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Thursday, 14 November 2002
Page: 6414

Senator MURRAY (4:20 PM) —I rise to speak to the changes to the excise arrangements on alcohol, specifically the beer components, in the Excise Tariff Amendment Bill (No. 1) 2002 and the Customs Tariff Amendment Bill (No. 2) 2002. Although the amendments that we are to move are not before you, we did send a draft of them to the Treasurer, the Treasurer's office, the shadow Treasurer's office, the Independents and the minor parties on 24 October, so they will have had the chance to have a look at them. I have slimmed them down slightly. I apologise; I had the understanding that they had already been circulated, but they had not.

The second thing I want to do, and I was assured that the explanatory memorandum would be somewhere in the chamber, is to table an explanatory memorandum that will cover my amendments to those bills. I seek leave to table the explanatory memorandum.

Leave granted.

Senator MURRAY —Moving on to my second reading debate remarks, these bills cover a number of areas. They cover the product stewardship oil scheme, the diesel water emulsion relief from excise and low-alcohol beer. I am going to restrict my remarks to the low-alcohol beer and related areas. Alcohol is one of those things that is a part of our community. Not surprisingly, there is not just cross-party consumption of the product—except for Senator Conroy, I might say on the record—but also cross-party support for addressing matters related to the use and abuse of alcohol. The Democrats have, in concert with credible and authoritative health campaigners who are experts in the alcohol field, long campaigned for the promotion of low-alcohol products. Well before the coalition's new tax system for alcohol was finalised in 1999, as portfolio holder for the Democrats I was keen to see an integrated low-alcohol policy introduced in Australia.

In the new tax system negotiations with the government, there was an agreement between the government and the Democrats to progress these issues over time. I have always been disappointed at the government's subsequent lack of progress. At various times, both formally and informally, I have tried to persuade the government and others as to the social and health desirability of introducing an integrated low-alcohol policy for Australia. The government has done good work over the past few years in putting forward changes that have helped to deal with low-alcohol beer. These bills are an example of addressing bureaucratic inefficiencies and standardising tax incentives for lower alcohol beer products.

The government and the Treasurer are to be congratulated for the lengthy negotiations that have resulted in a much improved beer taxation regime. What is missing from this situation, though, and from government generally is a clear and genuine commitment to reform taxation arrangements related to low-alcohol products much more broadly. In recent years, as portfolio holder, I have written to the Treasurer a number of times advocating the reform of alcohol taxation in order to deliver better health outcomes and a more equitable taxation regime. No doubt his minders or offsiders or bureaucrats respond and he just signs the letters, because I have as yet seen little sign of his bright mind in the responses. I have always been willing, both within and outside this chamber, to act on a sound idea without regard to who may have put the idea forward. I get the distinct feeling that, because this is something that Treasury itself has not come up with, it really has not shown much enthusiasm. Why one would not show enthusiasm for delivering a comprehensive low-alcohol policy regime quite escapes me.

So, quite frankly, I am disappointed. The introduction of a comprehensive low-alcohol regime and the further removal of alcohol taxation anomalies is something all parties could and should agree upon and should act on within a reasonable time frame. This is also not the time for the opposition to be timid. The opposition has in the past adopted a small target strategy. This area of alcohol tax is one in which there are well-informed opposition members, and a shadow minister like Mr David Cox can make a significant contribution.

What is at stake here? Why do I emphasise the importance of a comprehensive low-alcohol regime? Of the 77 per cent of Australians who consume alcohol, health experts say that 36 per cent consume alcohol at what are considered to be harmful rates. About 70 per cent of young Australians aged between 14 and 19 consume alcohol. The rate of consumption at harmful levels by younger Australians is high, and 57 per cent of males and 74 per cent of females do so at harmful rates. In addition, the issue of either licit or illicit drugs used in conjunction with alcohol has become a substantial issue of concern.

In the late 1990s the estimation of the economic cost of alcohol consumption imposed on the Australian community was more than $4½ billion per annum. This costing, based on mid-1990s mortality and morbidity figures, comprised more than $3½ billion of tangible costs, including those associated with the loss of work force productivity, health care costs and resources used in addictive alcohol consumption. There is nearly $1 billion of intangible costs, including mortality, where the value of loss of life or consumption forgone by deceased and suffering imposed on the rest of the community are added together, and morbidity, which is how the pain and suffering of the sick and the suffering imposed on the rest of the community is calculated.

Drinking alcohol has health, social and economic costs and benefits for both individuals and populations and for the industry sectors involved, and even for governments, which get much revenue from that area. People who drink in moderation have better health outcomes—and I would suggest better social lives—than many of those who do not drink; although, abstainers do achieve very much better health outcomes than heavy drinkers. Drinking alcohol at risky and high risk levels introduces long-term harm and is estimated to cause over 3,000 deaths each year. Perhaps Treasury, which does not pay much attention to health issues, might just stick that number in their heads: over 3,000 deaths in Australia a year, accounting for about four per cent of all male deaths, two per cent of all female deaths and about 50,000 hospitalisations. The short-term and long-term effects of excessive drinking make roughly equal contributions to those deaths. Immediate personal and social environmental effects can see family, social and work related disruptions that can end up with severe workplace and relationship breakdowns. Ultimately, criminalisation is a high potential outcome resulting from extended use.

For men, alcohol is the leading cause of disability in developed countries and the fourth leading cause of disability in developing countries, out of a list of 11 major risk factors. Put simply, alcohol abuse is still a major problem in this country and this government will be negligent in its duties if it does not take every available avenue open to it to address this problem. Let me stress again: the government has to be given credit for a much improved low-alcohol beer taxation regime, but that is only part of the opportunity. In this bill, as a contribution to furthering and incentivising low-alcohol policy, the Australian Democrats recommend that all packaged low-alcohol ready to drink products other than cider should be subject to the same tiered excise regime that has successfully encouraged the production and consumption of low-alcohol packaged beer. There is no justification for the omission of RTDs from the national scheme that applies to low-alcohol beer. The scheme is designed to encourage the consumption of low- and mid-strength beverages by providing lower tax rates for lower alcohol strength products.

Taxing low-alcohol packaged RTDs at a higher rate than packaged beer of the same alcohol content discriminates against individuals who prefer to consume lower strength RTDs and prevents the development of a market for lower strength RTDs. Some states and territories, like Queensland and the Northern Territory, pay a low-alcohol subsidy for low-alcohol RTDs. I would suggest to you that that is good social policy. There is no sound policy reason why the Commonwealth should not reduce the excise duty on packaged low-alcohol RTDs in the same way that it reduced its excise duty on packaged low-alcohol beer. There is no revenue cost; nothing hangs on it. There is no risk.

There is clear evidence that for consumers these products are direct substitutes for one another, competing for market share. Producers of RTDs would therefore be encouraged to produce low-alcohol versions of their products by lower associated tax costs. A submission to the Senate Economics Legislation Committee review of the bill from the only known maker of a low-alcohol RTD, Kirwan Quest Pty Ltd, has confirmed this view. There are significant community and health benefits to be obtained from encouraging production of lower alcohol RTD products. These benefits are unlikely to be limited to production of low-alcohol beer. That policy view is supported by a wide range of health industry groups, including the Alcohol and Other Drugs Council of Australia. I stress to the chamber that the alcohol health industry groups and experts support the route I am taking.

I am on the public record as supporting the volumetric taxation of wine. Those views are shared by a very large number of wine producers. Some who are attracted by my idea of having an option are the Wine Industry Association of Western Australia, the Queensland Wine and Grape Producers Association, the Vineyards Association of Tasmania and individual companies like Helm Wines and Stefano Lubiano Wines. I expect there will be substantial numbers of others who will be writing to me on this basis.

What do I mean when I talk about the volumetric option? There are two aspects to the volumetric taxation of wine. One aspect would be that, if it were applied to low-priced wines, it would raise the price of those wines. It has been found in research and from the policy decisions undertaken in the Northern Territory that, if you raise the price of cask wine, you lower alcohol abuse substantially in those communities. The second benefit of volumetric taxation of wine is that it lowers the price of higher value wines. The result of that is that it is good for jobs and the industry, without contributing to alcohol abuse.

The government is committed to WET. The Senate has passed the WET bills. I can see no prospect of WET, which is an ad valorem tax, being done away with. I recommend that the government seriously consider the option of entities or producers being able to choose to take either a volumetric approach or a WET approach by entity or producer. I can see no reason why that is not possible. As I say, there are large numbers of wine producers who are attracted by the option idea.

There are two benefits in a volumetric taxation approach. It is a means of raising the price of low-priced full-strength wines such as cask wines, which is desirable from a health policy perspective. The value-added wine equalisation tax has maintained, and in some senses increased, the low-priced, cheap alcohol cask market that is at the recorded centre of alcohol abuse. It is also a means of lowering the price of high-value wines, which is desirable from an economic and industry perspective. The value-added WET is seen to be punishing the premium and small-business bottled wine sector. The Democrats supported the introduction of the WET regime as part of the new tax system. The proposal that I am putting forward does not disturb that support or the WET itself. There is no low-alcohol wine category at present, so that is not a risk. The option regime is an entirely fair proposal.

There is a clear need for taxation incentives to produce low-alcohol wines, especially low-alcohol cask wines. This is supported by much of the respected medical and health literature. For instance, on page 45 of the Australian Alcohol Guidelines, put out by the National Health and Medical Research Council in October 2001, it states:

A recent Australian study found that the beverages most commonly associated with night-time assaults and alcohol-related injury were the cheaper alcohol products—cask (not bottled) wine, and regular-strength (not low-alcohol) beer ...

That study was by Stockwell. The amendments I put to the committee will provide such an incentive. They would apply to 100 per cent grape wines not exceeding eight per cent alcohol by volume.

In summary, what I am proposing includes the implementation of a taxation scheme for low-alcohol wine, involving the removal of low-alcohol wine from the WET regime and the inclusion of low-alcohol wine in the Excise Tariff Act schedule. I am suggesting an increase in the rate of excise on brandy to bring it into line with other spirits. I do not understand why we have a brandy market where 40 per cent of brandy—namely in the form of cognac and foreign brandy—is taxed at a different rate to other spirits. It is cheaper to get imported brandy than it is to get Australian rum. Spirits are spirits; alcohol is alcohol. It should be taxed at the same level.

We also know that use of some alcohol products appropriately does assist in promoting a healthy and happy society in a number of ways. The Australian Democrats are not wowsers. We say that, where there are benefits, take advantage of them in moderation and, where there are consequences, take action to address these. Our message to the government is simple: you are not taking enough action, despite the great credit I give you for the efforts you have made on the beer side of things. Changes to the taxation laws that advocate low-alcohol products cannot be seen as anything other than a positive move for the health of our community.

We are advocating low-alcohol products. There is no revenue cost in doing this, as these low-alcohol products—either in wine or in RTDs—do not exist at present. The government will say, `Aha! But it will take volume away from products which do generate revenue.' Our answer to that is that the health and social benefit will outweigh the small revenue cost, and we should be able to evaluate the effects over time, even if we cannot at this stage cost them accurately. So we are advocating more choice—the coalition likes choice; more flexibility—the Democrats like flexibility; and more opportunities—Labor likes opportunities—for people within our community to choose to drink low-alcohol products. I referred earlier in my address to my second reading amendment, on sheet 2732, which has been circulated. I now move:

At the end of the motion, add “but the Senate, noting that many sectors of the wine industry are experiencing difficulties, particularly small producers in the bottled wine market, requests that the Government:

(a) explore the feasibility of offering the wine industry the option to choose by entity/producer either to be taxed volumetrically or ad valorem, so that a volumetric wine taxation system could operate in tandem with the ad valorem WET system; and

(b) arrange for the feasibility to be assessed either by an inquiry by a government appointed body, or by the Senate Economics References Committee, for report by the last day of February 2003 for consideration of their findings by the Government in preparation for the 2003-04 Budget”.

That is a request. It is not an imposition. It is wise. I can assure the chamber that many hundreds of wine producers will be supporting that approach. I look forward to the support of the chamber for it. In closing, I say to the Labor Party and to the government that low-alcohol products are an issue where a bit of political adventurism is necessary. It is obviously a good health policy position and you do have the opportunity to make a difference.