The bill inserts a temporary provision into the Customs Tariff Act that suspends CPI-driven increases for customs duty rates that apply to draught beer. In practice, the measure treats the indexation multiplier as neutral for the period covered, keeping the existing tariff figures in place rather than letting automatic CPI adjustments raise those rates.
This matters for businesses in the on‑premise hospitality supply chain and for firms that import kegged or draught beer: it delays duty-driven cost increases that would otherwise flow through to venues and distributors. The measure also creates a short-term revenue deferral for the Commonwealth and introduces a targeted exception to the routine indexation framework used across the tariff schedule.
At a Glance
What It Does
The bill adds a new section (19AABC) to the Customs Tariff Act that instructs section 19(1) to use an indexation factor of 1 for specified draught-beer tariff lines on certain upcoming indexation days, effectively suspending CPI adjustments for those lines during the temporary period.
Who It Affects
Primary affected parties are importers and customs brokers handling draught/keg beer classified under the specified tariff subheadings, on‑premise venues and distributors that purchase imported draught beer, and the Treasury as the recipient of tariff revenue. Customs operations and tariff schedulers must implement the temporary rates.
Why It Matters
This bill creates a narrow, sector-specific interruption to Australia’s automatic tariff indexation process — a precedent regulators and budget officers will watch because it delays revenue growth tied to inflation and concentrates near-term benefit on the hospitality supply chain.
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What This Bill Actually Does
The bill amends the Customs Tariff Act 1995 by inserting a temporary provision titled 'Temporary freeze in indexation for draught beer' (section 19AABC). That provision directs that subsection 19(1), which normally applies CPI indexation to tariff rates, should be treated as if the indexation multiplier is 1 for the indexation days covered by the measure.
The drafting explicitly states the provision operates 'despite any other provision of this Act,' so it takes precedence over the routine mechanism that would otherwise increase those rates.
The scope is narrowly defined. The bill identifies a set of tariff lines in Schedule 3 — specific subheadings for draught beer (for example, entries under 2203.00.63; 2203.00.65; 2203.00.67; 2203.00.71; 2203.00.72; 2203.00.79; and parts of 2206 such as 2206.00.72, 2206.00.76, 2206.00.78, 2206.00.82, 2206.00.83 and 2206.00.89).
It also covers corresponding items in Schedule 4A (or later Schedules) that relate to those Schedule 3 subheadings. The effect is to freeze only the CPI-indexed duty rates that expressly fall within the listed lines; packaged beer and other beverage tariff lines are not altered by this provision unless separately listed.The bill’s commencement table sets the operative schedule to begin on 1 August 2025, while the procedural sections (short title, commencement mechanics etc.) take effect on Royal Assent.
The inserted section lists four explicit indexation days on which indexation is neutralised; indexation is expected to resume after that sequence, at which point the normal indexation multiplier will be applied against the unchanged rates. Practically, that means importers and customs brokers will see the same duty numbers during the freeze, administrative systems must be updated to reflect the suspended indexation, and Treasury will note a temporary deferral of inflation-driven increases that will be subject to later catch-up when indexation resumes.
The Five Things You Need to Know
The bill inserts section 19AABC into the Customs Tariff Act to treat the indexation factor as 1 for specified draught-beer tariff lines.
It identifies specific Schedule 3 subheadings that are covered, including 2203.00.63, 2203.00.65, 2203.00.67, 2203.00.71, 2203.00.72, 2203.00.79 and multiple 2206 subheadings (2206.00.72, .76, .78, .82, .83, .89).
The provision also captures any items in Schedule 4A (or later Schedules) that relate to those Schedule 3 subheadings, ensuring related tariff table entries are treated consistently.
Indexation is neutralised on four named indexation days listed in the inserted provision (the statutory text specifies each day), and indexation is to resume afterward with the normal multiplier applied against the frozen base.
Schedule 1 (the operative amendment) is drawn to commence on 1 August 2025, while the Act’s formal sections (short title, commencement mechanics) commence on Royal Assent.
Section-by-Section Breakdown
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Temporary freeze in indexation for draught beer
This is the operative change: the new subsection tells the indexation mechanism in section 19(1) to use an indexation factor of 1 for the specified indexation days, effectively cancelling CPI upratings for the listed draught-beer rates. The drafting includes an override phrase ('despite any other provision of this Act'), which ensures the temporary rule displaces the ordinary indexation routine for the covered tariff lines. For tariff administrators, this means the duty values in the rate column for those subheadings remain fixed for the period covered.
Which tariff lines are covered
Subsection 19AABC(2) defines 'CPI indexed draught beer rate' by reference to a discrete list of subheadings in Schedule 3 and to any Schedule 4A table items that relate to those subheadings. That approach keeps the change tightly targeted: it modifies only those entries explicitly called out. Practically, customs classification and tariff-schedule mapping teams must verify which imported products fall inside those subheadings and whether rate entries in later Schedules tie back to them.
When the freeze takes effect
The Act’s table gives differing start points: the short title and administrative sections commence on Royal Assent, but Schedule 1 is specified to commence on 1 August 2025. That gives the amendment a retroactive operational start for the tariff calendar on that date and requires customs and industry systems to reflect the frozen rates from that day forward.
How and when indexation is reapplied
The bill clarifies that when indexation resumes (after the listed indexation days), the standard indexation factor established under subsection 19(1) will be applied against the unchanged rates that resulted from the freeze. This means that the deferred CPI increases are not eliminated but postponed and will alter the base against which a later adjustment is calculated — an operationally important detail for revenue forecasting and for importers planning future pricing.
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Explore Trade in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- On‑premise hospitality venues (pubs, bars, restaurants): They avoid immediate CPI-driven increases in the landed cost of imported draught beer, which helps keep wholesale prices for kegged beer from rising during the freeze period.
- Importers and distributors of draught/keg beer: They gain short‑term predictability and avoid higher duty liabilities that would have occurred on the specified indexation days, easing cash-flow pressure and price negotiation with venues.
- Domestic retailers and keg-packagers purchasing imported draught beer: By keeping tariff numbers steady, the bill reduces the likelihood of sudden input cost increases that would otherwise be passed to downstream customers.
Who Bears the Cost
- Commonwealth Treasury (fiscal position): The Government foregoes inflation-driven tariff revenue increases during the freeze period, creating a near-term revenue deferral that affects budget projections.
- Australian Border Force / Customs tariff administrators: They must update tariff schedules, verify classifications against the listed subheadings, and manage communications and systems changes to reflect the temporary suspension.
- Businesses outside the draught-beer lines (e.g., packaged-beer importers): They receive no comparable relief, which may create competitive distortions or incentives to reclassify or repackage goods to exploit the frozen lines.
Key Issues
The Core Tension
The bill balances short-term cost relief for the on‑premise hospitality supply chain against the integrity and predictability of an automatic CPI indexation system: it helps businesses avoid immediate inflation-driven duty increases but shifts and concentrates costs into the future and adds administrative complexity, raising the question whether targeted, temporary tariff freezes are preferable to maintaining a predictable, economy‑wide indexation rule.
The bill achieves a narrowly targeted policy outcome with relatively blunt statutory tools. By prescribing an indexation factor of 1 'despite any other provision' the amendment is unambiguous in overriding the automatic indexation machinery, but that clarity shifts complexity into customs operations and industry accounting: systems that compute duties, advance payments, or price contracts tied to CPI-adjusted duty lines will require one-off changes and may trigger refund or reconciliation processes for transactions spanning the commencement date.
The temporary freeze defers CPI-driven increases rather than eliminating them. When indexation resumes and the normal multiplier is applied against the frozen base, importers and Treasury will face a catch-up dynamic that can introduce volatility in duty liabilities at the resumption point.
The limited scope (explicit subheadings and related Schedule 4A items) reduces fiscal cost but invites classification scrutiny and potential arbitrage if importers can alter product form or tariff classification to benefit from the freeze. Finally, the Act’s retrospective operational start date for the Schedule raises practical questions about duties assessed or paid between that date and Royal Assent — customs and industry will need administrative guidance to reconcile past entries and avoid disputes.
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