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There’s a Whiff of Free Beer in the Air

The first time I saw the words ‘free beer’, I was 18 years old and interested. The words were chalked onto the footpath at Melbourne University, and whoever had written them, had also given a time, a location and a promise of sausages. It looked like a superb, low-cost opportunity to take some of the edge out of the after lunch lectures and teach my taste buds that the glory days of sherbet bombs and creamy soda were coming to an end.

What I learned at this my first and only Students for Christ barbecue, is that free beer is a tricky and elusive concept. And so it has remained in later life. The happy hour, as wonderful and free and happy as it can be in isolation, has tended to morph into not quite so happy hours – where the wallet is empty and you’re trying to keep your shoelaces clear of unidentified fluids on bar room floors.

I was therefore telling myself not to get too excited when I saw the headline in Saturday’s Age, ‘Free beer proposal to fix GST problem’. What was this? Was the government going to offer small businesses slabs if they submitted their BAS statements on time? Had the Prime Minister decided that the key to us embracing the new tax system was to get us so drunk that we would embrace anything? It didn’t seem likely. Surely, no politician would risk such a plan without also including free wine and soft drink.

It turned out that the proposal stopped short of free beer for all, something I probably should have anticipated given the item ran on page six. Instead the idea is to return to beer drinkers what is rightfully theirs, namely, a mouthful of beer for every pot they have consumed since July 1 (let’s make it an early sip rather than backwash).

The issue is that post GST, consumers have paid 20 cents more for a pot of beer on the basis of an excise increase that it now appears likely will not be passed into law by the ALP/Democrat controlled upper house.

You might ask how an increase that hasn’t become law still became an increase. Well, just as Bob Hawke tried to do with a sales tax on retreaded tyres in 1984, the idea is to tell wholesalers that the law will be passed in due course to operate retrospectively. Not wanting to be out of pocket, the manufacturer immediately passes the liability onto retailers who pass it on to consumers. The government hopes that eventually, it becomes so administratively difficult and costly to return the money to the consumer that the opposition capitulates and passes the law in the Senate.

By June 2001, beer drinkers will have paid $200-240 million in increased excise. The ALP and Democrats are saying they will reject the tariff increase, because they see it as a sneaky attempt to increase a tax under the guise of the new GST. By simply removing sales tax and adding a GST, the price of a pot should have increased by about 2%. Nevertheless, the government knew it could get away with 10%, because that is the punch in the face we all expect now when we go shopping. So the excise was doubled, and the cost of a pot rose 9%.

Most proposals so far seem to be concentrating on squaring the ledger with next financial year’s drinkers. Brewer Lion Nathan has gone wartime in its thinking and suggested free beer vouchers (hopefully distributed by RAAF drop). Another idea is to drop the excise below the pre-rise level, and offer cheap pots until the $200 million tab expires.

But really, the people who deserve compensation are the consumers who have paid the tax since July 1 last year. We have to work out how many beers each person in Australia has drunk, and distribute the money on a per pot basis. As for how this could best be done, my suggestion is an honesty system.

‘Sir, are you one of the guys who paid the excise?’

‘Yes I am. Eight pots please.’

Hopefully, the opposition parties will stick to their guns in the same way as a rubber thong sticks to a bar-room tile. The excise hike was wrong and broke a pre-election promise. The use of a practical device to charge a tax before it has been authorised is even more of a concern. Nevertheless, the opportunity is there to put the situation right. The smell of free beer is in the air and the electorate is excited.