Brewers Association – Submission to the Federal Government Budget – Jan 2022

Brewers Association Pre-Budget Submission Proposal for a 50 per cent cut to the excise rate for draught beer to boost Australia’s brewing and hospitality sectors and create more local jobs

Executive Summary

As the representative association for Australia’s largest brewers we are asking the Morrison Government in the upcoming Federal Budget to support Australia’s pubs, clubs and brewing and hospitality sectors by reducing the rates of excise on draught beer by 50 per cent. We ask for a reduction specifically in the draught beer tax because it will disproportionately assist hospitality businesses – draught beer constitutes around 70 per cent of alcohol sold at pubs and clubs.

Australia’s beer tax rate is the 4th highest in the OECD1 and, with a couple of exceptions, it has been going up twice a year for more than 35 years. With a pint of beer now over $10 in most places, catching up at the pub with mates for a beer is becoming unaffordable for many Australian working people.

The next beer excise increase will be on 1 February and will be one of the biggest hikes in over a decade. With Australians facing cost of living pressures, we believe it is time that the 11 million Australians who enjoy a beer at their local get some relief from high beer taxes. Australians clearly agree, with YouGov poll published on 24 January 2022 finding 50 per cent of respondents said “the
cost of things like food… and the price of beer will determine which way they vote in this year’s Federal Election.

A beer tax cut would also help create hospitality jobs. Pubs and clubs employ hundreds and thousands of Australians. Pubs and clubs have told us they want to create up to an additional 74,000 jobs but as they rebuild from COVID-19 lock downs and slow trade but the high rate of beer tax is holding them back. They need a break from Government.

Importantly, the overwhelming benefit of a draught beer tax cut would be delivered to Australians and the Australian economy because of the domestic nature of brewing and hospitality. More than 80 per cent of the beer consumed in Australia is brewed in Australia.

As other countries cut their beer tax to help the hospitality industry or ease pressure on consumers, our beer tax rate is increasingly out of step with comparable countries like the UK and vastly higher than other major beer producing nations such as Germany, the US and Belgium where the rate is less than a quarter of what we pay here.

There is a strong economic case for a cut with brewing and beer sales in on premise venues contributing over $12.5 billion3 to the economy. There are 16,5004 Australians directly employed by the brewing sector and its supply chain and a further 66,0005 jobs in hospitality venues that are associated with the sale of beer.