Floor price

The below information is the Northern Territory Government’s proposed approach to drafting the Liquor Amendment (Minimum Pricing) Bill.

Contents


Introduction

The Northern Territory Government intends to introduce a minimum unit price for alcohol, commonly referred to as the ‘minimum floor price’, to minimise the harms associated with high-alcohol, low-cost alcoholic beverages.

The NT Government plans to introduce a bill into the Legislative Assembly in May 2018, with the start date of the minimum floor price to be determined later in the year.

The minimum floor price is not a tax.

Excessive consumption of cheap alcohol is linked by the evidence to alcohol‑related harm, which has serious negative social, health, and economic impacts on the Territory community.

The minimum floor price is a recommendation from the Alcohol Policies and Legislation Review Final Report, and an initiative under the NT Government’s Alcohol Harm Minimisation Action Plan 2018-19.

A minimum floor price means that one standard drink will cost a minimum of $1.30.

The minimum floor price is used to calculate the minimum cost at which a product can be sold, depending on how many standard drinks the product contains.

It does not mean the cost of a drink will increase by $1.30.

Licensed venues will not be able to use the new law as a reason to increase the cost of any of their products that are already sold above the minimum floor price.

Standard drinks are stated on alcohol product labels as required under Australia and New Zealand Food Standards Code made under the Food Standards Australia New Zealand Act 1991 (Cth).

Check your product label to determine how many standard drinks it contains.

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Definitions

Minimum floor price

The minimum floor price means the minimum price at which one standard drink can be sold, or offered for sale, in the Northern Territory.

The minimum floor price will be set at $1.30 per standard drink contained in the alcohol product.

The legislative amendment will prohibit selling alcohol below the price of $1.30 per standard drink. The legislation will impose the minimum price as an automatic condition of a liquor licence.

The Minister will be required to review the minimum floor price every three years.

Sale price

The sale price is the actual price paid by the customer to the retailer for the alcohol product.  Once the new legislation comes into effect it will be illegal to sell alcohol for a sale price below the minimum floor price.


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How it works

The minimum floor price of $1.30 per standard drink will apply to retail sale and supply of all alcohol products in the NT, including those from takeaway outlets and on premise sales. It does not apply to wholesale prices.

The floor price is used to calculate the minimum cost at which a product can be sold, depending on how many standard drinks the product contains.

Example of how the minimum floor price will be calculated:

A 750mL bottle of wine contains 7.7 standard drinks. It currently sells at a retail outlet for $8.00.

To determine the new price, multiply the minimum floor price by the number of standard drinks in the product.

$1.30 x 7.7 standard drinks = $10.01

Under the minimum floor price initiative, that bottle of wine cannot be sold for less than $10.01.

The price will be calculated using the standard drinks listed on the label.


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Frequently asked questions

The majority of alcohol products offered for sale in the NT will not be affected.

The minimum floor price targets products that are sold at a very low price per standard drink.

Beer, ciders, and spirits will either see no change in price or the change in price will be small.

Products that will see a price increase will be cheap, high alcohol content cask and bottled wine, and fortified wine.

The purchase of alcohol online will be subject to the minimum floor price where the destination of the product is in the Northern Territory.

The NT Government does not intend to regulate the wholesale price of alcohol. Wholesaling to licensees is not a part of minimum floor pricing.

Sales of duty-free alcohol are not required to comply with the minimum floor pricing rule.

Details are still being developed but the intention is that indexation will occur once a year.

Research provided to the Alcohol Policies and Legislation Review shows that the heaviest consumers of alcohol and individuals at risk of harm disproportionately depend on the cheapest alcohol. Young drinkers were identified as being particularly sensitive to the price of alcohol.

The research also shows that at risk and dependent drinkers are more price sensitive than moderate drinkers. The evidence strongly suggests that the introduction of the minimum unit price will be effective in reducing the harms of excessive drinking through the closer targeting of access and cost of products.

Alcohol abuse and the associated impacts extend beyond the individual to family, friends and the wider Northern Territory community.