Tuesday, 03 January 2017
MRC Executive Director Nick Cater writes in The Australian:
Never mind the hangover. The misuse of alcohol is costing us “a staggering” $36 billion a year. So proclaimed a straight-faced presenter on the ABC, a staggeringly gullible organisation with a tendency to pluck ludicrous claims from press releases and broadcast them as fact.
The uncontested $36bn figure, promoted back in 2010 by an organisation now known as the Foundation for Alcohol Research and Education, has been repeated time and again by lobbyists, journalists and government agencies demanding tougher regulations and punitive taxes.
Indeed, FARE’s chief executive Michael Thorn cites the figure in support of his “no-brainer” solution to the budget deficit problem. The $6.5bn the government extracts from drinkers’ pockets is way too little, apparently, which is why FARE has commissioned a report showing the benefits of increasing the sin tax on alcohol by 145 per cent.
This “equitable and efficient” revenue measure would tax alcohol by volume, doubling the cost of cask wine while knocking $5 off a bottle of French champagne — FARE’s idea of fair, apparently.
Like the Anti-Saloon League that drove the campaign for prohibition in the US a century ago, FARE presents alcohol as an unmitigated evil. It exaggerates harmful consequences and ignores its benefits. Alcohol is presented as the sole agent of social problems that have complex multi-factor causes; restrictions on alcohol are presented as a panacea to solve a broad range of social problems from premature death to child abuse and domestic violence.
Zealotry alone is seldom enough to change public policy, however, which is why activist organisations adopt quasi-economic arguments to justify their illiberal demands.
They commission reports estimating the alleged cost to the welfare, health and justice systems. Intangible costs are loaded on such as the cost of family disruption; they impose a monetary value on pain, suffering, diminished quality of life and loss of life.
Stick them on a spreadsheet, add them up and — hey presto! — they produce a staggering figure.
The kindest assessment is that they are guesstimates; a harsher judgment is that they are simply conjured out of the air with the aim of delivering a headline. Incurious journalists under the pressure of deadlines too frequently oblige.
Last year the Menzies Research Centre commissioned Cadence Economics to stress-test the $36bn claim. The results are published this week.
The report on which the figure was based has never been published. When Cadence Economics asked for a copy, none was forthcoming. FARE did publish a report in 2010, The Range and Magnitude of Alcohol’s Harm to Others, which includes $20bn in social costs. But the authors of that report caution against simply adding up the component costs and warn of potential double counting.
The figure $36bn was misleadingly presented as a “cost to taxpayers” in press releases and submissions. Yet even if we take the figures on face value, few of the costs are borne by taxpayers or reflected as transactions that occur through the tax-welfare system.
Perhaps the biggest error is the failure to take account of the benefits of moderate alcohol consumption. Deloitte Access Economics estimates that in 2012-13 the alcohol industry turned over $26.2bn and generated $2.2bn in exports. It provided jobs for the equivalent of 27,000 full-time employees. When tourism expenditure and an estimate for the health benefits of moderate consumption are included, DAE calculated the benefits of alcohol to be worth $30.7bn.
Cadence concludes that any attempt to assess system-wide costs and benefits is doomed to failure. It requires the addition of inconsistent data metrics and introduces double counting errors relating to the timing of the impact of alcohol consumption.
So much for FARE’s boast to be a research body that “puts the facts at the forefront of discussion” and its mission to hold the alcohol industry to account and counter “false claims that threaten to undermine or delay evidence-based reforms”.
Activist not-for-profit organisations such as FARE pose as public-spirited, community-based groups, defending the popular interest against powerful organisations. Their true character, however, is often very different. Their professionally run, well-funded, co-ordinated campaigns have the capacity to destroy businesses and kill investment.
The activists campaign on overlapping single issues ranging from the environment to public health. For the most part they are virulently anti-market, sharing an antipathy towards the private sector and a preference for government intervention.
They have been empowered by social media, and often receive favoured treatment in the traditional media, where they delight in portraying themselves as independent champions of the powerless and dispossessed.
Gallingly, many of these groups receive direct or indirect funding from government. FARE, for example, has received more than $115 million in federal funding since it was founded in 2001. The funds were supposed to be spent on alcohol treatment, rehabilitation and education. Yet its role has since changed significantly.
FARE has abandoned rehabilitation in favour of “raising awareness” and become a public policy advocate explicitly focused on “building the case for alcohol policy reform and countering false alcohol industry claims”. Where it once encouraged the exercise of personal responsibility to curb irresponsible drinking, it now argues for government intervention.
Even if we were to accept the ridiculous claims of the anti-alcohol lobby, there is scant evidence that the policies they advocate would influence the behaviour of drinkers. Price and availability are blunt instruments to control consumption, particularly when a substance is potentially addictive. The restrictions would be felt by millions of Australians who drink in moderation.
In any case, the amount of alcohol Australians drink has been falling steadily for 40 years. The zealots will never tell you this, but we drink 25 per cent less alcohol than we did in 1975. The average Australian drinks less than half as much beer as they did back then. Wine and spirit consumption has been falling since 2008.
As Adam Smith observed in 1776, 12 years before the first imports of alcoholic drink into the Australian continent, “though in every country there are many people who spend upon such liquors more than they can afford, there are always many more who spend less.”
The MRC's report now available under 'Publications'