House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Dr Daniel Mulino MP and the Assistant Minister for Citizenship, Customs and Multicultural Affairs, the Hon Julian Hill MP)

Glossary

This Explanatory Memorandum uses the following abbreviations and acronyms.

General outline and financial impact

Pause indexation on draught beer excise and customs duty rates

Outline

The Bills amend the Excise Tariff Act and the Customs Tariff Act to pause the indexation of the excise duty rates and customs duty rates on draught beer for two years. These amendments take pressure off businesses for the price of beer poured in pubs, clubs and other venues, supporting businesses and regional tourism across Australia.

Date of effect

The amendments apply from 1 August 2025.

Proposal announced

This measure partially implements the 'Supporting the Hospitality Sector and Alcohol Producers' measure in the 2025-26 Budget.

Financial impact

This measure is estimated to have a negative impact on underlying cash of $95.0 million over five years from 2024-25.

The loss of revenue is caused by the fixed rate of duty of draught beer for two years from the pause in indexation, instead of the usual biannual indexation of the rates of duty to the CPI. Biannual indexation will recommence from the paused rate of duty, resulting in a structural decrease to these rates compared to existing settings.

All figures in this table represent amounts in $m.

Human rights implications

These Bills are compatible with human rights. See Statement of Compatibility with Human Rights — Chapter 2.

Compliance cost impact

This measure temporarily pauses the increase in the cost from biannual indexation to excise on draught beer. The cost of draught beer should not be affected by an increase in excise or excise-equivalent customs duty for two years starting on 1 August 2025. Businesses that serve draught beer benefit due to the excise component remaining stable. This saving is ongoing as indexation to the CPI will resume at the paused rates, resulting in a structural decrease to the rate of duty compared to continuing to index the rates.

Chapter 1: Pause on indexation of draught beer excise and customs duty rates

Outline of chapter

1.1 The Bills amend the Excise Tariff Act and the Customs Tariff Act to pause the indexation of the excise and customs duty rates on draught beer for two years starting from 1 August 2025. These amendments take pressure off businesses for the price of beer poured in pubs, clubs and other venues, supporting businesses and regional tourism across Australia.

Context of amendments

1.2 A duty of excise is a duty imposed on fuel, alcohol and tobacco produced in Australia. When these types of goods are imported, they are known as excise equivalent goods within the meaning of the Customs Act and are subject to a duty of customs.

1.3 The rates customs duty that apply to excise equivalent goods that are imported into Australia are equivalent to the rates of the duty of excise that applies to locally produced fuel, alcohol and tobacco.

1.4 Indexation on the alcohol excise duty and customs duty rates usually occurs every 6 months generally on 1 February and 1 August. The indexation factor is calculated by dividing the most recent June or December quarter CPI number, by the previous highest June or December quarter CPI number.

1.5 Cost-of-living pressures have affected pubs, clubs and other licenced venues. These amendments reduce the pressure for businesses on the price of beer at pubs, clubs and other licensed venues. These venues in turn support other businesses and regional tourism across Australia.

1.6 To give effect to the Government's decision to pause the indexation of the excise duty rates and customs duty rates on draught beer for two years from 1 August 2025, the Tariff Proposals were tabled in the House of Representatives on 24 July 2025. The Tariff Proposals applied from 1 August 2025, which effectively paused the rates of duty for a 2-year period.

1.7 Section 114 of the Excise Act and section 226 of the Customs Act provide a period of legal protection to officers for anything done by them for the protection of revenue in relation to the Tariff Proposals. This period expires at the end of 12 months after the tabling of the Tariff Proposals in Parliament (unless the Parliament is earlier prorogued).

Summary of new law

1.8 The amendments to the Excise Tariff Act and the Customs Tariff Act pause the CPI indexation that would otherwise apply to the rate of excise duty and excise-equivalent customs duty for draught beer on 1 August 2025, 1 February 2026, 1 August 2026 and 1 February 2027.

1.9 These amendments incorporate the Tariff Proposals that were tabled in the Parliament on 24 July 2025.

Comparison of key features of new law and current law

Table 1.1 Comparison of new law and current law

Detailed explanation of new law

1.10 The amendment inserts a new section into the Excise Tariff Act and the Customs Tariff Act to pause the CPI indexation that applies to the rate of excise duty and customs duty for draught beer on 1 August 2025, 1 February 2026, 1 August 2026 and 1 February 2027. [Schedule 1 to the Excise Tariff Amendment (Draught Beer) Bill 2025, item 1, section 6L of the Excise Tariff Act 1921; Schedule 1 to the Customs Tariff Amendment (Draught Beer) Bill 2025, item 1, section 19AABC of the Customs Tariff Act 1995]

1.11 "Draught beer" means beer in certain bulk containers. This includes beer in certain bulk containers of 8-48 litres (inclusive) designed to be connected to a pressurised gas delivery system or pump delivery system or other prescribed delivery system and any individual container over 48 litres; and classified under sub-items 1.2, 1.6 and 1.11 of the Schedule to the Excise Tariff Act, and to subheadings 2203.00.63, 2203.00.65, 2203.00.67, 2203.00.71, 2203.00.72, 2203.00.79, 2206.00.72, 2206.00.76, 2206.00.78, 2206.00.82, 2206.00.83 and 2206.00.89 in Schedule 3 to the Customs Tariff Act and in Schedule 4A or a later Schedule that relates to a subheading in Schedule 3 mentioned above, of the Customs Tariff Act. [Schedule 1 to the Excise Tariff Amendment (Draught Beer) Bill 2025, item 1, subsection 6L(2) of the Excise Tariff Act 1921; Schedule 1 to the Customs Tariff Amendment (Draught Beer) Bill 2025, item 1, subsection 19AABC(2) of the Customs Tariff Act 1995]

1.12 The amendment reduces operational pressures on pubs, clubs and other licensed venues that serve draught beer by maintaining the excise and excise-equivalent customs duty on draught beer from 1 August 2025 for two years. By extension, the amendment provides support to other businesses and regional tourism across Australia.

1.13 CPI indexation will resume on 1 August 2027 and be applied to the unchanged 1 February 2025 rates, avoiding a large increase in the rates of duty of draught beer at the end of the pause. [Schedule 1 to the Excise Tariff Amendment (Draught Beer) Bill 2025, item 1, section 6L of the Excise Tariff Act 1921; Schedule 1 to the Customs Tariff Amendment (Draught Beer) Bill 2025, item 1, section 19AABC of the Customs Tariff Act 1995]

Commencement, application, and transitional provisions

1.14 The Excise Tariff Amendment (Draught Beer) Bill 2025 and the Customs Tariff Amendment (Draught Beer) Bill 2025 apply retrospectively from 1 August 2025 which is the day that the Tariff Proposals facilitated the 2-year pause on indexation of draught beer excise duty and excise-equivalent customs duty rates. The retrospective application of the amendments is wholly beneficial to the affected parties and have no adverse effect to duty payers as it freezes the rate of duty that applies for a two year period. [Excise Tariff Amendment (Draught Beer) Bill 2024, clause 2; Customs Tariff Amendment (Draught Beer) Bill 2025, clause 2]

1.15 The Tariff Proposals do not operate to amend the Excise Tariff Act or the Customs Tariff Act, but facilitate the pause in indexation for a limited period, with section 114 of the Excise Act and section 226 of the Customs Act providing protection to officers for anything done for the protection of revenue in relation to the Tariff Proposals in this period. The period is 12 months after the tabling of the Tariff Proposals in Parliament (being the end of 24 July 2026) unless the Parliament is earlier prorogued.

Chapter 2: Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Excise Tariff Amendment (Draught Beer) Bill 2025

Customs Tariff Amendment (Draught Beer) Bill 2025

Excise Tariff Amendment (Draught Beer) Bill 2025

Overview

2.0 The Excise Tariff Amendment (Draught Beer) Bill 2025 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

2.1 The effect of the Bill is to validate the Excise Tariff Proposal (No. 1) 2025 that was tabled in the House of Representatives on 24 July 2025.

2.2 The Bill amends the Excise Tariff Act 1921 to incorporate the Excise Tariff Proposal (No.1) 2025 that paused the indexation of the excise duty rates on draught beer for two years starting from 1 August 2025.

2.3 The amendments are mainly aimed at support for business and tourism and are not anticipated to encourage an increase in the consumption of draught beer within the Australian community.

Human rights implications

2.4 The Bill may engage the following rights:

•

the right to health in Article 12 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).

2.5 Article 12 of the ICESCR serves to protect a person's right to the highest standards of physical and mental health. Under Article 12(2)(c), the right to health includes the obligation on the State to take steps to prevent, treat and control diseases.

2.6 Any retrogressive step with respect to the realisation of the right to health must be directed towards a legitimate objective, be rationally connected to (that is, effective to achieve) that objective, and be proportionate. This Bill meets these criteria.

2.7 The objective of the Bill is to take pressure off businesses affected by the price of beer poured in pubs, clubs and other venues, supporting businesses and regional tourism across Australia. This issue of support for businesses and regional tourism is pressing and substantial and is warranted because the measure is not anticipated to result in any attributable increase in consumption of alcohol.

2.8 The Bill is rationally connected to the objective outlined above as it is an effective way to meet that objective. Finally, it is a proportionate response to the need to support businesses and regional tourism across Australia.

2.9 As the Bill is to maintain moderate costs for businesses to ensure their continued operation, no price reductions are expected to be passed on to consumers. Therefore, Article 12 of the ICESCR will not be impacted.

Conclusion

2.10 This Bill is compatible with human rights as it is not expected to have any impact on the right to health. The objective of the Bill satisfies the criteria for any step away from the right to health to be rationally objective and proportionate.

Customs Tariff Amendment (Draught Beer) Bill 2025

Overview

2.11 The Customs Tariff Amendment (Draught Beer) Bill 2025 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

2.12 The effect of the Bill is to validate the Customs Tariff Proposal (No. 1) 2025 (Customs Tariff Proposal) that was tabled in the House of Representatives on 24 July 2025.

2.13 The Bill amends the Customs Tariff Act 1995 to incorporate the Customs Tariff Proposal that paused the indexation of customs duty rates on draught beer for two years starting from 1 August 2025.

2.14 The amendments are mainly aimed at support for business and tourism and are not anticipated to encourage an increase in the consumption of draught beer within the Australian community.

Human rights implications

2.15 This Bill engages the following rights:

•

the right to health in Article 12 of the ICESCR.

2.16 Article 12 of the ICESCR serves to protect a person's right to the highest standards of physical and mental health. Under Article 12(2)(c), the right to health includes the obligation on the State to take steps to prevent, treat and control diseases.

2.17 Any retrogressive step with respect to the realisation of the right to health must be directed towards a legitimate objective, be rationally connected to (that is, effective to achieve) that objective, and be proportionate. This Bill meets these criteria.

2.18 The objective of the Bill is to take pressure off businesses affected by the price of beer poured in pubs, clubs and other venues, supporting businesses and regional tourism across Australia. This issue of support for businesses and regional tourism is pressing and substantial and is warranted because the measure is not anticipated to result in any attributable increase in consumption of alcohol.

2.19 The Bill is rationally connected to the objective outlined above as it is an effective way to meet that objective. Finally, it is a proportionate response to the need to support businesses and regional tourism across Australia.

Conclusion

2.20 This Bill is compatible with human rights as it is not expected to have any impact on the right to health. The objective of the Bill satisfies the criteria for any step away from the right to health to be rationally objective and proportionate.