No minimum price for alcohol

April 25th, 2014 at 2:00 pm by David Farrar

Judith Collins announced:

Justice Minister Judith Collins has received the Ministry of Justice report, The Effectiveness of Alcohol Pricing Policies.

The report considers options for a minimum pricing regime and the possible costs and benefits.

Ms Collins says the Government will not be introducing minimum pricing on alcohol as this would hit moderate drinkers in the pocket when there is no compelling evidence that increasing the price of alcohol is the correct approach.

The Government will allow time for the new alcohol reforms to bed in and to assess their impacts, including the development and implementation of Local Alcohol Policies which are likely to take up to two years to come into full effect.

Ms Collins says the Government’s changes to the Sale and Supply of Alcohol Act aimed to strike a sensible balance to curb the harm of alcohol abuse without penalising moderate drinkers.

“New Zealanders who drink responsibly and moderately should not be unfairly targeted. Introducing a minimum pricing regime would see alcohol companies earn around $131m extra a year at the $1.20 minimum price point,” says Ms Collins.

The alcohol companies will be hoping Labour wins office as their former spokesperson, Lianne Dalziel, demanded that there be a minimum price of $2 a standard drink. This would mean it would be illegal to sell a bottle of wine for under $15 a bottle.

No UK minimum alcohol price

March 17th, 2013 at 7:00 am by David Farrar

The Telegraph reports:

Sources have confirmed that the Coalition will not attempt to implement the Prime Minister’s plan for a 45p per unit minimum price.

Is that all? Labour MPs here were talking $2 a stand drink minimum price!

Mr Cameron had argued that making drinks more expensive would curb problem drinking, while several ministers argued that the minimum price would only serve to penalise responsible drinkers. The minimum price was also opposed by the Treasury, where officials argued that it would reduce tax revenues at a time when the public finances remain strained.

One Treasury source described the Prime Minister’s plan as “a remarkably stupid idea”.

Government insiders suggested the Chancellor is considering using the Budget to impose higher taxes on some drinks and argue that doing so will address problem drinking.

There is an interesting debate about the merits of minimum pricing vs excise taxes. Our current excise tax regime is lopsided and not all alcohol is taxed at the same rate.

A spokesman for the Wine and Spirit Trade Association said: “Minimum unit pricing would penalise responsible drinkers and treat everyone who is looking for value in their shopping as a binge drinker.”

Yet it is Labour and Green party policy. Beware.

Shearer indicated he does not support minimum pricing for alcohol

September 12th, 2012 at 12:57 pm by David Farrar

From the online chat. This is very significant, as Labour’s Justice spokespersons Lianne Dalziel and Charles Chauvel has constantly advocated for minimum pricing. Dalziel has insisted it should be at least $2 per standard drink (making it it legal to sell or buy wine for under $16 a bottle) and Chauvel has moved amendments to provide for minimum pricing.

Sounds like their own leader doesn’t agree with them. God knows how anyone is meant to work out Labour’s position on alcohol issues!

Crampton on minimum prices

July 11th, 2012 at 7:57 am by David Farrar

Eric Crampton blogs:

Last week, anti-alcohol advocacy group Alcohol Action NZ put out a press release where the University of Otago’s Jennie Connor was quoted:

“A recent Canadian study has shown that a 10% increase in the minimum price of alcohol reduces its consumption by 16% relative to other drinks”.

Eric did something very unusual then.

I got in touch with one of the authors of what has to be the study to which she’s referring

Chris Auld reported that the -1.6 price elasticity figure indeed only refers to a measure of own-price elasticity. Except it isn’t quite own-price elasticity. Because the estimation technique doesn’t correct for substitution effects, it combines the own-price elasticity with cross-price elasticity from other products. 

Eric then starts quoting formulas which will turn off neurones in most people, but they are there if you want to read them.

Chris also confirms that the -0.34 estimate is the one that best reflects the expected effects of an across-the-board price increase like minimum pricing

That means a 10% increase in prices would reduce consumption by 3.4%. Eric concludes:

Jennie Connor really should retract her press release or issue a correction. It leads people to believe that a minimum price will have far more effect on harmful drinkers’ consumption than can be supported by the evidence. Otherwise, how much weight should anybody place on any “fact” claimed by Jennie Connor in her press releases?

But to show he is balanced (and Eric is one of those guys who is all about the facts), he sides with Ross Bell of the Drug Foundation over John Key re the impact of minimum pricing on the quality of drink. But he also corrects Ross on a couple of things also. A post well worth reading.

Labour split on minimum pricing

July 7th, 2012 at 9:40 am by David Farrar

Stuff reports:

There are rumbles within Labour over MP Charles Chauvel promoting a minimum pricing regime for upcoming alcohol law changes as party policy.

TVNZ reported Labour had the numbers to pass the minimum pricing regime but it appears Mr Chauvel may not have all his colleagues on board, let alone the crucial votes of United Future and ACT.

That is because Labour is treating the changes as a conscience vote and several of its MPs oppose minimum pricing.

Will they vote against Chauvel’s amendment.

It is interesting that they are trying to say the amendment is a Chauvel amendment, not a Labour amendment. The problem is that Chauvel is their Justice Spokesperson, so amendments from him are not seen the same as amendments from a junior backbencher.

My challenge to every MP who votes for the minimum price amendment, is to be as courageous as Lianne Dalziel was, and state what you think the minimum price should be.

Labour in retreat

July 6th, 2012 at 12:00 pm by David Farrar

The Herald reports:

 Labour MP Charles Chauvel is calling for a minimum price on alcohol, but there is no consensus among his party about what that price should be.

This is trying to have your cake and eat it to. It is like a party announcing their taxation policy and saying “Oh we favour taxes going up, but we won’t tell you to how much”. A minimum pricing policy with no detail on what they want the minimum price to be, is not credible.

Before the 2011 election, Labour MP Lianne Dalziel argued in the House for a $2 minimum price per standard drink in Parliament. She said this would bump up the price of the $6 bottles of wine which young women “pre-loaded on”, while not affecting a $15 bottle of wine.

National has argued that this would mean no bottle of wine – which usually contained 7 to 8 standard drinks – could be bought for less than $16.

Ms Dalziel’s office yesterday said that the MP used the $2 threshold as an example, and it was not Labour policy. It was up to the Justice Minister to decide on the threshold, and if minimum pricing was voted on in the House, Labour MPs would vote individually on it.

Crap.  Here are her exact words:

we should set a minimum price that would prevent wine from being sold for less than $2 for a standard drink

Does that sound like an example? It is a clear statement of what the minimum price should be.

This was not a one off. Labour’s spokesperson has been very consistent. At the first reading in 2010 she also said:

The priority is to increase the price of dirt-cheap alcohol, and that is why I am arguing for minimum pricing. I refer to the $5.99 bottles of wine. At that price, three young women can buy five bottles of wine to preload on, rather than buy two bottles of very good wine for the same price. The ones who buy five bottles of $5.99 wine are the most price-sensitive buyers. They are the ones who will change their behaviour when prices go up. Do not let anyone tell us that it will do otherwise. That is the reason for a minimum price per standard drink. The $2 per minimum standard drink price would not touch a $15 bottle of wine. That would stay the same price, but it would slightly more than double the price of the $5.99 bottle of wine.

It would touch the $15 bottle of wine. My Central Otago Pinot Noir is 14%, which for 750mls is 8.3 standard drinks. That would mean a minimum price of $16.60. I generally avoid the $6 bottles of wines, but you get many good wines for $11 or so, and Lianne is advocating they increase 50% in price.

I hope that MPs in Parliament will not let Labour get away with their policy of saying we believe in minimum pricing, we want to pass a law to enable it, but we will not tell you what the minimum price should be. Labour should be honest and tell New Zealanders what they think the minimum price should be.

Maybe it is even more than $2 a standard drink?

How much should we pay for a drink?

July 5th, 2012 at 3:03 pm by David Farrar

In my Herald column I write about Labour’s proposed minimum pricing for alcohol.

Labour seem very reluctant to confirm what minimum price they are actually advocating. Lianne Dalziel twice stated in Parliament it should be at least $2 a standard drink. Her colleagues seem to want to ignore that, as seen below.

You can’t have it both ways and have your MPs get up in Parliament and say the law should be this, and then deny that is your policy – especially when the MP is your spokesperson on alcohol issues.

A reader sent me this graphic, which sums it up.

More usefully, Eric Crampton has an excellent analysis of minimum pricing. He states:

What would the world have to look like for minimum alcohol pricing to be a reasonable policy solution?

Suppose it is the case that harmful heavy drinkers, the sort that impose the greatest harms on others when they consume alcohol, really don’t care about the quality of the alcohol they’re drinking; they’re buying whatever product provides alcohol at the lowest price per standard drink. Suppose further that this cohort’s consumption is reasonably responsive to price measures: if you raise the price of the cheapest form of alcohol, you’ll do a lot to curb that cohort’s consumption while not doing much to reduce the normal consumption of moderate drinkers. Finally, assume that there’s little overlap between the kinds of alcohol consumed by harmful drinkers and that consumed by moderate low-income drinkers.

So minimum pricing is a good idea Eric says, if the above holds true.

where both heavy drinkers and moderate drinkers are choosing the same kinds of products, albeit in different quantities, we have to worry a lot about how each kind of consumer responds to changes in prices. The best meta-study on the topic remains Wagenaar, who found that heavy drinkers are roughly 60% as price responsive as moderate drinkers: the price elasticity of demand among heavy drinkers is -0.28 while it’s -0.44 for average drinkers. If we doubled the price of lower cost products, which we’d have to do to get to Labour’s preferred $2 minimum price per standard drink, moderate drinkers who currently choose that class of product would cut back their consumption by about 44% while heavy drinkers would reduce their consumption by only about 28%.

Intuitively you would expect heavy drinkers to be less price sensitive.

Labour’s $2 a standard drink policy

July 3rd, 2012 at 10:00 am by David Farrar

Charles Chauvel announced:

 Labour is seeking to toughen up the Government’s proposed alcohol law reform by proposing amendments to allow for minimum prices to be set and to give more clout to local government when licensing decisions are made.

I blogged last November that Labour’s policy is to have a minimum price of $2 per standard drink.

This power, if properly exercised, will put an end to $6 bottles of wine being sold in supermarkets. 

It will put an end to not just $6 bottles of wine, but $10 ones, $12 ones and $15 ones. Labour would make it illegal for a bottle of wine to be sold for less than $16.

I prefer measures that target problem drinkers, not those who sock hundreds of thousands of responsible drinkers also.