Dylan Firth: Brewers' Association Executive Director on what less Kiwis drinking means for the Government tax take

Kiwis drinking less could hurt the Government tax take, according to new reports.

Stats NZ data published last week shows total beverage volumes have fallen 10.7 percent since 2020

The Brewers Association estimates Treasury is likely overstating total alcohol excise revenue as much as $180 million dollars a year - up to 2029.

Executive Director Dylan Firth says it's been overestimated in Budgets for the past five years.

"They projected there would be a small dip after Covid, and then it would go back to normal, with slight increases over time. That just hasn't happened."

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Episode Transcript

Speaker 1 (00:00):
If you're listening to this broadcast with a pinet or
a glass of wine or an afterwork cocktail in hand,
you may very much be in a minority. New Zealand's
per capita alcohol consumption fell to a new all time
low over the past year, and this could actually end
up being an issue for the government because if we
start drinking less, the alcohol tax take will fall as well.

(00:20):
So Dylan Firth has a dream job. He's the Brewers'
Association executive director. Hell of Dylan.

Speaker 2 (00:27):
Hey andw here you go?

Speaker 1 (00:28):
Good mate? Why is everybody drinking less?

Speaker 3 (00:31):
We've seen alcohol consumption declining kind of year on year
for the last little while. There's been a number of shifts,
both generational, different types of alcohol being consumed. You know,
a lot of people say there's a huge horizon zero
percent beers, which are extremely popular. So there's been generational
shift in the space. But not only just total consumption.
We've seen patterns around harmful consumption dropping as well. Was

(00:53):
a really great drink?

Speaker 1 (00:55):
Is it for health reasons though? Or the old cost
of living crisis?

Speaker 2 (01:00):
Oh? Look, I think there's a number of things.

Speaker 3 (01:02):
You know, We've started seeing shifts years ago when lots
of people became online and they were spending less times
going to pubs and maybe having a beer with friends,
and maybe spending more time in different social circles.

Speaker 2 (01:11):
We see a little bit of people looking.

Speaker 3 (01:13):
For kind of wellness reasons others, you know, just choosing
different different things to do and in cost of living
is a huge part of that, and I guess that
comes into what we've been talking about around you know,
xosed taxes increasing and the impact on prices and I
guess consumption in general.

Speaker 1 (01:28):
This is the unintended consequence. Of course, Treasury, you say,
is overestimating now just how much alcohol excised tax will
be earned over the next few years. Now, now, what's
it going to cause?

Speaker 3 (01:40):
Well, I think the problem here is that Treasury is
kind of not only in this budget but in previous
budgets since COVID has really over forecast what the excise
revenue is going to be for the last five years.
They kind of projected there will be a small dep
ath to COVID and then it would go back to
normal have slightly increases over time, and that really just
hasn't happened. You know, we expect the next kind of

(02:00):
between five years out there you know, the overestimates about
one hundred and eighty million dollars and that's quite substantial.
And what that means is that you know, when Treasury
over forecasts, you know, government setting policy based on numbers
that don't exist.

Speaker 2 (02:11):
You know, we're trying to.

Speaker 3 (02:12):
Get back into surplus here and we're seeing you know,
the costs go up every year because alcohol is excis
is indexed based on CPI and what's happening is those
price is a pressure and kind of hospitality businesses, for example,
who we're seeing the largest levels of liquidations.

Speaker 2 (02:27):
So ever, so what do you want to do?

Speaker 1 (02:29):
So what do you want the government to do to
the tax level?

Speaker 3 (02:32):
Well, ultimately, I think that the way that it's designed
at the moment isn't fit for purpose. I mean you've
got to look at it and say, you know, is
the excise take going to be pushing bars out of business?
And ultimately they're not paying as much tax as they
would be if they existed. So what we're saying is
that you know, there's options here that you don't necessarily
have to index that every year.

Speaker 2 (02:51):
Around hospitality businesses.

Speaker 3 (02:53):
Specifically, we've said, actually there's an opportunity here to introduce
a keg tax rate, which Australia and the UK have
for example, where there's a lower rate for tap beer,
which primarily focuses on hospitality businesses who sell their beverages
through taps. So you know, there's a lot of different
options on the table, but it's not necessarily just cranking
up tax every year.

Speaker 1 (03:10):
Good stuff, and I thank you for your time today.
That is Dylan Firth, who is the Brewers Association Executive director.

Speaker 3 (03:15):
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