The controversial Australian 'alcopops' tax has been defeated by the country's Senate this week. Michelle Russell looks at the fallout.

The RTD hike was defeated 32-31 in the Senate after Family First Senator Steve Fielding sided with the opposition to reject the bill, blowing a A$1.6bn hole in the government's budget plans for the next four years.

The result has left distillers jubilant and health groups infuriated, while Government ministers appear decidedly red-faced.

The 70% tax hike was introduced by regulation in April last year, with 12 months to win approval from the parliament. With the defeat of the Bill, the A$300m tax collected to date will now have to be refunded.

The Alcohol Policy Coalition said it was a "sad day" for the health of many Australians, while Geoff Munro from the Australian Drug Foundation said those who voted down the tax, namely the Liberals, Nationals and Family First Senator Steve Fielding, had failed young Australians.

"The Senators who voted against the tax have voted for cheap alcopops, the favourite drink of under-aged drinkers," Munro added, saying that a "rare opportunity" to tackle alcohol problems on a structural basis had been lost with the overturning of the bill.

Greens Senator Rachel Siewert added that it was a pity the changes to the alcopops bill, including an extra $50m to be spent on health education, had been lost amid the Senate "shenanigans".

Despite this, senator Steve Fielding believes he has "broken the back of the alcohol hold on Australia" by voting against the Government after his demand for a ban on alcohol advertising during the broadcasting of sports events was ignored.

"This issue was not on the radar until Family First put in place a Bill into the Senate."

He said his persistence means the issue of drinks advertising now has a high profile in the community.

Shadow Health Minister Peter Dutton backed Fielding's decision and said the result sent a clear message to government that the RTD tax hike was nothing but a "tax grab".

"The Coalition has maintained all along that this was a tax grab by the Rudd Government - dressed up as a health measure - and last night the Senate said exactly that," Australian publication The Shout reported.

"Not one witness appearing before last week's Senate inquiry was able to point to any evidence that the increased tax on RTDs had achieved a reduction in teenage binge drinking."

The Distilled Spirits Industry Council of Australia (DSICA) also welcomed the result, adding that stakeholders on both sides should now come together to form an effective, evidence-based solution to binge drinking. 

"The senators who made the right decision in rejecting the Government's tax grab on RTDs realised that a tax was not a solution to problem drinking," said DSICA spokesperson, Steven Riden.
 
"The Government should also be recognised for placing harmful and binge drinking on the political agenda and the impetus for change must be embraced by all groups who have participated in the RTD tax debate," he said.

However, Greens leader Bob Brown said Fielding was adopting an attitude like the "boy on the burning deck".

"With Senator Fielding the attitude now is: 'Give me what I want or no deal'," he said.

Health Minister Nicola Roxon said the defeat of the Bill had "written a cheque" to return to the distillers the $290m earned by the higher excise on ready-to-drink alcoholic beverages since last April.

She said the anti-binge drinking measures offered by the Government to gain support for the Bill would not go ahead and that it is something the Liberal Party and Senator Fielding "share responsibility for".

"If the Liberal Party didn't want to return this money, they should have supported this bill. We believed this was a sensible tax putting all spirits on to the same base, closing a loophole created by Mr Costello (former treasurer Peter Costello) that saw the consumption of these products skyrocket."

While the opposition has offered a way out by voting to validate the taxes already collected, in a bid to underline its political point, the government rejected the move.

The Distilled Spirits Industry Council of Australia (DSICA) and Foster's Group have pledged to donate any tax refunds they receive in the country to DrinkWise Australia.

The excise on RTDs will now revert to the rate before the tax hike went into effect in April last year, with prices expected to fall up to A$1.30 per bottle.