Australian workers now face some of the world's most expensive beer prices, a direct consequence of a federal alcohol excise system that has systematically increased costs for over 43 years. This system, indexed to inflation and rising every six months, has driven up the price of a pint, making social spaces like pubs and live music venues increasingly inaccessible for the working class.
This escalating cost isn't an isolated issue. It grinds pub culture and live music venues into dust, as people find it too expensive to regularly go out for a drink. The burden falls heavily on those who rely on wage or salary income, particularly renters, who are simultaneously navigating a period of record-low rental affordability.
The State's Extraction Machine
The federal excise system was fundamentally reshaped 43 years ago by the Hawke Labor government's 1983-84 budget. Then federal treasurer Paul Keating explicitly stated the new biannual indexation program was designed to maintain the “real” value of the government's excise revenue.
Keating noted that previous discretionary increases had not been "sufficiently frequent or, in aggregate, large enough to counteract the eroding effects of inflation,” leading to a fall in revenue from traditional excises from $4.3 billion to $3.3 billion between 1973-74 and 1982-83. His policy ensured that these excises would "rise gradually in line with inflation and as wages and other incomes themselves increase," effectively institutionalizing a mechanism for continuous state revenue extraction from the populace.
This six-monthly indexation has remained in place ever since, contributing directly to Australia's high beer prices. Nationals MP Kevin Hogan stated two years ago that tax accounts for just under half the cost of a mid-strength beer and 60 percent of a full-strength beer. This reveals the significant portion of consumer spending diverted directly to the state through taxation.
Who Bears the Cost
While the brewing and alcohol industries, along with members of the Opposition and crossbench, have complained about the beer tax for years, their concerns often center on their own profit margins. The real impact is felt by workers enduring stubbornly high inflation, record-low productivity growth, real wage declines, and deteriorating economic growth per person. These are the structural conditions that make even a simple social outing a financial strain.
The state's reliance on CPI indexation extends beyond alcohol, applying to local council rates, toll roads, water access charges, education fees, and subsidized medicines. This creates a feedback loop, pushing inflation higher across essential services and further eroding the purchasing power of wages. The state's mechanism for protecting its own revenue thus actively contributes to the broader economic pressures on the working class.
Limits of Liberal Reform
A "thought experiment" proposes abolishing the excise on beer for five years to see if pubs and live music would thrive. Such a temporary measure, while offering a brief reprieve, fails to address the foundational issues.
It doesn't confront the systemic underpayment of labor, the record-low rental affordability, or the state's broader role in maintaining an inflationary environment through indexed charges on essential goods and services. A temporary tax cut offers a symbolic concession without challenging the structural mechanics of wealth concentration and state-backed extraction that define the current economic order.