WA breweries fear overseas beer flood in excise relief

WA'S senior beer body has called on the Federal Government to amend one component of its excise relief package, fearing the tax changes could prompt an invasion of cheap overseas brews.

Treasurer Scott Morrison tonight confirmed in his third Budget an overhaul of Australia's beer taxation, including eliminating the staggered structure in which 50-litre kegs attracted a lower excise rate than 30-litre kegs.

Currently, 50-litre kegs are taxed at $34-a-litre of alcohol but beers in kegs under 30-litres are slugged $49-a-litre of alcohol. The new low flat-rate structure for all kegs above eight litres will come into effect on July 1 2019.

While this was initially championed as boost for craft breweries, opening opportunities for beer makers to get more of their products into cafes and small bars, the Western Australian Brewers Association has identified a potential problem that could affect its members and put pressure on the local industry.

With the advent of one-way kegs, which, unlike 50-litre kegs, can be disposed after use, overseas brewers will look at bringing more of their beer into the State, putting competition pressures on local beer makers.

WABA believes the current arrangement provided some price protection to local breweries. But that position is now under threat.

WA is the only State in Australia without a macro-brewing operation but there are 62 small breweries throughout the State. WABA president Dan Turley said there were concerns among the association membership about an influx of overseas beer.

“The reduced keg excise must be met with some caution, however, in that it may also potentially open the floodgates for cheaply produced imported beer packaged in smaller kegs, especially one-way disposable plastic kegs,” Mr Turley said.

“We would urge all customers – wholesale and consumers of WA craft breweries, to continue to support locally made beer to ensure that this extremely important industry continues to flourish.”

WABA called on the Federal Government to apply the lower rebate on returnable (or non one-way kegs) only.

However, WABA expects the Government's decision to lift the excise rebate by $70,000 to $100,000 will enable local beer producers to grow their businesses and create more jobs throughout the industry.

*The author is contracted to the Western Australian Brewers Association.