Calls to raise 'sin taxes' ignore complexity

Katherine Rich.
Katherine Rich.
An article appeared in The Weekend Mix of August 17 about the effect lobbyists are having on public health. Katherine Rich, chief executive of the NZ Food and Grocery Council, and Dr Eric Crampton, chief economist with the New Zealand Initiative, respond.

Katherine Rich

Sir David Skegg has had a long and esteemed career in academia and leadership, but his suggestion to the Otago Daily Times that the only reason successive governments have not adopted additional food, alcohol or other public health "sin" taxes and other public health interventions is due to industry lobbying does not accord with reality. His claims appeared in your feature entitled "Up to no good - the lobbyists deciding health policy" (17/8/19).

Sir David believes that someone must be to blame for ministers not adopting public health advocates' ideas as formal policy and that the "monster under the bed", so to speak, is the food industry.

Having watched such official decision-making processes quite closely for the past 20 years both in Parliament and outside, it's not that simple.

It's more likely to do with the quality, practicality, efficacy and likely popularity of such policies championed by public health advocates.

If I summarised the range of policy demands made over the past 10 years, many were never going to work in real life. Many calls were impossible to implement without creating major market distortions and would have hurt the poor the most through higher grocery prices.

And there has been a long list of demands. For example, over the past few years, public health experts have called for taxes on sugar, salt and fat levels.

Taxes have also been suggested on beef, lamb, cheese and milk in the name of climate change.

Public health campaigns have also called for additional taxes on other supermarket products that are already significantly taxed, such as wine and beer. Even bread has been in their sights. And it beggars belief that there is no pause for even a moment's empathy to imagine the impact on the public from taxes on products such as honey, jam, Marmite, cheese, fruit juice, chocolate and ice cream, which another Otago researcher once listed out as "Needn't Foods".

Though neatly debated in university workshops, it's hard to believe there is little or no recognition of the impact such increases would have on the grocery bill for families. The belief that New Zealanders can be taxed slim might be supported by many in public health, but few economists agree. Nor do many others.

So what are the most likely roadblocks? I suspect it's more likely to be major party politicians' awareness of the limited public tolerance for intervention in their lives and their sense of what's workable and what's not, rather than food companies countering official advice.

Because of their public-facing roles, most political leaders understand the wider community impact of making people artificially poor by imposing even more taxes on food and the limitation of taxes to change behaviour. Remember that unlike many other countries, New Zealanders already pay 15% on staple foods, making taxes a major component of the week's grocery bill.

Long-serving political leaders also develop a strong sense of what is possible in terms of policy, and recognise that so many ideas sincerely proffered by academics would be soundly rejected by voters.

Sir David made a lot of assertions about what he believes the New Zealand Food and Grocery Council does, including "They are lobbying all the time".

I'm not sure why he thinks he has detailed knowledge of our work, but this is not correct. Speaking with ministers is a rarity indeed. Perhaps an explanation is necessary.

We are an industry association for people who make consumer goods that are sold in our supermarkets. As Sir David rightly notes, "the name of the council makes you think of things like soap". We do indeed have members who make soap - and shampoos and other personal goods, and beer, bread, beverages, cheese, nappies, milk, fresh and frozen fruits and vegetables. We have around 250 members, who make everything from fresh to frozen, staples to treats.

As an industry association we work on a wide range of projects important to a vibrant food and grocery industry. We do this mostly through groups that work on topics such as health and safety in factories and supermarkets, talent and diversity programmes to encourage positive career paths for young Kiwis, exporting and small business initiatives to grow markets overseas, and on health and regulatory issues by way of submissions in response to government public consultations. We have a couple of groups looking at the issue of the wet wipes and waste water at present, and another working on the efficacy of sunscreens. We champion reformulation to reduce salt, sugar and fat where possible, help members with food labels, their implementation of the Health Star rating, and often assist with food recalls, food safety, Customs and biosecurity issues.

FGC working groups have on them volunteers with a working knowledge of each area. For example, our health and regulatory working group is made up of experts in nutrition, manufacturing, food law and food safety, and they provide important input to policy development through public submissions. These are on our website.

In many cases our members provide expertise that is not otherwise available to government officials working hard to develop effective and implementable policy to ensure, among other things, that our food and grocery supply is safe and sustainably produced.

Those in public health have expertise that is vital to the development of policy, but it's important to recognise there are other areas issues such as packaging, tax policy, economics, advertising and food manufacturing that they are not necessarily skilled in.

Finally, Sir David was correct that the FGC has spoken against sugar taxes and other topics. I have popped up from time to time to rebut or correct misinformation. Mainly, I have shared independent sales trend information about countries where such taxes have been implemented, such as Mexico.

I have shared accurate sales figures that show sales bounced back within a year and consumer prices of all drinks rose, including water.

Apart from extracting an enormous amount of money from the public, sugar taxes have not worked anywhere in the medium to long term. In New Zealand there have been far more successful interventions such as reformulation and consumer education.

This is why our country is way ahead of Mexico in terms of consumers switching to low and zero-sugar drinks.

And long may that trend continue.

Dr Eric Crampton.
Dr Eric Crampton.
Dr Eric Crampton

Superhero movies have had something of a comeback over the past decade, seeming to be one of the surest ways of generating a decent box-office take. But tropes of noble heroes and venal villains are not the best way of understanding the world. And they do us a specific disservice when they cross over into newspaper reporting.

Last weekend, Bruce Munro wrote a fantastic story of sugar tax heroes and villains in the Otago Daily Times' magazine.

The heroes are the crusading public health research activists, who have only noble intentions and know sugar taxes will do all manner of good. The shadowy villains on the other side - paid lobbyists - thwart the crusaders' vision of a healthier country.

If only things were that simple.

My opposition to sugar taxes had me cast among the villains in the article. Otago University's Sir David Skegg noted that I have been rather vocal about sugar taxes recently, and implied that my opposition has pecuniary motivation: I am chief economist with the New Zealand Initiative, a think-tank whose member-funders consist of many of the country's top companies, including Coca-Cola and the supermarkets.

Our members are listed on our website and are hardly secret.

But neither Mr Munro nor Sir David bothered to mention any of the substantial concerns raised across the columns and interviews they cite as damning me.

If they had bothered to read those columns, they might have noticed that the tallying of heroes and villains is more complicated than they like to pretend. In January 2018, the Ministry of Health released to me, after an Official Information Act request, a report it had commissioned from the New Zealand Institute for Economic Research (NZIER).

The ministry had asked the NZIER to review the past five years of published literature on sugar taxes and to gauge their effectiveness.

Having received the report in August 2017, the ministry then sat on it - an election was under way, and the ministry needed a minister to receive the report before releasing it publicly.

The NZIER report - which was, again, funded and commissioned by the Ministry of Health - reached the same conclusion as previous work by the Initiative. The NZIER concluded methodologically rigorous studies on sugar taxes "report reductions in intake that are likely too small to generate health benefits", and any benefit of those reductions could easily be swamped by consumers shifting to other sources of sugar or calories.

The NZIER also weighed heavily research under way at Waikato University by Prof John Gibson, my former Canterbury University colleague.

His work on sugar taxes, supported by the Royal Society's Marsden Fund, shows that many estimates of consumer responsiveness to sugar taxes are simply incorrect. Prof Gibson gave a superb presentation on this work when he was awarded a well-deserved Distinguished Fellowship with the New Zealand Association of Economists in 2017.

Further Ministry of Health documents provided under the OIA included a presentation by the Ministry of Health titled "Sugar Tax: Why we still don't have one".

There, the ministry noted: "There is no evidence that sugar taxes reduce obesity or obesity-related illness." While the presentation did not note any industry pressure influencing the ministry's position, it did point to "pressure in NZ from health academics" and the media.

Overall, the NZIER report and the set of papers released under the OIA showed a different picture from Mr Munro's tallying of heroes and villains. Where Sir David suggests only shadowy interest groups oppose Otago public health's crusade for sugar taxes, we find instead a Ministry of Health sceptical of the merits of sugar taxes, and a ministry-commissioned report that lends substantial weight to that scepticism.

I have summarised the NZIER report and the ministry documents in columns and interviews over the past year. When the Ministry of Health's then-chief science adviser, Dr John Potter, provided the Prime Minister with two pages of bullet points in support of sugar taxes, and forgot to mention that the ministry had only two weeks earlier released the NZIER report reaching the opposite conclusion, I noted that as well.

It seemed a rather underhand attempt to mislead the Prime Minister.

Universities are meant to be places where ideas can be contested in the pursuit of truth.

When public health academics convince themselves that only the shadowy workings of lobbyists can explain why their ideas have not been implemented, and ignore any piece of evidence that does not fit their world view, it becomes difficult for them to pursue truth.

Superhero tropes where valiant public health crusaders battle evil vested interests may sell movie tickets and newspapers.

But they do not help us to understand, let alone fix, real world problems.


How ironic that Skegg should accuse the food industry of 'lobbying', while at the same time indulging in yet another bout of lobbying-via-the-credulous-media.

The evidence is unequivocal: sugar taxes not only do not work but actually hurt the people they're supposed to help. That public health lobbyists are unable or unwilling to accept this illustrates why their area has long been the poor step-child of medicine.

What do Katherine Rich and Eric Crampton make of the meeting with Bill Birch? If his demands were not due to lobbying, what else are they attributed to?

Prof Skegg is right, and Rich and Crampton are diluting the influence of the food/sugar/alcohol industry lobby into public health outcomes. Part of the 'education' advocated for consumers has to include an understanding of this lobbying that Rich and Crampton are downplaying.

From the consumers' perspective, it's not just the individual products, but includes understanding the industries behind them. If the products are truly harmful, the industry doesn't want the consumer to become sufficiently educated to realise that, because they wouldn't sell as much.

Try "A Fat Lot of Good" by Dr Peter Brukner.

The biggest killer of mankind has been health "experts" pushing the carb food pyramid down everyone's throats for the last 40 years. The harmful myth that you can exercise your way to thin-ness. The pyramid has been inverted. The experts have been exposed.

First, do no harm.

Whoever coined the word 'sin' should be told secular puritanism is out. This is the impulse that condemns single mothers and seemingly 'obese' people.