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Corrective taxes and chronic disease: Looking at alcohol

Reducing the burden of chronic disease is an Australian health priority, but the nation’s policy approach is lame and ineffective.

Arguably, under former Prime Minister Tony Abbott’s administration, tackling chronic disease was handicapped by the wholesale dismantling of Australia’s national preventive health program and an in-built bias against government-led intervention, including having applying tax driven solutions.

The demise of Abbott has been seen as an end to the politics of division, characterised by sloganeering, aggression and ideology. Only time will tell.

In the meantime, there is an opportunity to give serious consideration to meaningful public policy action that will address the challenge of chronic disease. Prime Minister Malcolm Turnbull has made it clear that he will not be positioned to rule policy options ‘in’ or ‘out’. This is a good start for evidence-based policy.

The burden of chronic disease is both wide and deep. It is costly to lives and wellbeing as well as to the budget and to taxpayers.

Chronic diseases are responsible for 83 per cent of all premature deaths in Australia[i] and 85 per cent of the total burden of disease,[ii] making it our nation’s greatest health challenge.

Conditions such as heart disease, stroke, heart failure, chronic kidney disease, lung disease and type 2 diabetes, are all too common in Australia, placing great pressure on our healthcare systems as they struggle to deal with the increasing flow of patients.

Dealing with these diseases comes at a $27 billion cost to the Australian community and accounts for more than a third of our national health budget.[iii] This equates to 36 per cent of all allocated health expenditure.

There are many factors contributing to this burden – too many to canvas in the space available here. Suffice to say, this is neither a challenge that is not understood, nor one without solutions.

The analysis of the burden of chronic disease and pre-mature death can be seen through different lenses. Either through the disease lens: cancers, cardiovascular disease, chronic respiratory disease and mental health conditions. Or through the lens of risk factors: drinking, smoking, sedentary lifestyle and obesity. Or a combination thereof.

Alcohol’s contribution to this burden is significant. Globally, alcohol is the fifth leading cause of death and disability, and third among the leading risk factors in developed countries after tobacco and blood pressure.[iv]

In Australia the consumption of alcohol has remained at about ten litres of pure alcohol per person a year for about 25 years – rising and falling over this period. We are currently on a slight downward trend, and below ten litres. Over the last 100 years Australia’s per capita consumption reached its peak of about 13 litres in the mid-1970s and a low of less than three litres in the 1930s.

The heaviest drinkers, the top ten per cent, consume 53.2 per cent of all the alcohol, 20 per cent of adult Australians are non-drinkers, and 50 per cent of drinkers account for as little as 6.9 per cent of overall consumption.

The patterns of drinking have changed markedly over time. Peak drinking levels in the 1970s were due to drinking by blue-collar men. But times have changed. Women’s drinking has increased (about six litres per year), people are living longer and sustaining their drinking, and rates of episodic drinking (binging) have increased. All behaviours which are contributing to increased health harms.

Each year, more than 5,500 people die and over 150,000 people are hospitalised from the consumption of alcohol.[v] Ambulance callouts where alcohol is the main cause are increasing, as are presentations to hospital emergency departments. We know that alcohol contributes to more than 200 diseases,[vi] including cancers of the mouth, throat and breast, as well as cardiovascular disease and cirrhosis of the liver.

Health Ministers have recently initiated work to develop a new chronic disease framework to replace the National Chronic Disease Strategy 2005, and early indications are this will be a protracted process. Critical in any new plan will be a need for a strong focus on prevention. Not to do so will be regarded as a major fail.

Chaos in Australian public policymaking over recent years has prevented recourse to the best policy buys, as recommended by the World Health Organization (WHO), for preventing and reducing health harms.

In alcohol’s case, like for tobacco and junk food, the best policy buys to prevent and reduce harm are increasing price, limiting availability and restricting marketing and advertising.

Price effects are best achieved through corrective taxes. The Commonwealth Government’s Reform of Federation[vii] process has importantly identified corrective taxes as a major policy option to address the economic externalities of the use of alcohol (costs beyond the drinker). As it should.

Taxation is important for the operation of the modern state and corrective taxes are a critical component of the overall suite of tax options available to governments. Corrective taxes are a useful because they offset economic externalities, raise revenue for services, nudge people to change harmful behaviours, and research shows they target the heaviest drinkers.[viii]

If price is the most determinative factor in the consumption of alcohol then the use of corrective taxes must be a ‘go to’ public policy option.[ix] Taxation, which targets alcohol, also has the benefit of being a cost-effective policy intervention.[x] It is cheap to enact and can be effected quickly. Contrast this with policies that target individual drinkers through costly public awareness campaigns or direct interventions by health professionals.

Overcoming chronic disease and reducing its burden will not happen overnight, but rational efforts to develop strong responses must focus not only on health and medical interventions but also on a strong preventive health agenda.

To this end the Public Health Association of Australia (PHAA) and the Foundation for Alcohol Research and Education (FARE) have launched Prevention 1st to put preventive health back on the political agenda.

One of the first policy responses must to be fix Australia’s incoherent system of alcohol taxation and thereby afford the opportunity to make a major contribution to reducing chronic disease through reducing levels of harmful consumption of alcohol. Adopting a sensible approach to the employment of corrective taxes as part of an overall suite of policy measures is absolutely essential.

Hopefully, Prevention 1st can play a role in achieving this aspiration.


[i] Australian Institute of Health and Welfare. (2010). Premature mortality from chronic disease. Bulletin no. 84.Cat. no. AUS 133. Canberra: AIHW.

[ii] IHME (Institute for Health Metrics and Evaluation). (2013). DALY estimates for Australasia. Retrieved from:

www.healthmetricsandevaluation.org. Cited in Australian Institute of Health and Welfare. (2014). Australia’s health 2014. Australia’s health series no. 14. Cat. No. AUS 178. Canberra: AIHW.

[iii] Australian Institute of Health and Welfare. (2014). Australia’s health 2014. Australia’s health series no. 14. Cat. No. AUS 178. Canberra: AIHW.

[iv] World Health Organization (2008). Issues paper: Strategies to reduce the harmful use of alcohol. 61st World Health Assembly adopts resolution on developing a global strategy. Geneva: WHO

[v] These figures do not include the burden of alcohol’s harm to others, which are extensive and are estimated to cost in excess of $20 billion annually.

[vi] World Health Organization. (2014). Global status report on alcohol and health 2014. Geneva. Switzerland.

[vii] Commonwealth Government (2015). Webpage: White Paper on the Reform of the Federation. Accessed at: https://federation.dpmc.gov.au/

[viii] Wagenaar, A.C., Salois, M.J. & Komro, K.A. (2009). Effects of beverage alcohol price and tax levels on drinking: A meta-analysis of 1003 estimates from 112 studies. Addiction. 104: 179-190.

[ix] Wagenaar, A.C., Salois, M.J. & Komro, K.A. (2009). Effects of beverage alcohol price and tax levels on drinking: A meta-analysis of 1003 estimates from 112 studies. Addiction. 104: 179-190.

[x] Vos et al. (2010). Assessing cost-effectiveness in prevention (ACE-Prevention) final report. University of Queensland, Brisbane and Deakin University, Melbourne.


This post was first published in the Consumers Health Forum of Australia journal, Health Voices, Issue 17, November 2015

Michael Thorn

Michael was was Chief Executive of the Foundation for Alcohol Research and Education (FARE) from January 2011 until November 2019

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