Tuesday, 2 April 2019
Treasury Laws Amendment (2019 Measures No. 1) Bill 2019, Excise Tariff Amendment (Supporting Craft Brewers) Bill 2019; Second Reading
The Treasury Laws (Amendment (2019 Measures No. 1) Bill 2019 and the Excise Tariff Amendment (Supporting Craft Brewers) Bill 2019 are parallel to the Customs Tariff Amendment (Craft Beer) Bill 2019 debated by the House earlier. That bill contained the separate amendments to the Customs Tariff Act 1995 to give effect to measures concerning imported draught beer. With these bills, the government is legislating amendments to the Excise Tariff Act and the Excise Act to extend concessional rates of excise to domestic brewers that supply draught beer in kegs or other containers with a capacity of eight litres or more that are designed for use with pressurised gas delivery systems or pump delivery systems.
The amendments made by the bills apply to relevant goods entered for home consumption on or after 1 July 2019. From the outset, I want to note that Labor supports the amendments to the excise regime as it affects craft beer. I also want to note that it is my belief that none of these reforms would have happened without the campaigning and advocacy of Labor members—in particular, the previous speaker, the member for Grayndler, who has been intensely passionate and advocated for this sensible reform for many years, to the extent that he now has his own craft brew named after him in his electorate by Willy the Boatman. And I've got to say it's not a bad drop. I think it's the ultimate accolade for an Australian politician to have a beer named after you. It is something that Hawke's Brewing Co. in my electorate of Coogee have done in honour of former Prime Minister Bob Hawke, and it is now something that the member for Grayndler has to his name as well.
Australia's annual consumption of beer has been declining in recent years. Despite this, the craft brewing industry is growing strongly and has taken nearly 10 per cent of the national market. The industry is worth about $400 million a year and, according to Austrade, there are about 200 small breweries throughout Australia. The research shows that people in their 20s and 30s in particular are attracted to boutique brews for their variety of tastes, as well as the fact that they are produced locally in their own communities and that they support employment and jobs in those communities. Craft beer looms as an economic opportunity that we cannot afford to ignore.
Excise accounts for about 46 per cent of small brewers' costs—almost half of the cost to actually produce the beer. This makes no sense. It must be reviewed.
There's a huge potential in craft beer tourism, whereby operators set up walking tours where enthusiasts visit several breweries to sample different types of beer. Craft beer tours are already available in Sydney's inner west as well as in Adelaide and Melbourne and other parts of the country.
The government caught up to Labor in 2018-19 in the budget, when there was included a measure to reduce the excise rate on draught beer and containers between eight and 48 litres designed to be connected to pressurised gas or pumped delivery systems to bring them into line with the lower excise rate currently applied to containers of 48 litres or more. The measures aim to support small brewers of boutique beers—commonly referred to as 'craft' beers—who typically are unable to manufacture or market beer in containers or kegs of 48 litres or more. The current higher excise rate on beer sold in containers that are less than 48 litres means that these small brewers are at a disadvantage when competing with larger brewers, who typically supply their beer in kegs larger than 48 litres.
There are some other non-controversial measures featured in schedules 3 and 4 of this bill. Schedule 3 of the bill amends the Income Tax Assessment Act to continue to provide Global Infrastructure Hub Ltd with an exemption from the liability to pay income tax on its ordinary and statutory income. Schedule 4 of the bill makes a number of miscellaneous amendments to legislation in the Treasury portfolio, and these amendments make minor technical changes to correct spelling errors and such. Labor supports these schedules.
In conclusion, I want to make some quick comments about another issue which these bills deal with. Labor are always pleased to vote in favour of measures for which we've advocated. But I want to make this final observation.
Despite the non-controversial nature of the overall craft excise measures, the government sought to poison the parallel domestic tax bills scheduled to be debated after this bill with an unnecessary and unrelated measure relating to self-managed superannuation funds. Schedule 1 of the bill amends the Superannuation Industry (Supervision) Act, the Income Tax Assessment Act and the Superannuation (Unclaimed Money and Lost Members) Act to increase the maximum number of allowable members in SMSFs from four to six. Not only does it appear that no consultation was conducted with the SMSF sector regarding this change; the Minister for Revenue and Financial Services stated in a media update:
Unlike Bill Shorten and the Labor party, who continue to unfairly target SMSFs, the Government recognises the valuable role SMSFs play in providing competition throughout the superannuation sector and the opportunity they provide Australians who want to take a more hands-on approach to their retirement.
The government was ordinarily and originally looking to hold an uncontroversial measure supporting craft brewers hostage to a purely partisan and political policy that no-one asked for. The superannuation industry, the SMSF industry, didn't ask for this change. But the government tried to relate it to this craft brewers measures bill. And, as to that particular reform that I'm speaking of, Labor opposes schedule 1 of that bill. It's Labor's hope that the government removes that schedule and ensures that all related bills relating to craft beer pass as soon as possible, without controversy.
The electorate of Mayo is a hotspot for craft brewers and they are important in growing the tourism industry for us in our region. They complement our region's reputation for fine wines, gins, ciders and spirits. As a multitude of ministers can attest, I have been a very persistent advocate for a fair deal for the craft brewers in my electorate, so I warmly welcome the Treasury Laws Amendment (2019 Measures No. 1) Bill 2019 and the related bill, which puts my key recommendation into law. I first wrote extensively to the then Treasurer, now Prime Minister, about the unique challenges that craft brewing businesses face: a thoroughly complex excise regime and the resultant cash flow management challenges that put a brake on expansion plans; market access concerns with pubs and clubs inevitability giving preferential treatment to the big market players; and, critically, a higher rate of excise being levied against the smaller kegs that craft brewers prefer to use. It is ridiculous and fundamentally unfair that a higher rate of tax existed on smaller kegs than on larger kegs. Of the multitude of issues faced by craft brewers, I made levelling this playing field my primary objective. I followed up on my correspondence with numerous meetings with government and I lodged detailed questions in writing on the Notice Paper. Finally, unrelenting persistence and the value of reasoned and logical policy reform shone through.
It will come as no surprise that I warmly welcomed the government's decision and announcement to finally level this playing field. No longer would craft brewers have to pay more, simply because they wanted to ship their beer in smaller kegs. I know that I have not been the only advocate. I acknowledge in particular the member for Grayndler—I do not have a beer named after me!
An honourable member: Yet!
Yet! I recognise the efforts of many in this chamber in getting a fair deal for craft brewers. I also want to acknowledge the efforts of Corinna and Frank from the award-winning Prancing Pony Brewery in Mount Barker. If you are in Mount Barker, please get along. It is a fantastic venue. They first approached me to discuss the challenges their sector faces. Corinna and Frank have spoken to me about how big a win these changes are for them and their business. The changes give them the opportunity to sell their products into smaller venues and have the occupational health and safety advantage of moving kegs that weigh 35 kilograms rather than 65 kilograms. This legislation is the culmination of the collective efforts of many in this chamber and beyond this chamber and I therefore commend the bill to the House.
Thank you. Firstly, I would like to thank those members who have made a contribution to the debate tonight. We have heard from those on the other side, who have espoused—and rightly so—that they have a beer named after them. I have mentioned the Scenic Rim Brewery in my electorate before. Whilst I don't believe I have a beer brand named after me, they do have a line called the Fat Man, so it is quite possible that I do have some notoriety in that place!
The Treasury Laws Amendment (2019 Measures No. 1) Bill 2019 has four schedules. Schedule 2 to the bill, together with the Excise Tariff Amendment (Supporting Craft Brewers) Bill 2019, extends supports to the craft brewers. Schedule 3 to the bill extends the income exemption for the G20 Global Infrastructure Hub for an additional four years. Schedule 4 to the bill introduces minor technical and machinery amendments to the Treasury portfolio legislation. I also foreshadow the government's amendments for removing schedule 1 from the bill.
Schedule 1 would have increased from four to six the maximum number of members allowed in self-managed super funds and small APRA funds. It is regrettable that the opposition would not support a sensible change to that law and thus provide additional choice for flexibility for Australians to manage their retirement savings. The government continues to support this change and will seek progress on that at a later time. I commend the bills to the House.