NO.070

NSW TO KEEP LOW ALCOHOL BEER SUBSIDY

Low alcohol beer will continue to be sold at lower prices following agreement by the

NSW Government to maintain its subsidy.

The decision by the NSW Government to continue with the subsidy is a win not only for

drinkers, but for good public policy.

The subsidy has been in place since 1997. It had been set at 15 per cent of the

wholesale value of low alcohol beer and was paid to suppliers and producers. Before the

introduction of the subsidy in 1997, exemptions from NSW liquor business franchise fees

delivered lower prices to consumers of low alcohol beer.

The NSW Government will continue the subsidy on current arrangements until 30 June

2001.

Discussions will commence on an alternative scheme to maintain a lower price for low

alcohol beer with such a scheme to be paid for by New South Wales.

The terms of the agreement are in the attached letter to

me of today’s date.

I commend the NSW Government for its sensible decision to continue this subsidy

notwithstanding earlier statements that it would end it.

Under the terms of the agreement the Commonwealth and the States will meet before 30

June 2001 to negotiate a uniform Commonwealth excise providing a concession for low

alcohol beer.

Until the expiry of budget balancing assistance, the costs of the differential excise

would be deducted from that assistance. In the case of NSW this is expected to be 2007

– 8.

Should NSW not maintain the subsidy until 30 June 2001, two months notice to the

Commonwealth will be required and NSW will pay the Commonwealth the remaining proportion

of the 2000-2001 subsidy.

MELBOURNE

4 July 2000

Contact : Niki Savva (03) 9650 0244