Worth Richard: Alcohol Advisory Council Amendment Bill — Third Reading 
Worth Richard: Alcohol Advisory Council Amendment Bill — Third Reading 
[Volume:652;Page:1885] 
Hon Dr RICHARD WORTH (Minister of Internal Affairs) 
 on behalf of the  
Minister of Health 
: I move  
That the Alcohol Advisory Council Amendment Bill be now read a third time 
. The bill amends the Alcohol Advisory Council Act 1976 to address problems with the current levy-setting mechanisms. It is a technical amendment that introduces an updated and simple calculation system. It future-proofs the levy against new types of alcoholic products and provides for regulations to be made by Order in Council to fix the rate of levy payable. 
The bill introduces a system of alcohol classification bands an approach that aligns it with the system the New Zealand Customs Service uses to collect alcohol excise duty and excise-equivalent duty. Under this system a dollar amount per litre of beverage for the Alcohol Advisory Council (ALAC) levy will be set for each alcoholic beverage according to its deemed alcohol content or average alcohol content. This means that alcoholic beverages with a higher volume of alcohol will contribute a higher proportion to the levy. This Government along with members from other parties is keen to progress a bill that will improve the way in which the ALAC levy is set. 
During the bill’s second reading members spoke on the importance of the work done by ALAC. The Government supports the role of ALAC and it notes that this bill is a technical amendment to the way in which ALAC is funded rather than legislation to reduce alcohol-related harm. 
There are in my view four main reasons why this bill should be passed. First the levy-setting mechanism is outdated as it is based on only four classes of liquor. The emergence of ready-to-drink products with around 5 percent alcohol and of an increasing number of standard spirits with less than 42 percent alcohol by volume is not readily accommodated by the levy in the way it is currently struck. That highlights the need to future-proof the classification system by enabling the easier classification of emerging types of beverage. Second the spirits category requires the calculation of what are called “proof litres”—a concept that is no longer in use. Since 1986 the New Zealand Customs Service has measured spirit volumes as litres of alcohol and proof litres are no longer recorded. Third the current levy-setting mechanism is unnecessarily complex when viewed alongside the way excise and excise-equivalent duty is set—that is on the basis of alcohol content. Alcohol importers and producers have often noted that this procedure could be simplified. Fourth—and this is the final point—section 27 of the Alcohol Advisory Council Act 1976 allows the levy to be set by the Minister of Health by  
Gazette 
 notice. There is no process for Cabinet to be involved in the levy-setting procedure. That is inconsistent I would argue with more robust approaches to setting levies such as the procedure for the problem gambling levy. 
ALAC is funded by a levy on all alcoholic beverages manufactured in and imported into New Zealand. The total levy amount for ALAC during the 2007-08 financial year was $12.4 million. That is small compared with alcohol excise and excise-equivalent duty which was $795 million in the year ended June 2008. The new system will not affect the total sum collected for the levy. Estimates from the 2006-07 levy round suggest that the beer industry will be affected most by the proposed change to the calculation of the levy due to the high volume of imported and manufactured beer products in New Zealand. The spirits and wine sectors will both contribute a lower proportion of the levy under the proposed system. The change will have minimal impact on those who pay the levy and industry groups are generally supportive of the bill. 
After looking at the bill and considering submissions from six submitters the Health Committee recommended that the bill proceed with two minor amendments. Mr Ryall who was a member of the Health Committee when it considered the bill was pleased to see the two amendments incorporated because clearly they provided more clarity. I understand that at that time every committee member supported the changes. 
The bill will provide an easier more effective and more robust process for levy setting in the future. I therefore recommend that the House pass this bill.