This is my second post on matters raised in the Law Commission’s review of Alcohol Legislation. The previous post on the Purchase Age is here.
The question of pricing comes up a lot in discussions about ways to reduce harm caused by alcohol abuse. Much of the evidence available suggests that increasing the retail price of alcoholic beverages does in fact lead to a decrease in binge drinking and other harmful activities.
You may or may not agree with this. If you do, the next question is how best to go about achieving this.
The two options are:
- Increasing excise tax
- Establishing a minimum price for alcoholic beverages
These two are not mutually exclusive and could be used either in combination or separately.
So the two questions are: Should we be increasing the price of alcohol and if so how best do we go about it?
Here in BC Canada, our liquor sales have not decreased with non-government sales, most of which DO have higher prices on everything.
Many of us have been trying, but, to no avail…to somehow convince our Federal Gov’t Leaders for legislation on mandatory health warning labels on all liquor containers. It’s been accomplished with Cigarette Packages, so…why not alcohol ?
Currently the 5 most severe, permanent health afflictions solely caused from moderate consumption, has no forewarning signs, nor any cures… Therefore, we’d better warn our youth, or…
Heaven help us all…!
If I must bite the paternalist bullet and pick one or the other, I’d say minimum-price.
Here’s the reason: attaching a fixed cost to alcohol purchases has a bigger effect on the demand for the cheap-and-terrible drinks that people buy mainly to get drunk than it does on the demand for the decent wines and whiskeys that are altogether more civilized.
An increased excise favours neither—assuming price elasticity is the same and constant across different beverages (a ridiculous assumption, but I’d have to weaken my point if I don’t assume it)—: it reduces demand across the board, hitting civilized drinkers just as hard as rambunctious yahoos.
Obvious disclaimer required to keep my anti-paternalist credentials intact: I’m against both.
Of course raising the price reduces demand. Not just for booze, it works for houses too. If RTDs were $50 each, no one would drink them. However, they would drink something else. So to be effective, all booze would have to be prohibitively expensive. Chateau cardboard for $1000 a box? A six pack for $500? I think your idea needs more thought.
@jennifer: Yes, the point of increasing the price would be to REDUCE demand not eliminate it as per your suggestions, so there is no need to take this to spurious extremes.
A minimum price would be across the board and based on alcohol volume. It would not be a mechanism for encouraging one type of beverage over another as you have suggested.
Is this idea the same as the Progressives (Jim Anderton) response to teenage drunks, to increase the tax on alcohol. All the RDT coys did were to reduce the level of alcohol to 13.9%, the result port and sherry carried the tax hike, and they still do. Now when you walk down Queen St there are many many teenages drunk on these 2 fortified drinks !!!
Why not use the law + reinstate an old law of Being druck in Public is an offense. And police the law.
Okay, Iain, so what price would you put on a 12 pack of beer so as to prevent binge drinking yet allow sensible consumption? Currently costs around $20. I’m waiting?
Not that I want to get drawn too far into a straw-man argument but setting a minimum price wouldn’t just be about increasing the regular price but making it impossible to have massive reductions (I remember Rheineck going for $6 a dozen one weekend and yes that IS too cheap).
I reckon $20-25 a doz is probably about right, perhaps a little more, but this is about the concept, not the specifics.
Oh, and I’m not advocating for anything here. It’s just one of the options the Law Commisson has put up and I’m looking for constructive feedback.
Thanks for your honesty, Iain, but my point is that it is all too easy to talk about “concepts”, but the devil is always in the detail. Ask Rodney Hide. His super city sounds fine – one mayor, one council, one plan – but in the real world it is a fiasco and will make things worse.
Indeed, which is why this is out for consultation and I’m raising it here for discussion rather than being part of a machine that rams this stuff through without thought of the consequences.
So my question, and it’s a genuine question, to you is what problems do you think might arise from establishing a minimum price in the region of what I said above?
So is your aim to put a halt to binge drinking?
For many (including myself) like to have a social drink, so the options are to increase prices so that… the many pay the cost to manage the few?
I like a social drink too. And because I enjoy the flavour and quality of the beverage, the things I drink are unlikely to be caught by a minimum price – they already cost a bit more. That isn’t always true, of course like when the supermarket discounts a particular wine.
The same could not be said for an across-the-board tax increase, that would indeed increase the price for every drinker.
Iain, understand your reluctance. But I like to try to get my head around things.
Assume you were talking about 12 x 330ml bottles (or cans) of beer. This afternoon on the Liquor King website, such packs are on offer for $13.99 – $22.99, and Stella Artois at $29.99.
Assuming (always a dangerous thing to do) beer is an average 5% proof, the dozen would have 198ml alcohol with a minimum price of $20.
Then calculating alcohol volumes, there would be a minimum price of $9.10 for a 750ml bottle of 12% wine and $30.30 minimum for a 750ml bottle of 40% spirits.
If beers were at $25, the wine figure becomes $11.30 and the spirits $37.98.
Is this how you see the concept working?
@Herodutus 98% of NZers don’t commit crime but we all pay for the Police. And as Iain pointed out, it is unlikely that if you choose Stella Artois at $29.99 you would see any difference under a minimum price scheme.
Whereas if you buy Black Ice at $13.99 you would see a difference.
@Phil as in the minimum price of a beverage would depend on the alcohol content, yes.
Binge drinking has become acceptable or even something to attain to. “Back in my day”, if you were under 20 there were opportunities to drink even in public, but you were vunerable & had respect to the law, bouncers etc and the consequences so you behaved, and learnt by osmosis.
Now everyone has rights, in this context to drink in public at 18. No ability to learn from your elders. It appears to me that “The Young” learn from their peers.(And I know that there is a binge culture encompasing all ages)
Also from contacts I have in Supermarkets, no wonder they are in support of NOT using beer/wine as lost leaders. Who wouldn’t be that you can only sell a product at a profit!!!!!
Another thought on the issue charging everyone for the actions of a few: If it worked, imagine how much we could save in police time, improved productivity, health resources etc etc etc. You’d more than get your money back!
You would have to be careful when establishing minimum prices as it would affect a lot of your constituents.
It may also spur an increase in home manufacturing which could have the undesired consequence of actually increasing consumption of cheap liqour.
And if this progressed to high-alcohol moonshine serious health issues could arise. Check out how many die in India from tainted home brew.
As long as the Isle of Isay is not affected by price increases!
Regarding Binge drinking, is the aim to change the behaviour resultant from drinking or the health affects?
Dependant upon the aim will dictate the actions. By trying to do everything the mechanism of change could get muddled and thereby the result is not what was expected or desired.
The aim is to reduce binge drinking.
If you reduce binge drinking it is logical you will reduce the incidence of the types of behaviours / activities associated with binge drinking as well as the detrimental health effects.
Hi Iain,
Good on you taking a closer look at that report and kicking of the conversation here, may it evolve to something substantial. This is an important discussion for the Labour caucus to be having.
Not just about the price of booze but about what measures can be taken, if any, to decrease alcohol abuse more broadly in New Zealand. I don’t want to highjack this thread (that is just looking at the effects of price) but I believe alcohol abuse the most severe social problem in NZ.
More than 3/4 of hospital admissions during the weekend are caused by it. And we (current and past governments) are doing very little to seriously address it.
I think we need to look closely at increasing the price of booze, decreasing the alcohol driving limit, removing alcohol sponsorship of sports and introducing a massive social marketing campaign with celebs and sporting hero’s to try and change the way Kiwis view drinking.
We need to get the NZRU and the All Blacks on board for it to work. We need a cultural change, we’re getting there with smoking, and we can do it with alcohol.
How about charging people who end in hospital for alcohol related accidents for the cost of their treatment? I think one day in the distant future we will be on the right track when sculling a yard glass to celebrate ‘coming of age’ at your twenty-first becomes a distant memory.
Billy has been a very naughty boy and the whole class will have to practise lining up outside the classroom again after school. I saw such reasoning as bullshit when I was a child and my mind hasn’t changed.
Raising the price of alcohol in this country will only serve to further impoverish those that are the most vulnerable.
It is an over-simplified and unscientific approach to harm reduction. New Zealand doesn’t need expensive booze it needs the education and the support services to minimise some of the harm that alcohol causes. The difference between these two solutions is that one requires thinking.
Why punish one person for the actions of another? Why should I be forced into changing my behaviour because other members of society can’t help themselves? If the Labour Party wanted to lose my vote and hordes of others then it should pursue this line of thinking until it paints itself into the corner of political irrelevance with the brush of ‘mother-knows-best’ hobby horse policy making.
Does no one in the party know what it is like to survive on $300 a week? Out of touch and out of government.
I do not think that a price rise is the answer. It will put more strain on poorer people. Already we have some families where they put alcohol in front of food for their kids this will only exasperate that problem. It will not stop them buying alcohol but rather decrease the amount of food, clothing etc that they buy.
What is needed is to change our drinking culture, a price rise will not change the culture.
Thats if there is a problem at all? personally and as a young person I do not think there is a huge problem. I know that back in the day people went and got pissed to its not a new thing.
Drop all the social engineering rubbish and start leaning on the offenders hard, awful thing to day but as long as you allow hotels to continue serving drunk people, allowing public drunkenness to be tolerated, the greedy few serving, selling and providing alcohol to minors, and allow offenses to carry the pathetic punishment they currently do the problem will exist.
Ask any central city retailer that has cleaned up 10 pound of chunder or 10 bladders full of piss out his door way after some dimwits “great night out” what he thinks of liberal policies.
Price is not the issue, enforcement is.
Reducing the immediate ill-effects of alcohol will be solved easier through enforcement – too many bars in The Square/Courtenay Place/The Strip are full of people who’ve had too much, but don’t get sent home. Although flooding these areas with police will just make tanked up people pick fights.
Long-term health problems caused by alcohol need to be looked at from a health perspective, rather than a simple price model. As we see with illicit drugs, having a higher price per point/tinny/etc. doesn’t stop habitual use.
Hey thanks for these comments. We are getting to some of the substance of the issue now.
To those who have talked about enforcement, that is indeed part of the review and I will post on that later.
To Patrick in particular but also everyone else, please realise that these posts are a discussion about the content of the Law Commission’s issues paper, not Labour policy. I’m really keen to give people the opportunity to give your honest opinion but if this discussion is just going to be used to chuck labels around, I won’t bother. In saying that, Patrick’s post did offer a useful perspective for getting an idea of the politics of the issue if not the substance.
I actually hope that whatever changes come out of the review will have fairly broad political support anyway.
Keep your comments coming.
I think that increasing the price of alcohol is an appalling idea
This will punish lower income people and put them in a position where they won’t even be able to afford a basic wind down drink at the end of a hard day.
Why should the rest of society pay the price for the behaviour of others? If you really want to change binge drinking culture then use an education programme and don’t bully people into drinking less by making it too expensive. Education programme do actually work.
I also think of the bars that will suffer financially as their clientel drops off because their prices are too high. Raising the price of alcohol only encourages people to stay out of the bars and drink something stronger elsewhere. Now if for example a young person decides to drink how the Bleepin bleep is that person supposed to learn to drink in a civilised way if a bunch of rich PC bullies have made it too expensive for them to drink in bars?
I haven’t read the thread yet so I apologise in advance if I’m going over ground already covered. I’ve just finished a 12 and a half hour day – topped off with a glass of wine for a job well done – which I might add that being poor I wouldn’t be able to afford to give myself under the proposed price hikes.
A relative of mine is seriously ill with auto immune diseases including severe raynaud’s disease. This poor person is chronically purple and risks amputation if the person gets too cold. Now the drugs for the raynauds make this person’s blood pressure go up dangerously high and have landed the person in hospital a lot. Alcohol, dialates the blood vessels and reduces pain for this person and a glass of wine does wonders for this person’t quality of life. This person is extremely hard up financially, and I think it would be cruel to make this person go without alcohol – which is what would happen if it became expensive.
I think you’re a great guy / MP but “I like a social drink too. And because I enjoy the flavour and quality of the beverage, the things I drink are unlikely to be caught by a minimum price – they already cost a bit more.” – You are lucky to be able to afford this, there are some people who would choose a civilised drink, but due to low income can only afford the discounted stuff available at the supermarket.
@Jake Quinn – I’ve always voted Labour, but if Labour adopts this stance on alcohol it will seriously put me off the party and I for the life of me cannot see how a party that wants to get back into power could even consider contemplating such an unpopular move.
@Jennifer, Patrick A and others that see sense – I think I love you. I agree with everything you wrote Patrick A. @James – yes binge drinking has been around a long time and some would argue that it was worse back in the 70s and 80s.
@Iain – sorry I think I did chuck a couple of labels in there because I was so angry at the topic of the thread and didn’t read your objection to labels until aftewards.
I’m sure there are better solutions to the binge drinking issue.
@ Iain Lees-Galloway
I realise that we are discussing the Law Commission’s findings and that Labour has yet to unveil any prospective policy in relation to these findings.
Here are the findings: New Zealanders like getting pissed. Some New Zealanders get too pissed and hurt themselves and/or others.
You propose to increase the price of alcohol as a solution to this. Your solution annoys me because I happen to drink alcohol and I don’t have a large ammount of disposable income such as an MP like yourself.
I am worried that if the price of alcohol is increased there will not be sufficient deterrent for high salary earners such as yourself and your colleagues to leave off binge drinking. I understand 3.2 (The Beehive’s own private bar and purveyor of the demon drink)sells alcoholic beverages at tax payer subsidised rates (an Islay whiskey is only $8 – usually $16!). I think that it would only be fair if you were to increase the price of alcohol at rate in line with what each citizen earns.
I buy a dozen beers every Friday and it costs me $20 – this works out at about a fifteenth of my weekly wage. As an MP you would earn around $2500 weekly if my arithmetic is correct. Under my proposed alcohol price increase scheme you would pay $166.00 for that same dozen beers.
I would hate to think that us peasants were being saved from the ravages of alcohol while our betters continue to do themselves alcohol related harm.
I don’t apologise for the labels and the inuendo slinging; politics is a dirty business and if you haven’t realised this yet Iain then I think you may be in the wrong job.
@Spud: Love back ‘atcha brother.
@Spud&Patrick: The comments about income are a fair cop. Not that I think my drinking habits have changed all that much in the short time I have been an MP!
The discussion around the effects on people with lower incomes is pertinent and very useful so thanks to everyone who has raised this.
@Patrick: Politics does not ALWAYS HAVE to be dirty. Nothing wrong with having a civil conversation about the issues. MPs from all parties do that all the time.
In saying all of that, it is useful to know how Patrick, Spud Jennifer and others would perceive the adoption of a policy like this so don’t hold back!
James and others hit it on the head.
Raising the price only hit the impovished.
Because of the stress in their lives they drink and/or smoke
for personnal relief. They do neither in excess because of cost.
In some impovished families if it comes down to a kilo of sausages for the kids or a 6 pack/20 ciggies guess what wins.
This of course causes other social problems.
Why hurt these people further because of the stupid actions of a few?
@Spud: Your first (I think) comment has only just appeared for some reason. A minimum price shouldn’t effect people going to bars/restaurants etc because it is already more expensive to drink there. Certainly the Law Commission’s intention, as I understand it, is for the minimum price to have most effect on off-licence sales.
You say you wouldn’t be able to afford a bottle of wine under the “proposed price hikes.” How high do you imagine the minimum price would be set? Even though you are opposed to the idea, I’d like to know what you think is a reasonable price for a bottle of wine or dozen beer?
Iain, There are other, more effective ways to deal with “alcohol harm” (as the cliché de jure would have it) than pricing.
What is needed is better enforcement of the existing law. If premises that serve alcohol to drunks or minors have their licences suspended for a first offence, longer suspension and heavy fine for a second and revoked on a third separate offence, then such bars will take their responsibilities more seriously.
However, on the other side of that coin, bars that are well-operated and where the police/DLA get no hassle, no compliance issues and no complaints should then be rewarded with reduced licensing fees. A financial incentive will work better in a commercial environment than a moral sermon.
Also reintroduce the offence of being drunk in a public place. Along with that make it illegal for parents to supply their children with alcohol outside a supervised family setting.
Give judges proper sentencing guidelines that advise them to consider the presence of alcohol in an offence to be an aggravating factor rather than a mitigating factor and let everyone know that if they decide to drink then they had better behave themselves or they will be looking at more serious criminal charges.
And change the culture in universities. This is often where kids first get to drink unsupervised and while the cosseted wee darlings might think they are a bunch of fun-loving, party-hard legends, the rest of the country thinks they are deeply unattractive, vomiting, shambling husks.
Events like the Undie 500 and – as you would remember from your time at MUSA – the Steinie Stampede and Tour da Coma give these impressionable wee flowers the idea that it is right and proper to get completely shitfaced and act like a moron. Far better if they were taught how to drink sensibly and given some grounding in pub etiquette (ie don’t shout, scream or push your sweaty face into someone else’s unless you are tired of your teeth) than be sent out – with the student union’s blessing – to get hammered as some spurious “rite of passage”.
@Iain – I don’t know what’s happening – most of my comments appear straight away on threads, but at least one a day says awaiting moderation. Depending on the quality of the wine $5 for plonk, $10-$12 for average wine and higher for flash wines. $12 – $18 for a dozen beer.
@Iain – just finished reading the thread, yes it was my first post. Thanks for listening to us about this issue, I appreciate it.
Iain, big ‘ups’ for this ‘conversation’. So many of your colleagues just blog and run. This is the first time on RedAlert that we are having a genuine conversation on the issue with the poster. Do you think it might catch on? On the issue, maybe the Law Commission should stick to black letter law and leave the public policy to others? No matter how you cut it, raising the price is not the answer to binge drinking. Prohibition didn’t work, and nor will any derivative of it. I think most people agree with Anderton that alcohol is the cause of much of our social problems, but booze is ubiquitous, so I guess just get used to it. Young people will go crazy sometimes, it’s in their nature.
A risk, if the price is pushed too high, is that people on low incomes resort to homemade or illegal supplies. However I do see a minimum price as a useful measure restrict loss leader and heavily discounted sales.
“Your first (I think) comment has only just appeared for some reason. A minimum price shouldn’t effect people going to bars/restaurants etc because it is already more expensive to drink there. ”
what makes you think that since it cost more for the restaurant to buy it that they wont raise their prices in order to retain their profit margins?
Oh my, I just cannot really brook this. 90% of people overtaxed to prevent the 10% that over indulge.
Why not “maximum purchase quantities” instead? Does anyone really need a 1125 of bourbon in a single night?
Hmm, not sure I like that either…
Baron, or maybe we could appear before a ’star chamber’ of worthy citizens and apply to purchase booze, and if we make our case, we could get a ‘purchase order’ and go to the state liquor shop and buy it? Maybe then drink it under supervision, and get periodically breathalized to ensure we are not indulging in irresponsible consumption? I know this comment will be ridiculed, but it simply illustrates the dilemma for those who want to “fix” the problem. How does the government stop young people binge drinking, or having unprotected sex, or riding on cars, or any of the myriad things young people do, and have always done? I think the answer is to relax and realise that most young people go a little crazy sometimes, but in general, are cool and get things right. So maybe just leave them alone to accumulate ‘life experience’?
freedom of choice and accountability seem to lost on the left here.
Lets say you try to make alcohol so expensive that it becomes hard to purchase it – what do you think that the people with problems will do. If they can afford it – they will continue to buy it to the detriment of their family.
If they cannot – Im sure a lot will turn to crime to fund their problem – as many do with drugs. We are talking about people with problems – your idea of taxing or minimim price is very poorly thought out and would be useless.
Yet again the left need to be told that more taxes is not the answer.
Too late BK, alcohol is ALLREADY highly taxed . You should be advocating elimination of those taxes if you had any consistency.
Or is there a level of additional tax on harmful and addictive substances that you are happy with- you closet socialist ?
GHW: While it was a question for BK, I’ll bite…
I don’t mind a reasonable level of taxation on alcohol and other substances. That taxation should be set at a level that covers the reasonable additional costs that are created by that substance.
So, if we have to spend $500m a year on hospital treatment for drunks, then $500m a year of excise tax on alcohol. And so on and so forth. Its all about internalising the externalities! (But please put some rigour into these assessments – the hysterical calculations of some researchers in this area are truly shameful).
I recognise that that methodology could lead to higher prices – if so, so be it. But at least you have a consistent rationale for setting excise taxes, rather than “raise them til noone can afford to binge any more”.
GHW – I know that it is already highly taxed. so is petrol.
The difference here is that they are trying to actively tax people out of something to make up for the few who simply cannot act in a manner responsible.
The baron answered it quite nicely (cheers).
Actually I think The Baron’s argument is quite sound. I need to check my data but rest assured the taxes raised from alcohol sales go nowhere near covering the associated costs. Will come back to you with some numbers.
If you go the taxation route, though, some powerful retailers (yes I’m looking at the supermarkets right now) just refuse to allow the producers to pass on the increase so it never actually makes it to the consumer. Who should bare more responsibility for the decision to binge and get messed up – the consumer or the producer?
@ jennifer: I’m not going to ridicule, I’m just going to laugh and take a point well made.
Doesn’t stop me wanting to explore the options, though!
@ Iain – good. Make sure you come back with the sources of those numbers though too.
Iain, so what if the supermarkets loss lead booze in order to get folks into their stores. It just means that those who chose to buy wine, for example, get a better deal. I’m genuinely afraid of where this is going. Hasn’t Labour learned anything from the ‘nanny state’ days? I thought Phil had put that behind you? If you want to raise the drinking age, or the purchase age, then do that. But why cripple everyone with targeted ‘what’s good for you’ taxes?
I thought from one of Iain’s earlier comments that he seemed to understand where we were coming from, I’m reassured by that. As for who pays for the damage? The perpetrators (of drunken horrible behaviour) and not the consumers please?