Finance Finance News Michael Pascoe: Government playing Santa – money for beer

Michael Pascoe: Government playing Santa – money for beer

Our beer culture must be flawed, as the government feels compelled to give money to select beer makers. Photo: TND
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One of the hallmarks of the Crash of ’87 was the way the people behind both arms of our then brewing duopoly eventually managed to go bust.

Who would think you could go broke selling beer to Australians?

Yet there must be something deeply flawed in our beer culture as it seems the government feels compelled to give money to select beer makers, including the world’s largest.

It’s fair to say we’ve been a little critical of the $3 billion or so in corrupt federal government grants we’ve reported on this year, but in the spirit of Christmas and giving, let’s for a moment put aside any churlishness about blatant “it’s not illegal” vote buying.

No, government generosity isn’t limited to the likes of #sportsrorts and the regional and Community Development Grants rackets for targeted electorates.

Many, many millions are gifted to all sorts of businesses under other programs without obvious correlation to certain seats.

And there’s the promise of $1.5 billion to come for the Prime Minister’s six manufacturing priority areas, when the government gets around to it.

The showering of grants can seem a little random and iniquitous at times.

Businesses can feel like kiddies comparing what Santa has left them on Christmas morning. Little Mary might get a pony while little Scotty only finds a lump of coal in his stocking – not that he would think there’s anything wrong with that.

No, government generosity isn’t limited to the likes of #sportsrorts. Photo: AAP/TND

So to prepare for how the Morrison government’s “modern manufacturing initiative” might go in helping manufacturers “scale up”, it’s instructive to have a quick look at how, say, the existing “Manufacturing Modernisation Fund Grants” have been handed out.

Which is where ale comes in, the beer barrel rather than the pork.

Australia is overflowing, so to speak, with boutique breweries. The Independent Brewers Association has no less than 524 members and then there are the big boys on top of that.

There are so many breweries making so many more different beers that an old codger can become confused and nostalgic for the good old days of only having to decide between Tooheys and Reschs, VB or MB.

Making beer would therefore appear to be a very competitive business, a healthy industry, a feisty one, you could even say it was hopping.

So what need could there possibly be for the federal government to  hand out taxpayers’ funds to a couple of lucky breweries, giving them an advantage over their competition?

A quick look through the list of winners in round one of the small-scale manufacturing modernisation grants this year quickly puts a fella in mind of a drink.

Is it really government’s place to un-level the beer playing field? Photo: AAP

The Ballistic Beer Co in Brisbane won $79,008 from you and me towards the $158,017 cost of a “brewhouse upgrade”. That’s nice for Ballistic, but is it fair for the score of other Brisbane breweries competing with it?

We gave the Little Bang Brewing Company Pty Ltd in Stepney, South Australia $100,000 towards its $206,682 “manufacturing modernisation and efficiency project”. Was it the only brewer in South Australia that needed some modernisation and efficiency?

There’s no surprise though that the very successful Young Henrys Brewing Company in trendy Newtown, Sydney, copped $100,000 towards a $223,600 project. There must be old heads on Young Henrys’ shoulders to tick as many politically hot boxes as they did in seeking cash for “Fermentation CO2 sequestration/recovery and greenhouse gas abatement”.

Yes, folks, we’ve finally found a real carbon capture and sequestration project!

But the hot beer story back in May wasn’t these small-scale grants – it was our $700,000 donation under the large-scale category to the world’s biggest brewer, Anheuser-Busch InBev, best known here for owning Carlton & United Breweries.

The government will soon hand out another $1.5 billion in manufacturing grants. Photo: TND

Among the brands not as commonly associated with AB InBev is 4 Pines Brewing Company in Sydney’s Manly, purchased by the giant in 2017.

On our behalf, the Morrison government gave 4 Pines $700,000 towards a $3.4 million “automated multi-function packaging line with data capture and analytics” at its Brookvale plant.

What that means is the government subsidised AB InBev’s importation of Slovenian equipment that can handle both bottles and cans.

The aforementioned Independent Brewers Association wasn’t overly impressed by the government giving so much money to a foreign company to import foreign equipment to enable it to compete more efficiently against the locals.

As trade publication BrewsNews reported at the time: “4 Pines is owned by the largest drinks and brewing company in the world, AB InBev with more than $US52.33 billion in revenue, $9.17 billion in profit, and 17,000 employees worldwide,” IBA chair Peter Philip said.

“That’s $700,000 going to help fund one multinational-owned brewery compared to $379,008 given to small struggling independent brewers.

“Was it really the intention of this program to give money that will go straight to the bottom line of a foreign-owned multinational that pays little or no company tax in Australia rather than supporting Australian-owned small businesses?” Philip asked.

It’s a better question to ask why the government was un-levelling the beer playing field at all.

If you can’t make money making beer in Australia, don’t try to make beer. Look up Alan Bond and John Elliott.

But it’s not all hops and barley – there are spirits and wine as well. Kangaroo Island Distillery $100,000, Australian Distilling Pty Ltd $100,000, Kingston Estate Wines $100,000.

And perhaps most intriguingly, cricket balls. We gave Kookaburra Sport Pty Ltd $100,000 towards $307,762 for “blending artisan skills and robotic automation for cricket ball production”.

I’ve just chosen beer as an example of that random pony-for-you, coal-for-you equity question and to wonder about the role of government and its priorities.

But I’ve never really understood Santa, either. I mean, the danger of reindeer spreading foot and mouth in normal times, never mind the COVID Mr Claus must encounter in the northern hemisphere.

Have a Merry Christmas.