Craft beer brewers celebrate excise win

21 Jul 2020
Prancing Pony Face Pic

Posted May 05, 2018

After more than a year of lobbying the Federal Government to even the business playing field for craft brewers in the beer industry, Federal Member for Mayo Rebekha Sharkie has welcomed a pre-budget announcement to drop the excise on smaller kegs and cut the red tape on taxation.

Photograph: Federal Member for Mayo Rebekha Sharkie, left, celebrates the Government's announcement about beer excise changes with Corinna Steeb and Frank Samson from Prancing Pony Brewery near Mount Barker.

“I have been working on this issue since Corinna and Frank from the Prancing Pony Brewery approached me last year to talk about the challenges holding back their award-winning boutique business,” Rebekha said.

“Craft brewing is a burgeoning industry in my electorate and all around Australia, yet it is being held back by a complex taxation regime that favours the big players and puts the brakes on boutique brewers who want to build their business.

“While more work needs to be done, it is fantastic news that the excise rate will be lowered for small kegs, and brewers will receive up to an additional $70,000 in the excise rebate.”

Under existing rules, kegs smaller than 48 litres attract a higher rate of excise.

For beer containing 3.5 per cent alcohol by volume, the excise for a 50-litre keg is $34.21 per litre compared with $48.57 for a 30-litre keg.

The $14.36 cost difference encourages craft brewers to use the bigger vessels to keep costs down.

This has led to workplace health and safety concerns because the standard 50-litre kegs can weigh up to 65 kilograms, and they are often manually handled during delivery.

Rebekha began advocating for craft brewers in mid-2017 after being approached by Dr Corinna Steeb from the Prancing Pony Brewery.

She wrote to the Treasurer about the challenges facing craft brewers several times in 2017 and again in Parliament through detailed Questions in Writing to the Treasurer.

“This is pressure politics,” Rebekha said.

“I don’t quit until we can needle our way to make sure the Government sees the issue from those on the ground.”

Dr Steeb said having local MPs advocating for the brewing industry had made a difference.

“Our industry has been lobbying for this forever but it obviously carries much more weight if a local Member of Parliament can see how it hampers your industry and takes up the issue for you in Parliament,” Dr Steeb said.

“For us, we have seen excise rise 12 times in the six years we’ve been in business and obviously that impacts on your business.

“The biggest win for us is market accessibility so having a smaller tax rate on the smaller kegs gives us the opportunity to go into smaller venues that prefer smaller kegs and obviously it’s a big occupational health and safety advantage to be shifting a keg that weighs 30kg versus one that weighs 65kg.

“The other big thing for us is the rebate increasing from $30,000 to $100,000 because that allows us to reinvest that money back into the brewery, predominantly through employment.

“It means some of our casual people will become part-time people, we will have a bit more confidence putting on and making that commitment to people so it’s a huge win.”

The Government’s announcement to streamline excise across keg sizes will allow craft brewers to use one-way plastic 30-litre kegs, reducing the costs from the many kegs that are lost, stolen, or damaged in transit and making the delivery to smaller venues more commercially viable.

As of 2016, there were 34 craft brewers in South Australia, with many of these found in the Adelaide Hills and on the Fleurieu Peninsula.

Between 2013 and 2016, the number of Australian craft brewers has grown by 90%, and there are over 380 craft breweries in Australia.

The independent brewing sector directly employs over 2,400 FTE employees which is more than 70% of all employment in the national beer manufacturing industry.

Independent Brewers Association Executive Officer Chris McNamara said the Government’s announcement was a positive move for his industry which would allow craft brewers to invest back into their businesses and hire more staff.

“It also means smaller cafés and restaurants will be able to stock craft beer at a competitive price and their staff do not have to lift heavy kegs,” Mr McNamara said.

“We’re really appreciative of Rebekha’s assistance with this. She appreciates the importance of independent brewers in her electorate and has been a great help.”

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