Following a week of criticism over their initial election promise, the Labor government has announced a two-year freeze on excise tax increases for draught beer if re-elected. This move aims to alleviate financial pressures on brewers, pubs, and consumers. The decision comes as part of a broader effort to address rising costs within the brewing industry. Despite welcoming the change, industry leaders stress that more immediate and comprehensive support is needed to sustain smaller breweries.

The Impact of Excise Tax Freeze on Draught Beer

The Albanese government's proposal to halt excise tax hikes on draught beer for two years represents a strategic move to benefit various stakeholders in the brewing sector. By freezing these taxes, the government hopes to stabilize prices and support local businesses, particularly in regional areas where tourism plays a crucial role. While this measure is seen as a positive step, it primarily targets draught beer, leaving other segments of the industry still facing significant challenges.

In detail, the bi-annual excise tax increase, traditionally aligned with the Consumer Price Index (CPI), has been a contentious issue for years. Brewers argue that these regular hikes contribute significantly to the rising cost of beer, impacting profitability and consumer prices. The proposed freeze would commence from August 2025, coinciding with the next scheduled tax adjustment. This temporary relief could provide some breathing room for businesses struggling with escalating expenses. However, critics point out that the delay until 2025 means many breweries will continue to face hardships in the interim. Moreover, while draught beer benefits from this freeze, other forms of beer production remain subject to ongoing tax increases, highlighting the need for broader reforms.

Industry Response and Future Outlook

The Independent Brewers Association (IBA) has cautiously welcomed the announcement, describing it as a "modest step in the right direction." While acknowledging the potential benefits, the IBA emphasizes the urgency for more comprehensive and immediate measures to support independent breweries. The association highlights that many small breweries are already struggling with profitability, and without additional assistance, some may be forced to close. The IBA also calls for a broader review of the alcohol tax regime to ensure fair treatment for all segments of the industry.

Specifically, the IBA has long advocated for a complete freeze on excise taxes for all types of beer, not just draught. They argue that the current tax structure disproportionately affects smaller producers who lack the market access enjoyed by larger, foreign-owned breweries. Additionally, the planned increase in the excise remission cap to $400,000 from July 2026 is seen as a positive but delayed measure. Many breweries require immediate relief to stay afloat, and the IBA urges the government to expedite such changes. CEO Kylie Lethbridge expressed gratitude for the government's efforts but stressed the need for more meaningful reforms to prevent further closures of independent breweries. The association encourages public participation in their campaign to save indie beer, emphasizing the importance of supporting locally owned businesses in the brewing industry.