Apr 2, 2019

Customs Tariff Amendment (Craft Beer) Bill 2019 – Second Reading – Tuesday, 2 April 2019

Some in this House may remember that, in June 2017, I introduced a motion in support of the craft brewing industry—supported by many people on both sides of the parliament, it must be said—calling for legislative change to benefit our craft brewers. These people are small businesses. They operate now at the rate of a new one every six days in regional Australia, our cities and suburbs all around. They’re employing locals, providing entertainment for local communities and providing jobs and economic growth. The fact is that the industry was being disadvantaged at the federal level by poor legislation related to the excise rates faced by independent brewers.

I and the member for Hunter held a very effective forum at Wayward Brewing Co. in Camperdown in my electorate, during which we worked out a strategy and a campaign. I’m pleased that that campaign has been successful in delivering one step on the road to reform, because currently the rate of federal excise charged for a keg containing 50 litres of beer is less than the rate charged for a keg containing 30 litres. This does not make sense. In addition to this, the maximum tax rebate a brewery could receive per calendar year is $30,000. This compares, for example, with the wine industry’s producer rebate, or WET, of some $350,000. One of the reforms that has occurred by regulation recently is to increase that to $100,000. That increase means literally every year a small craft brewing company, usually employing perhaps eight, a dozen or 20 people, is able to have $70,000 extra cash flow for their business and are able to employ more local people.

I thank the Prime Minister and the government for adopting Labor policy on this measure. We’ve seen a number of Labor policies adopted tonight, it must be said, and this is just another one. Indeed, imitation is the sincerest form of flattery, and we take that on this side of the House. I thank those people across the parliament who campaigned for this reform, many of whom were on the backbench.

The fact is that this isn’t just a matter of economics. The difference between a 50-litre keg of beer and a 30-litre keg—and the reason the tax treatment disadvantages smaller craft brewers—is that a publican is far less likely to say, ‘Yes, I’ll give your beer a try and put your keg on,’ if they have to have a 50-litre keg rather than a 30-litre keg because they’ll always sell more of the mainstream products—Carlton or VB—than they will of a craft beer. The fact is also that many of the operators have told me it distorts employment. Because a craft brewery is not mechanised—unlike a mechanised, big operation run by a Lion Nathan—if the craft brewery wants to employ someone, the employee has to be able to physically carry a 50-litre keg of beer, which is a real challenge. That distorts the people who can work in the industry, so there are employment implications that are very important as well.

The excise problem is that all beer of any alcohol percentage contained within a keg of over eight litres but below 48 is still taxed at a higher rate at the moment than kegs over 48 litres. This is because of historical overhang. The fact is that craft brewing is a relatively new industry at scale, but what we’re seeing is that it doesn’t matter whether it’s in Grafton or in the Gold Coast or in Marrickville or in Wagga Wagga; right around Australia, this is a growing industry.

The Excise Tariff Amendment (Supporting Craft Brewers) Bill 2019 is legislation that shouldn’t be packaged alongside other bills to pass both houses, as that one has been. The government tried to push their agenda by including the bill with irrelevant legislation which, put simply—if you excuse the pun—doesn’t pass the pub test. It was included with the be Treasury Laws Amendment (2019 Measures No. 1) Bill 2019 that’s about superannuation and allowing an increase in the maximum number of allowable members in self-managed super funds from four to six. It is unfortunate that the government put together bills that aren’t related in an attempt to try to slide this through. Labor referred the bills to a Senate inquiry because of the lack of a relationship between the two pieces of legislation. I’m pleased that the coalition has seen the error of its ways and that the government has ensured that changes to the brewing sector can be finalised without debating unrelated and, frankly, unnecessary changes to self-managed superannuation funds. As a result, this legislation should be able to pass both houses of parliament and come into effect from the beginning of July.

As of June 2018, there were some 547 independent breweries operating in Australia, and the sector continues to grow. The Independent Brewers Association has reported that each brewery employs an average of seven people. That is some 4,000 jobs and counting. Furthermore, independent breweries constitute 97 per cent of all licensed breweries in Australia. What really matters, though, is that 65 per cent of independent breweries are located in rural and regional areas of Australia, such as the Little Rivers Brewing Company in Scottsdale, Tasmania, which I visited with the member for Bass in 2017. This is a brewery that has become the centre of the local community. It’s where people have birthday parties. It’s where people have functions to celebrate anniversaries. Like in many places around Australia, it really is a focal point for that local community.

Nationwide, the craft brewing sector was estimated to be worth some $518 million in 2018, an extraordinary increase of well over $100 million in the space of just two years. This is not to mention the potential for export value, particularly in Asia to our north. In China alone, it is estimated that the market for premium beer will be worth $35 billion in 2020. We have been very successful at exporting wine to the region, and there is no reason why we can’t be just as successful with beer.

As the shadow tourism minister, I can say that craft breweries are an important attraction as well. In my electorate, Dave’s Brewery Tours book out well in advance. They book out some months in advance if you want to go on a tour on the weekend, and that’s not surprising because in my electorate alone you have Willie the Boatman, the manufacturers of Albo Ale, and you have Batch Brewing, Sauce Brewing, Sunday Road Brewing, Wildflower, Young Henrys, Wayward Brewing, The Grifter, Malt Shovel, Akasha, Rocks Brewing, Staves, BlackFont Brewhouse and Stockade. It is, indeed, the craft beer capital of Australia, and I’m very proud. It is to craft beer what the Barossa Valley is to wine. Indeed, this time, instead of a campaign launch for the local election in Grayndler, I’m having a ‘can-paign’ launch on 24 April at Willie the Boatman. Albo Ale is going from long-neck bottles into cans, so we’re combining the two events and having a ‘can-paign’ launch—perhaps, dare I say, Australia’s first ever ‘can-paign’ launch. The fact is that this is an important industry. It’s important for jobs. It’s important for tourism. It’s important for our economy. It’s good that the government has recognised that.

I will conclude with the words of Frank Zappa, who said:

… you can’t be a Real Country unless you have A BEER …

This is indeed a real country. Beer is a part of our cultural history in this country. We should give support to those small businesses that are doing the right thing by their local communities by creating jobs and taking risks to make sure that those businesses are able to grow and thrive into the future. I commend the bill to the House.