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Wednesday, 11 March 2009
Page: 1321


Senator McLUCAS (Parliamentary Secretary to the Minister for Health and Ageing) (4:10 PM) —I table a revised explanatory memorandum relating to the bills and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

CUSTOMS TARIFF AMENDMENT (2009 MEASURES No. 1) BILL 2009

The Customs Tariff Amendment (2009 Measures No. 1) Bill 2009 contains amendments to the Customs Tariff Act 1995.

These amendments implement changes that are complementary to amendments contained in the Excise Tariff Amendment (2009 Measures No. 1) Bill 2009.

The amendments apply to imported alcoholic beverages not exceeding 10 per cent by volume of alcohol that are classified under several subheadings in Schedule 3 to the Customs Tariff, as well as items in Schedules 5 and 6. These amendments increase the excise equivalent component of the customs duty applying to those subheadings and items from $39.36 to $66.67 per litre of alcohol content on and from 27 April 2008.

The amendments will ensure that imported beverages are subject to the same excise equivalent customs duty as the excise duty imposed on these beverages when manufactured locally.

The ad valorem component of customs duty for these goods, where applicable, has not been changed.

Full details of the measure are contained in the Explanatory Memorandum.

EXCISE TARIFF AMENDMENT (2009 MEASURES No. 1) BILL 2009

The amendments contained in the Excise Tariff Amendment (2009 Measures No. 1) Bill 2009 seek to confirm in legislation the increase in the excise and excise-equivalent customs duty rate applying from 27 April 2008 to ‘other excisable beverages not exceeding 10 per cent by volume of alcohol’, commonly referred to as ‘alcopops’ or ‘ready-to drink beverages’ or ‘RTDs’.

The amendments also alter the definition of beer for taxation purposes, and complementary changes will be made to the Customs Tariff Act 1995 so that imported beer is subject to the same definition. The change to the definition of beer is part of a package of measures that includes changes to the wine definition which will be made to the Customs Tariff Act 1995 and A New Tax System (Wine Equalisation Tax) Regulations 2000.

These amendments aim to ensure that beer and wine based products that attempt to mimic spirit based products in relation to their taste are taxed as a spirit product, that is, at a higher tax rate.

On 26 April 2008, the Government gazetted increases to the rate of excise and excise-equivalent customs duty applying on other excisable beverages not exceeding 10 per cent by volume of alcohol from $39.36 to $66.67 per litre of alcohol content. The Excise and Customs Tariff Proposals were tabled in the House of Representatives on 13 May 2008.

The Australian Taxation Office and Australian Customs Service have been collecting excise and excise-equivalent customs duty at the higher rate since 27 April 2008.

The amendments introduced today seek to confirm in legislation the higher rate of taxation for alcopops.

The amendments set out in Excise Tariff Amendment (2009 Measures No. 1) Bill 2009 will alter the Schedule to the Excise Tariff Act 1921 for other excisable beverages not exceeding 10 per cent by volume of alcohol from $39.36 to $66.67 per litre of alcohol content on and from 27 April 2008. This rate is subject to indexation on a half yearly basis and is increased in February and August each year.

As most members are aware, this measure - reversing a serious mistake made by the Liberals in 2000 - is backed by research, backed by health experts, and backed by the evidence.

The increase in the rate applying to alcopops reflects the Government’s concern at the growth in alcopop consumption, alongside their appeal to young and underage drinkers - and the role they play in encouraging binge-drinking.

No-one who reads the newspaper or watches television can be unaware of the problems caused by binge drinking. Community leaders, police and health experts alike agree that action needs to be taken.

Nevertheless, the Opposition has doubted that binge-drinking is an issue, so let me address that first of all.

In any given week, approximately one in ten 12 to 17 year olds are binge-drinking or drinking at risky levels.

Almost 20,000 girls aged 12-15 drink daily or weekly. The number of young women aged 18-24 being admitted to hospitals because of alcohol has doubled in eight years.

In a year, more than three-quarters of a million Australians are physically abused by persons under the influence of alcohol.

In 2004-05 the social cost of alcohol misuse in Australia was estimated to be about $15.3 billion.

Last year, NSW Police Commissioner Andrew Scipione estimated that ‘70 per cent of every police engagement with a member of the community in the streets of NSW has alcohol as a factor.’

And on Monday 9 February 2009 in the West Australian, it was reported that girls are turning increasingly to violence and crime, with new figures showing a 70 per cent rise in offences by females 18 and under in the past three years. Western Australian Police warned that a yobbo culture had developed among girls similar to young men and police were being inundated with reports of drunken, antisocial behaviour by females.

Acting Inspector Cameron Taylor, from the central metropolitan district, said: ‘There seems to have been a change in social standards and it’s become more acceptable and normalised for girls to drink and get aggressive…Quite often when officers are dealing with males they will be confronted by females who are abusive and aggressive, which as recently as five years ago was much less likely to occur.’

So we know that binge-drinking is a problem. Parents know it is a problem. Police know it is a problem. Health experts know it is a problem.

The Member for Warringah, on the other hand, has described concerns about binge-drinking as ‘a beat-up’. The Member for North Sydney has urged people not to ‘overplay it’.

These are irresponsible attitudes, and they inform the irresponsible opposition of that side of the House to our alcopops measure.

What much of the debate over the last twelve months has centred on is the role of alcopops in binge-drinking - with the alcopops industry and the Liberals on one side, and health experts and Labor on the other.

The House should be aware of the evidence that supports the Government’s view.

Alcopops are targeted directly at young people and underage drinkers. This is, quite simply, indefensible. By using bright colours and sweet flavours, alcopops companies aim to hook young people on drinking early in their lives.

Research shows that alcopops expose young and inexperienced drinkers to a higher than normal risk because they are more likely to make false judgments about the product they are consuming.

But with all that going on, in 2000, the Liberals made a terrible decision - to give the alcopops industry a tax break.

This mistake had consequences.

Between 2000 and 2004, the percentage of female drinkers aged 15-17 who had consumed alcopops at their last drinking occasion increased from 14% to 62%.

For females drinking at risky and high risk levels in 2004, 78% drank alcopops on their last drinking occasion. That figure has increased from 21% in 2000.  

The industry itself admits their sales grew by 250 per cent since 2000.

So the Rudd Government made the entirely sensible decision to reverse the Liberals’ mistake.

The Government’s decision leads to the logical situation that all spirits - bottled or pre-mixed - are taxed at the same rate.

As a result, the price of most alcopops has increased.

Research shows us that price increases can play an important role in tackling binge-drinking, and that higher prices lead to a reduction in consumption, especially among young people.

In fact, an independent expert report, commissioned by the Howard Government, found that:

‘Alcohol excise taxes are capable of being designed explicitly to target the types of alcohol known to be the subject of abuse (for example, high strength beer and alcopops),’

‘For example, studies show that young people are more influenced by the price of alcohol so that increasing the tax rate on alcoholic drinks which are specifically targeted at the youth market is likely to be effective.’

And as a result: ‘There would appear to be strong justification for the April 2008 increase in the Australian tax on pre-mixed drinks (alcopops) by 70%.’

And indeed, Collins and Lapsley’s faith has been borne out by the empirical evidence in Australia.

Tax Office figures drawn from the first nine months of this measure show that alcopops sales have dropped by 35 per cent compared to the previous year.

This is significant. What is more, it is far beyond our modest predictions. When this measure was first introduced, modelling predicted that it would slow the astronomical growth of alcopops sales - an achievement in itself.

In fact, alcopops sales have slumped - bringing overall spirits sales with them. Despite a smaller increase in full-strength spirits sales, overall spirits sales have fallen by almost eight per cent.

It is perhaps not a surprise, then, that despite the opposition of the alcopops industry and the Liberal Party, health experts have supported this measure in droves.

The Australian Drug Foundation’s CEO John Rogerson stated that ‘This tax fixes a problem started with the introduction of the GST and shows that the Government is serious about tackling alcohol problems in our community.’

Australian National Council on Drugs - Dr John Herron, former Liberal Minister and former AMA President, in a letter to the Prime Minister stated:

‘I am writing on behalf of the Australian National Council on Drugs (ANCD) to congratulate your government on the recent announcements regarding alcohol, particularly the public personal support you are providing for the encouraging work undertaken by the Minister for Health & the Parliamentary Secretary for Health.

… Utilising the taxation system is one of the most effective measures we have for reducing alcohol related harm and problems for both individuals and communities.’

The Alcohol and other Drugs Council of Australia CEO David Templeman said, ‘that this initiative clearly recognised the problems created by the excessive consumption of RTDs which were attractive to the youth market.’

The President of the Public Health Association of Australia, Mike Daube who is also a member of the National Preventative Health Taskforce stated: ‘There is now dramatic evidence showing that young women are out-drinking their male counterparts - and unfortunately many of them drink to get drunk.’

‘We know that price is the most effective single measure in reducing alcohol consumption, especially by young people. This increase will make a real dent in one of our biggest current social problems.’

So that’s the alcopops measure - backed by research, backed by health experts, backed by the evidence.

The alcopops industry has been ruthless in trying to undermine these facts, motivated by the desire to protect their profits. Before explaining the array of measures we are taking to tackle binge-drinking, it is appropriate briefly to address some of the myths they have attempted to propagate.

The allegation that ‘There is no evidence the measure is working.’ Absolutely wrong. As previously stated, figures from the Australian Taxation Office - the most reliable figures available - show that sales of alcopops have fallen significantly.

Even when you take into account a rise in sales of full-strength spirits, total spirits sales have fallen by almost eight per cent. As already explained, that is a significant drop, and well beyond initial predictions.

The industry has tried time and again to confuse the issue, arguing that annual seasonal variations, which occur year in year out, show trends that they simply do not show.

The allegation that ‘Because some young people are now drinking full-strength spirits, they are more likely to drink more without meaning to.’ In fact, research shows that young and inexperienced drinkers who drink alcopops are at higher than normal risk because alcopops disguise the taste of alcohol, which may lead to false judgments.

The allegation that ‘The measure has failed because alcopops producers are now producing beer-based alcopops to get around the measure.’ In fact, this is exactly what all companies do when faced with a tax measure which is impacting their bottom line - they try to get around it. This is one of the strongest signs yet of the measure’s success. What is more, we are closely looking at action to block these companies’ shameful attempts to put profits above young people.

The allegation that ‘Figures show there is no binge-drinking problem.’ This is an argument the Liberals have tried to make, but again, it’s just wrong, as already explained.

The Government understands that many in the community, and in Parliament, are keen to ensure that alcopops is not the only measure the Government is introducing to tackle alcohol abuse.

So the Government would like to offer its reassurances, in the form of concrete facts.

The alcopops measure is just one part - albeit an important part - of the Government’s comprehensive approach to tackling binge-drinking.

Early last year, the Prime Minister announced the first steps in our National Binge Drinking Strategy. The Strategy includes $53.5 million to address binge drinking among young people. Elements of the package include:

  • $14.4 million to invest in community level initiatives to confront the culture of binge drinking, particularly in sporting organisations. Six major sporting codes have now signed up to a code of conduct.
  • $19.1 million to intervene earlier to assist young people and ensure that they assume personal responsibility for their binge drinking; and
  • $20 million to fund advertising that confronts young people with the costs and consequences of binge drinking.

In 2008, the Minister for Health and Ageing launched the Government’s Don’t Turn a Night Out into a Nightmare campaign to confront young people with the dangers and the consequences of binge-drinking. The ads are gritty and hard hitting, for which the Government makes no apology.

When the Minister announced this measure, she made a clear statement as to how the revenue would be used: ‘this change will see the single biggest investment ever by a Commonwealth Government into preventative health measures’.

So it should not have come as a surprise to anyone when at COAG the Government announced the single largest investment ever made by an Australian Government in preventative health, to support a range of programs and interventions to reduce the impact of chronic illness on the community - $872 million. This is all new money.

Tackling alcohol abuse will figure highly in this National Partnership.

What is more, the National Preventative Health Taskforce is currently well down the track in developing a National Preventative Health Strategy - and alcohol is one of its highest priorities.  

Emerging from that Strategy will be further, significant initiatives to tackle alcohol.

The alcopops measure will raise $1.6 billion from 27 April 2008 and over the forward estimates, somewhat less than the original estimate at the time of the last Budget. This is a clear indication that the measure has been working.

Note, though, our new investments - $872 million in the National Preventative Health Partnership, the single largest Commonwealth investment in prevention ever, as foreshadowed in the original alcopops announcement; $53 million already allocated to the National Binge-Drinking Strategy; and more to come via the National Preventative Health Strategy. It is clear this Government is serious about binge-drinking - far more serious than any government before it.

It is appropriate to end with a brief note of sadness for the irresponsibility shown by those in the alcopops industry, and even more galling, those on the other side of this House.

The alcopops industry, for their part, have shown a flagrant disregard for truth and reasoned public debate. To quote Michael Moore, the CEO of the Public Health Association of Australia, when he described the ‘sort of tactics of distorting facts and statistics that have been used by some representatives of the distilled spirits industry to protect their own profits.’

What is worse, the Liberals have stood with them every step of the way.

Since this measure was announced, the Liberals and Nationals have opposed it. They have doubted the existence of a binge-drinking problem - to think specifically of a former Minister for Health and a former Shadow Minister for Health.

Perhaps even worse, the Leader of the Opposition has thrown up his hands in surrender, suggesting that there is nothing to be done about binge-drinking, and even praising ‘the enterprising ingenuity of the Australian drinker.’

The Liberals are standing with the alcopops industry as they attempt to protect their profits - at the expense of our young people.

This measure is working. It is backed by research, backed by health experts, and backed by the evidence. It will enable us to make significant investments in prevention, and in tackling alcohol abuse. It should be supported.

When multibillion dollar companies develop products to hook underage drinkers on alcohol, by producing sweet, sugary drinks, that is something that should be condemned - not rewarded with a tax break.

The changes to the taxation definition of beer contained in the bill will support the alcohol tax increase by ensuring that beer-based products that attempt to mimic spirit based products are taxed at the higher rate, that is, the alcopops rate.

The change to the definition of beer will set a combination of minimum limits on bitterness and maximum limits on sugar content that must be present in the final beverage. As part of the sugar requirement, artificial sweeteners will not be permitted to be added to beer.

The amendments also establish a limit on the amount of spirit distilled from beer that can be used in the brewing process. This limit is considered to be sufficient for normal industry purposes and reduces the risk of large amounts of beer spirit being added to beer in an attempt to mimic a spirit flavour.

Apart from establishing new restrictions on the definition of beer, the Government has also taken the opportunity to make changes that encourage innovation in the beer-making process. The amendments will allow additional ingredients to be added during the brewing process, including small amounts of alcohol from a non-beer source.

These changes are expected to allow domestic brewers to better compete with international brewers by providing opportunities to produce new beer flavours within the overall new limits concerning bitterness and sugar content.

The amendments are not designed to have any significant impact on conventional beer products and the Government understands from consultations that the beer industry is supportive of the changes.

Subject to the support of the Parliament, the amendments to the definition of beer will apply from 1 July 2009, which will provide sufficient time for industry to be informed of the changes and to make any adjustments. These amendments will not impact on the date of effect for the RTD tax increase of 27 April 2008.

As discussed, complementary changes will be made to the Customs Tariff Act 1995 so that imported beer is subject to the same definition of beer for taxation purposes.

Full details of the Excise Tariff Amendment (2009 Measures No.1) Bill 2009 is contained in the Explanatory Memorandum.

Debate (on motion by Senator McLucas) adjourned.