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Budget ‘doesn’t offer much’ for indie brewers

Independent brewers and their association are in unison that Tuesday’s Budget didn’t come close to addressing what the industry desperately needs around tax relief and the freeing up of much needed cash.

The Independent Brewers Association (IBA) chair Pete Philip said earlier this week that while the Budget’s Modern Manufacturing Fund and Instant Asset Right Off Scheme could benefit indie brewers, the fact their calls for excise relief were ignored was “disappointing”.

“Anyone carrying a tax debt will be precluded from bank loans which is why our pre-Budget submission also asked for these debts to be forgiven,” he said.

“This is also the case for the instant asset write off option – how will our members invest in equipment if they don’t have any cash or can’t borrow?”

Ed Nolle from Ballarat’s Dollar Bill Brewing and Corinna Steeb from Prancing Pony Brewery in Totness in South Australia echoed the IBA’s stance on excise.

As a manufacturer and a hospitality provider, Corinna said she was yet to wade through what grants Prancing Pony was eligible for. But, taking Tuesday’s Budget at face value, she said excise relief was the “single most important thing the industry is facing” and it “doesn’t offer much hope” on the matter.

“Excise has been, and is being, deferred by brewers over this COVID period, so quite a few will have an ATO debt and won’t be eligible for the funding that is available,” she said.

“Very few of the hundreds of independent breweries in Australia are going to have a very strong balance sheet. And because any perceived benefits that this Budget might offer our industry are reliant on actually spending money then I just think it misses us completely.

“If brewers have any spare cash they will be holding onto it pretty tightly, rather than spending. The future isn’t exactly certain right now.”

Ed from Dollar Bill said, aside from the real need to cut or freeze excise at this time, the “bureaucratic double handling” of the current excise claims process was preventing much-needed cash being freed up for breweries.

“At the moment we’re following the ludicrous system where we submit our excise returns and then ask for a refund that can take a lot of time to come back. It’s a pointless system, and one of the things we feel the government has overlooked,” Ed said.

“We could simply be paying a smaller tariff from the get-go, make the whole system run more efficiently and put cash back in brewers’ pockets when they need it the most.”

In its pre-Budget submissions, the IBA requested the government “increase the Small Brewers Rebate Scheme from the current cap of $100,000 to $350,000 per year equal to that assisting the wine industry; forgo excise debt accrued by brewers while they have been deferring payments from March 2020; and allow brewers to pay their excise net of any rebate rather than needing to pay excise and claim a refund”.

In response to that, Corinna said “all we want is an equal playing field with the wine industry”.

“We’re not asking for anything outlandish or special. Remember, breweries have a far lower return on their dollar than the wine industry have.”

For breweries who did have cash reserves, Ed at Dollar Bill said the Budget did provide some opportunities.

He felt the Budget’s Modern Manufacturing Fund and the Instant Asset Right Off Scheme would allow some breweries to benefit from the current increase in package sales as keg revenue dropped off due to COVID-19 restrictions.

“It’s a good thing the government has made that call. It shows a positive understanding of what small to medium manufacturers need right now to survive and grow,” Ed said.

“Everyone needs to change the way they operate under COVID-19 and with keg sales just not the way they used to be, you need to be packaging more and more.

“This type of support might just allow those breweries to go out and buy the kind of equipment they need to capitalise on that.”

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