How different might the Tax Forum have been if a “health in all policies” framework had been one of its driving forces?
The tax system is not only important for specific health issues, with tobacco and alcohol being the obvious examples, but also for how it can help shape the social and economic factors that influence health more broadly, and particularly health inequalities.
It seems, from comments below by Croakey contributors, that the forum was something of a lost opportunity from a health perspective, although the initiatives arising out of it, as outlined by political blogger Comitatus Possum, may offer some ongoing openings.
It’s ironic that in just a few weeks, we can expect to be hearing plenty about the importance of broader social and economic policies for health, thanks to a global conference aimed at building support for action on the social determinants of health. The WHO conference kicks off in Brazil on October 19.
So how could tax reform be used to benefit the community’s health, and particularly to address health inequalities?
Members of the Crikey Health and Medical Panel respond below (a separate post, to follow, will cover calls for a “fat-tax”, similar to that just introduced in Denmark).
An opportunity lost
Professor Mike Daube, Director, McCusker Centre for Action on Alcohol and Youth at Curtin University
The health voice was kept to an absolute minimum at the Tax Forum.
The Mental Health Council of Australia and the Australian Healthcare and Hospitals Association were there – but no AMA or other professional associations, no Public Health Association of Australia, no health policy experts, no Indigenous health organisations, no Cancer Council, no Heart Foundation, no organisations with specific expertise in alcohol, no DOHA.
There was clearly no understanding that health and tax issues are fundamentally linked.
The argument from health and related groups was not that change should happen instantly – but that the Forum was the appropriate place to start the discussion, and to start considering the detail of how an appropriate volumetric tax on alcohol might be introduced.
Credit to the participants who did manage to raise their concerns about alcohol tax, but it is clear that the Tax Forum will not bring about the new approach to alcohol tax recommended by the Henry Review – let alone the changes recommended by health authorities.
So we will continue to face an alcohol tax system generously described by Henry as “incoherent”, criticized not only by health and medical organisations but even the brewers and some major players in the wine industry, all because of what appears to be a concern to protect the cheap wine producers.
The arguments used by some wine producers to oppose a volumetric tax are truly remarkable. The Managing Director of De Bortoli wines, Darren De Bortoli, is quoted in the Financial Review as saying that the campaign by the NAAA (National Alliance for Action on Alcohol) “was ignoring the beneficial effects of moderate consumption”.
Even setting aside the growing evidence that any health effects of alcohol have been continually overstated, there are not many “beneficial effects” when drinkers are swilling wine from casks at $2 a litre.
It is instructive to compare the two relevant Ministers in the current government. Nicola Roxon has taken on Big Tobacco – arguably the world’s most lethal, ruthless and nasty industry.
She acted on the basis of health recommendations, stood up to the tobacco industry’s pressures and dirty tricks, and is delivering outstanding outcomes for the community. She also faced down the distillers over the alcopops tax, where she led for the government, and achieved an important and symbolic win over tough and powerful opposition. She is rightly being lauded as a winner not only in Australia but around the world.
Wayne Swan’s argument that action on cheap alcohol cannot be taken during a wine glut is not only illogical – the discredited Wine Equalisation Tax is contributing to the glut – but is losing the government a golden opportunity to set in place changes that will benefit the health of the community.
Tax summit misses opportunity to support Henry’s alcohol plan
Professor Ian Olver is CEO of Cancer Council Australia and a medical oncologist
Despite both the Henry tax review and the National Preventative Health Taskforce calling for the introduction of a tax system based on net alcohol content (volumetric tax), the Government has ruled out changes to alcohol taxation arrangements and did not want to discuss the issue at this week’s tax summit.
So the most problematic component of the current system, the Wine Equalisation Tax (which provides cheap wine at lower cost than bottled water) can’t be touched.
The reason, we’re told, is that Australia is experiencing a “wine glut”. It seems illogical that a “glut” should preclude excise changes, particularly in relation to a product that causes major population harms.
Yes, you wouldn’t increase tax on a rare commodity that provides important benefits and causes no harm. But a harmful product available in extraordinary abundance at low cost?
Surely this is the best opportunity to correct the inequity in Australia’s alcohol taxation regime.
More than 5000 new cancer cases in Australia each year are directly attributed to alcohol consumption; alcohol causes more cancer deaths in Australia than melanoma. The more you drink, the higher your risk of alcohol-related cancer. And it’s the level of alcohol content (the ethanol in alcohol) that conveys the risk. It’s also the alcohol content that causes all the other health problems linked to drinking.
Evidence shows that problem drinkers – i.e. those who are most likely to harm themselves and others through their consumption – generally favour products that provide maximum alcohol content at minimum cost. The tax system should recognise this and tax the product accordingly. After all, the whole community has to pay for the annual $15.3 billion in total social costs attributed to alcohol misuse, so the tax component of product price should be tied to the ingredient that does the harm – the alcohol content.
A volumetric tax on alcohol makes great economic and social sense.
The Australian Government stood up to the alcohol companies a couple of years ago when it closed the loophole on pre-mixed drinks targeting young people with its alcopops tax, and has shown great leadership on plain packaging of tobacco products.
It’s incongruent for the messy alcohol tax system to be off limits to a reformist Government that’s just hosted a tax summit, particularly when its leading economist, Dr Henry, has rightly called for a volumetric tax.
The evidence shows taxation is an effective public health intervention
Jan Barendregt, Assoc Prof of Epidemiological Modelling,School of Population Health, University of Queensland
From our ACE-Prevention study, looking into the cost-effectiveness of about 100 preventive interventions for non-communicable disease, it followed that in general population-wide interventions (including taxation and regulation) were far more cost-effective than individual targetted ones.
Based on that, it is likely that a tax on energy-intensive foods/drinks (possible augmented with a subsidy on fruit and vegetables) would be very helpful in curbing the obesity epidemic.
In addition, the current highly idiosyncratic tax system for alcohol is certainly due for overhaul, and replacement by a volumetric tax.
Remote areas could benefit from innovation in the taxation of foods
Professor David Atkinson, Broome
The key tax reforms to assist health are a volumetric tax on alcohol and overall increases in both alcohol and tobacco taxes.
Unfortunately the loud cries of bulk cheap wine producers and marginal seat campaigns in wine growing areas has prevented the implementation of one most useful way of reducing consumption of excess alcohol. A shocking example of our so-called democratic processes.
The cries to remove the exemption for fresh food on the basis that rich people buy more good quality fresh food is misplaced. From a health perspective we should be doing everything we can to encourage the consumption of more fresh food by everyone in our society and differential taxation is one of the tool we should be using. Introducing a ‘fresh fruit and veg’ GST sends entirely the wrong signal.
Taxing more heavily processed food or even ‘high fat, high refined carbohydrate and low fibre processed food’ is sensible from a public health perspective.
This latter tax could be used to subsidise locally produced and sold fresh food, reducing our ‘food miles’ and also transport for remote areas where fresh food is prohibitively expensive due to the cost of transport.
Paying tax is good for our health
Dr Rob Roseby, paediatrician
I believe there are many important things for the government to spend money on, and I am happy for them to do so.
We need governments to spend money to enable children to develop and grow to the best of their developmental potential, we need excellent hospitals and healthcare to provide for the sick, prevent illness and promote wellness, and we need to spend money disproportionately on those in society with disadvantage due to the bad luck of choosing the wrong parents, socioeconomic status, chronic disease, etc.
This and a whole lot more costs money, and I am happy for the taxation system to collect enough money for the government to spend what it needs to spend on our behalf.
So the first point is that paying tax is a privilege because we are contributing to a collective good, and paying less tax is not necessarily a good thing because it will necessarily mean there is less money for the government to spend.
My non-economist view is that the tax system should collect money in a manner which:
• Can be used to redistribute wealth (ie takes less from those less able to pay, and more from those with greater capacity to pay)
• Provides incentives for all sorts of things
• Many claim it is important that the tax system does not contain disincentives to work harder. Apologies for the double negatives, but this argument, which had a run recently in the US where there were protests against the so-called ‘Buffett-tax’, whereby the well-off were to pay more tax, contains something important. It is an acknowledgement that the tax system contains disincentives and incentives.
• Some of those incentives can be health promoting. For example, taxing cigarettes disproportionately encourages fewer people to smoke. Some incentives are health-harming, such as the fact that one can salary package a car with a tax-incentive to use it more (I have never understood this) but one cannot salary package a bicycle.
• I have no problem with the tax system providing incentives to reduce pollution, increase exercise, eat better, quit smoking, drink less alcohol etc. The question of whether or not it is the right tool to achieve such objectives is legitimate. The expense and complexity to make the tax system do these things may be too great, but we know incentives work for a lot of things.
Tackle the waste caused by “non-attenders” in public hospitals
Professor Guy Maddern, surgeon, Adelaide
The recent focus on tax and how it could be restructured in order to better serve the community is a welcome initiative.
If one considers, however, the healthcare system currently in place in Australia, the obsession with providing free health care to every Australian has become a mantra that is costing the community far too much in wasted resources.
In particular, the problem of non-attendance at outpatient clinics by appointed patients and, worse still, failure to attend for elective surgical procedures is a scandal which receives little publicity.
It appears that because treatment in the public sector is free many patients feel it costs nothing to provide. Nothing could be further from the truth.
The waste in outpatient clinics of non-attenders is a minor scandal, but the considerable waste of resource for patients who up to one or two weeks prior to planned admission to hospital have committed to surgery and then on the day failed to attend is a huge drain on the public health system.
Initiatives need to be put in place to make patients accountable for their actions, particularly when they commit to surgery and then fail to attend. Solutions that could be looked at would be a deposit placed at the time of making a commitment to attend for surgery which would then be forfeited unless an adequate reason could be produced.
Obviously illness, family bereavement or the need to care for a relative would be appropriate but simply wishing to go shopping, forgot or decided to take a holiday would be considered unacceptable and would lead to forfeiture of the deposit. Such an initiative remains contrary to the Medicare rules and regulations.
It seems that the Government is more obsessed with maintaining an ideology rather than conducting an efficient use of taxpayers’ dollars.
Access to free health care is every citizen’s right within Australia but access to wasteful squandering of resource is no-one’s prerogative.
Some form of incentive or punishment needs to be introduced to ensure that the community values the outstanding public healthcare system we all enjoy.
We should not be looking to increase taxation to support inefficiency but rather supporting efficiency to improve performance.
Statement from the Australian Healthcare and Hospitals Association
The Tax Forum can play a key role in reforming Australia’s tax system to ensure our public health and hospital system are sustainable over the long term, according to the Australian Healthcare and Hospitals Association (AHHA).
The AHHA is the independent peak membership body and advocate for the Australian Public and not-for-profit health sectors and national voice for universally accessible, high quality healthcare in Australia.
“A sustainable and fair tax system is the foundation of a sustainable and fair health system,” Ms Prue Power, Executive Director, Australian Healthcare and Hospitals Association, said today.
“Australia’s health system is facing many challenges due to the ageing of our population and the increasing cost of health care worldwide. If we are to continue to provide high quality care, accessible to all in the community, we need to ensure that out public health system is adequately resourced.
“AHHA supports the principles of Medicare as a universal health insurance program. We believe that Medicare is a major reason why Australia is able to keep our health costs at around (or just below) the OECD average while achieving higher than average health outcomes. Medicare and our public health system give Australians great value for their health dollars.
“However, Medicare’s values of fairness and equity are under threat on a number of fronts. These include the failure to fund adequate oral health care and the steady increase in co-payments making even basic health care unaffordable for some.
“AHHA proposes some key changes to ensure Australia has a strong public health system for the future. These include:
- Including oral health in Medicare, funded by an increase in the Medicare levy, in a phased approach beginning with children and adult concession card holders;
- Means-test the private health insurance rebate (as proposed by the Government) and direct the saved funds to the public health sector;
- Increase taxes on alcohol and tobacco in order to reduce the harmful health and social effects of these substances on the community;
- Superannuation reforms, including incentives to take up annuities instead of lump sums and a review of the spouse superannuation offset; and
- Changes to pensions which increase access to key health services, such as podiatric surgery.
AHHA welcomes the opportunity to provide input into the Tax Forum and urges the Government to work together with stakeholders to develop a healthy tax system for Australia’s future,” Ms Power said.
In the wake of two days of tax and transfer discussions, ACOSS is calling for the Federal Government to set out a clear agenda for tax reform in the national interest.
“We congratulate the Government for staging the National Tax Forum, which despite some cynicism, was extremely worthwhile. But the Commonwealth needs to outline a clear path for the next phase of tax reform in the areas of vital importance to the Australian community,” said ACOSS CEO, Dr Cassandra Goldie.
“There was widespread agreement – from community to business, academia, environment groups, and others – on the need to secure our future revenue base, tackle income tax shelters, and make superannuation fairer.
“ACOSS was particularly heartened by the broad acknowledgement that income support allowances, notably Newstart Allowance, is simply not enough for people to live on and should be increased as recommended by Henry.
“This was widely agreed on, not just by community groups but also unions, academics, and economists like Judith Sloan from National Seniors Australia. Researcher Peter Whiteford told the forum the Newstart benefit has shrunk so much relative to living costs that the cheapest capital city accommodation leaves a person with just $16.50 a day to live on.
“ACOSS does not support the Treasurer’s view that every single expenditure, especially Newstart Allowance, has to be linked to savings. Government’s prioritise spending in every budget and we think policies to ease the worst poverty should have a high priority.
” ACOSS believes that an increase in Newstart can be funded almost immediately by Government action to close business loopholes and shelters that we estimate cost at least $20 billion in forgone revenue every year. This compares to around $1 billion to fund an increase in Newstart by $50 a week – which would help lift scores of struggling people out of the worst forms of poverty.
“ACOSS rejects any talk of a supposed welfare payments blowout as completely overblown. Commonwealth figures show that the proportion of people of working age relying on income support has declined in the past decade, and as Professor Whiteford explained, Australia spends less in social security than the average of the rich nations in the OECD.
“We were disappointed the Treasurer did not make any reference to securing more affordable housing through the tax and transfer system, which was another area of wide consensus. We simply must tackle the biases in the tax system that favour speculative investment in housing and other assets, which inflate home prices and add to cost of living pressures.
“Whilst ACOSS welcomes the announcement by the Treasurer of the independent tax advisory board, we believe it is essential that both the board and the new business tax working group include representation from the community and unions as well as business.
“Tax reform isn’t just about business interests. This was well demonstrated by the Tax Forum itself where the diverse interests represented helped to sharpen the debate. The government must ensure that diverse representation continues.
“The tax and transfer system is the engine room of the country. It must be used to guarantee the things we all want – namely, adequate income for all, including post working life, affordable housing, and a greater sense of fairness and equality for all Australians,” Dr Goldie said.
For more Tax Forum reading:
Ken Henry’s speech covered, amongst other things, the importance of informed debate and included this nugget:
Good policy outcomes are much more difficult to secure where
visionary ideas, big challenges and creative approaches are
floated for the first time in the announcement of a policy
decision. A better outcome will usually be achieved when the
visionary idea is so well accepted that it seems banal; where
the challenges are so broadly accepted that everybody is
worried sick by them; and when approaches to dealing with
those challenges appear merely natural.