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Monday, 16 March 2009
Page: 1614

Senator FURNER (7:58 PM) —I am pleased to be able to speak today in the chamber in relation to the Customs Tariff Amendment (2009 Measures No. 1) Bill 2009 and the Excise Tariff Amendment (2009 Measures No. 1) Bill 2009. As a member of the Senate Standing Committee on Community Affairs I was present at the two public hearings in Canberra on 10 and 11 March 2009. Following the tax increase in 2008, the committee conducted inquiries into ready-to-drink alcohol beverages and the Alcohol Toll Reduction Bill 2007 [2008]. These inquiries provide some important context for the current inquiry. In particular, the RTD inquiry found:

Risky and high risk drinking by young people and underage drinkers—

particularly young women—

has become a major public health issue.


Data over recent years has also highlighted the rise in popularity and influence of pre-mixed alcohols, known as ready-to-drinks (RTDs) or ‘alcopops’ … on teenage alcohol use, particularly for females.

And RTD beverages are a popular and commonly ‘first-used alcoholic beverage among younger age groups’.

The purpose of these bills is to bring into force the government’s decision to increase the excise and customs duty on the beverages commonly known as ready-to-drink beverages or alcopops. On 27 April 2008, the excise rate on such beverages was increased from $39.36 to $66.67 per litre of alcohol content. The bills will obviously reverse the Liberals’ decision in 2000 to give alcopops a tax break.

During the recent inquiry into RTDs, the Australian Institute of Health and Welfare, AIHW, submitted that there is no agreed definition of the term ‘binge drinking’; it can mean either excessive consumption on a single occasion or a prolonged period of drinking. Accordingly, the AIHW preferred the language used in the National Health and Medical Research Council guidelines, which use the terms ‘risky’ and ‘high-risk’ drinking. It would be fair to suggest that no-one could establish a definition of binge drinking as a result of the inquiries.

The increase to the excise and customs duty was duly supported by public health and drug experts on the grounds that it would help to reduce risky drinking among young Australians, reduce their exposure to alcohol and lead to positive health outcomes. Those in opposition to the increase to the excise and customs duty generally came from the alcohol industry, such as the industry representative bodies and producer groups, which tended to favour evidence and views that questioned the effectiveness of price increases in reducing consumption and which highlighted the role of substitution in undermining price-increase approaches to reducing consumption. Some witnesses voiced their support for a form of volumetric tax; however, that is not the purpose of these bills.

The committee was provided with copious amounts of data, and a number of sources of evidence were relied on by submitters and witnesses. In general terms, the sales and consumption data rather than the survey data as the basis for its findings in relation to the inquiry’s terms of reference demonstrate a more reliable source. The basis of this preference was described by Professor Steven Allsop, who appeared before the committee in a private capacity. He said:

… it is universally accepted that sales data are strongly and closely aligned to consumption of alcohol and are preferable to survey data. Survey data … are notoriously flawed in their capacity to accurately account for consumption. Even national surveys with very large sample sizes, like the highly regarded National Drug Strategy Household Survey … account for less than 60 to 70 per cent of alcohol known to be consumed from sales data. … The reason is that there are a number of methodological problems, including the frequently observed phenomenon that people, either in error or deliberately, underestimate their personal alcohol consumption.

The Australian Taxation Office clearance data is the amount of taxable alcohol in beer, spirits and RTDs sold in Australia. Compared to the same period in 2007, the clearance figures for the period May to September 2008 showed a 34.6 per cent decrease in alcopops clearances. A number of witnesses and submitters relied upon the ACNielsen Liquor Services Group data showing the number of standard drinks consumed in May to July for the years 2007 and 2008 by beverage type. That data showed a 26.1 per cent decrease in consumption of RTDs, which is equivalent to 91 million standard drinks; a 1.5 per cent increase in consumption of beer, which is equivalent to 13 million standard drinks; and a 2.6 per cent decrease in consumption of wine, which is equivalent to 21 million standard drinks. The Nielsen figures showed a 2.7 per cent decrease in consumption, which is equivalent to 64 million standard drinks. Mr Strachan, the Chief Executive Officer of the Winemakers Federation of Australia, indicated that the whole of the industry relies on those larger companies which purchase Nielsen and that that is a fairly strong indication that they think it is reliable. In his view, it is the best around and it is highly likely to be reliable.

The budget papers from May 2008 estimated the excise and customs duty increase would deliver an ongoing gain to revenue of $3.1 billion over the forward estimates—notwithstanding that the explanatory memorandum to the bills provided a significantly lower updated estimate of $1.6 billion over the forward estimates. Mr Colin Brown, Manager, Costing and Quantitative Analysis, Department of the Treasury, advised the committee on the assumptions underlying the estimates of forward revenue arising from the measure. Mr Brown noted that, taking into account an initial drop in demand for RTDs, the projections assumed an ‘underlying rate of growth in RTDs’ that accounted for future growth in population and the economy. If senators vote against this bill, not only will the liquor distillers make an enormous amount of money but, in just a few weeks, teenage girls will be back paying pocket money prices for lollywater drinks.

Senator Bernardi, in his contribution to this debate, questioned what would happen to the $290 million in returned excise if these bills were defeated. One member in particular of DSICA is demanding the return of his share of the excise if these bills are defeated. That is an indication that people out there in the industry want their money back should these bills be rejected.

The Alcohol and Other Drugs Council of Australia indicated that there is currently ‘minimal data to either prove or disprove significant substitution effects’. However, it expressed the view that the ATO data did show that, while there was a substitution from RTDs to full-strength spirits, total spirit consumption fell by 334,000 litres of pure alcohol. The ADCA also referred to data provided by ACNielsen ScanTrack showing that, from January to November 2008, there was a 2.3 per cent decrease in the value of the dark RTD market and a 0.2 per cent increase in the value of the light RTD market.

Ms Pezzullo, Director of Access Economics, in her evidence to the committee claimed to have anecdotal evidence from Adam of Sydney, who said:

I’ve got to say that I personally have increased my consumption of sprits as I now buy a bottle of Bourban every couple of days now instead of the 2-3 cans of ‘Woody’ I used to … but now that I have a whole bottle of spirits sitting there, after I’ve had a couple, as long as I’ve got enough coke to get me through, I tend to drink a few more. Yes, it is cheeper, but I know I’m drinking more. I just can’t afford to be buying 4 cans of bourban premix for $20 when I can buy a 700ml bottle of bourban with 2 litres of coke …

You would really have to challenge this evidence on the sole basis of trying to find a liquor outlet that sells a 700-millilitre bottle of bourbon and two litres of coke for $20. Maybe Adam was flying in and out of the country every couple of days and purchasing it duty free.

The Choice website shows that alcopops are very appealing to younger people and contribute to underage and binge drinking. In Choice’s trial, 24 per cent of the 18- to 19-year-olds thought there was no alcohol in the alcopops they tasted. The regulation of alcopops marketing—and of alcohol more generally—does not effectively protect teenagers. Parents need to get involved and keep the lines of communication open.

The committee also became aware of websites on Facebook condoning and encouraging youths, mainly women, to photograph themselves drinking various types of RTDs. Some bloggers went to the length of identifying themselves as young school-age children. In one case, a young girl appeared to be in a school uniform.

Last year the New South Wales Commissioner of Police estimated that ‘something like 70 per cent of every police engagement with a member of the community in the streets of New South Wales has alcohol as a factor’. Surely our police have better things to do than go around to clean up the mess that RTDs generate among the youth in our society.

The Winemakers Federation of Australia conducted a comparison of the long-term compound growth rate of total wine sales with the compound monthly growth rate for the eight months after the tax increase. It concluded that, taking into account normal seasonal trends, there was no evidence of substitution of wine for RTDs. ADCA’s submission, having considered the ATO clearance data as well as the ACNielsen consumption data, concluded the tax increase:

… was designed to specifically reduce consumption of one type of beverage, ready-to-drink spirits. On that measure, the tax reform appears to have been successful.

The National Drug Research Institute noted that the ACNielsen data showed that since the increased tax there had been 43 million fewer standard drinks consumed as RTDs. Associate Professor Anthony Shakeshaft from the National Drug and Alcohol Research Centre commented that the extent of the changes in consumption of RTDs demonstrated the potential for price measures such as tax increases to influence consumption behaviour. All of this evidence clearly shows a reduction in consumption of RTDs firmly in the context of long-term consumption patterns, demonstrating that the 34.6 per cent reduction was even more significant considered in this light. Professor Chikritzhs provided figures which revealed the effect of growth in RTD sales post 2000 on consumption levels of young people. He said:

In 1999, before reductions in tax and in the retail price of RTDs in 2000, RTDs were the preferred beverage of about 23 per cent of 12- to 17-year-old female drinkers. By 2005, after the tax decrease, 48 per cent of young females drank RTDs, while the preference for higher-taxed spirits fell from 42 per cent to 30 per cent. For 12- to 17-year-old males, RTD consumption  increased from 6 per cent  to 14 per cent.

Mr Munro, National Policy Manager of the Australian Drug Foundation, drew attention to ACNielsen data and showed a 38 per cent decrease in sales of vodka based RTDs with more than six per cent alcohol, and described this as a significant result in the context of the stated intent of the tax increase.

We have heard from those opposite of the belief of youths mixing their own spirits with their mixers and leading to an increase in drinking. There has been no evidence of the amount of consumption anywhere that indicates an increase where consumers choose to buy a bottle of spirits and mixers, nor was there any evidence of the amount of mixers purchased when consumers purchase bottled spirits—none whatsoever.

Development of beer and wine based alternatives to RTDs resulted from the introduction of the tax on RTDs. Beverage companies had responded to the increased excise and customs duty by developing so-called ‘malternatives’. The government acted decisively on this and on 25 February 2009, in recognition of malternatives and the potential for similar wine based products to be developed, the government moved amendments to the bills to ensure that such products do not undermine the purpose of the 2008 changes by providing substitutes for alcopops that are not subject to the duty increase and are therefore cheaper.

We heard evidence from the ADCA that excessive consumption, understood as risky and/or high-risk consumption in relation to short- and long-term harm, is prevalent among consumers of alcohol. In particular around 50 per cent of alcohol is consumed at risky or high-risk levels for short-term harm and around 40 per cent of alcohol is consumed at risky or high-risk levels for long-term harm.

Recent changes occurred when, on 6 March 2009, the National Health and Medical Research Council released new guidelines on safe drinking. The new guidelines specify that two standard drinks a day for both men and women and four on one-off occasions is advisable to avoid alcohol related injury or disease. The guidelines emphasise the risks of alcohol consumption for young people, saying that people under the age of 15 should not drink at all and that persons between 15 and 17 years of age should delay drinking as long as possible. These new guidelines provide a lower level of alcohol consumption to avoid alcohol related harms than the previous guidelines, effectively lowering the consumption level that should be classed as risky or high risk.

One would only need to accept a clear understanding that the National Health and Medical Research Council made this change in warnings and guidelines for a sole reason. The reason is clear to most of us—that is, we have a drinking problem in our society, particularly amongst our youth. An industry insider recently told the Age that companies targeted young people by sweetening drinks to mask the taste of alcohol. The insider indicated:

These figures prove that RTDs are consumed by the riskiest drinkers and pose an immediate threat to the health and wellbeing of teenagers around Australia. Some single cans contain almost three standard drinks, which means young people get drunk quickly.

Thousands of teenagers are admitted to hospital after overdosing on alcohol each year. Some suffer permanent brain damage, and some die, yet the industry is increasing the strength of drinks favoured by the youngest binge drinkers.

Many witnesses and submitters, particularly those representing health bodies, endorsed the changes. In particular, Professor Alan Moodie stressed the importance of a comprehensive, long-term, multipronged approach. He said that we should look at some of our past successes in Australia and he referred to tobacco, road trauma, skin cancer or cardiovascular disease as examples of how we have been able to make inroads in those insidious diseases.

Even Dr Rosanna Capolingua, President of the AMA, also expressed support for a comprehensive approach:

We support the alcopops tax in the context of broader measures to address harmful drinking, particularly among young people.

   The AMA believes that the positive potential of this tax measure would be significantly strengthened if the government … implemented a multifaceted and substantial strategy of alcohol harm reduction and prevention measures addressing alcohol marketing, advertising, labelling and early intervention.

Even within the industry, DSICA was supportive of the government’s broader preventative health strategy, particularly as it relates to reducing alcohol related harm, stating:

   DSICA recognises and commends the Government’s focus on preventative health, and … the creation of the Preventative Health Taskforce.

In conclusion, particularly as a parent of young teenage children, over the years I have been involved firsthand with young children who have been affected as a result of indulging in alcohol and particularly RTDs. We need to try to tidy up this particular issue for our youth. By no means am I a wowser. However, we need to introduce appropriate measures such as in these bills to try to turn the tide on the drinking culture, which is currently getting out of hand. I commend the bills to the chamber.