Dissenting report by Liberal Senators
Introduction
Liberal senators acknowledge that the abuse of alcohol,
especially by the young, is a major social, health and economic challenge
confronting all Australians. Accordingly governments at all levels must be
prepared for tough, comprehensive measures to address this challenge and to
empower communities and individuals to wind back what witnesses called the
“write-off culture” of drinking in our society. As the community’s focus on
this issue sharpens, it is critical that government set an example of good
policy setting and evidence-based action. Initiatives which are poorly thought
through, which appear opportunistic or which alienate the very cohorts whose
behaviour they are designed to modify are likely to fail. Public cynicism
about the motives of governments, particularly where measures involve the
raising of taxes, can seriously undermine the objectives these measures pursue.
The increase in the tax rate applying to ready-to-drink
alcohol beverages (RTDs) will impose a $3.1 billion tax burden on Australian
consumers. Even assuming positive health implications from this increase, there
are certainly potential downsides in terms of employment in the alcohol and
hospitality industries, unanticipated deleterious behavioural changes by those
who abuse alcohol and greater financial pressures on those who consume alcohol
responsibly.
For this reason Liberal senators believe that an onus
must fall on the Federal Government’s shoulders to demonstrate that a step of
this magnitude is likely to achieve overall positive outcomes in the fight
against alcohol abuse. We reject the notion that “doing something” about
alcohol abuse is a sufficient justification for a measure which carries such
serious potential downsides as does this excise increase. Evidence of a net
benefit should be clear and unambiguous.
Liberal senators however believe that the evidence before
the inquiry was indeed ambiguous. On the test suggested above, therefore, since
the evidence is not conclusive or clear, the case for the tax is not made out.
Further, much of the support for the tax from the public
health sector was conditional on the Government implementing a broad suite of
policies relating to alcohol, a suite which it is clear does not presently
exist and the resourcing for which has not yet been allocated.
In this dissenting report we outline a number of areas where
the case supporting the tax is either weak or at best marginal.
Lack of evidence that consumption is increasing
One of the key points made by
the Australian Institute of Health and Welfare (AIHW) on their analysis of the
National Drug Strategy Household Survey data was that the overall drinking
status of the Australian population has been stable over the past two decades
(see Table 1 below).
Table 1–Alcohol Drinking Status: proportion of the
population aged 14 years or older, Australia, 1991 to 2007. [1]
In support of this finding the Distilled Spirits Industry
Council of Australia (DSICA) made the following points:
- Australia's per capita global alcohol consumption ranking has
been falling;
- On a per capita basis, alcohol consumption in Australia has
fallen by over 20 per cent since a 30 year peak reached in the early 1980s; and
- Alcohol consumption on a per capital basis has not increased
significantly since the tax reforms in 2000 which included the tax on RTDs.[2]
DSICA provided a table
to demonstrate that the growth in popularity of RTDs must be set against a
decline in overall alcohol consumption (see Figure1).
Independent Distillers Australia (IDA) also
commented that:
It is important to note that drinking at risky levels has been
decreasing over the last six years as measured by the Government's own
statistics, including among young females.[3]
Figure 1: Australia's adult per capita
alcohol consumption by alcohol category (1971-71 to 2006-07)
Source: Submission No. 27 (Distilled Spirits Industry Council
of Australia), p.69.
Mr Terry Mott, Chief Executive Officer, Australian Liquor Stores
Association (ALSA) pointed out that:
It appears from evidence from the Australian Institute of Health
and Welfare, the ABS and the New South Wales Department of Health’s secondary
schools survey that there does not appear to be a significant, growing problem
with youth drinking, and that information does not seem to have been contested.
ALSA does not for a minute shy away from the fact that there may be young
people misusing alcohol, but it does not appear to be an endemic, growing
problem. Even if there were an epidemic of teenage binge drinking, we are not
of the belief that taxation, as a blunt instrument, will give any real solution
to solve that sort of problem.[4]
Mr Daryl Smeaton, Chief Executive, Alcohol Education and
Rehabilitation (AER) Foundation, told the Committee that a comprehensive
approach was needed as:
...clearly our biggest drinkers are not teenagers; they are the
20- to 30-year-olds.[5]
Mr Smeaton further noted:
We have focused this particular issue around young women but
excessive consumption is a problem across a very broad range. It is not just
young women.[6]
While none of this constitutes a reason for inaction on
excessive drinking, it does suggest that a rushed or under-researched response
to this problem is not warranted. The anecdotal evidence of a surge in
dangerous drinking offered by some witnesses to the inquiry needs to be set
against the less emphatic data available from bodies such as AIHW.
The ‘link’ between RTDs and risky alcohol use
The AIHW noted the preference for RTDs has increased slightly
over the period 2001–2007, particularly in older age groups, but the trend
among those aged under 18 years is unclear (see Table 2 and Table 3).
The AIHW also found that there has been virtually no change in
the pattern of risky drinking over the period 2001–2007, including among young
Australians.[7]
Given these findings the AIHW concluded that 'given the stable
prevalence of risky drinking, and the lack of any clear trend regarding
preferences for RTDs, the increased availability of RTDs does not appear to
have directly contributed to an increase in risky alcohol consumption'.[8]
IDA pointed out that the Government has publicly relied on the
findings from the National Drug Strategy Household Survey to justify the excise
increase saying the figures showed an 'explosion' of binge drinking among
teenage girls. They noted:
The Government has misinterpreted the findings of this report
and mistakenly endeavoured to correlate growth in popularity of RTDs with binge
drinking. We are yet to see any evidence to support this assertion. [9]
Table
2–Trends in preferences for specific alcoholic drinks, 2002–2007, males (per
cent)[10]
Table 3–Trends in preferences
for specific alcoholic drinks, 2002–2007, females (per cent)[11]
Mr Douglas McKay, Executive Chairman, Independent Distillers
Australia told the Committee:
RTDs have been part of the national alcohol landscape for 40
years in Australia. Unarguably, the convenience and other benefits of RTDs have
helped augment their popularity. But this increasing popularity does not
necessarily mean increasing alcohol abuse and the two things seem confused in
much of this debate. RTDs are a minority part of the liquor industry and there
is no compelling evidence linking them to an increase in alcohol abuse. Levels
of risky drinking remain largely unchanged or slightly down according to the
most comprehensive and long-running research by the AIHW.[12]
Mr Terry Mott, Chief Executive Officer, ALSA also questioned
the link that has been drawn between RTDs and alcohol abuse as:
A tenuous interpretation of the statistics, as they fail to
compare what young people may have been consuming and mixing for themselves in
earlier statistics....it does seem a long bow to draw to suggest that, even if
there were a significant trend in alcohol misuse, that is has been caused by a
particular product or category.[13]
Liberal senators assume that if RTDs are indeed a ‘Trojan
horse’ to young Australians, ushering them into higher or more dangerous levels
of alcohol use than before, there would be evidence of increased rates of
overall drinking in these age groups. There is no such evidence. The evidence
is consistent with this generation of young drinkers having switched to RTDs
from, say, the beer or sparkling wine preferences of earlier generations, but
not at overall greater consumption levels than their predecessors.
Were health considerations uppermost in the Government’s mind?
Liberal senators note the lack of a submission from Treasury to
the inquiry despite the modelling being included specifically in the terms of
reference at (g). Questioning of Treasury officials during Estimates revealed
their task was only to estimate the impact on the budget of the measure using a
range of studies of the price elasticity demand for alcohol.[14]
Treasury officials also commented on the involvement of Health:
Senator COLBECK—Mr Ray, you said before that you
did not speak to the Department of Health in relation to this. Why would you
not talk to the agency that has all the figures in relation to this matter?
Mr Ray—With respect to my colleagues in the department of
health, they did not have the data that we needed in order to do the costing.
Senator COLBECK—What data was that?
Mr Ray—As I explained earlier, it is ATO data on
clearances.[15]
IDA argued that the Government's revenue and health policy
objectives will not be achieved.
The Government's economic modelling to support the tax increase
is not based on solid research – Treasury themselves acknowledge broad
assumptions have been made in formulating their revenue projections.[16]
IDA further commented that sales data since the excise increase
calls the modelling by Treasury into question:
Treasury estimated that RTD volume would decline by 4%. Current
sales trends, however, indicate that Treasury estimates of the revenue from the
new tax could be overstated by a much as 40%.[17]
Mr Warwick Ryan, Director, Government relations, KPMG told the
Committee:
But certainly sales of 375 ml and 200 ml containers of
full-strength spirits have gone up about 20 per cent since the tax increase.
Certainly the zero cross-price elasticity assumption which Treasury used in
their modelling is not a number that has been applied in overseas countries and
it is not the cross-price elasticity or the transference factor which you refer
to that will be used in the modelling undertaken for DSICA. Certainly the
evidence in the market of substitution of full-strength spirits, beer and wine
shows that that zero transference factor is not credible.[18]
Liberal senators note with concern that Health was not a party
to the cabinet submission which approved the RTD excise increase. We conclude
from this extraordinary omission that the Government’s chief objective was
revenue-specific, not health-specific.
Revenue windfall not matched by investment
in prevention/education strategies
Treasury modelling showed the financial implications of the
increase in excise for RTDs. The total revenue increased from $97.9 million in
2007-08 to $892.6 million in 2011-12.[19]
By contrast, the Prime Minister’s National Binge Drinking Strategy has a budget
of just $53 million.
IDA noted that none of the revenue will go to the National
Binge Drinking Strategy:
The Budget shows the RTD tax changes are expected to raise $3.1
billion. Despite the increased revenue from the excise increase, Budget papers
reveal the National Binge Drinking Strategy will not receive any of this.
Instead, 2008-09 Budget Papers say the Strategy will be 'met from within the
existing resourcing of the Department of Health and Ageing'.[20]
IDA further noted the lack of clarification regarding the use
of the revenue:
Minister Roxon has said that a proportion of the $3.1 billion
revenue will be directed to general preventative health programs. The
Government has not outlined how much constitutes a 'proportion' or if alcohol
strategies or programs will benefit.[21]
Mr Smeaton, AER noted:
You asked me what my understanding was. As I have said, the
government have said on a number of occasions that some of the revenue from
this particular increase in taxation will be directed back to preventative
health. I have not sought, nor have they offered, an amount. There is a National
Preventative Health Strategy task force working on these issues, and it is due
to report, I think, initially by the end of this year. I expect that some of
the recommendations will need funding and some of those things will be funded,
I expect, from that revenue stream.[22]
The Government appears at this point to be putting virtually
all its eggs in the tax increase basket, despite the strong urgings of public
health groups that a multi-faceted approach is required. Liberal senators can
understand why Australians would be cynically attracted to the view that
revenue is the Government’s primary motivation here.
Indicator-by-indicator examination of the effects on drinking patterns of
the RTD tax
Consumption patterns since measure
introduced shows total alcohol sales only marginally reduced, if at all
DSCIA
provided the Committee with early market reaction to the tax change as reported
by the AC Nielson Liquor Scan Track Service for the two week period ending 11 May 2008. This showed:
- A 39 per cent decrease in the sales of dark spirit-based RTDs
(such as whisky, run and bourbon preferred by male drinkers aged over 25);
- A 37 per cent decrease in the sales of light spirit-based RTDs
(such as vodka, gin and white run preferred by females); and
-
A 20 per cent increase in the sales of full strength spirits.[23]
Mr Mott, ALSA told the Committee that while it is not yet
possible to determine the long term effect of the measure:
...from the data that is available to date it may well be that the
net total consumption of alcohol has increased...[24]
Mr Mott further commented:
As I said, in some areas there seems to have been a lift in
sales of beer, but it is hard to measure, and also increased sales of sweeter
styles of wine. The beer would be, typically, four to five per cent alcohol and
the wines, typically, six to 12 per cent ABV. So, while it is too early to tell
if the net amount of alcohol consumed—or, more importantly, any alcohol
misuse—has risen or declined, it does not appear that there has been any
significant public health benefit from this measure; it is simply a further
distortion in the nature of the beverages sold in the market place.[25]
This evidence is in contrast to the conclusions of other
witnesses, eg the Public Heath Association which postulated that early
indications are that the tax “is effective in reducing introduction to alcohol
amongst young women...”[26]
In fact there appears to be no clear evidence on consumption levels at this
early stage, with the market no doubt discovering and adjusting to the excise
increase. DSICA commented:
I think it is a novel concept that people would stop drinking...[27]
Liberal senators believe that careful analysis will be
required into whether alcohol sales actually reduce, and in particular whether
such reductions are attributable to the decisions of young drinkers or of adult
ones who currently make up the majority of consumers of RTDs.
Substitution and the popularity of
spirits among younger drinkers
The industry asserts that in recent years there has been a
change in product preference but not a change in consumption:
It can be seen the increase in the popularity of RTDs has been
primarily in substitution for bottled full-strength spirits and full-strength
beer, and is not due to an overall increase in consumption.[28]
This was echoed in the comments of Dr Anthony Shakeshaft,
National Drug and Alcohol Research Centre:
So when you just look at the drinking habits of underage people
– and the date we have got is for 12- to 17-year-olds – they tend to be very
price inelastic around alcohol, so they have got a clear preference for
spirits.[29]
Mr Warwick Ryan, Director, Government Relations, KPMG told
the committee:
Certainly the market evidence here in Australia that we have
included in our submission has shown a very significant substitution of
full-strength spirits, and there is anecdotal evidence that there has been
substitution of beer and wine products as well. We are not aware of any international
evidence that shows that there would be a reduction in total alcohol
consumption as a result of a tax increase on one category of product.[30]
In support Mr Michael McShane, Managing Director, Brown-Forman Australia,
stated:
Yes, there has been a migration. Our experience so far is that
there has been a definite reduction in the amount of sales of RTD products
since the imposition of the tax, but equally there has been a significant shift
into full-strength spirits since that date. We also have anecdotal evidence to
suggest that there is switching going on into other categories, and I think the
opening comments in the Four Corners program on Monday night would have
shown that. Our experience is that there is definite shifting going on.[31]
IDA pointed out that while RTD consumption may decrease as a
result of the excise increase:
There is clear evidence through retail sales data since the
increase of the excise that there will be almost a direct substitution to beer,
cider (same strength), wine (three times stronger) and spirits (seven to 10
times stronger).[32]
IDA concluded that:
There is already sound evidence that the new RTD tax has simply
caused a shift in consumption from RTDs to the same or potentially larger
quantities of alcohol in the form of spirits, wine, cider and beer. [33]
Mr McKay from IDA described the early evidence to the
Committee:
The early evidence is indicating that the overall consumption of
alcohol will not be affected by this tax, as RTD consumers merely substitute
RTDs for other forms of mostly higher strength and/or cheaper alcohol.[34]
Mr Mott from ALSA noted that:
Although the early reports fully indicate a drop in sales of
RTDs, we are, as I have said, somewhat concerned at the lift in sales of
full-strength bottled spirits and other forms of alcohol beverages. Our members
have also noticed that, along with the increased sales of bottled spirits,
sales of soft drink mixers have also risen, suggesting a practice that may not
result in the stated benefits of the measure. It seems that the highly mobile
18 to 24 population are now buying full-strength spirits and mixing on the run.
People in that age group do not necessarily carry measuring jiggers with them
to mix. It seems highly unlikely that they will be accurately measuring the proportion
of alcohol in the mixed drink, resulting in disturbing variable and potentially
risky strengths of alcohol in their drinks. If they are mixing on the run, it
is almost impossible for them to accurately calculate the amount of alcohol
that is going into their drinks and the drinks of whoever they are sharing it
with. At least with prepackaged products it was a set amount of alcohol and it
was clearly labelled with the number of standard drinks.[35]
The experience of tax increases
in other countries here is illuminating. DSICA cites the case of a tax on RTDs
introduced in Germany in August 2004 which had the following impact over 3
years on total teenage alcohol consumption (see Figure 2).
Figure
2: German experience: Total teenage alcohol consumption increased between 2004
and 2007 after the 2004 tax increase
Source:
Submission No. 27 (Distilled Spirits
Industry Council of Australia), p.49.
If there is a preference among young drinkers for spirits or
spirit-based drinks, as both “sides” of this debate seem to concede, one would
expect a considerable problem with younger drinkers shifting from RTDs to spirits
to avoid the tax. Those problems may include an impaired capacity to count
standard drinks and a greater incidence of drink-spiking. These factors need to
be included on the debit side of the ledger when the tax’s implications are
tallied.
Capacity to count standard drinks
and the avoidance of drink-spiking
At the hearing DSICA told the committee about the unintended
consequences of the excise increase: Mr Gordon Broderick, Executive Director of
DSICA stated:
The government’s 70 per cent tax increase on a limited range of
alcohol products has created some potentially dangerous unintended
consequences, and these effects are already evident in the community. The
consequences are real and current and include inexperienced consumers being
driven to purchasing and mixing their own, stronger spirits and younger
drinkers opting for cheaper wine pops and cask wine, which contain twice the
alcohol and are taxed at half the rate. Young girls are facing the real risk of
being victims of drink spiking; highly respected medical experts are already
warning that teenagers are at risk of being drugged as they opt for buying open
drinks over the bar or at parties rather than safeguarding against drink
spiking by consuming drinks already premixed in a can or a bottle. There is
increased abuse by young men of full-strength beer, with the potential for
greater street and domestic violence. The tax hike trial has failed not only
because it does not achieve its objective but also, more dangerously, because
it has created a series of problems that continue as long as the trial
continues.[36]
IDA noted that:
Most RTD products on the market are actually at the lower end of
the scale at about the same strength as beer and provide a safer alternative
than straight or home-mixed spirits.[37]
Mr McKay outlined the benefits of RTDs:
Our benefits really are the benefits you associate with RTD
products—convenience, a premeasured serving of alcohol, clear labelling, and a
safe and secure pack.[38]
Substitution to illicit substances
Some witnesses expressed concern that one form of
substitution that could be expected is to illicit drugs, which in some cases
may become cheaper than RTDs. DSICA cited a 1997 study whose findings suggest:
...high
school students (the majority of whom initiated their alcohol and drug use
earlier) treat alcohol and marijuana as substitutes...[39]
Lack of evidence on which excise decision based
The Australian Hotels Association believed there was a lack of
evidence for the increase on the excise stating:
The Commonwealth Government has consistently highlighted
binge-drinkers as being young females, yet all the evidence suggests the real
consumers of pre-mixed alcohol products are 25+ single males. [40]
The AHA further asserted that 'there has been no evidence
presented by the Commonwealth that links price structure of the pre-mixed
alcohol market with binge-drinking' and 'there has been no evidence presented
by the Commonwealth that links the increasing popularity of the pre-mixed
sector with problem drinking patterns in young drinkers'.[41]
IDA also concluded that the basis for the 'singling-out of
RTD products is not backed up by research'. They argued:
There is limited published Australian research or data on the
role of specific alcoholic products on risky drinking behaviours and none of
it, that IDA is aware of, specifically nominates RTDs as the root cause of
binge drinking.[42]
IDA recommended that there needs to be better understanding of
the role played by not only RTDs but other alcoholic products in drinking
behaviours across both sexes and all age groups.[43]
IDA also pointed out that this measure will have a
considerable effect on their industry as RTD drinkers switch to other forms of
high strength and/or cheaper alcohol.
The Federal Government's excise increase on RTDs has the
potential to significantly impact the company; putting 480 jobs at risk,
including more than 250 jobs in Australia.[44]
Liberal senators believe that given the potentially negative
consequences, such as the potential loss of revenue and jobs for the industry,
such consequences should be carefully weighed and the evidence should be
conclusive.
Issue of aligning alcohol taxes with a volumetric approach
The Alcohol Education and Rehabilitation (AER) Foundation
argued that all alcohol should be taxed under one, consistent volumetric regime
which would save administrative costs and not favour any particular alcoholic
beverages.[45]
The AER provided the Committee with a diagram (available in
chapter four of the majority report) indicating a hypothetical tax rate to show
what a single rate of taxation would look like that produces revenue neutrality
but taxes by alcoholic content, not by drink type. Mr Daryl Smeaton, Chief Executive
Officer, AER, told the Committee that:
From a purist’s point of view, the foundation has said that it
does tax the alcohol in RTDs at the same rate as the alcohol and spirits. But,
as our hypothetical tax rate does show, when you apply a tax to the
alcohol—whether it is in beer, wine or spirits—at the same rate, you clearly
cannot tax them at the spirits rate. That would treble the amount of revenue
that the government would get and it would not make much change at all to
unsafe consumption, other than the fact that most people would not be able to
afford to buy alcohol any longer. One of the effects of applying an
across-the-board tax rate is that certain products would reduce in price, and
spirits are one of those products. But, as I pointed out earlier, the spirits
share the alcoholic market is only two per cent by volume; the beer market is
still by far the biggest part of the market, and I expect it would continue to
be so.[46]
Regarding alcohol taxation, Mr Smeaton further stated:
...But the fact is that the alcohol taxation system is broken. It
does not achieve anything other than a revenue stream for government. I have no
doubts that governments need to maintain revenue, but if we looked at the
alcohol taxation system from a public health perspective, as well as from an
economic perspective, then I think we could come up with a much better system
that would serve Australia equally well in both areas.[47]
Several
witnesses welcomed the excise increase as a step towards a volumetric approach
to alcohol taxation. It is however clear from the AER submission that
this is not true; AER suggests that a revenue neutral volumetric level of
taxation on RTDs would equate to a tax per standard drink of 47cents. In fact
the recent increase has raised the tax to $1.25.
Ironically
the tax level was closer to a revenue neutral volumetric approach before
the increase than it is now.
Other witnesses, notably those representing beer and wine
interests, highlighted the dramatic price changes across categories that would
stem from a shift to a pure, revenue neutral volumetric tax model. Australasian
Associated Brewers Inc provided modelling, verified by Access Economics, which
indicated the significant price increases beer and wine products would face,
compared with significant price reductions for spirit based categories under a
revenue neutral volumetric tax regime (see table 4).
Table 4 – Price
effects of volumetric taxation in dollar terms
|
BEVERAGE
|
CURRENT PRICE
|
VOLUMETRIC PRICE
|
+ / –
|
|
Spirits
(700ml)
|
$32.40
|
$20.40
|
–
$12.00
|
|
RTD> 7% (carton)
|
$72.03
|
$45.85
|
– $26.18
|
|
RTD< 7% (carton)
|
$72.03
|
$53.33
|
– $18.70
|
|
Wine (cask)
|
$15.14
|
$31.23
|
+ $16.09
|
|
Wine (bottle)
|
$11.81
|
$13.22
|
+ $1.41
|
|
Light Beer (schooner)
|
$2.92
|
$3.61
|
+ $0.69
|
|
Light Beer (carton)
|
$32.10
|
$35.90
|
+ $3.80
|
|
Mid Beer (schooner)
|
$3.34
|
$3.91
|
+ $0.57
|
|
Mid Beer (carton)
|
$30.15
|
$32.40
|
+ $2.25
|
|
Full Beer (schooner)
|
$3.85
|
$4.34
|
+ $0.49
|
|
Full Beer (carton)
|
$37.85
|
$39.02
|
+ $1.17
|
|
Premium Beer (schooner)
|
$5.01
|
$5.43
|
+ $0.42
|
|
Premium
Beer (carton)
|
$40.43
|
$41.53
|
+
$1.10
|
Source:
Submission No.34 (AAB), p.4.
Several witnesses indicated that a strictly volumetric
approach could be tempered by variations. DSICA posed the options of an
excise-free threshold, the phasing in of volumetric rates and, in particular, a
"series of tiered rates ...whereby lower content beverages are taxed at
lower volumetric rates."[48]
It is important to note however that even if a moderately tiered arrangement
were adopted in the future, the excise on RTDs recently imposed would be way
out of kilter with such a scheme.
Conversely, the excise imposed on RTDs would be consistent
with a volumetric approach if the Government were to lift overall taxation
levels on alcoholic products substantially. This may have health benefits but
is not part of any general strategy which has yet been spelt out to the
community. The Committee is conscious that the Henry Review might encompass
such options; Liberal senators trust there will be appropriate consultation
with affected industries and the broader community before such a move is
adopted as the Government’s policy.
Support of many health groups
conditional on Government's "follow up" with an across-the-board
volumetric approach – little evidence that this will occur
Although many health groups supported the excise measure,
their support was conditional that this was just one measure to address harmful
alcohol consumption of young people and should be part of a comprehensive suite
of measures such as volumetric taxation.
The AMA noted the focus on RTDs alone may provide 'perverse
incentives for young people to shift their preferences to potentially more
harmful behaviours or alcohol substitutes' and advocated:
Uniform application of a volumetric alcohol tax to ensure that
there are no incentives for people to shift their drinking preferences to
cheaper, but higher alcohol volume products.[49]
The AMA stressed that raising the excise tax on RTDs should not
be applied in isolation and a multi-faceted strategy should address controlling
supply and reducing demand.[50]
They further noted the 'RTD tax increase alone will not solve the problem and
it is simplistic to suggest otherwise'.[51]
Similarly, the Australian General Practice Network qualified
its position on the new tax:
To summarise our position, we do support the current approach,
although we would not support it if that was the end of it. We do support it if
it is part of a broader approach to risky behaviour with alcohol amongst young
people. We do support a volumetric approach and we would like to see, in that
approach, incentives to produce lower alcohol products. We also believe very
strongly that there need to be targeted strategies to increase the capacity of
the primary health-care sector in dealing with risky alcohol consumption.[52]
Professor Michael Moore of PHAA also struck a note of
caution:
We just described it as a first step and we continue to describe
it as a first step because, as we stated in our submission on the alcohol toll
bill, we believe that a comprehensive approach is critical. That comprehensive
approach should include pricing measures.[53]
Liberal senators saw scant indication of the broader prevention
and education measures which might be expected under such a multi-faceted
strategy. Officers of the Department of Health told the Committee that the task
force working on a preventive health strategy is not due to report for more
than a year.[54]
Lack of any present device to measure the ongoing success of this excise
increase
Ms Virginia Hart, Assistant Secretary, Drug Strategy Branch,
Department of Health and Ageing told the Committee during estimates hearings
that they were in the process of designing an evaluation for all components of
the binge drinking strategy and also the increase in excise.[55]
At the hearing the department reinforced that:
...the RTD excise is only one lever being used to tackle
adolescent binge drinking. We are in the process of now trying to devise an
evaluation to look at how all the initiatives that we have set out will
contribute to tackling binge drinking.[56]
No timeline for completion of an evaluation instrument was
provided. Liberal senators were disturbed to hear that no device was available
or was being contemplated by the Government to test its new tax’s
effectiveness. They further suggest that the blending of other anti-binge
drinking measures into the purview of an eventual evaluation instrument will
make isolating the success or failure of this measure even harder.
Evidence of sweetness as a "hook" for RTDs
Regarding the attractiveness of RTDs to young palates due to
their sweetness, Mr Broderick from DSICA told the committee:
I think the high sugar content is an assertion. I have not seen
any scientific data saying that the ready-to-drinks have higher sugar content
than any fruit juices or soft drinks. The most common component of the
ready-to-drinks is probably cola. I do not think they are artificially highly
sweetened for any devious purpose. This strawberry wine would be very sweet.
People could well migrate to that.[57]
DSICA later added:
A 375 ml can of Coca Cola has 39.8 grams of sugar compared with
33.4 grams in a 375 ml can of Jim Beam and cola, which is representative of
DSICA member pre-mixed products. That is, the 375 ml can of Jim Beam and cola
has 16% less sugar than the same size can of Coca Cola soft drink.[58]
Mr McShane supported this and stated:
Over 90 per cent of the ready-to-drink products in Australia are
actually served with cola, and those are cola bases which could carry similar
sorts of sugar levels and caffeine levels, for example, as a standard cola that
you would buy in a supermarket.[59]
Mr McShane also added that sweetness is not necessarily an
inducement to drink more:
There is a term that we use in the industry: ‘sessionable’. You
cannot drink too much sweet product because it just becomes sickly on the
palate, and so, in fact, sweetness is not necessarily an inducer. It can
actually be a negative. So excessive sweetness is not necessarily a good thing.[60]
Support by Australians for other strategies
Liberal senators note that Australians
polled by AIHW rate a number of measures to combat alcohol abuse well ahead of
increases in tax levels (see Table 5)
Table 5 –
Support(a) for alcohol measures: proportion of
the population aged 14 years or older, by sex, Australia, 2004, 2007
Source: AIHW 2007 National Drug Strategy Household Survey:
first results, April 2008.
Respondents listed "More severe penalties for drink
driving", "Stricter laws against serving drunk customers" and
"Strict monitoring of late night licensed premises" as their highest
priorities. These measures attracted support at about twice the rate of
"Increasing tax on alcohol".
Liberal senators are unaware of any moves by the Government to
address the alcohol-related measures supported by most Australians, even to the
extent of encouraging their colleagues in the state and territory governments
to contemplate action.
Conclusion
Given the evidence for the excise increase is not clear and
that there are potential negative consequences such as substitution, punishing
responsible drinkers, and potential industry job losses, the question of
whether the tax should proceed is problematic based on the evidence.
Liberal senators are not opposed in principle to strong new
weapons to attack the culture of alcohol abuse. Indeed they acknowledge that
such measures must be seriously contemplated by all levels of government, for
example liquor trading hours and the number of retail outlets need to be on the
table for examination. But any measure adopted must pass a basic test of
commonsense and adequately-researched efficacy. We remain concerned that this
has not occurred here.
We support close examination of a volumetric method of
alcohol taxation, or variations thereof, such as a scaled approach that gives
low alcohol products a market advantage. We are not however convinced that the
Government’s RTD tax is part of such a strategy.
Accordingly, Liberal senators recommend that the RTD
excise increase be reversed until the Henry Review
of Australia’s tax system has reported and a response devised.
| Senator Gary Humphries, Deputy Chair |
Senator Sue Boyce |
| |
|
| Senator the Hon Richard Colbeck |
Senator Simon Birmingham |
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