Tuesday, June 10, 2014

Preventitive Health - Nanny State or Growth Strategy

The Australian breathlessly (pun intended) reported last Friday that tobacco plain-packaging laws had failed as cigarette consumption had actually increased.  The article relied on one market research study and anecdotal evidence.

Stephen Koukoulas on his blog pointed out that the core of the story was simply wrong...and to do so he relied upon the ABS National Accounts figures for sale of tobacco products. And quite frankly I'll take the ABS over InfoView.

Now there is the possibility that both are right - because another part of the claim is that additional excise on tobacco has simply moved people to cheaper brands - and so there could be an increase in volume together with a decline in dollar value sales.

But that argument has nothing at all to do with plain packaging!

The Kouk makes the equally valid point that if the plain packaging law was INCREASING tobacco sales rather than decreasing them, the tobacco industry would be wanting to retain them rather than eliminate them.  Yet this isn't the industry's behaviour.

But what is far more worrying is the follow-up story in The Australian on Saturday. Here Coalition backbenchers are reported to favour repealing this "Nanny State" law.  And this is where the poor thinking becomes important.

The question that they need to understand is why does any Government care about how many people smoke? And the short answer is because smoking costs the economy a lot. It costs the economy in two ways. The first is the cost of avoidable health care. And if you don't know the long drawn out respiratory conditions require a lot of hospitalisation and treatment. The second is in shortened life expectancy. The two biggest economic inputs are labour and capital; and despite the rhetoric of the "labour market" not all units of labour are the same. In particular people in later years have developed many useful skills, reflected in the higher incomes of older workers. Reduced effective working life from smoking is a major negative on economic output.

Alex Hawke is quoted as saying "I think our policy should be evidence-based and where governments get the best bang for their buck; that is on individual responsibility rather than big government."  The fact is that the plain packaging is exactly the kind of thing he should support.  It is a very low cost to Government (once introduced virtually free) and it is Government rather than the individual that gets most of the benefit. Admittedly there was a high implementation cost for industry and especially retailers. But that one off cost has occurred and is now sunk.

The second view comes from George Christensen who says "If we honestly believe that smoking is that evil, we should have the guts to ban it. If we don't feel that strongly about it, get out of people's lives." The two of them should really talk, because a ban is exactly the wrong policy because it has far higher implementation costs for Government. Bans are effective only to the extent they are enforced -as every prohibition movement - alcohol in early 20th century America and the war on drugs - proves.  And, of course, a ban really is the "Nanny State" intervention

So, in summary, discouraging smoking is good for the economy. Restrictions o the promotion of smoking - including advertising restrictions and plain packaging - are a low cost government intervention to support the economy. That's the sort of thing I thought the Coalition parties believed in.

PS It is worth noting at this point that the Abbott Government had a host of retreats on preventative health initiatives in the budget, notably abolishing the National preventative health advisory body and tearing up the preventative health agreement with the states.

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