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Thursday, 13 August 2009
Page: 4857


Senator CORMANN (12:03 PM) —When this 70 per cent tax hike on ready-to-drink beverages was first announced by the government, it was presented as a key measure in the fight against binge drinking. This was supposed to address alcohol abuse and alcohol abuse related harm in the community, in particular among young people. The reality is that this legislation was never about that. This tax hike was never about fighting binge drinking. It was never about addressing alcohol abuse related harm in the community. This was always a tax binge to deal with the Rudd government’s binge spending and binge debt. The hollowmen, the spin doctors, in the Rudd government that were looking for a way to sell a tax grab, to make it palatable to the public, thought the best way was to dress it up as a health measure.

We have had this debate earlier this year and we went—in some great detail—through all of the arguments as to why this is not an effective way to address binge drinking in the community. I say to the responsible drinkers of RTDs across Australia: the Rudd government wants to make you pay for and to make you contribute to their spending binge. They want you to pay to help address the financial mess that they have got our country into. In particular, I say to the responsible young people of legal drinking age who perhaps prefer the RTD beverages to some of the other alcoholic products available: this government wants you to help pay for their binge spending and their binge levels of debt. Young people are really the victims of this government across many areas. Young people are the victims of this 70 per cent tax hike on RTDs. They are the victims of the student tax grab that is being pursued by this government. And they are the people that will have to pay back the incredible levels of debt that are being mounted up under this government for decades to come.

When this measure was introduced, there was no health target. There was no performance measure alongside it to determine how, and by how much, the level of alcohol abuse related harm in the community was to be reduced. There was no measure whatsoever to give us some sort of target to measure whether it had been successful in helping to address alcohol abuse related harm in the community. There was only one target, and that was a fiscal target: the government wanted to raise $3.1 billion in additional revenue.

As I have mentioned, the government thought, ‘How do we sell this?’ The spin doctors came up with a great idea: ‘Let’s send out health minister Nicola Roxon and let’s ask her to sell it as a health measure.’ This is yet another area in which the Minister for Health and Ageing operates as the propaganda minister for Treasury to sell a good old-fashioned—or, rather, a bad old-fashioned—Labor tax grab on behalf of the government by dressing it up inappropriately as a health measure. Why do I say this is not an effective health measure? Well, there was no evidence to start off with that this would be the appropriate way to deal with this. Why is it that whenever there is a serious problem in the community the only way Labor think they can address it is by introducing a new tax or a tax hike? If they did want to address it through taxation, what they should have done—and this is what all the public health experts said before the relevant Community Affairs Committee inquiry—was make a hard decision. If Labor really wanted to address it through taxation, they should have made a hard decision and explored the opportunity of introducing volumetric taxation on alcohol. They know that if you really want to use taxation as a vehicle to help address alcohol abuse and alcohol abuse related harm in the community, then you have got to have in place a tax system that encourages people to go for lower alcohol content beverages rather than higher alcohol content beverages. Of course, in that context, this measure before us goes exactly in the wrong direction. This measure actually increases the tax on a comparatively lower alcohol content beverage and it makes more lethal alcoholic beverages comparatively more attractive.

If the Rudd government had gone to the authoritative data from the Australian Institute of Health and Welfare, the national body with the most authoritative data on levels of alcohol consumption and levels of drug use and abuse across the community, they would have seen that the drink of choice for male binge drinkers, the drink of choice for male problem drinkers, is beer for all ages; that is, from 14 years up. The drinks of choice for female binge drinkers are spirits and liqueurs, up until the age of 29, and white wine, for those 29 years of age and over. So, even by looking at the data of the most authoritative source, the Australian Institute of Health and Welfare, you note the government should have been able to see that by targeting ready-to-drink beverages they were actually targeting the wrong drinks. The international evidence was also very clear that this was also not going to be an effective way of addressing binge drinking. In jurisdictions where this had been tried before all of the negative flow-on consequences that we predicted did actually happen.

We had two Senate inquiries into this. One of them was after this measure had been in place for 12 months, as we wanted to see whether the government had any evidence at all that this 70 per cent tax hike on RTDs had been successful in reducing alcohol abuse or alcohol abuse related harm in the community among young people in particular. There was none. There was no evidence at all. The only thing that the government were able to tell us was: ‘The sales of RTDs have gone down, which was why our revenue estimates have collapsed. Our revenue estimates have collapsed and so sales have gone down, so this is evidence that there is less binge drinking.’ But they cannot say that at all because they have got absolutely no idea of who is drinking less. All they know is that, yes, in the first year of this 70 per cent tax hike, the sale of RTDs went down. They have got no idea of who is drinking less and of whether they are problem drinkers or responsible drinkers drinking less. They have got no idea of whether problem drinkers are the ones who have actually substituted to the more lethal, stronger spirits. They have got no idea of whether younger people are now substituting with stronger spirits, the more lethal drinks. They have no data whatsoever.

In fact, what we pointed to at the time was Treasury modelling which indicated that as of 1 July 2009 the sales of RTDs were expected to go up again. Sure enough, that is exactly what is happening. As we said in March, when the Senate defeated this measure when it was first presented, the sales of RTDs are going up again. Let us go back through the government’s logic. When this was debated in March they were trying to tell us that sales of RTDs are down and that means consumption is down and that must mean that binge drinking is down. The sales are now going up again! Overall sales of alcoholic products across Australia are now higher than they were when this measure was first introduced. So does that mean that the government, by their own logic—the logic that they presented to us—now concede that binge drinking is up; because sales are up, consumption is up so binge drinking must be up? It is not a reasonable argument and I readily grant you that because we do not know who is drinking more. It could well be that responsible drinkers are drinking more and are drinking more responsibly. We would not have a clue.

The point I am making is that clearly from the outset this was never a health measure. It was trying to address in a simplistic way what is overall a very complex problem. Alcohol abuse and drug abuse are very complex social issues which we as a parliament ought to address seriously with a comprehensive, strategic approach that is well considered and based on the evidence. An ad hoc tax measure, an ad hoc tax grab which is the only thing that Labor ever seem to come up with when faced with a public policy challenge, is not the answer particularly when it has the sorts of flow-on consequences that this measure has very clearly had.

I raised in the debate in May, when we were looking at the consequences of the Senate’s defeat of the measure in March—and this is a very serious issue that I think the parliament will have to consider moving forward—that this measure was first introduced as a tariff proposal on about 27 April 2008 and tariff proposals are a very important administrative tool for government. It is important for a government to be able to introduce and announce revenue measures with immediate effect. There is an important proviso attached to that: those tariff proposals have to be validated by parliament. They have got to come to the Senate and we have got to have a vote on them. Normally that happens very soon after a particular proposal has been introduced by the government. On this occasion it took the government nearly 12 months. They waited until the last possible minute to introduce it. Why? I suspect the government were in doubt as to whether they had a majority on the floor of the Senate. They were concerned that on bringing this particular tariff proposal to the parliament the chances were it would be defeated. And so it was. The tariff proposal to increase the tax on RTDs by 70 per cent was defeated. The Senate rejected it. It did not have the support of the parliament.

Irrespective of that, the government continued to collect the revenue for another month and a half. There is argument that, because the tariff proposal was in place for 12 months, the government was able to do that. However, where I really am seriously concerned and where I will, along with my colleagues, explore all possible avenues to see this addressed is when the government turns around after that first 12-month period is out of the way and re-introduces the exact same tariff proposal in clear defiance of the express will of the parliament. The Senate, clearly taking the view that it would not be practical to return the $340 million that had been collected over the first 12 months of this measure, having rejected it in March, made a decision in May, which we had flagged we would support, to validate the revenue collected so far, making it very clear that we would not be supporting the continuation of that tax hike moving forward. The Senate, the parliament, had expressed its view. It had rejected the measure put forward by the government to increase the tax on ready-to-drink beverages by 70 per cent and, in complete defiance of the parliament, the government turns around and introduces a tariff proposal implementing the same measure again for a further 12 months. If this were allowed to stand, the government could go on and do this year in, year out. If this is a valid way for the government to act under current legislation, then I think the parliament has to very seriously consider ways in which it can ensure that the government takes note of, follows and acts on the decisions made by this parliament. Why would the parliament have to validate the tariff proposal if once it rejects that proposal the government can just turn around and say, ‘Thank you very much for that, but we will just go ahead and continue to do the same anyway’?

In concluding on behalf of the opposition, this was very bad public policy from the start. It is an ad hoc tax grab which has the potential to make things worse in terms of alcohol abuse related harm in the community, because it has the potential to encourage younger people to go for the more lethal spirits and mix them rather than for the premixed, comparatively lower content alcohol products. It is a measure that was never based on the evidence. It is a bad, old-fashioned Labor tax grab. It is part of Labor trying to address its binge spending and its binge debt. It was never based on the evidence when it was first introduced. It was sold as a health measure as part of a political strategy to sell a tax grab to the public; ‘Everybody surely is going to support this if we are doing it as part of our fight against binge drinking,’ was how the strategy went. This was the political strategy of the government. But there was no evidence that this would work that way at the start, there was no evidence after 12 months in operation, and we now know that the sales of RTDs are on the up again and, by the government’s own arguments two or three months ago when we last discussed this, this must mean, according to the government, that binge drinking is on the up again.

We are obviously in the situation now where this government has taken our country from a circumstance of no net public debt and a $22 billion surplus to a circumstance where this year we are looking at a $58 billion deficit and $315 billion of debt. In that context there is only one reason why the opposition, despite this being a very bad public policy measure, will not oppose it—and that is because of the financial mess the Rudd government has taken this country into. The financial mess that we find ourselves in today is the only reason the opposition will not be opposing this legislation. But let there be no doubt—this is a tax grab. The government dishonestly sought to sell it as a health measure for political purposes. There was no evidence that this ever was going to be effective from a health point of view when it was first introduced, there was no evidence that it would be effective after the first 12 months of operation, and we can now very clearly see that the sale of alcohol products overall is on the increase and that the sale of alcohol—RTDs in particular—is on the increase again. This measure has failed, and from that point of view we think that the government should have a very, very serious look at the way it is approaching this very serious social issue across our community.