Alex McKin­non on the eco­nomic case for cannabis le­gal­i­sa­tion

The Saturday Paper - - Front Page -

On Oc­to­ber 17, gov­ern­ment-ap­proved re­tail out­lets in Canada be­gan stock­ing cannabis for le­gal recre­ational con­sump­tion. It’s proved a prof­itable move for the coun­try’s pro­vin­cial gov­ern­ments – that first day, the Nova Sco­tia Liquor Cor­po­ra­tion pulled in $C660,000 in new tax rev­enue. Five days af­ter le­gal­i­sa­tion, Al­berta made $C1.3 mil­lion.

South of the bor­der, where sev­eral states on the west coast of the United States have taxed le­gal cannabis sales for some time, the fig­ures are even higher. Cal­i­for­nia raised more than $US74 mil­lion from cannabis sales in the sec­ond quar­ter of 2018. In July last year, Colorado’s take passed $US500 mil­lion since recre­ational use was le­galised in 2014.

Aus­tralia is yet to see a state gov­ern­ment float the idea of le­gal­is­ing cannabis for recre­ational pur­poses. But fig­ures from the Vic­to­rian Par­lia­men­tary Bud­get Of­fice (PBO) sug­gest the pol­icy could gen­er­ate $136 mil­lion in tax rev­enue from cannabis sales in Vic­to­ria alone.

The fig­ures, re­quested by Vic­to­ria’s Rea­son Party, costed two pol­icy op­tions – le­gal­is­ing cannabis, as Canada has done, and de­crim­i­nal­is­ing per­sonal drug use en­tirely in the state. The party’s de­crim­i­nal­i­sa­tion pro­posal takes its cues from the Por­tuguese ex­pe­ri­ence, where drug pos­ses­sion and con­sump­tion have been de­crim­i­nalised since 2001 and ad­dicts have been di­rected to health and so­cial ser­vices, rather than to courts.

The PBO found that, to­gether, the two poli­cies would leave the Vic­to­rian bud­get nearly $350 mil­lion bet­ter off by the end of the 2021–22 fi­nan­cial year. “A re­duc­tion in jus­tice en­force­ment, preven­tion, pros­e­cu­tion, and le­gal aid ac­tiv­i­ties across the ju­di­cial and polic­ing sec­tors” would save the state more than $200 mil­lion, ac­cord­ing to the fig­ures.

The amount of money on of­fer would pay for some of the big­gest prom­ises made in the cam­paign so far, or at least give the next gov­ern­ment more funds to work with. The royal com­mis­sion into the state men­tal health sec­tor promised by the Vic­to­rian premier, Daniel An­drews, in Oc­to­ber will cost an es­ti­mated $13.2 mil­lion. La­bor’s promised re­de­vel­op­ment of Frankston Hospi­tal would cost $562 mil­lion by

2024. Op­po­si­tion Leader Matthew Guy’s sig­na­ture pay­roll tax cuts for re­gional busi­nesses would cost the bud­get more than $46 mil­lion a year, while his pledge to “fix crum­bling coun­try roads” would cost $1 bil­lion.

The cost­ings come in the midst of a Vic­to­rian state elec­tion cam­paign that’s been dom­i­nated by tough-on-crime rhetoric. De­spite the state’s fall­ing crime rate – which dropped more than 7 per cent in 2017–18 – an Ip­sos poll in Au­gust found crime was the most press­ing con­cern for 48 per cent of the elec­torate, far ahead of any other is­sue. Shadow po­lice min­is­ter Ed O’Dono­hue has called the elec­tion “a ref­er­en­dum on who can fix vi­o­lent crime in Vic­to­ria”.

Aided by fed­eral col­leagues, the Op­po­si­tion has lever­aged the is­sue of “African gangs” to paint the An­drews La­bor gov­ern­ment as “soft” on crime. Partly in re­sponse, the state gov­ern­ment has passed bail restric­tions and manda­tory min­i­mum-sen­tenc­ing pro­vi­sions that have sent the state’s prison pop­u­la­tion to record highs. In April, La­bor an­nounced a new 700-bed max­i­mum­se­cu­rity prison out­side Gee­long that will cost al­most $700 mil­lion to build.

Vic­to­ria’s le­gal fra­ter­nity has been with­er­ing in its as­sess­ment of the “law and or­der” elec­tion. On Wed­nes­day, the at­tor­ney-gen­eral, Martin Pakula, and his shadow, John Pe­sutto, faced a hos­tile re­cep­tion from the Law In­sti­tute of Vic­to­ria at the Mel­bourne Press Club. In­sti­tute pres­i­dent Belinda Wil­son said the restric­tions on bail had turned the state Mag­is­trates’ Court “into a 24-hour, seven-day-a-week op­er­a­tion”.

“We are now see­ing a sys­tem where the pre­sump­tion of go­ing to prison, as op­posed to get­ting bail, means our prac­ti­tion­ers are deal­ing with some very low-level of­fences and their clients are held in re­mand for ex­ces­sive pe­ri­ods,” Wil­son said.

And the com­plex and emo­tion­ally charged is­sue of drug abuse has been folded into the crime-wave nar­ra­tive. Data from Vic­to­ria’s Crime Statistics Agency shows that crim­i­nal of­fences as­so­ci­ated with metham­phetamine in­creased nearly 50-fold be­tween 2011 and 2016, mak­ing it the most com­mon type of drug cited in use and pos­ses­sion of­fences af­ter cannabis. In 2016, 5886 drug of­fences in­volved metham­phetamine. Ten years ear­lier, six of­fences did.

As tight­ened bail laws have taken ef­fect, peo­ple ac­cused of drug pos­ses­sion are spend­ing months or years be­hind bars be­fore hav­ing their cases heard. Nearly 10,000 peo­ple were charged with drug of­fences in 2014–15 – up from fewer than 7000 in 2010–11. Fifty-seven per cent of them were pros­e­cuted for drug use and pos­ses­sion.

That partly ex­plains the ex­traor­di­nary ex­pan­sion of Vic­to­ria’s prison pop­u­la­tion dur­ing the past two decades. Be­fore 1995, Vic­to­ria’s prison pop­u­la­tion had never ex­ceeded 2500. It now stands at more than 7000. In 2017, Vic­to­ria’s in­car­cer­a­tion rate was 113.1 peo­ple per 100,000 – the high­est it has been since 1896. A re­port from Vic­to­ria’s Sen­tenc­ing Ad­vi­sory Coun­cil found the state’s un­sen­tenced pris­oner pop­u­la­tion more than tripled from 2006 to 2016.

A de­vout Ro­man Catholic, Premier An­drews’ po­si­tion on drug pol­icy has been un­pre­dictable. In Jan­uary, he dis­missed calls to im­ple­ment pill test­ing at mu­sic fes­ti­vals af­ter a mass over­dose at a West Mel­bourne rave hos­pi­talised nine peo­ple.

Last year, how­ever, he re­versed his long­time op­po­si­tion to open­ing a trial opi­oid in­ject­ing room in Mel­bourne af­ter speak­ing with the fam­ily mem­bers and loved ones of peo­ple who died from over­doses. In Vic­to­ria last year, 220 peo­ple died from heroin over­doses, the high­est rate since 2000.

“To stub­bornly con­tinue with a pol­icy that’s just not work­ing, then that’s the wrong thing to do when there is an al­ter­na­tive, one that can save lives,” An­drews said dur­ing an an­nounce­ment of the trial last Oc­to­ber.

An­drews partly cred­ited Rea­son Party leader Fiona Pat­ten with his change of heart. Pat­ten told The Satur­day Pa­per that de­spite their philo­soph­i­cal dif­fer­ences, An­drews has been open to ideas he is first in­clined to op­pose.

“He has that great lead­er­ship at­tribute of be­ing able to change his mind in the light of new ev­i­dence and what the com­mu­nity says. When I first said I wanted to move a de­bate on as­sisted dy­ing, or cre­ate safe ac­cess zones out­side abor­tion clin­ics, or es­tab­lish the in­ject­ing room, his first re­sponse was, ‘No way,’” said Pat­ten. “On all three of those is­sues, he has moved. We pre­sented him with facts and com­mu­nity con­sul­ta­tion, and I was pleas­antly sur­prised that he came around.”

Pub­licly, the Vic­to­rian Lib­eral leader Matthew Guy has taken a hard line on drug pol­icy. He has pledged to shut down the Rich­mond in­ject­ing room trial, say­ing the fact users are al­lowed to in­ject metham­phetamine in­side makes it a dan­ger to the pub­lic. In April, he claimed that “ice and metham­phetamines are be­ing dis­pensed by the gov­ern­ment” and the cen­tre’s prox­im­ity to North Rich­mond Pri­mary School “leaves all those kids and the safety of that school ut­terly com­pro­mised”.

Ac­cord­ing to Pat­ten, though, many Lib­er­als on Spring Street are open to con­ver­sa­tions about de­crim­i­nal­i­sa­tion when the cam­eras are off. How­ever, she says the state elec­tion has em­pow­ered the party’s old-style con­ser­va­tives who see drug pol­icy as an is­sue of moral­ity.

“Pri­vately, I think a lot of Lib­er­als agree that it’s a waste of tax­payer money to be lock­ing up ad­dicts and turn­ing them into crim­i­nals. But I do worry that the Vic­to­rian Lib­er­als are lis­ten­ing to a smaller and smaller base of so­cial neo­con­ser­va­tives, and that Guy is be­ing led by that,” she said.

Pat­ten points to a sweep­ing in­quiry into drug law re­form that Vic­to­ria’s par­lia­men­tary com­mit­tee on law re­form, road and com­mu­nity safety conducted last year as ev­i­dence the gov­ern­ment can talk sen­si­bly about drug pol­icy – at least when there’s no elec­tion on. Au­thored mainly by La­bor and Lib­eral politi­cians, the in­quiry rec­om­mended that “the Vic­to­rian gov­ern­ment, while main­tain­ing all cur­rent drug of­fences in law, treat the of­fences of per­sonal use and pos­ses­sion for all il­licit sub­stances as a health is­sue rather than a crim­i­nal jus­tice is­sue”.

“When you’re in Op­po­si­tion, you’re dif­fer­ent to when you’re in gov­ern­ment. I hold hope that if Matthew Guy wins the elec­tion, he’ll be a more prag­matic leader than what we’re hear­ing now,” said Pat­ten.


For mi­nor par­ties, such as Rea­son, be­ing able to get their poli­cies costed at all is a re­cent de­vel­op­ment. In 2017, Vic­to­ria es­tab­lished the Par­lia­men­tary Bud­get Of­fice, al­low­ing Op­po­si­tion and mi­nor par­ties to in­de­pen­dently cost their own pro­pos­als with­out re­ly­ing on the gov­ern­ment-con­trolled Depart­ment of Trea­sury and Fi­nance or hir­ing ex­ter­nal con­sul­tants.

“It’s been just amaz­ing. It’s only been up and run­ning for about six months, so this is the first elec­tion we’ve re­ally been able to use it,” said Pat­ten.

“We could do back-of-the-en­ve­lope cost­ings or hire some­one be­fore but hav­ing an in­de­pen­dent body to do that work is an­other thing en­tirely.”

PBOs have given mi­nor par­ties the op­por­tu­nity to shift the de­bate on is­sues they cam­paign on by pre­sent­ing de­tailed pol­icy pro­pos­als to the pub­lic. In April, the Can­berra PBO found a fed­eral Greens pro­posal to le­galise recre­ational cannabis con­sump­tion would raise $3.6 bil­lion over four years. It was quickly dis­missed by both La­bor and the Coali­tion but hav­ing con­crete fig­ures gave the pro­posal weight in a way that would have been dif­fi­cult to achieve oth­er­wise.

While ty­ing sub­stance abuse to law and or­der is still stan­dard fare for state and fed­eral gov­ern­ments, mi­nor par­ties of var­i­ous ide­o­log­i­cal stripes have proved more re­cep­tive to do­ing things dif­fer­ently. Vic­to­rian Vote 1 Lo­cal Jobs MP James Pur­cell sup­ported the in­ject­ing room trial, cit­ing the suc­cess of the Kings Cross room in Syd­ney. “Le­galise it! Le­galise it and tax it,” Sen­a­tor Der­ryn Hinch de­clared in a Ra­dio 3AW in­ter­view in 2016.

As ju­ris­dic­tions over­seas be­gin count­ing their rev­enue, and the cost of law-and-or­der drug poli­cies con­tin­ues to climb, it re­mains to be seen if gov­ern­ments

• in Aus­tralia will take the bait.

ALEX McKIN­NON is Schwartz Me­dia’s morn­ing ed­i­tor, and a for­mer ed­i­tor of Jun­kee.

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