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Thursday, 10 December 1998
Page: 1941

Mr NEVILLE (10:02 PM) —This being the festive season, I thought I might speak tonight about Bundaberg rum. In doing so, I hope that my colleagues and others will imbibe the product liberally but responsibly over the holidays. Those who do not might, if it is their wont, use it in the Christmas cake or in the plum pudding. There is a serious side to this and I thought tonight, being such an occasion, I might touch upon a few points.

Honourable members know that I come from the city of Bundaberg and that I take a great interest in the local products, in particular Bundaberg rum—not just because of the pleasures of that product but because it is part of the economy of my district. In 1872 commercial sugar production began in Bundaberg and 16 years later—110 years ago last month—the Bundaberg Distilling Co. came into being and began producing its rich, dark rum the following year. The distillery was founded on the banks of Burnett River, adjoining the Millaquin Sugar Mill, which is now associated with the Bundaberg Sugar group. It also happens to be one of the two major shareholders of Bundaberg Rum.

Bundaberg rum has been intertwined with our nation's history since Federation and it has played a very important part in our nation's coming of age. We are often asked where the little flask came from that many people put in their luggage to take on holidays. That little product came from the oldest squatters, graziers and stockmen, who used to put it in their saddlebags. Rum being one of the few products that you can enjoy with warm water—there were no ice buckets out there in the west, it was just what you got out of the local stream or the billabong—the flasks became a very important part of Australia's history. Bundaberg rum has grown up with Australia.

Twice the distillery has been destroyed by fire—in 1907 and in 1936—and it played a very important part in two world wars as a tonic for our troops and our sailors. For many of our returned diggers, a Bundaberg rum and milk toddy on Anzac Day is an absolute essential. I am sure that many of those who have been to the dawn service know that Bundaberg rum and milk is standard fare on that day. They are called gunfire breakfasts in some areas. For many tourists who come to Australia, their visit is not complete without a bottle of the great Aussie spirit. Many go further and travel to Bundaberg to take the tour of the rum distillery. I can recommend it to honourable members. I have arranged for many who come up on parliamentary delegations to see the distillery.

It is very interesting that Bundaberg rum is the largest selling spirit label in Australia, ahead of all the scotch whiskies, gins and other products. For this reason, we should not underestimate the ability of Bundaberg rum to earn revenue not only for the company and its shareholders but also for the local economy through its work force and the tourists it attracts, and for the Commonwealth itself through excise and taxes. It might surprise you that that one relatively small distillery on the banks of the Burnett River returns to Commonwealth revenue in income tax and excise $100 million a year. That is an extraordinary figure from one business.

There are two policy initiatives of this government which go a long way toward providing a more level playing field for this great Australian icon. They are the equalisation of excise levels on boutique alcoholic beverages and the enshrining of the sealed duty-free shopping bag in the legislation for the new tax system. There was a great deal of inequity previously in excise levels between drinks derived from fermented and lowly taxed alcohols, that is, between drinks derived from fermentation as distinct from distillation.

You might ask what does it matter what source they are derived from; it is still alcohol. Nevertheless, those two forms of alcohol were treated quite differently. It always seemed unfair to me that those longstanding distilled products like Bundaberg rum, the many whiskies, gins and other products that we sell in this country, when mixed with something like Bundaberg ginger beer or the various colas, attracted one level of excise while the more modern products, referred to sometimes as designer drinks—you are all familiar with those so I will not mention them by name: I am not being too pejorative when I say that some are little better than firewaters and are based on wine products while others are based on fermented alcohol—were taxed at a much lower rate. To me that seemed inequitable.

The Bundaberg Distilling Co. and the various whisky companies in Australia were always very responsible with their mixed drinks and always kept them roughly to the level of a super-beer. However, many of these firewaters were quite excessive in the amount of alcohol they contained, bearing in mind that young people were the ones who drank these products. Under the government's legislation, all these drinks will be treated equally and fairly.

The Bundaberg clause contained in the government's tax reform white paper—Not a new tax: a new tax system—brought all these products into one regime and in so doing did not give one product a government instigated advantage over another. I echo the Bundaberg Distilling Co. and the duty-free industry in their strong support for the government's decision to retain a GST and duty-free sealed bag from July 2000. Over 50 per cent of Bundaberg black—for those who are not initiated in this product, there is a black label Bundaberg rum now: it is a very high-quality rum that equates with the black label whiskies—the premium aged product, is sold in duty-free stores.

Export sales of Bundaberg rum products through duty-free shops are in the order of $5 million to $10 million annually and growing. This is very important to the economy of my electorate of Hinkler and, for that matter, to employment. When you take a slice of $10 million out of the day-to-day operations of any company in your electorate, it will affect employment. I am pleased that the government responded by retaining the sealed bag system.

It is also interesting that, under the GST regime, like most countries, we will refund the GST to people who come to our country and buy $300 worth of goods in a particular store, and so we should. That is an important part of tourism. But that is a fairly onerous, if not convoluted, task. People have to keep their dockets and front up to the window at the airport to get their GST or VAT back. I am not suggesting that we should do it any differently. Other countries do it that way and the Australian economy should benefit to the same extent.

However, a person going overseas every once in a while, perhaps to Bali, New Zealand or Fiji—not the great international traveller, but probably the battler who has saved up for years to have a bit of an overseas fling—spends, on average, $41 at the duty-free stores buying a bottle of rum or whisky, a few smokes or some nice perfume. It would have been iniquitous to have deprived those people of the benefits, as part of their holiday, of being able to buy a bit of duty-free.

Mr Bevis —Especially when it's Bundy white.

Mr NEVILLE —Of course. I am indebted to the member for Brisbane for his support. It is the only time I have had it this year. Under the current sealed bag system, it is a very simple operation which allows the operator to pay sales tax and excise. It was hoped that under the new regime the government would retain that and apply the same method with the GST and the excise. Although we have not seen the detail of that—I hope to get the detail from the Treasurer in the near future—I understand that the same principle will apply. In other words, if the company does have the little green slip to produce, it pays the excise.

As we move towards this GST system and remove some of the anomalies from the tax system, it would be appropriate that the treatment of alcohol and other products derived from Australian primary production be examined. I conclude by referring to brandy and rum. One is derived from grapes, a by-product of a primary industry, and the other is derived from sugarcane. I believe that, as we remove anomalies, those products should be brought closer together in their tax treatment. I wish everyone enough Bundaberg rum for the festive season.