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Enough with the hysteria – it’s time for the facts on alcohol pricing

Newspaper readers have been whipped into a state of hysteria over incorrect reports that the Australian National Preventive Health Agency (ANPHA) is going to recommend to the Government that the price of alcohol be increased. None of the subsequent commentary has been more nonsensical and more extreme than The Courier Mail article Wine tax wowsers ruin life’s pleasures for us all’, published on Tuesday 16 October.

The title doesn’t exactly suggest that this article is going to present a balanced and evidence-based commentary on alcohol pricing, taxation and alcohol-related harms – and in that vein, the content of the article does not disappoint.

Dare I suggest that we add a little fact to the groundswell of people wielding pitched forks and fire torches at the prospect of changing prices to alcohol.

So at the risk of sounding like a ‘wowser’ from the pits of ‘hell’ – here are some facts:

The article states that: A government report says Australians drink too much and the solution is higher taxes on wine – in effect, prohibition by stealth.

FACT: ANPHA is developing a report on minimum pricing for alcohol. A minimum price would result in a minimum price for a standard drink of alcohol, below which no alcohol can be sold. The report on minimum pricing has not yet been released – so I’m not quite sure where this assertion came from.

The article states that: Now apparently the final report is almost upon us and will recommend a floor price on wine that will push the price of the cheapest bottle of cleanskin plonk to about $10, and a four-litre cask (which at Chateau Syvret is used for cooking and medicinal purposes only) to somewhere in the vicinity of $50.

FACT: The final report from ANPHA on minimum pricing for alcohol is not due until December and there is still a further consultation process that will occur before this report is even drafted.

However, while we are on the issue of pricing, let’s just stop and have a look at the price of a cask of wine. A four litre cask of wine contains 40 standard drinks – that’s twice as much alcohol as a bottle of vodka. This cask wine can be purchased for as little at $10 or 25 cents per standard drink.

This disparity makes this product and other wine products by far the cheapest form of alcohol available on the market. This has resulted in wine consumption increasing dramatically in recent years (suggesting that people’s purchasing is influenced by lower prices).

Now as much as the wine industry would like to have you think that this product is only consumed by pensioners – who drink responsibly – the invention of the game ‘goon of fortune ’ suggests otherwise.

The article states that: According to the logic of AMA president Geoffrey Dobb, the fact you can buy a four-litre cask of wine for as little as $10 encourages people to drink more because it’s so cheap. Right. So drinking is all about price point and nothing to do with having a thirst up on a Friday night after work, when you’re more likely to be in the pub paying up to $4 for a pot of beer anyway.

FACT: Price is a significant factor when people are deciding what to drink. This is why the consumption of wine (by far the cheapest alcohol product available) has increased so dramatically in recent years. This is also why you might go to the bottle shop planning to buy one bottle of wine and leave with six because the deal was just so good. FARE’s Annual Alcohol Poll consistently finds that price is second only to taste when people are considering what to drink – with 52% of people considering this in their purchase.

Is it the only factor that contributes to a person’s drinking? No.

Is it an important factor? Of course.

The article states that: And didn’t the tax on so-called alcopops (pre-mixed spirit drinks such as rum and cola) work a treat? Yes, jacking up the price of a six-pack of Bundy’s finest to over $20 did render it unaffordable for many young drinkers, who immediately solved the problem by buying bottles of raw spirits and mixing it up themselves.

FACT: Did the alco-pops tax work? Yes. While I see that this article has decided to run the well-worn line pushed by the alcohol industry, the evidence shows that the increase in the price of alco-pops resulted in a decrease in the overall consumption of alcohol.

The article states that: The problem with using the taxation system as a tool for social engineering is that the increases in tax are usually exceptionally regressive in that they are felt most acutely by lower-income households.

FACT: The demographics of drinkers are very different to the demographics of smokers. Unlike tobacco smokers, people who are more affluent spend more of their money on alcohol – not the other way around. So changes to alcohol taxes will not be ‘felt most by lower-income households’ – it will be felt most by people that drink the most alcohol and these people exist across all demographics and socio economic groups.

The article states that: With the massive increases in the tobacco excise in the past decade, one of the major results was not so much a dramatic fall in the number of smokers as a boom in the black-market trade for “chop chop” tobacco and illegally imported foreign cigarettes on which no duty had been paid.

What the Preventative Health Agency is proposing is in effect prohibition by stealth, lifting the cost of a quiet tipple to astronomical levels for those who can least afford it.

FACT: Again it’s important to clarify that ANPHA has not proposed anything to Government. But for the sake of a discussion – let’s just say that a minimum price was introduced.

If this were to occur, the only products that would be affected by the introduction of a minimum price at the rates currently being discussed, is wine. This is because wine is the cheapest product available – most beers and spirits are all taxed well above these proposed rates.

And changes to the price of wine aren’t necessarily a bad thing for the wine industry. This is why leading wine producers Treasury Wine Estates actually support changes to the way that wine is taxed, which would effectively increase the price of cheap wine. The masses of cheap ethanol being produced by some of these companies is not helping the image of the Australian wine industry, just like it’s not helping our health or our economy.

So let’s try to refrain from the doomsday talk of alcohol being so expensive that people will create a black market – because the reality is, it’s not what is being proposed.

And by the way, the ‘chop chop’ argument was a tobacco industry-inspired tactic to starve off the introduction of plain packaging.

Caterina Giorgi

Caterina is the Chief Executive of the Foundation for Alcohol Research & Education.


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