Ideas@TheCentre
Minimum prices for alcohol
The term ‘nanny state’ gets a bad rap. Those who believe the state should protect people from themselves fulminate about this pejorative label. ‘But don’t you understand?’ they say, ‘we are helping people; “nanny state” is used by people who don’t care about others.’
But what is using the coercive power of the state to curtail potentially risky behaviour, if not nannying?
Nanny might soon be given another lever. The federal government is considering a recommendation from the National Preventative Health Agency (a new bureaucracy whose job is to recommend laws and taxes to prevent people from consuming alcohol, tobacco and fast food) to introduce a minimum sale price per standard drink of alcohol. Taxes aren’t working, apparently because competition (usually considered a virtue) has kept prices of some types of liquor low. Moreover, people are drinking too much! So a minimum price is being mooted to discourage drinking.
A minimum price regime, in effect state-mandated price fixing, would make liquor a more protected industry. It would encourage trade in illegal cheap alcohol, and would also be highly regressive. Low-income drinkers would have to spend an even higher portion of their income to have a drink. No doubt the minimum price would rise over time, as it became obvious that alcohol consumption had not been sufficiently reduced.
Minimum prices are blunt impositions that hamper the operation of entire markets. In the case of alcohol, they would penalise people who drink in safety and moderation.
Minimum prices are a woefully inadequate way to try and prevent some of the problems of excessive alcohol consumption such as violence and alcohol poisoning. People addicted to substances are the least affected by price increases.
At best there could be a slight reduction in harmful drinking (but at what cost to other drinkers?); at worst, those who are poor and have an alcohol problem will substitute liquor alcohol for meths or something even more dangerous.
This proposed policy fails on the grounds of equity, efficacy and the ‘do no harm’ principle. It won’t even be effective nannying.
Luke Malpass is a Policy Analyst with the Centre’s New Zealand Policy Unit and author of Alcohol Policy and the Politics of Moral Panic.
