Andrew Murray (WA, Australian Democrats) Share this | Hansard source

They are exorcising the Spirits Act 1906. Thank you, Senator Brandis.

The fourth bill is the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006. The purpose of the bill is to amend the Customs Tariff Act 1995 to implement changes that are complementary to amendments contained in the above act. This bill amends the Customs Tariff Act by: reducing customs duty applicable to aviation gasoline and aviation kerosene, in line with alterations to the Excise Tariff Act 1921; amending schedules 3, 5 and 6 of the Customs Tariff Act to ensure uniformity of customs duties with excise rates of duty; changing the definition of mead to conform with the definition in the A New Tax System (Wine Equalisation Tax) Act 1999—which I wish they had not done, because I think it should have been done volumetrically; aligning the snuff tobacco rate with excise rate and imposing a duty on tobacco leaf of $290.74 per kilogram to protect the revenue—this import duty will not be payable when the tobacco leaf is used in excise manufacture; repealing items 44 and 67 of schedule 4 of the customs tariff that currently allow concessionary importation for excise equivalent goods that are for use in the manufacture of excisable goods; reclassifying biodiesel from chapter 15 to chapter 38 of the customs tariff; and implementing related and consequential amendments to the customs tariff. A fairly formidable list.

Numbers of these changes are administrative and technical and modernise and improve the customs and excise regime, and are to be welcomed as such. The minor changes to tobacco and alcohol are positive from a health, administrative and tax perspective. The real issue of contention with these bills, more so with respect to the fuel tax bills, concerns biofuels and changes to fuel taxes.

As we all know, excise is levied in part to influence consumer behaviour. That is primarily the reason why the excise on cigarettes is so high. It is an attempt to give people a reason to stop smoking, and it has been effective. In case the health benefits are not a call to action, then a hip-pocket shock might do the trick. I am pleased to see in this legislation amendments are proposed to treat all tobacco products in the same way as cigarettes. And I want to compliment the government, as I have in previous debates, for their action in introducing a far better excise regime with respect to tobacco products than we had formerly. This will have an impact on the number of people who roll their own cigarettes, not to mention chewing tobacco, both of which are heavy contributors to the rate of mouth and throat cancer in Australia.

I took the opportunity to refer these bills to the Senate Economics Legislation Committee to examine alcohol related issues. The alcohol changes in the bills are supported by the various sectors of the industry, who welcome the streamlining. That was not at issue. The committee reference was, quite frankly, an excuse to address some of the larger issues which sit on the horizon and, because these sorts of bills which affect alcohol only come along once in a while, we had to take the opportunity when it came. I am grateful to both major parties for supporting that reference.

The health professionals and spirits industry have urged the government to continue incremental reform—and that makes a great deal of sense to me, given the high stakes at hand with respect to the industry concerned—in particular, as for low-alcohol beer, to introduce price incentives for low- to mid-strength ready-to-drinks. A great virtue of ready-to-drinks and the reason I and others have strongly supported them is that they are a measured drink and you get away from the barbaric practice of people just sloshing a bit of Coke into a large amount of spirit and not having a measured drink. Health authorities continue to advocate customs and excise tariff changes that embrace volumetric taxation for wine and cider and differential tax rates based on alcohol strength.

As a party, the Democrats continue to be the strongest advocates in parliament for further alcohol tax reform to encourage responsible consumption but, as individuals, I know that there are members of all parties who are very supportive of the view that further alcohol tax reform should encourage responsible consumption. In that respect, I want to put on the record my recognition of the courageous stance—and the man is not without courage in any forum—of the committee chair, Senator George Brandis, who has grasped that nettle and has made recommendations for the government to consider the long-term adoption of a volumetric tax system for all alcohol products and has recommended that the government commence planning and consultations with relevant parties as a step towards this goal. He quite rightly used a long-term approach. It is a difficult issue and needs careful management. His other recommendation in this area was that the government apply the same tax and excise treatment to low- and mid-strength ready-to-drink alcohol products as it applied to similar strength beer products. The tax and excise structure for RTDs should incorporate the three-tiered structure currently applied to beer, with the 1.15 per cent excise-free threshold that applies to beer extended to low- and mid-strength RTDs but not to full-strength RTDs with 3.5 per cent alcohol by volume and above. I thought the chair’s summary of the evidence and the support of the other parties in ensuring a unanimous report was very important, so I express my thanks to you, Sir, for your chairing of that committee.

I have worked long and hard to bring more equity into the way in which alcohol is taxed in Australia, because I have strong connections to the industry and always have. I am very much connected to their economic interests, but I also have a very strong social view, and I think taxation has a major part to play in the way in which responsible consumption can occur. Alcohol is alcohol. It is a basic principle that like goods should be taxed alike. In the case of alcohol, that is volumetrically. Discrimination in tax levels should only occur as a result of sound policy reasons, which have economic and health considerations in this particular case. In the case of alcohol, that requires tax concessions to encourage the consumption of low-alcohol beverages. We have the precedent and we know how well it works and has worked with beer. Economic support for any part of the industry, such as small wine farmers, should be via grants or rebates. It should not be via discriminatory tax exemption. I am supportive of measures to boost the economic circumstances of regional communities through encouraging tourism and through maintaining small business wine farmers on the land, but I do not think it should be done through tax exemptions; I think it should be done through grants or rebates.

One reason excise is levied on alcohol is that the government, health authorities, doctors and the road safety councils around the country all realise that alcohol impacts on the health of our citizens, it contributes to family violence, it contributes to road fatalities and it increases the strain on our health system. So any strategies which can be implemented to limit the abuse or misuse of alcohol consumed should be supported. There is no point in spending money on road safety advertisements about drink driving, healthy eating and drinking habits or on family violence issues if the excise and customs system does not play its part in pricing to affect consumption. As I have said on a number of occasions before, the government’s low-alcohol policy is insufficient, because it only focuses on beer when there are clear opportunities for incentives to encourage low-alcohol ready-to-drink beverages and wines.

As I said earlier, I took the opportunity to refer these bills to the Senate Economics Legislation Committee to examine alcohol related issues. In the submission from Beam Global Spirits, they urged the government to provide identical excise tax treatment for RTDs as it currently does to low- and mid-strength beer—that is, low- to mid-strength RTDs should have access to the 1.15 per cent excise-free threshold that is currently available to all beer products, because the effect of that is to lower the price. If you lower the price, you encourage consumption of those low-alcohol products. You might think, ‘They would say that, because it works in their favour.’ Of course it does. They are going to sell more products, but this argument is supported by the Alcohol and Other Drugs Council of Australia and many other health bodies which were listed in submissions to us. In their submission, the Alcohol and Other Drugs Council of Australia pointed out:

Outside of beer, little incentive exists within the current tax system to manufacture, promote and consume reduced strength alcoholic products.

And that is not a group, as the chair said in his report, that could be seen to have its own bottom line as a motivator.

This approach, advocated by both sides of the argument, is about public health. In Australia, there are more than 3,200 alcohol related deaths per annum. More than 400,000 hospital bed days are taken up with alcohol related illness and an estimated $4.5 billion of taxpayers’ money is spent addressing alcohol related harm. That makes for a very stretched public health system. Many of the submissions to the committee pointed out that, from a public health perspective, the excise and taxation on alcohol should be based on alcohol content and the strength of drinks rather than the cost of manufacture or the method used to produce the alcohol. The policy priority for government should be—and it is not reflected in this new raft of legislation—to introduce excise taxation incentives for the low-alcohol consumption of RTDs and wines.

Although I am supporting the passage of these bills, I still take issue with the wine equalisation tax. I have been against it from the start—although I should note that my party was not—because it has created a low-price cheap alcohol cask market that is at the centre of alcohol abuse and because as a value-added tax it punishes the premium and small business bottled wine sector. The wine industry in Australia has exploded over the last 15 years and now there is a wine glut in Australia where well-known winemakers are being forced to the wall. The way in which the excise has been levied on wine is part of the problem. The way in which excise is levied on premium wines impacts on the ability of that end of the market to do well.

These customs and excise bills yet again do not address the volumetric taxation of wine. Part of the consequences of such a decision by the government is that the economics of the industry are distorted. I notice the government has again been lobbied by the wine industry to provide a bail-out, and that lobbying has been successful. I notice that in legislation soon to be in this place, the Tax Laws Amendment (2006 Measures No. 3) Bill 2006, one of the schedules we will be voting on is to increase the WET producer rebate from $290,000 to $500,000.

That kind of ad hoc approach to industry support seems absurd. Why not create a system in which the wine industry is assisted in a sensible, ongoing way through industry support, rather than distorting the excise system so that wine industry support ends up as a greater priority, and pricing wine casks so that the appalling alcohol abuse in some Indigenous communities, including in my state, can be lessened through price mechanisms. This is further evidence of a short-term approach being taken to a problem, rather than a long-term, considered plan to maintain the viability of the industry.

Once again, I commend the chair of the committee that looked at it for understanding that point and making it in the report. Cheap cask wine is at the centre of alcohol abuse, which in turn is a cause of family and domestic abuse. Price affects alcohol consumption. That is empirically established fact. A simple change in the way the excise is levied has the potential to change consumer habits. The government should take that step, and support it with advertisements, family assistance programs, housing programs, health programs and so on. Volumetric taxation of wine is, in the long term, the way to go. (Time expired)