Rudd’s tax could end Independent Liquor’s Aussie adventure
Independent Liquor’s Australian future hinges on the outcome of a revote on prime minister Kevin Rudd’s controversial alcopop tax, voted down by the senate last month.
Chief executive Peter Murphy says that the company’s Australian business would be untenable if the tax goes through on a revote, which may force the closure of its Melbourne factory in Laverton and send production back to New Zealand.
“My whole focus right now is on saving jobs. But if that tax goes through, and we’re forced to close, a move back to New Zealand would have to be our most obvious outcome,” he says.
The 69% tax has devastated the company’s performance in the country, and it has already retrenched 23 positions at the factory.
After the initial defeat, the Australian government voted to retain the income from the tax (now estimated at just short of $A400 million), which would’ve blown a severe hole in the budget, and is continuing to collect the tax to this day.
Mr Murphy says the company was doing well last year, growing the business, profits and hiring more staff.
“The government, with the stroke of a pen, has killed our entire growth strategy,” he says.
The tax has culled an estimated 30% of the company’s sales, and Mr Murphy now says that the company’s growth has gone into decline in Australia.
About 60 percent of Independent’s total sales are made across the Tasman.
The Australian Labor pary's Health Minister Nicole Roxon and treasurer Wayne Swan are determined to push the bill through again.
It should head back to the Senate around mid-June, Mr Murphy estimates, where deadlock-breaking Family First Senator Steve Fielding first voted down the measure by a single vote.
Mr Fielding has demanded curbs on alcohol advertising during sport, amongst a raft of other measures before he will change his vote.
Shadow health minister Peter Dutton has argued that it’s little more than a tax grab, that won’t actually fix any of the underlying problems with Australian binge drinking.
Mr Murphy told NBR that bar some political wrangling, no new information in support of the measure has been brought forward, and so suggests there should be a similar result.
“Look, it’s really hard to stand in front of your workers and say ‘I don’t know’, but their livelihoods depend on something that’s completely out of our control,” he says.
Mr Murphy says he has been in close contact with the authorities here during Sir Geoffrey Palmer’s sale of liquor review, and is committed to helping fight the binge drinking problem.
“But to suggest that it’s because of one particular type of alcohol is just not fair,” he says.
Ready to Drinks (RTDs or alcopops) make up just 6% of the total liquor market, and the majority of Independent Liquor’s portfolio in Australia comes from this segment.
Independent Liquor was founded by New Zealander Michael Erceg and purchased by private equity firms Pacific Equity Partners and CCMP Capital Asia $1.26 billion after Mr Erceg’s death in a helicopter crash.