we separate big business and small business. I would hope that tonight, with this motion, we do start to see some reflection on this by government that leads to some policy reform that will encourage the small business operators and entrepreneurs trying to grow microbreweries and, therefore, grow the tourism industry throughout Australia, particularly in regional Australia.

The proposal is that existing provisions of the excise regulations be modernised to permit brewers to obtain a refund of 60 per cent of excise duty paid in any one financial year, up to a maximum of half a million dollars per year, and that the definition of ‘microbrewer’, which caps production at 30,000 litres a year, be removed from the regulations. As I say, it seems sensible policy, and the cost to government is minimal. In fact, picking up on what the previous speaker said, over time I think we would see a benefit to government by encouraging some entrepreneurship within Australia, and I would certainly hope that we see if not in this budget round then in one very soon some positive reform and reflection by government on this area.

The point with regard to current times of global financial pressures which I think is a standout for government to reflect on in the short term is the figure of three per cent. Three per cent of Australian-made beer is drunk within this country. We hear lots of debate in this place about retail sectors and monopolies or duopolies. Also, in recent times, I notice one newspaper—the Daily Telegraph; I do not know whether other papers around Australia are doing it—running campaigns trying to up the ante on the ‘made in Australia’ message. Here is a classic example before most people on most nights of the week as a true example of an opportunity to do something about the ‘made in Australia’ message. If we can get the policy settings right, and if we can at the same time—also picking up on the message from previous speakers—through some good policy change, drive home the message of the boutique and craft beer market about drinking less, drinking safer and getting away from the binge drinking culture and actually enjoying the different opportunities that the boutique beer markets provide, then I think that we in this place would be doing some good work.

For those within the media who want to drive campaigns at the moment about ‘made in Australia’, the message that we are talking about tonight in a tripartite way is a beauty, if they want to effect an outcome within executive government to promote, not in a protectionist way, entrepreneurship and small business within Australia. It is sad that only three per cent of the beer all of us drink is made within this country. I think that as policymakers and as a country we could do an awful lot better.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.