We’ll pay more so drunks may drink less

RECENTLY in this newspaper, Dr John Boffa urged Territorians not to “ignore the evidence on booze” and promoted the introduction of a Minimum Unit Price (or Floor Price) of a $1.50 per standard drink of alcohol sold in the NT.

The expert panel led by former Chief Justice Trevor Riley and the Gunner Government should be applauded for considering all possible measures (including Minimum Pricing) to reduce alcohol abuse which is a major problem in the NT. I enthusiastically support the majority of recommendations in the report.

The question is: will Minimum Pricing of $1.50 per standard drink effectively reduce some of the more visible and widespread alcohol problems in the NT?

Minimum Pricing has already been extensively examined at a Federal level and rejected. In 2014, the Australian National Preventive Health Agency, an independent, evidence-based Commonwealth body, recommended against its adoption by the Commonwealth Government, concluding that “it is very difficult for this policy to result in net benefit to the community”.

Likewise, in the UK, the Cameron government rejected Minimum Pricing in 2013. These decisions effectively rejected the argument of Minimum Pricing that potential public health benefits outweigh all other considerations.

The potential negatives associated with Minimum Pricing have been clearly identified. Moderate drinkers on lower incomes would be unfairly penalised. Minimum Pricing represents a windfall to the liquor industry with no direct community benefit through revenue raising to fund alcohol programs.

In the UK, the liquor industry would have pocketed between £700m and £2.2b a year. What it might be in the NT is a matter of conjecture.

Price resistance among those addicted to alcohol and drink in certain social settings has been reported in studies.

To be fair, there are also many studies that show the opposite. However, as many Territorians have put it, “Drunks will keep getting drunk no matter what the price”.

Considerable evidence of massive price resistance in the NT which would undermine Minimum Pricing cannot be ignored. Despite huge increases in tobacco prices over the past 40 years (4-5 times in real terms) both NT indigenous and non-indigenous smoking rates remain much higher than the rest of Australia (13 per cent). Unfortunately, indigenous smoking rates have remained over 50 per cent during this period – underlining price resistance.

The PAAC and Dr John Boffa point to the effects of the introduction of the Liquor Supply Plan (LSP) in Alice Springs in 2006 to back their claims that price increases would be extremely effective in reducing consumption in heavy drinkers in the NT.

From 2002 a number of restrictions were introduced including hotels serving only light beer until 11.30am and greatly reduced alcohol takeaway hours. In 2006, limitations on cask wine and fortified wine sales were introduced, including a limit of one 2L cask of wine per person per day – only available between 6-9pm.

Alcohol consumption fell by 18 per cent accompanied by positives including a decrease in alcohol-related hospital admissions. There was a shift from cask wine to full-strength beer, accompanied by an average increase in the price of a standard drink – since beer costs more.

Those recommending Minimum Pricing conclude that nearly all the reduced consumption was due to the indirect effect on price resulting from the physical restrictions in place. However, other effects on consumption due to the switch from cask wine to full-strength beer may have been underestimated – particularly the challenge of drinking a very large volume of beer compared to 2L of cask wine. Furthermore, many moderate drinkers might purchase heavy beer when shopping – rather than wait till 6pm to purchase their 2L cask of wine. Some tourists might not have purchased as much alcohol in Alice Springs for similar reasons.

There are no figures available about who contributed to the 18 per cent reduction in consumption. How much by moderate drinkers, by tourists who usually comprise around 14.5 per cent of the Central Australian population and most importantly – how much by the problem drinkers?

Despite suggestions to the contrary, I am well aware of the differences between Minimum Pricing and Volumetric Taxation on alcohol. Those differences are clearly shown in a recently published study from Monash University titled “Minimum Pricing of Alcohol versus Volumetric Taxation”.

This paper calculates average price rises in alcohol purchased by consumers at a Minimum Price of $1.50 as being about 37 per cent for table wine, 14.5 per cent for heavy beer and over 300 per cent for 4L cask wine. Prices remained relatively unchanged for most other products. This was a Melbourne study with low transport costs, heavy discounting and where 4L casks are still sold.

Obviously there will be differences for the NT including the fact only 2L casks wine casks are sold here.

Last week in a local bottle shop, three bottles of Baily and Baily Cabernet Sauvignon ($16 each) were discounted to $30. With 8.6 standard drinks per bottle and a Minimum Price of $1.50 per standard drink, one bottle could not be sold for less than $12.90 and three bottles could not be sold under $38.70

“It is very difficult for this policy to result in net benefit to the community”