Beer and Brewer Magazine

Dan Holland reports on Australian microbrewing's greatest battle yet.

It's an election year so Canberra is crawling with lobbyists over and above the usual quota of mouthpieces-for-hire. There's one particular group doing the legwork around Lake Burley-Griffin which, in reality, represents Australia's largest constituency: beer drinkers. The Australian Association of Microbrewers (AAM) is campaigning for a special tax relief which, if achieved in the 2007-08 budget, would represent the culmination of three years sweat.

Tax is never going to be sexy, but the W.E.T. (Wine Equalisation Tax) excise the AAM have so passionately been lobbying should at least have craft beer fans a bit tingly.

This excise could spell an explosion in craft breweries throughout Australia. It could also spur existing small brewers to extend their range, and create regional beer tourism to complement the massive wine region industry. Think about that the next time you and your better-half take in the Hunter or Coonawarra.

In a nut shell, the microbrewers want what their winemaking bretheren have: an exemption in alcohol excise aimed at supporting small, independent producers. The wine industry has been very effective in getting WET exemption, with the Winemakers' Federation of Australia striking success in the 2004 budget and again in the 2006 budget.

It meant every Australian winery these past four years has enjoyed an exemption on the 29% WET for the first $1.72 million in sales - a maximum rebate of $500,000.

That buys a shed-load of grapes and a truck load of corks and means about 90% of the 2,000 or so Australian wineries pay no excise. The WET exemption is largely the reason there's more wines to choose from each year.

"The current system is crippling, it's outrageous," explained Scott Garnett, MD of Barons Brewing Co in Sydney.

"A long-term view should encourage entrepreneurs, as well as competition and industry growth. In the wine industry, smaller companies enjoy up to $500,000 in tax subsidies per year. In comparison, Barons and other up-coming breweries that produce more than 30,000 litres (4,000 cases) a year receive zero tax support, we're subject to the same excise rates as Fosters and Lion Nathan!

"How is that a system that encourages growth, competition, consumer choice and quality products, let alone satisfy our growing need for upped exports and regional industry?" Garnett asks. "Excise on some of our beers approaches 50% cost of goods. It's a cashflow killer because the government collects excise within a week of beer leaving our brewery. When do we get paid? That's another story,"

But getting heard in Canberra isn't easy. Microbrewers represent about 1% of the total beer market in Australia, and there are plenty of interests tugging at the surplus (not to mention the MP's kids' Future Funds).

It's a true ‘David vs Goliath' battle, but so far there's been no outward move by the two giants to crush them underneath their massive political clout. In fact, according to the Victorian Microbrewers Association, the response so far from the two major brewers has been quiet support.

A rare act of unity between brewers big and amall. Maybe. The proposals will benefit Foster's and Lion Nathan too, albeit mildly.

The multi-million dollar question now is how much will it cost. If the Brewers' sums are right the changes will have paid for themselves by 2010 because an added $500 million in economicactivity has been forecast. Better yet, about 40% of the positive impact will be felt in drought-stricken regional areas, where many Australian microbreweries are based.

Cam Hines, the co-founder of Victoria's Mountain Goat in Melbourne, along with fellow brewer Paul Holgate of Holgate's Brewery, has been spearheading the AAM's charge since he and Dave Bonnington started their brewery a decade ago.

"Although we'd been thinking about it since those early years, fair to say our first couple of trips to Canberra saw us a bit out of our depths," recalls Hines today.

Inevitably, the brewers did what they usually did to win people over: they poured them a beer and got chatting. Cam and other brewers held a tasting at Parliament House, cracking about 40 different stubbies in one of the Parliamentary committee rooms, a feat of which ex-Prime Minister and former world yard-glass skolling champion Bob Hawke would've no doubt been proud.

"After the first few presentations we knew we had to get serious," says Hines. "The formation of state bodies, the latest being the NSW Brewers Guild, allowed us to get a national body together and, from there, employ a professional lobbyist."

That man is Armon Hicks, less the ‘ice to eskimoes' salesman as school debating coach. Hicks sharpened the AAM's argument and got them the ‘ins' they needed, all for a near pro bono fee (Hicks must be aware he'll never have to buy a beer again if the right result comes in Mr Costello's 12th budget).

Hicks and the AAM have presented to five different MPs and Minister for Small Business and Tourism Fran Bailley has been behind them from the get-go. They even snagged a meeting with John Howard's self-styled right hand man, Senator Bill Heffernan.

Not until February did they crack the big one: a meeting with Assistant Treasurer and Minister for Revenue Peter Dutton, chief bean counter for the federal budget, and man most likely when it comes to knowing where the government's loose change is hiding.

Suddenly, tax is being talked about over a beer nationwide. And, even if the AAM are again unsuccessful in their quest for a WET, the amber lining to this dark cloud is that the forces of the Australian craft beer industry are finally amassing as one. We'll drink to that.

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