Eric Hutchinson (Lyons, Liberal Party) Share this | Link to this | Hansard source

Today I rise to speak on behalf of the 10 whiskey distilleries that I have in my electorate of Lyons, the craft brewers and, more broadly, the producers of the highest quality wines that this country can produce in their battle to balance the books—particularly in the case of spirits—in relation to high alcohol excise imposed on them. It is an absolute impediment to seeing these businesses grow, a disincentive to small businesses to innovate and to increase their production, and ultimately their capacity to be able to sell their product within Australia. It also has a significant impact on the tourism industry, which is so important to my state of Tasmania.

By way of historical fact, in July of 2000 wine and beverages consisting primarily of wine became subject to a wine equalisation tax to replace the difference between the current 41 per cent wholesale sales tax and the proposed GST at the time. The excise on beer and other beverages with less than 10 per cent alcohol content increased to make up for the removal of the wholesale sales tax. Australia has the highest spirits tax in the OECD group of 10. The industry needs reforming to grow. I believe the current tax system places an entirely unfair burden on consumers—particularly of distilled spirits—while other products are taxed at a far lower rate. I note the representations of DSICA, the industry body. They have put out a number of recommendations—not all of which I entirely agree with—and there are certainly a number of recommendations that I think make absolute sense. I will be working with them to try to achieve an outcome. There are a number of anomalies within the current arrangements. Ready-to-drink—RTD—and spirit drinkers pay 13 times the tax than, for example, cask wine drinkers for every standard drink. It simply does not make sense.

In the case of wine I acknowledge and welcome the initiative of Assistant Treasurer O'Dwyer, following on from her predecessor, Frydenberg, to look at the wine equalisation tax and the rebate. I welcome the consultative process that she has undertaken. We want to see an industry that can grow exports and have a greater focus on quality. I look forward to seeing alcohol more broadly included in the government's response to the tax white paper.

It is politically difficult—we understand that—but we do need to have alcohol taxation reform. Why? In the case of Tasmania, those who purchase distilled spirits pay $1 in excise per standard drink compared to 5c per standard drink of cask wine. In the case of Tasmania you pay 94c per standard drink on a bottle of wine over $50, whereas a bottle of wine valued at $15 is only taxed at 28c per standard drink. There is an inequity there and an inconsistency that needs addressing. Indeed, these statistics were outlined in the government's Re:think discussion paper, published in March, under the alcohol tax chapter. By the research that they quoted, the statistics in this report have shown just how much of a mess the current system is in. The system is currently taxed on price; not on the amount of alcohol you are purchasing. The long-term impact of changing the current excise will not benefit brewers or distillers over wine producers—rather, all of the industry will be a beneficiary if we can make appropriate changes.

The second point is that Australia has the second-highest alcohol taxation in the world—second to Sweden, which has some of the highest taxation levels in the world. The current alcohol excise does not reflect what the government is fundamentally trying to achieve—that is, a regime of lower taxation and reduced bureaucratic red tape to allow business to prosper and thrive. Currently, the alcohol tax is not in keeping with the overall intent of the government in looking at ways to grow the economy and create jobs.

The level of tax is an unfair burden on craft distillers and brewers right across Australia, but particularly in my home state of Tasmania where, as I mentioned, there are 10 commercial craft whisky or spirits distillers. As an example, the breathalyser does not discriminate between different types of alcohol. Rather, it operates on how much you have drunk. Breathalysers do not suggest whether you have drunk wine, beer or spirits. The taxation system in this country should be no different. The taxation system should not discriminate between the types of alcohol you have drunk or how much you have paid for it. The system should judge you on how much alcohol you have consumed, irrelevant of type.

If GST is levied on a price basis or on how much of the product you purchase, the alcohol excise should be levied on how much alcohol you consume. Exploring a volumetric rate of tax therefore seems rather logical. Of course there are drinkers who are at risk, but the research does not suggest that the changes that have been made or the varying taxation rates that exist have any influence over the type of products that we see. In the alcopops debate we saw that the tax just moved drinkers from one type of alcohol to another type of alcohol. The data is there for anyone that is willing to look and see. I think that we should all be focused on developing a system of taxation in this sector that is fair, that allows growth and that allows our country to compete on an export basis. The economy would benefit.

My state is doing its best but is being impeded by the current taxation regime. The current taxation system is not supporting innovation, or growth or development; rather, it is stifling those things. The 10 small distillers in my electorate take a prominent position and are doing their best to generate wealth and create jobs in their local communities, both directly and indirectly. Our brewers and distillers provide jobs, particularly in tourism, which is an increasingly important industry and sector within my state. They become symbols of their local community. Some of the icons in the whisky industry—like Bill Lark and his Sullivan’s Cove business, which has produced the world's best whisky. I think of Nant at Bothwell redefining that small country town. I note the support of the minister for cities: Jamie Briggs has written opinion pieces on this issue. I think it is important we have South Australia, Victoria, New South Wales, Western Australia and my home state getting similar support.

I want to acknowledge those whisky distillers that are blazing a trail in my home state of Tasmania and in my electorate particularly. They include Straits Brands on the Westerner; Hanger 43 in the Northern Midlands; John Calwell and his operation up at Wilmot; Redlands Estate in the Derwent Valley; Overeem; Shene, which will be an absolutely stunning place for people to visit once it is completed; Nant, as I have mentioned, at Bothwell; Peter Bignell from Belgrove at Kempton; and who could forget Bill Lark, the doyen of the Australian whisky industry? There is also McHenry Distillery at Port Arthur on the Tasman Peninsula and Nonsuch at Sorell. This is a sector that has the potential to grow, along with the craft brewers in my electorate and along with the very high-quality wine producers in the state of Tasmania. Their businesses can be supported with changes to the current taxation system.