Alcohol Advisory Council Amendment Bill

STUART NASH (Labour) Link to this

I stand in support of the Alcohol Advisory Council Amendment Bill. As I said when I spoke in favour of this bill during its second reading, we should all be in favour of any legislation that promotes consistency across an industry or product, especially when that consistency benefits an organisation with the public health mandate such as the one that the Alcohol Advisory Council (ALAC) has. Again, I spoke at length on the council previously, and my colleague Jacinda Ardern quoted its chief executive officer extensively in her recent speech in this Chamber. We should be even more in favour of the bill, given that the proposed amendments will have minimal impact upon those who will pay this levy—that is, the customers who purchase alcohol. Therefore, industry, consumers, our communities, and society benefit from this amendment bill.

It is a technical amendment bill, but that does not detract from its importance or its function. Basically, as has already been alluded to, this bill amends the Alcohol Advisory Council Act of 1976 by simplifying the current mechanisms for setting the Alcohol Advisory Council levy. It solves the problems that exist with the current levy-setting mechanisms by introducing an updated and simple calculation system that reflects the current alcohol market as well as future-proofs the levy against new types of alcoholic products. The amendment bill also provides for regulations to be made by Order in Council to fix the rate of levy payable. Of course, the debate on this bill is not the occasion on which to debate the concern around alcohol-related harm, but, as with the last bill debated, the Sale and Supply of Liquor and Liquor Enforcement Bill, any legislation that helps our communities—in this case, through the good work of ALAC—to be better served through education and enlightenment around the healthy and safe use of alcohol is a start. Our communities demand this, and that is why the last Labour Government introduced this bill.

I think we all agree that one of the positive aspects of this bill is that alcoholic beverages with a higher volume of alcohol will contribute a higher portion of the levy. This is salient in today’s environment where evidence shows that young drinkers are drinking the dreaded alcopops—in essence, alcoholic fizzy drinks—and the role of ALAC has reached a new level of importance and relevance. The new system will not affect the total sum collected for the levy, and the effect on prices for consumers, through shifts in the levy payable between beverage types, will not be significant—approximately 2c for a 750 ml bottle of spirits, and a difference of less than 1c for a bottle of wine, a six-pack of beer, and a four-pack of ready-to-drink beverages.

This bill has its genesis in the 2004 Ministry of Health review of the current levy-setting mechanisms of the Alcohol Advisory Council Act 1976, which found four major problems with the way in which ALAC’s levy was calculated and apportioned. The first problem was that it was outdated—the industry has changed considerably over the past 30-odd years. The second finding was that the spirits category required a calculation of proof litres; this concept is no longer in use. The third problem was that the current levy-setting mechanism was unnecessarily complex, and the fourth was that section 27 of the Alcohol Advisory Council Act 1976 allowed the levy to be set by the Minister of Health by Gazette notice; hence there was no process for Cabinet to be involved in the levy-setting process. This bill rectifies all those anomalies; therefore, I support it wholeheartedly. Thank you.

Dr PAUL HUTCHISON (National—Hunua) Link to this

Unlike the previous bill, the Sale and Supply of Liquor and Liquor Enforcement Bill, the Alcohol Advisory Council Amendment Bill is not intended to contribute to reducing alcohol-related harm. Instead, the bill aims to simplify the calculation of the levy that funds the Alcohol Advisory Council. I must say what a very important job the council does. It receives in levies about $12 million, and that sum helps it to continue its work in research, in dissemination of information, in educational programmes, and in innovative treatment programmes. But the whole point of this bill is that it is a technical bill that is designed to simplify the machinery of levy setting.

It is interesting that the bill was brought in, I believe, in about November 2007. Here was a classic example of something that could have been simplified, but the previous Labour Government had other things in mind—things like the Electoral Finance Act. Labour was not going to simplify the entangled mesh of bureaucracy it had made over the previous 9 years, so it is a very positive thing that this new National Government has, with alacrity, brought this bill into the House and is passing it expeditiously. This bill is here to simplify and align the levies with the export duties that were out of line in the past.

Part 1 is the major part of the bill. However, I believe that by sleight of hand we are on to the transitional part. It is important to make it clear that this bill creates new definitions of wine, because in the past those definitions were not flexible enough to encompass the various drinks that have come on to the market, including ready-to-drink beverages, the alcopops, which change rapidly from moment to moment as the marketers think of a new product that they are able to sell. So it is important to put in a new definition and align that with a rate, which is done so in the schedule of this bill, in order to make a flexible regime in line with the excise duties. I note that the bill repeals the old definitions and brings in the new ones. The definition of “wine” substituted in clause (4)(a)(i) includes: “cider, perry, and mead; and (ii) fortified wines such as sherry, port, and fruit or vegetable-based liquors; but (b) does not include—(i) beer or spirits; or (ii) any liquor containing no more than 1.15% volume of alcohol.”

I note that the bill has a very clear mechanism for determining the amounts of levy of each class of liquor. It goes in five steps that are very, very—

IAIN LEES-GALLOWAY (Labour—Palmerston North) Link to this

I do not intend to take particularly long. As the previous speaker said, the Alcohol Advisory Council Amendment Bill is very clear. It sets out its intentions very clearly, and the amendments that have been made at the Health Committee are excellent; they clarify a couple of matters very well.

It is only natural, I suppose, that speakers have drawn a comparison between the previous bill, the Sale and Supply of Liquor and Liquor Enforcement Bill, and this one. As we were debating the previous bill, a number of statistics and points of view were quoted from the health industry and the justice sector, and all of that information is brought together by the Alcohol Advisory Council (ALAC). I think that is one of the most important things about this organisation—it allows a reasoned, evidence-based, sensible debate around alcohol issues to take place. That is why it is fantastic that we can tidy up the funding mechanism. It is got out of the way, it is nice and easy, and ALAC can focus on the good work does in supporting the kinds of issues we have heard debated this evening. There is universal support for the bill, although we heard a number of slightly different opinions, all with some evidence to back them up. That is excellent to see.

This is one of the benefits of treating alcohol in the way that we do. We regulate it. It is a legal substance, but it is regulated. That allows us to include the ALAC levy within the taxation of alcohol. It provides for the funding of an organisation like ALAC so that we can look seriously at the issues and at the balance, as the member opposite mentioned, between liberty and responsibility. I just add my support to the bill and to its speedy progress.

KELVIN DAVIS (Labour) Link to this

I stand to support the Alcohol Advisory Council Amendment Bill. I, too, will not take too long over this. This bill is a technical amendment bill, and it provides for a levy-setting regime that is fair, up to date, and simple to calculate. It replaces the current levy-setting mechanisms of the Alcohol Advisory Council Act 1976. That Act was reviewed by the Ministry of Health in 2004. It found that there were problems in the way the levies were calculated and apportioned. Clearly, there was a need to move this levy system into the 21st century, and, effectively, this bill does just that.

The functions of the Alcohol Advisory Council, as far as we are aware, include research, dissemination of information, educational programmes, and innovative treatment programmes. These functions are vital if we are to arrest the damage alcohol does within our society. However, this bill does not address that damage, unlike the previous bill that was debated—the Sale and Supply of Liquor and Liquor Enforcement Bill. As I mentioned, this bill stems from a review carried out in 2004 by the Ministry of Health of the mechanisms used to set levies in the Alcohol Advisory Council Act 1976. The review found that the levy-setting mechanisms were outdated, and that there were four problems in the way the levy was calculated and apportioned.

Firstly, in 1976 the classes of alcoholic beverages were limited. In fact, there appeared to be only four classes of alcohol. From my perspective as a 9-year-old growing up in Northland in 1976, those four classes appeared to be Lion Red, DB, cask wine, and top shelf. The point is that the range of alcohol available in the market has changed considerably since 1976, and the levy-setting provisions no longer reflect the diversity of alcohol available for purchase in New Zealand. I welcome the future-proofing of levies against the emergence of new types of beverages. The ready-to-drink products, which contain about 5 percent of alcohol and taste little different from Thrifty or Raro, were not available in 1976, so we can only imagine the jet-fuel mixes that will be released on to the market in the years to come. So I welcome this bill, which streamlines the levy classification of emerging beverages.

Secondly, the spirits category requires the calculation of proof litres—something that no longer exist. It is, therefore, an anomaly that needs rectifying. Proof litres are no longer recorded by the New Zealand Customs Service, which instead measures spirit volumes as litres of alcohol.

Thirdly, the current levy-setting mechanisms are unnecessarily complex, especially when viewed alongside excise duties, which are set on the basis of alcohol content. Alcohol importers and producers have noted that this procedure could do with simplification. There is no process for Cabinet to be involved in the levy-setting procedure, and that is inconsistent with the more robust procedures for setting levies such as the problem-gambling levy.

This bill corrects technical anomalies around the collection of levies, and does not, in fact, increase by much the amount consumers pay for the various alcoholic products. It makes the new system fairer, and ensures that a greater levy is paid for beverages containing more alcohol. Therefore I support this bill.

NICKY WAGNER (National) Link to this

I rise to support the Alcohol Advisory Council Amendment Bill in the Committee stage. However, the title “Alcohol Advisory Council Amendment Bill“ is a little misleading. The bill does not amend the Alcohol Advisory Council (ALAC). It is a technical amendment to the method of calculation of the levy that is applied to alcohol in New Zealand, and that is used to support ALAC. This amendment updates, simplifies, and streamlines the levy calculation to make it easier, and to make the process more transparent.

The method of calculation takes the existing levy and aligns it with the separate excise and excise-equivalent duties that are also calculated on alcohol. This levy was first applied back in 1972 when the council was set up. The method of calculation was designed to reflect the drinking culture of the 1970s. Since then our drinking habits—where we drink, what we drink, and how we drink—have changed dramatically, and probably not for the better. It is time to update the calculation. The new calculation is future-proofed in that it is flexible enough to adapt to future changes in drinking habits, new products, and new ways of consuming alcohol.

The money from the levy is used positively by ALAC. When ALAC was set up it was designed to educate New Zealanders to use alcohol sensibly, and to reduce alcohol-related harm. It does that in four different ways. It does it by commissioning research about alcohol—about how we are drinking, and what we are drinking. It disseminates information. The ALAC website is a treasure trove of information about alcohol. It allows us to make good decisions about what we should be doing with alcohol in our society. It also develops education programmes, which are delivered in schools, in the community, and also on television and through other media.

The very hard-hitting ALAC message of how “It’s not the drinking. It’s how we’re drinking.” accompanies these ads. About 94 percent of all New Zealanders remember those ads. They are very powerful ads; in fact, they are a little bit sickening. I do not know about other members, but when I see them on television I tend to turn away. The one that is particularly disturbing is the story of a family barbecue, with a young father playing with his son. At the beginning of the ad there is a lot of fun, there is a lot of laughter, and everybody is having a good time. But as the evening progresses and the father drinks more and more, he becomes drunk. He then plays with his son, there is a nasty accident, and the thud of the child’s head hitting the furniture is absolutely shocking.

We are shocked by those ads. They are very powerful. In fact, ALAC has won an award for producing such well-remembered ads. I think that even if people occasionally complain and say that they are too realistic, we need to face the fact that this sort of behaviour is going on, night after night, in our communities. The ads reflect what happens when dad is a drunk, maybe mum is a drunk, or maybe somebody in the extended family does not know how to manage alcohol.

ALAC is doing very effective work in our community, and this new bill will ensure that the levy that underpins its work is collected in the most cost-effective, simple, and efficient way. Therefore, I support the bill.