The Senate votes this week on the Rudd Government’s alcopops legislation with all eyes on Senator Steve Fielding.
Last week, Fielding joined the Liberals and Nationals to sink the government’s package to reform the murky world of political donations and he may join with his natural political allies to halt the excise hike on the ready-to-drink (RTD) spirits industry in the next few days.
Since Health Minister Nicola Roxon introduced the legislation in April last year, more than $290m in revenue has been collected by the Commonwealth. If the Senate rejects the Bill, the collected excise will have to be returned to the major distillers and their distributors, leaving a gaping hole in the government’s revenue base.
The powerful spirits industry has mounted a fierce lobbying campaign to persuade senators to reject the tax increase which has already raised the price of RTDs and led to a 30% across-the-board drop in sales.
But the industry’s case has been weakened by mixed messages over what it will do with the tax if it is repaid. A public relations impression has been created that the industry will devote any refunded money to education campaigns to prevent the misuse of alcohol and not put into corporate coffers to boost the bottom line.
The Distilled Spirits Industry Council of Australia has retracted an earlier statement that members did not want the money back if the legislation fell over in the Senate. The change of tune followed an announcement by one of the council’s members, Bacardi Lion, that it had decided to seek a refund.
Another major industry player has also been ambiguous. Independent Liquor, owned by the private equity group Pacific Equity, has “reserved” its position on the possible windfall refund from the Australian Taxation Office, while admitting that in its 12 years in existence it has not spent any funds on alcohol-related causes.
The Senate has long been a fertile hunting ground for the spirits industry. Two former senators, Andrew Murray (Australian Democrat) and Paul Calvert (Liberal), were both inducted into the industry’s elite club, ” The Keepers of The Quaich“, at a ceremony held in 2006 at Blair Castle in Scotland when both were servants of the upper house, Calvert as Senate President.
Inductees at “The Keepers of the Quaich” ceremony in 2006: Standing back row from the left: Gordon Broderick, head of the the Distilled Spirits Industry Council of Australia (DSICA) and Democrat Andrew Murray, now retired.
They were nominated for membership by Gordon Broderick, DSICA’s executive director. The Quaich is described as “an exclusive society … with membership by invitation only” which was established 20 years ago to “reward individuals for their services to the Scotch whisky industry”.
It would be interesting to know how many Australian senators or MPs have been inducted as “Keepers” over the years, but that is not widely available.
Since leaving parliament, Murray has pursued his interest in the liquor industry (before politics he owned a bottle shop) and generously offered to write an alcohol tax submission to Ken Henry’s Tax Review on behalf of a coalition of leading health groups.
In his original draft submission, Murray called for the removal of a 5% tariff on alcopop imports and made no mention at all of a special tax on the high alcohol drinks which have been causing health havoc among binge drinkers, particularly young women.
Naturally, the health groups weren’t impressed and they have now stepped up their own lobbying in advance of this week’s critical vote.
This is the final sitting week before the May Budget. The government must get its anti-binge drinking legislation through this week or the legal protection covering the collection of the tax will collapse.
Last orders, please, the senate bar is about to close.