Alcohol tax increase’s impact on regional pubs

One of the biggest pub closures was the Tallarook Hotel, with one of the reasons being the increase in cost to operate, so The News sat down with owner Tim Sutherland to hear about what happened.

The pub first opened in 1871 and was known as the Railway Hotel.

It wasn’t smooth sailing for the hotel, with the building being struck by lightning. The Kilmore Free Press reported on December 6, 1906, that “the inmates of which were felled to the floor, but otherwise no serious injury was done”.

It was also involved in two fires in the first half of the 20th century, one in 1929 and one in 1949.

In 1972, the hotel’s name changed from Railway Hotel to Tallarook Hotel due to confusion on the Seymour telephone exchange with a Railway Hotel both in Seymour and Tallarook.

Tim Sutherland took over in June 2021, and in his first six months of operating the pub, it was closed for three of them due to COVID-19 lockdowns.

For two and a half years, Mr Sutherland ran the hotel, putting it up for sale in December 2024.

Over the years, Mr Sutherland said he had seen four key changes in the alcohol industry.

“Per capita consumption of beer has dropped greatly,” he said.

“There’s been an increase in wine consumption and a trend to quality over quantity.”

The fourth was more of a cultural shift in the way the community interacted with pubs.

“People stopped dropping in after work to a pub to communicate on a work and social basis,” Mr Sutherland said.

“Drinking driving laws slowed this, but the widespread use of mobile phones meant face-to-face meetings were no longer required.”

In terms of the alcohol tax, he said it was a topic he had struggled with over the years, but it wasn’t the deciding factor between staying open or closing the hotel.

“The alcohol tax is an illogical mess that makes no sense,” Mr Sutherland said.

“If the aim is to reduce consumption, then why is there a price discrepancy depending on how the alcohol is manufactured?

“The alcohol excise goes up twice a year, so either I have to reduce margins or increase prices every six months.”

He said that his wasn’t the only business impacted, and it led him to starting a new website.

“The excise has been a major factor in independent breweries closing,” he said.

“Within 106km of Tallarook there are over 230 wineries, breweries and distillers selling under their own label, which I consolidated into a website.

“A number of the originals included in the directory when it went live in 2022 have closed, and of those owners I talked to, the alcohol excise was a contributing factor in closing.”

Mr Sutherland’s other reasons for closing included burning out, the difficulty finding staff, and state, federal and local laws.

“It was over three years of 80-plus-hour weeks running the pub as the sole full-time employee,” he said.

“Finding interested, qualified and experienced staff in rural Australia is difficult. I found staff that were interested, and experienced, but they could not find anywhere in commutable distance to live.

“I have to be compliant with federal, state and local agencies and reporting and record-keeping requirements across levels and within levels are inconsistent, overly prescriptive and/or vague.”

Overall, he said that although it wasn’t the straw that broke the camel’s back, the alcohol tax put extra pressure on regional and rural pubs.

“The alcohol excise does not sit in isolation, but in a national, Victorian and, in my case, Mitchell Shire framework that I must operate my business in,” Mr Sutherland said.

“I have no control or say in the excise, it is just one of the costs that are passed on to me, that I then make a business decision of how much I pass on to my customers.

“It is the attitude of the (federal and state) government that they see this flawed tax is the best way to achieve their means, which causes me concern.”

In Shepparton, The Aussie Hotel is also impacted by the increase in alcohol tax every six months.

Publican Paul Tsorbaris said the increase in alcohol tax had a direct impact on regional pubs.

“It’s like the government’s trying to put us out of business,” Mr Tsorbaris said.

“The tax (went) up on February 1, which meant everyone had to put their prices up, which probably means less customers.”

Shepparton Brewery owner and manager Daina Winch said that as an independent brewer, she saw the benefit of the tax.

“At this point, it doesn’t ultimately affect us so it’s helping the small brewers in being able to compete with the big boys because everything we do costs us a lot more than what they do, so in a sense, it’s helping the smaller ones try to be competitive with them,” Ms Winch said.

“The pubs need to get on board with supporting the local breweries.”

To check out Tim Sutherland’s website, head to within106.com.au