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Wednesday, 25 February 2009
Page: 1838


Mr NEVILLE (5:20 PM) —It is a great pleasure to participate in this debate on the Excise Tariff Amendment (2009 Measures No. 1) Bill 2009 and the Customs Tariff Amendment (2009 Measures No. 1) Bill 2009, especially as the member for the city of Bundaberg.


Mr Snowdon —Rum, rum, rum!


Mr NEVILLE —And I note the honourable member for Bonner in the House today, who is also a Bundy girl from way back.


Mr Snowdon —Is she! How do you know her drinking habits?


Mr NEVILLE —You’d be surprised, Minister. The coalition is opposed to these bills, which seek to validate a substantial tax increase on one category of alcohol products: ready-to-drink beverages. The government claims it increased these taxes as a health measure—a measure aimed at cutting the rate of binge drinking, particularly amongst young women. The coalition certainly does not deny that there is binge drinking in some sectors of our society. We are as concerned about that problem as anyone else is. But this policy is quite transparently a tax grab designed to boost the bottom line of the budget, allegedly to protect young women. In other words, the smoke and mirrors trick is the young women. On both health and tax counts it is a failure.

I do not promote binge drinking—in fact, quite the opposite. I have always promoted responsible drinking and, despite some of the muck that has been thrown at me at the past in this chamber, there is already ample evidence that RTDs deliver a measured quantity of alcohol. When you get a Bundy and cola, a scotch and dry or whatever it may be, you know exactly what you are drinking. You know you can have a can or two drinks of a particular one and that is your limit. From a road safety perspective, that is a very sensible way to drink. For example, a can of XXXX Gold has an alcohol-by-volume reading of 3.5 per cent, but the grey label Bundy, or the mid Bundy as some call it, also has 3.5 per cent. Why should one be taxed at $0.36 and the other at $0.90? What is fair about that? Let us take one standard drink—not a can—and this time compare not the half strength but the full strength. A full-strength beer has an excise rating of $0.39. One standard drink of Bundy and Coke is $0.88. Where is the equity in that? Why is one form of alcohol any more dangerous to the person, be it a young person or an old person, a motorist or nonmotorist or any other? And where are the hundreds of millions of dollars that Minister Roxon said would flow to preventative health measures?

My colleagues on the other side have been talking about this today. Let me enlighten them. Instead of the government spending a paltry $53 million on a National Binge Drinking Strategy—that is $40 million for community initiatives, $19 million to assist young drinkers and $20 million for anti-binge advertising—what we find is that these measures are funded through the existing resources of the government, and there is no further indication of how much of the alcopops’ revenue has been or will be provided to this preventative measure. So if they are fair dinkum, of the $22 million-odd how much has flowed into this system? I do not want to be too cynical, but perhaps all this money was meant to pour into the health coffers that were never intended to materialise. This is just an example of how spin has become more important to the government than real substance.

I have often spoken in this House about the contribution of Bundaberg Rum to my community and to this country. It is important to me—as I said, I come from the city of Bundaberg—but it is also important to the wider Australian community, to say nothing of its significant corporate contribution to national sporting events. Bundaberg Rum has been in Bundaberg for 120 years. It is an important adjunct to the sugar industry. It is a great employer—a particularly good employer—a great tourist operator, a great ambassador for Australia and a great sponsor for the local community in supporting events as well. Bundaberg Rum’s parent company, Diageo, has invested $24 million in the Bundaberg distillery, which includes the construction of a modern multimedia tourism centre which draws around 80,000 tourists a year. That is an enormous part of the Bundaberg tourism profile and its economy—not just the economy of Bundaberg but of the entire Wide Bay region and Queensland.

The Bundy bear was made a Queensland heritage icon in 2004. So should the heritage trust of Queensland be lambasted for allegedly supporting binge drinking, as I was in this place? You all know that I was said to have a full-size bear in my office and that the minister was shocked. It was a poster for the tourist centre; it had been in my window for several years. (A) how could it be shocking? and (b) it certainly was not a life-size bear—and what is more I have never supported binge drinking. I quote my good friend and colleague in state politics in Queensland Anna Bligh, who said:

I think Queenslanders and Australians love their Bundy and they love their Bundy Bear.

Frankly, I do not think the Bundy bear is about to lose favour with Queenslanders and Australians. Leave the bear alone! On just one thing in the state election I agree with the Premier—just the one.

Again I ask: is this new tax regime more a health measure or a tax grab? And, from a local perspective, why should Bundy drinkers—because they are the major ones—be singled out for this additional tax? The Australian newspaper reported on 17 May 2008 that the excise increase first emerged in a finance department budget submission couched in terms of closing a tax loophole, which it never was. As Christian Kerr said:

Was the alcopops tax motivated by concerns about the health of teenage girls or the health of the budget surplus?

That question remains today because the government simply cannot supply any hard evidence that the tax has had an impact on levels of harmful drinking.

The bills before the House are about the tax impact. The 69 per cent increase in excise on RTDs—that is, from $39.36 a litre to $66.67 a litre—will raise $1.6 billion across the forward estimates. But this increase of 69 per cent is a massive tax grab, especially coming from a government that claimed we would have no new taxes. The budget estimated revenues originally at $3.1 billion, but, as I said, it is now down to $1.6 billion. Clearly, it has failed both as a health measure and as a tax matter. The minister said sheepishly that the revenue was—and I will quote for members of the opposition—‘somewhat less’. Minister, try halved.

One questions not only the government’s intentions but also the quality of its advice. For example, on a Treasury minute on 14 May 2008, the very day after the budget, Treasury said of relative rates of alcohol consumption:

RTDs have different patterns of cross-price elasticy being complements to some products (eg a reduction in RTD consumption may also be reflected in a reduction in beer consumption) …

Wow! How they ever got to that conclusion I will never know. The quote goes on:

… and a substitute for other products. On balance the cross-price elasticity estimates are assured to be zero.

However, this advice was proven unreliable and in its Mid-Year Economic and Fiscal Outlook Treasury was forced to admit that there has been substitution into spirits and beer—in other words, the government’s basic rationale was faulty. But still they deny it, even in the face of advice from their own agency. Let me quote MYEFO’s admission that the RTD sales have fallen with the excise rate increase. It says this:

… was partly offset by a substitution towards domestically produced and imported spirits and other excisable alcoholic beverages.

In other words, people were drinking more full-strength spirits and, in addition to that, other excisable alcoholic averages—wine and beer, no doubt. I draw the members’ attention to that last phrase ‘other excisable beverages’. In that statement, they let the cat out of the bag, at least in part. Despite the fact that we cannot get the beer and wine figures since 27 April, it is clear there has been a move towards beer consumption. That has been kept very quiet in this debate. There has not been a word, I think, from either side of the chamber—there might have been a few words from our side but nothing from the other side. But, again, you get caught out. In its quarterly trading update to 31 December 2008, released on 19 February, only a week and a half ago, Lion Nathan reported:

Australian beer market remains robust with a growth rate of 2.3 per cent for the quarter.

So beer went up in that quarter. Better still: Foster’s Group reported that, for the first six months of the current financial year, their beer sales had increased three per cent. More interestingly, for January, the beer figure has shown an increase of eight per cent. In other words, the problem has shifted from one mode of alcohol to another. There has been a shift in drinking modes, but so far the government has presented no evidence that there has been a net decrease.

When you have inconsistent taxing, more particularly, excise applications, you will always get distortion and drinkers moving from one mode to another. The kids will tip a bit out of a bottle of Coke and fill it up with full-strength spirit or they will drink beer because they find the RTDs too dear.

Back in 2000, at the time of the introduction of the A New Tax System—and I say this proudly—I was one of those who fought for alcoholic beverages to be taxed on alcohol content, not the type of alcohol. There is no logic in that whatsoever. I am not against the wine industry having special concessions to protect its development; let me make that quite clear. But, in broad terms, one form of alcohol should not be taxed at a different rate from another.

The tax system at that time was grossly unfair and worked against some types of premixed drinks because it was based on the source of the alcohol rather than the amount of alcohol being consumed. The motivation was not as the member for Corio said in his address this morning but rather to remove a loophole which allowed the development of designer drinks, which are the real alcopops—and I am not talking about Bundy and whisky and others—which had a non-spirit base and, broadly, to bring RTDs in line with canned and stubbies of beer with which they competed. Why should you have one rate for beer and another one for an RTD? At that time I fought for fairer treatment of premixed drinks for three reasons: firstly, because the original law was archaic and unfair; secondly, it worked against the interests of our own distillery in Bundaberg and its potential in the Australian market; and, finally, because premixed drinks are a known, measured quantity of alcohol and are a more responsible way to drink.

Many speakers have said today that the government’s increased taxation on RTDs has driven people away from alcohol in a measured form to either cheaper products on the one hand or splashing random quantities of full-strength spirit into mixers on the other. I have a piece of interesting history I will share which I am sure the minister at the table, the Minister for Defence Science and Personnel, and my two colleagues opposite will be very interested in. Back in 2004 Labor floated this very idea and, let me tell you, the people and workers of Bundaberg delivered a message loud and clear, ‘No way, no how.’ In fact, the outcry at that time forced the Labor Party to deny it had even considered a tax hike on premixed drinks. We actually had the documents, but they denied it emphatically. The now Minister for Resources and Energy and Minister for Tourism, Martin Ferguson, said that the concern was ‘unnecessary’ and was reported in the Australian as saying that a tax hike of premixed spirits would be ‘unfair’.

I recall convening a meeting at that time which involved local community leaders, tourism stakeholders as well as members of the Distilled Spirits Industry Council of Australia and representatives of Diageo, the parent company of Bundaberg Rum, to thrash out what Labor’s policy would mean for our town and its industry. That meeting and the public outcry forced the hand of then Labor leader, Mark Latham, who clearly thought Bundaberg would accept this passively. He was dead wrong. When Bundaberg fights back, it fights back hard and that is something Labor need to learn—and I suspect they are going to need to learn it again in the forthcoming state election.

Now we face a Labor government intent on resuscitating the tax in a cynical grab for money. Minister Roxon makes much of the fact that RTD sales have dropped 35 per cent since the excise went up, but she has not admitted to any great extent that the sales of full-strength spirits have increased nor, as I said earlier, about the beer consumption. Anecdotally, bottle shop attendants will tell you that RTD sales have plummeted, with young Australians preferring straight spirits and a couple of litres of Coke to go with it. One survey by Roy Morgan reported that in the period June to September last year cider sales went up 249 per cent. That is a big increase. This government was warned that that is exactly what would happen—there would be a mode shift in drinking habits.

The minister has also complained about companies trying to avoid tax by making RTDs based on beer or wine. She has been caught again—as I said before—by the inanity of her own argument. If you are going to have a cheaper excise on other forms of alcohol, people are going to move to make alcopops from that source of product. Again, the government was warned that this would happen and, faced with these cold, hard facts, the minister tried to claim that the industry’s reaction is a sign that the tax is working. That is a very long bow—and I am not talking about Strongbow either.

Even some of the groups who support the government’s action acknowledge that they certainly do not know whether young drinkers have simply switched to higher strength alcohol products or not. When it gets down to the short strokes, the minister has hidden behind the smokescreen of allegedly protecting young female drinkers. But if we take, for example, the 14- to 19-year-old group—and I am sure colleagues would acknowledge that on the face of it this is about the middle of the most vulnerable group of the lot—we find that they represent only 0.5 per cent of the Australian population and one per cent of the total female population of this country. I just make the point here that, if it is as small as that and if it is as easily recognised as members in the government have said in their speeches today—I think the member for Leichhardt cited 20,000 people; they may not have been the same denominators but were roughly in that same group—why do we not target them? Why do we not target them with education and responsible drinking regimes instead of using them as some sort of stalking horse for the government to pick up more revenue through tax?

I would like to conclude with three very interesting facts—referring again to that 14- to 19-year-old age group. Members opposite who have been peddling this stuff all day might like to know this figure: there was a 27 per cent reduction in risky and high-risk drinking in this group in the period 2001-07. The second fact is that—contrary to the impression the minister gives all over Australia—the biggest consumers of RTDs are males over 24. Finally, three-quarters of all RTDs are dark spirit based products, like Bundy and cola, whisky and cola, and bourbon and cola. These are quality distilled products, preferred by males—hardly synonymous with ‘alcopops’. But then, as I said before, the government’s actions are a tax grab. They are about spin, not about substance.