BERL responds
July 7th, 2009 at 12:19 pm by David FarrarI’m pleased to see that BERL have responded to some of the criticism of their report concluding the cost of alcohol abuse in NZ was close to $5 billion a year.
Treasury have apologised to BERL for some of their comments, on the basis that BERL were not asked to do a full cost/benefit study. In that regards, it is fair enough that BERL not be criticised for working to their brief.
However as someone interested in public policy, there are real questions abotu why Government agencies both commissioned something that was not a full cost benefit study and further why it was promoted by such. The research was being treated as gospel, and we now know it was research only looking at costs without benefits.
BERL have said Crampton and Burgess made some mistakes in their analysis, and Crampton has blogged that yes there were two mistakes. However they only add $36 million onto the costs. And as it happens they had also missed out the portion of excise tax collected by Customs which increases external benefits by $197 million. This means that their original figure of a net cost of $146 million is now a net benefit of 38 million. That is close enough to zero – in other words the current excise taxes cover the external costs of alcohol, and there is no case for increasing them.
I hope suitable scrutiny will be directed towards other research reports which do not look at both benefits and costs, and get used by lobby groups and government agencies incorrectly.
Roger Kerr makes some good points in a recent column:
Liquor is in many ways not special. Hundreds of products – matches, detergents, electricity, pharmaceuticals, motor vehicles and firearms, for example – cause problems if misused.
Nevertheless, there are external social costs, such as drink driving, which give rise to legitimate concerns.
The challenge for policy is to target these problems with effective interventions (and enforcement of existing laws), not to penalise with regulations or taxes the vast majority of responsible drinkers.
As one commentator has noted, “Raising taxes on alcohol to prevent problem drinking is akin to raising the price of gasoline to prevent people from speeding.”
Absolutely. Too often the Government goes for the easy approach which pubishes everyone equally, rather than target those causing the problem.
The Law Commission needs to engage with this analysis and follow the Generic Tax Policy Process for any recommendations on tax.
Similarly, it should follow the required Regulatory Impact Statement process for any recommendations on regulations in its forthcoming discussion paper.
That process requires a demonstration that the benefits of any recommendations or regulations exceed the costs. Competent analysis requires benefits and costs to be quantified, not just asserted, otherwise serious public policy errors could be made.
It is highly unlikely that proposals to restrict liquor outlets, for example, would meet a cost-benefit test.
I agree. They won’t stop problem drinkers getting alcohol but will make it harder for most people to buy alcohol conveniently.
Instead, the Law Commission should focus on ways of internalising the external costs of alcohol abuse.
For example, why should those who injure themselves in an alcohol-fuelled assaults or burglaries enjoy generous ACC benefits? Many foreigners would regard such treatment as ludicrous. Will Sir Geoffrey Palmer, one of the ‘fathers’ of ACC, be open-minded enough to look at such an obvious remedy?
Similarly, if we are willing to confiscate the vehicles of boy racers, why should we not confiscate the vehicles of serial drink drivers?
Target the offenders, don’t try and social engineer the entire population.
July 7th, 2009 at 12:28 pm
From the original BERL report, page 9:
“Any illegal drug use is assumed to be harmful, reflecting the absence of evidence for the non-medical health benefits from the consumption of illegal drugs”
They did pretend to look at benefits, before dismissing them.
Vote:July 7th, 2009 at 12:36 pm
Roger Kerr is awesome. Does anyone know if he has a mailing list for all his publications?
Vote:July 7th, 2009 at 1:08 pm
Ruby, I think if you subscribe to ‘updates’ at http://www.nzbr.org.nz/ you should get what you are after.
Vote:July 7th, 2009 at 1:17 pm
“Target the offenders, don’t try and social engineer the entire population.”
Sounds like the current approach to child abuse and domestic violence, continuing under National.
Vote:July 7th, 2009 at 1:27 pm
We do confiscate the vehicles of serial drink drivers – section 129 and 130 Sentencing Act – so that is covered. Next!!!. I am happy to make the stuff illegal and classify it as a class B drug.
Vote:July 7th, 2009 at 1:32 pm
Will, yes, BERL certainly did consider benefits all over the place.
More examples from BERL’s report:
…health benefits due to drug use are explicitly excluded from the scope of the study. This is due to the absence of rigorous evidence for health benefits from the consumption of illegal drugs, and contentious studies regarding the health benefits of alcohol (p. 29)
Any illegal drug use is assumed to be harmful, reflecting the absence of evidence for the non-medical health benefits from the consumption of illegal drugs (p. 93).
We assume that it is irrational to drink alcohol to a harmful level and that harmful alcohol use has zero private benefit. (p. 173)
Expenditure on alcohol used in a harmful fashion, including these later taxes, is arguably not matched by an equivalent private benefit (fn 107, p. 105)
all illegal drug use is assumed to be harmful and consequently has no private benefit (p. 173)
Why BERL considered benefits at all is a mystery – but little wonder there is has been so much confusion over what they actually did.
Vote:July 7th, 2009 at 1:36 pm
“Target the offenders, don’t try and social engineer the entire population.”
Of course this should apply to all substances, not just Booze.
Vote:July 7th, 2009 at 2:59 pm
The new generation of intelligent cars coming down the line will be sufficiently to exercise their right to self preservation (I Robot Car) by closing down if the self drive system determines it is being over-ridden by a drunk or druggie.
Remember Hal in 2001?
On the other hand it could be wired to enhancing the gene pool by driving full speed into the nearest wall.
I RoboCar will not need to sense your breath or anything it will be able to determine your general incompetence to drive by testing your reactions. Could also close down and instruct you to take a nap.
Vote:July 7th, 2009 at 3:17 pm
“However as someone interested in public policy, there are real questions abotu (sic) why Government agencies both commissioned something that was not a full cost benefit study and further why it was promoted by such.”
The answer is fairly obvious, I would have thought. The Ministry of Health and ACC both have vested interests. An inflated “costs only” figure masquerading as net costs gives such agencies an ability to advocate for higher product taxes and Accident Compensation levies. It matters not to them that such increased imposts fall unfairly on the majority of people who do not abuse alcohol.
Pressures on the state to increase taxes and levies on its citizens must always be questioned and constrained. We should therefore be grateful to Crampton, Burgess and others who are prepared prepared to interrogate and challenge questionable research and its use for public policy advocacy.
When might we expect to hear amended recommendations from the Law Commission?
Vote:July 7th, 2009 at 3:25 pm
“For example, why should those who injure themselves in an alcohol-fuelled assaults or burglaries enjoy generous ACC benefits?”
It’s a beguiling argument, but what is the alternative? If someone injures themselves in the course of an illegal act, do we say “Sorry” and send them home to cope with the pain (and possible disability) as best they can? I’m sure many here would support that idea, but I’m also sure many doctors would have ethical problems with that. Or, if there’s a cutoff, then which injuries get treated and which do not?
Vote:July 7th, 2009 at 4:03 pm
Repton
ACC doen’t only cover expenses directly related to an injury. I agree that the state is stuck with this for the foreseeable future.
ACC also pays out a percentage of a person’s income (80%?) until the person can resume work.
I assume it would be possible for ACC to cover direct medical costs for injuries sustained in the course of committing a crime, but not provide any other assistance. If the law was changed.
Vote:July 7th, 2009 at 5:23 pm
ACC is meant to be an insurance program. If the government decides as a matter of social policy that it’s a good thing to pay the costs for folks who injure themselves while drunk, then that should probably come out of the general account rather than out of ACC. Unless, of course, ACC is allowed to start charging premiums that correlate with risk. Given the uproar about charging less for folks with safer cars, I’m not optimistic.
Vote:July 7th, 2009 at 5:57 pm
Owen McShane 2:59 pm Says:
“On the other hand it could be wired to enhancing the gene pool by driving full speed into the nearest wall.
I RoboCar will not need to sense your breath or anything it will be able to determine your general incompetence to drive by testing your reactions.”
I trust you’re not suggesting that if the driver is determined not to achieve the required level of competency that ‘Hal’ would automatically drive “full speed into the nearest wall”. This result may please Winston Peters by solving what he considers to be an ‘immigration problem’ from certain countries. Of course it may also have the unfortunate by-product of seriously reducing the fairer half of the current driving population.
But otherwise, bring it on I say!
Vote:July 7th, 2009 at 7:58 pm
Bring on Rodney Hide’s Regulatory Responsibility Bill. Be interesting to see if National are prepared to face down the resistance to it in some state service quarters – these have correctly wised up to its implications to their vested interests in socially engineered societal outcomes.
The Prime Minister seems to be a supporter of the Bill- be interesting if his support holds up. If it doesn’t, then it’s life as usual under National
Vote:July 7th, 2009 at 9:49 pm
What the hell is Treasury apologising for? Do they think BERL is some sort of god who can bring thunder and lightning on Earth?
Vote: