Drinks industry bodies have expressed disappointment in the Federal Budget, saying it offers little relief for local producers who are struggling with cost-of-living pressures, rising tax burdens and impacts from the Middle East conflict.

Australian Grape & Wine said the Australian Government had missed a critical opportunity to support an orderly transition in the wine sector and minimise the impact on regional communities. 

Despite providing a comprehensive, evidence-based suite of targeted measures in its Pre-Budget Submission, Australian Grape & Wine said the industry had received no new funding. It said this marks the third consecutive year that calls for targeted intervention have gone unanswered.

The Australian Government has also confirmed it will phase out the Wine Tourism and Cellar Door Grant program – effectively removing $10 million per year from one of the only Federal programs wine businesses have been able to access – and cutting a critical source of support for regional wine businesses. 

Chief Executive of Australian Grape & Wine Lee McLean (pictured main) said: “At the worst possible time, this Government has chosen to withdraw a program that directly supports regional businesses.

“For many producers, this is essential to maintaining cashflow and profitability. Ending it now effectively pulls the rug out from under businesses already facing enormous pressure.

“This Budget is a bitterly disappointing outcome for an industry under significant and sustained strain.

“We did not ask for a handout. We put forward practical, targeted measures to support an orderly transition, reduce long-term costs, and minimise the impact on regional communities. Once again, the Government has chosen not to act.”

“The sector continues to face a structural supply-demand imbalance, compounded by the loss of key export markets, rising input costs, and global uncertainty. Australian Grape & Wine has been clear that supply must adjust to market realities, and that work is already underway. However, the scale and speed required cannot be achieved by industry alone.

“The expectation that industry can manage this adjustment alone is unrealistic.

“Without government partnership, the cost will not be avoided, it will simply be shifted. It will fall not just on growers and winemakers, but on government and taxpayers as the consequences of a disorderly industry collapse unfold.

“Without timely support, this will not be an orderly adjustment. It will mean growers walking away from vineyards they can no longer afford to maintain, leaving environmental risks and communities without the capacity to respond.

“This is not about propping up production. It is about enabling transition. Without targeted support to remove the barriers to exit, redevelopment or diversification, that transition will be slower, more costly, and far more damaging.

“If that approach continues, the legacy of this Government risks being the decimation of Australia’s wine sector, and the loss of regional communities and livelihoods that depend on it.”

Beer taxed more than gas

ACT Independent Senator David Pocock lamented the Australian Government’s lack of courage in failing to implement a 25% gas export tax in the Federal Budget. 

Pocock noted on his website that the Budget papers show actual revenue from the Petroleum Resource Rent Tax this financial year fell $100 million against what was predicted at the end of last year.

The Government is forecasting an increase of $400 million next financial year, he said, but it then drops off again and remains well below what Australians are paying in beer excise. 

“This budget is such a mixed bag – on the one hand some big reforms on housing that took real political courage, on the other a tragic missed opportunity to set us up for a more prosperous and secure future,” Senator Pocock said.

As of February 2, 2026, Australian beer excise rates increased, following biannual indexing, although a two-year freeze applies to draught beer (kegs) to ease cost-of-living pressures. Excise is calculated based on alcohol content, with rates for high-strength packaged beer exceeding 3.5% ABV starting at $63.75 per litre of alcohol.

Calls for spirits tax overhaul

Spirits and Cocktails Australia chief executive Steven Fanner is calling for a spirits tax overhaul. Australia’s spirits excise is currently $107.99 per litre of pure alcohol, making the nation’s spirits some of the most heavily taxed in the world.

There are also fears that concessions designed for small businesses are being exploited by the black market.

“We are concerned that high excise rates, equating to more than $30 on a standard 700mL bottle of spirits, combined with loose controls around alcohol producer tax breaks, are creating an environment that risks incentivising demand for tax-free alcohol and opportunistic behaviour,” Fanner said.  

“Despite having some of the highest spirits taxes anywhere in the world, Australia is beginning to see significant quantities of tax-free alcohol being sold to retail outlets and venues below the cost of the excise paid by legitimate  producers.  

“Tax-free alcohol distorts the market, as genuine spirits producers are required to pay more than $30 per bottle to the Government in excise.  

“The Alcohol Manufacturers Remission Scheme, administered by the ATO, is intended to support craft distillers and brewers to grow, create regional jobs, and support Australian manufacturing and tourism.  Under the scheme there is no excise payable on roughly the first 8,500 litres of spirits sold.   

“The remission scheme has been a catalyst for growth within Australia’s distilling industry, but the industry has long been warning Government about unintended consequences of taxpayer funds being redirected to organisations that have no intention of building a spirits brand and investing in the Australian distilling industry.

“We want to see a transparent, high-integrity system that protects taxpayers and gives the Australian spirits industry the certainty it needs to grow jobs, grow tourism and reach its full potential.  At the moment we seem to have benefits intended for spirits producers going to middlemen and wholesalers who aren’t producing anything. “

Industry warns high excise fuelling organised crime

Melbourne’s hospitality industry has been hit by a recent spate of fire bombings, with fears the alcohol excise is creating a black market in alcohol, following the explosion in illicit tobacco.

Dozens of venues, ranging from nightclubs and bars to upscale restaurants, have been targeted over the last two months. 

The rise in illicit tobacco has dented the Federal Budget’s excise takings and led to gang violence. Budget papers show the Australian Government was forecast to receive just $3.56 billion from the tobacco excise duty in 2026-7, down $500 million in the previous financial year.

The Australian Association of Convenience Stores has called for a 50% excise cut to tackle the booming black market in tobacco and now illicit alcohol.

CEO Theo Foukkare said illicit tobacco makes up more than 60% of the Australian market and is forecast to reach 90% by 2029. AACS members have lost an estimated $2.5 billion in sales over four years as crime networks thrive and the crisis has now expanded to bootleg booze.

Last November, the Australian Taxation Office estimated illicit alcohol sales were worth at least $767 million, which was more than 10% of all spirits consumed legally in Australia according the National Drug Research Institute.

Victoria Police Detective Superintendent Jason Kelly said police were aware alcohol could be coming into Australia without being taxed, but told reporters on Tuesday that it wasn’t clear whether the attacks were the beginning of an illegal alcohol trade war.

“That’s the million-dollar question,” he said. “Everything is on the table.”