Anthony Albanese announces two-year beer excise freeze

Despite no longer drinking himself, Anthony Albanese has announced Labor will implement a two-year freeze on the indexation of beer taxes.

Anthony Albanese has unveiled a two-year freeze on beer excise indexation. Picture: Liam Kidston

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Labor will implement a two-year freeze on the indexation of beer taxes, as the Albanese government attempts to win over working-class voters increasingly dissatisfied with its handling of the nation’s cost-of-living crunch.

The change, to commence when the next biannual indexation increase is scheduled in August, comes after beer drinkers have faced a string of price hikes in recent years tied to the rate of inflation, denting consumer demand and giving rise to bootleg booze.

Mr Albanese in 2019 with a can of Albo Corn Ale Beer.

Making the economic case for the excise freeze, which delivers on the longstanding demands of alcohol and hospitality lobbies, Anthony Albanese said the measure would help “support our small and medium local businesses to thrive”.

“Freezing the excise on draught beer is a commonsense measure that is good for beer drinkers, good for brewers and good for pubs,” the Prime Minister said.

Australia has some of the highest alcohol taxes in the world. For canned and bottled beers with an alcohol content from 3 to 3.5 per cent, brewers are levied $61.67 in excise per litre of pure alcohol.

That figure was $52.49 in February 2021, an increase of 17.5 per cent in four years.

While the government has offered “modest” relief to beer drinkers, Mr Albanese on Thursday revealed he himself was no longer one, having not had a drink since the start of the year.

“I’m off the grog completely … from New Year’s Eve … I went real hard (drinking that evening),” he told Melbourne’s Nova radio.

Mr Albanese is now a teetotaller.

In early January, the Coalition signalled its willingness to consider changes to the beer excise, with deputy opposition leader Sussan Ley flagging she was “sympathetic” to altering how alcohol was taxed given its diminishing affordability.

The commonwealth is expected to collect $2.7bn in beer excise this financial year, according to December’s mid-year economic and fiscal outlook. The excise freeze will dent those tax collections by as much as $200m over the next two years.

That hit to Treasury coffers comes after the budget update projected a $1.9bn downgrade in spirit and alcohol excises over the next four years, as soaring taxes crimped consumption and drove growth in black market production.

The rise of bootleg booze is evidenced by the Australian Taxation Office’s estimates of the so-called “tax gap” – the difference between actual tax paid and the projected revenues if everyone was fully compliant with the law – which was almost $800m for spirits and beer in 2022-23.

Mr Albanese pours himself a pot of Willie the Boatman Albo Pale Ale.

Around $710m, or 88.8 per cent, of the unreported alcohol duty was due to illicit activity in the black market or “shadow economy”, the ATO has calculated.

Last year, Victoria Police and the ATO uncovered a billion-dollar liquor substitution racket in which crime syndicates mixed denatured spirits – such as those used for paint strippers – with whisky, vodka and other top-shelf spirits.

The bootleg booze was subsequently sold at a host of pubs, nightclubs and music festivals, and law enforcement estimates 2.4 million bottles of illicit alcohol enter the market annually.