Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Madam Deputy Speaker, I have always wanted to stand up in this place and call for more beer, and that is exactly what I am doing tonight. When my Twitter account became aware that this was coming before the House, I knew I was not alone. There are many people in Australia who also want to see some changes in support of the small beer makers of Australia. Whilst I am sure there are 101 jokes that can be made about a politician standing up in an Australian parliament to do this, when you look at the detail you can see there is enormous inequity being faced by small beer makers. I would hope that this parliament in all seriousness and in detail can consider making some changes in support of small business generally but also in support of Australian small brewers in particular. The origin of this motion can be found in the very different circumstances of one small business in my hometown of Port Macquarie compared to one big business that recently got sold internationally. The aptly named The Little Brewing Co. operates in Port Macquarie's industrial area. It is an award winning family business producing craft beers of distinction. In the lead-up to last year's October national tax forum, Kylie Little, one of the co-owners, announced that she was sick and tired of being a tax collector first and a brewer second.

Unlike small wineries, small brewers do not get a significant rebate of the excise on sales they must collect. They only get $10,000 back, which I think was introduced in 2000 during the Howard years and was at the time trying to recognise some of the inequities faced by small brewers trying to get off the ground. The excise currently, though, is holding back this business and other businesses like them. It is keeping them from growing and potentially employing new workers.

In the lead-up to last year's national tax forum as well, by comparison, the foreign-owned SABMiller announced its purchase of Fosters for more than $10 billion. So an era of big Australian breweries is all but ended with that announcement. There are one or two that you could still argue the case might be around, but really the majority now of the large former Australian owned breweries have gone and the Australian owned beer market is the small beer market in Australia. Therefore, I would hope in policy we can consider the inequities that we place before small beer makers as compared to their multinational cousins.

In 2000 the Howard government introduced the microbrewery refund to nurture the development of small craft breweries by rebating beer excise of up to $10,000 to brewers of less than 30,000 litres of beer a year. These levels have not moved in 12 years. The Australian Association of Microbrewers has campaigned for the rebate to be lifted to $500,000 to match the tax rebate available to small winemakers. A 2007 study suggested this reform could in fact increase government revenue by removing a major barrier to microbrewery growth. It is understood that more than half of Australia's microbrewers are regionally located and many are major tourist attractions, very similar to wineries.

Alcohol tax was off the agenda at the national tax forum, wrongly in my opinion. That is why I have brought this motion before this House. The major parties in the Senate have previously rejected a similar motion to this. However, that motion was highly prescriptive, containing a definitive change to the rebate threshold to 300,000 litres. So, in the interests of giving the major parties and every member of parliament room to move, this is simply a call for the rebate to be significantly lifted and, hopefully, in considerations leading up to this year's budget or in any of the considerations from the Treasurer and the executive, that lift of the rebate can occur. I trust that the merit of supporting small, often regional, Australian businesses against dominant foreign-owned competitors will compel all members of this chamber and the major parties and the executive to support this motion and to get to work on developing fairer tax arrangements for microbreweries in Australia.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

I rise to speak in favour of the motion moved by the member for Lyne. Microbreweries are an important niche in Australia. We have a brewery in Townsville. It is more of a boutique brewery. A brewer and a worker in a brewery cost the same whether they are working for Lion Nathan, SABMiller or the Townsville Brewery. The production costs are extraordinarily outclassed. While Lion Nathan will do 100 million litres of beer per year, Townsville Brewery will do about 200,000. So the economy of scale and the cost per unit production is just so much. The Townsville Brewery, run by Peter Summers, is trying to go from being a quaint little tourist attraction and supplying local restaurants and a couple of niche hotels to also supplying bottle shops, to take that next step. It is a major punt by anyone trying to get into small business at the best of times, but getting into something that is so dominated by the giants of beer in Queensland is even harder. The member for Lyne said 'No beer jokes please,' but up there we call VB 'green death'—it is outlawed; it is visitors' beer; it is very bad. We are the home of XXXX Bitter, the world's greatest beer. I will not do the Wally Lewis ad.

My brewery in Townsville wants to provide a quality product. Their products include Ned's Red, Townsville Bitter, Belgian Blonde, Lager Lout, Digger's Golden Ale and Bandido Loco. They do the full gamut of beers. They are trying to not only provide a bit of local interest but develop a business. Increasing the excise return or increasing tax benefits to brewers, as wineries receive, would play a significant part in them being able to compete and take that next step. Whilst I appreciate the rebate on 30,000 litres, at 200,000 litres or even a million litres it would still only be one per cent of what a major brewer would be putting out in the market. On a scale of one to 10 of how it is going to hurt the economy, we are not talking big bickies.

Whilst I have the floor, I would like to say a couple things. While the government has done nothing to help microbreweries in the last four years, changes like those outlined in the motion would have a significant and positive impact on breweries like my brewery in Townsville. It is the difference between being able to sell their beer locally to restaurants and something more. The Townsville brewery is in the process of expanding their brewing capacity. Peter Summers has recently come to me with some red tape issues and red tape is the killer of all business. In this instance, to take that next step he has to install a bottling facility. It is Chinese made and required a Chinese engineer to come and install it. The absurd bureaucracy that is in place at the moment on immigration left the brewery floundering with painful production losses. They had to outlay the cash to buy the thing and bring it in here but they simply could not access staff to come into the country to put the thing together and get it to work. At every turn we say we are in favour of small business, and at every turn we say we are trying to get small businesses its just desserts, but at every turn we put up another hurdle in front of small business. The people in small business at the moment are saying they are tax collectors first. They are working in their business, not on their business. The problem was eventually solved, but not before a lot of toing and froing and a lot of lost capacity.

I support the member for Lyne on this issue and I believe that what we are trying to do in Australia is create a finer art of what beer actually is. We are now an international beer drinking nation. It is not that you are stuck with one brand for life. I do not mind South Australian beer. I love Tasmanian beer. New South Wales and Victorian beers still leave me a bit cold. Queensland beer is still the best in the world. We should be doing everything we can to support these industries because they do bring so much to regional communities.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

I support this motion on microbrewing in Australia that has been brought before the House by the honourable member for Lyne. I moved a similar motion on this issue on 16 March 2009. This issue has not gone away. It is still here and it is still going on. The member for Herbert has just outlined the concerns within his electorate. I have five microbreweries in my electorate of Lyons. If we are to promote innovation in Australia, as the other two members have spoken about, we need to allow microbrewers to compete on an equal footing with boutique wineries, which are their competition. It is not really the big brewers—Boag's or Cascade in Tasmania—that the microbrewers are competing with. It is really about the people who drink with their lifestyle.

Microbrewers are suffering disadvantage because they pay considerably more tax than equivalent small wineries within the same region or within other regions. I do not believe they are asking for special treatment; they are just asking for equal treatment. I do not believe they are in the same argument as alcopops or anything like that, where it involves a bulk-buying exercise and drinking lots of alcohol, which causes the problems that we see within our electorates and especially around the major cities. It is an issue that has to be dealt with, as is bulk buying and advertising aimed at the young.

The main concern for microbrewers is the complexities and inequities of the tax system in relation to alcoholic beverages. I remember looking at this when I first moved a motion a few years ago. Excise taxes go back a long way, when you start thinking about Scotland and the whiskies. But it is a major issue for rural and regional Australia. They are major employers. They employ people and bring people into our area. In my state we get a cheese factory, a microbrewery and a small winery, which can turn around a region in good time. I am very concerned and we need to act on this.

There are seven microbreweries in Tasmania, five in my electorate. They value-add to farm produce. Some of them are primary producers, producing more than just beer. They produce on-farm stuff and value-add. I went to a microbrewery not long ago and saw the barley growing on the other side of the hill. It is a pretty special thing to be able to grow the barley near the brewery and bring it down and malt it and make the beer. They also grew beef and other produce there.

Tourism is coming along. A meadery is being built and there is also a hop garden. The old hops are part of the tourism opportunities around a microbrewery. So there are very productive and innovative projects adding to the economy in Tasmania, as we have heard from members from other parts of our country. We need to build on this. The government have not been backward. I understand that the government have assisted and they are very sympathetic to the arguments being put forward. I understand there has been some reform in the small business sector here. They used to have to pay excise within seven days, but they can now get it out to 21 days or 51 days. That is a plus. We are also broadly delivering value tax relief to about 2.7 million Australian small businesses. There is also the issue of the mining tax, which will give opportunities for small business to write down assets of $6,500. (Time expired)

Karen Andrews (McPherson, Liberal Party) Share this | Link to this | Hansard source

I welcome the opportunity to speak on this motion. Microbreweries are unique and important businesses in Australia. They are very valuable to our economic growth. These breweries also provide significant job opportunities across Australia, both directly and indirectly: directly through production, sales, marketing and administration and, indirectly, they play a role through the tourism industry by attracting business to their brewing facilities through tours and taste testing.

Microbrewers are often referred to as craft brewers. They produce a fairly limited amount of beer—around 30,000 litres per year, although that is not a hard and fast definition. From a consumer perspective, they are known for their uniqueness in taste and marketing and for their innovation. These craft brewers are the classic Australian manufacturers, making local products for a local market, although of course the export market remains a viable option as always. Within my electorate of McPherson, on the Gold Coast, I am fortunate enough to have a microbrewery, which supports our local economy and helps contribute to a great niche industry throughout Australia. The microbrewery is of course the Burleigh Brewing Co. It is one of the leading microbreweries in Queensland and is the Gold Coast's only craft brewery. Burleigh Brewing Co. combines tradition and innovation in brewing a variety of beers. I must make special note of one of their gold-medal-winning beers, known as My Wife's Bitter—it deserves special mention just for its name.

In 2006 the Burleigh Brewing Co. was launched by local husband-and-wife team Brennan and Peta Fielding. Brennan is the brew master at Burleigh Brewing Co. and provides one of the vital ingredients to their success. He has over 20 years experience, including time as an international judge. It is a tribute to this local business that its beers have won so many awards, including four world championship gold medals for four different beers in its line-up, which is a fantastic achievement. It is great to see a local manufacturer recognised for its achievements. This local business brand has been described as a cross between 'monk-like tradition', in deference to the European monks who brewed many beers, and 'cool surfing living', so it is very Gold Coast unique.

The Gold Coast is of course filled with manufacturers and businesses which epitomise the ambition and success that we applaud in Australian small businesses. As a local brewery, the Burleigh Brewing Co. uses all Australian made packaging and employs 12 locals in its facility at Burleigh. I have had the opportunity to visit this facility on a number of occasions and it is most impressive. I have spoken to them and to other brewers and have really spent a lot of time trying to work through with them what the issues for their businesses are. I will speak to some of those very briefly. According to the company's own figures, beer excise now represents approximately $12 to $15 per carton of their craft beer. Based on these figures, and given the downward price pressure on the Australian beer market and the rate of excise growth over the last couple of decades, that represents about 25 per cent to 30 per cent of the company's revenue. That is a significant hit to them. The excise is payable by the brewer the minute that the beer leaves the brewery and well before the brewery has been paid for its beer. An excise report has to be prepared and paid every single week, which is a huge administrative and cash flow burden to these smaller breweries.

From the customer side, the Australian brewing market is now dominated by two major chains: Coles and Woolworths. For small suppliers in the markets this has a couple of significant effects. There is very little price elasticity for the brewers to raise their wholesale price at the same rate that the beer excise increases, because the chains are able and in a good position to put downward pressure on prices. There is no room for the smaller suppliers to negotiate terms of trade, with 90 days being the norm. This is a big issue for the microbreweries and is one that I have been delighted to speak on tonight.

Debate adjourned.