A Senate inquiry into red tape has heard that the regulation of the sale, supply and taxation of alcohol has become so bad it’s causing people to leave the industry.

By Gavin Atkins, Media Adviser to Senator David Leyonhjelm

The inquiry, which was instigated and is chaired by Liberal Democrats Senator David Leyonhjelm, heard that as many as 16 different tax classifications are applied to alcohol in Australia, ten or more licences may be required, and bars and hotels may soon need to employ lawyers as bar staff to keep up with the dozens of statutes.

Jules Norton Selzer from Diageo noted that the regulatory landscape was designed to kerb excessive consumption but has failed to keep up with changes in consumer behaviour, which shows drinkers consume less but drink premium brands.

“They drink better rather than more, and the spirits industry is leading this trend through the growing premium small bar and cocktail culture,” Mr. Selzer said.

“Despite these positive trends, an increasingly challenging regulatory landscape and red tape culture is suffocating the industry. Australian distillers and consumers currently pay some of the highest alcohol taxes in the world, while businesses have to decipher a maze of overly complex bureaucracy, which varies significantly across the states.”

Appearing for Coca-Cola Amatil, Shane Richardson pointed out how the industry has had to develop innovative ways of complying with regulations.

“State liquor licensing arrangements result in complexity and cost for Amatil in meeting its service requirements to licensed customers. For example, Amatil validates each liquor licence for each customer in each state against the drinks association database of licensed premises. In 2016, Coca-Cola Amatil employed one full-time employee to undertake this activity,” Mr. Richardson said.

Boutique local producers of spirits are subject to a heavy regulatory burden, including an obligation to pay high levels of excise monthly while customers often don’t pay for two months.

Appearing on behalf of the Small Bar Association of NSW, Mr. Martin O’Sullivan told the hearing that while Australia’s drinking culture has changed, regulation of the industry has not. Indeed, he claimed it has become so burdensome that many people were leaving it.

He noted that the NSW Government restricted the sale of certain spirits after midnight, despite the effect this has.

“When you look at the practical impacts of the restrictions there are some bizarre outcomes. After midnight you cannot drink a single malt whisky on the rocks, but you can if it’s mixed with coke or in a listed cocktail. If a patron wants a cocktail that isn’t on an existing printed menu at 12.01am, they have to be refused. The same is true if they want a classic cocktail such as a martini, negroni or old fashioned, because they contain a product with more than 50 per cent alcohol-by-volume (ABV).”

Mr. O’Sullivan noted that a number of small bars in Sydney that have never had problems with alcohol related violence still cannot get exemptions from lockout laws purely because the police automatically deny applications.

“The message to business is inconsistent. On one hand the NSW State Government (and other states) says it wants to support the growth of low-risk, responsible cocktail bars, but on the other hand these very operators face numerous restrictions that are directly hampering their growth.”

The inquiry also heard how applicants can apply for alcohol licences in other countries via a single page online form, while in Australia there are many pages to be filled out in a process that often requires lawyers.

The inquiry received a number of recommendations to streamline and simplify the regulation of alcohol. The Institute of Public Affairs proposed that restrictions on potential licensees prior to trade should be shifted to increased enforcement of breaches once they occur. The Australian Taxpayers Alliance and MyChoice recommended mutual recognition of state and territory Responsible Service of Alcohol (RSA) certificates from other states and territories.

This was the first hearing of the Red Tape Inquiry, which will tackle a range of issues about Australia’s regulatory burden. Recommendations from the inquiry will be issued in an interim report within a month.

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