Call for sugar tax leaves a sour taste

January 23, 2018
JUDITH SLOAN
The Australian

Contributing Economics 

The Australian Medical Association is commonly described as the most powerful trade union in the country. I beg to differ.

For one thing, the AMA is not a registered trade union; there are other organisations representing the industrial interests of doctors. And, second, it has done a particularly lousy job of restricting the supply of new doctors, a key tactic of a trade union to bolster its power.

Consider the number of students commencing medicine. In 2002, there was a total of 1837, ­including 367 international students. Note that many international students stay in the country after graduation.

In 2017, the total had swollen to 3853, with 642 international students. In other words, the number of students commencing medicine more than doubled over that period. 

To be sure, the population also increased over that time frame. But if we consider the number of practising doctors per head of population, the ratio increased from 2.6 doctors per 1000 people in 2002 to 3.9 in 2015. This is an increase of 50 per cent. 

So if the AMA has failed to restrict the number of new doctors entering the market, what is it up to? If you care to look at the AMA’s annual reports, you will find very many photos of the ­organisation’s activities under the heading “Advocacy”. There is also a list of the AMA’s key advocacy wins during the year.

The range of issues on which the AMA advocates is wide and varied: from climate change to asylum-seekers, from domestic ­violence to obesity. 

In point of fact, the Labor Party would be very proud to put out the AMA’s publications. The contents closely mimic many of the ALP’s policy concerns and ­actions.

It’s probably unsurprising that less than 30 per cent of medical professionals are actually signed-up members of the AMA, and there is a disproportionate number of older members aged over 50 years. This does not bode well for the future of the organisation.

So let me outline the AMA’s advocacy stance on obesity, which it describes as “the biggest public health challenge facing the Australian population”.

The ­revised AMA position statement calls on the federal government “to take national leadership in implementing a multifaceted strategy to address the serious health threat that obesity poses to individuals, families and communities”.

The statement continues: “Combating obesity demands a whole-of-society approach, and the AMA strongly recommends that a national strategy to address obesity includes: a sugar tax; stronger controls on junk food advertising, especially to children; improved nutritional literacy; healthy work environments; and more and better walking paths and cycling paths as part of smarter urban planning”.

So among all this gobbledygook there is the strident suggestion that a sugar tax be introduced. To be sure, it is not only the AMA that is advocating this measure, the details of which are yet to be worked out. The idea is backed by an outfit called the Obesity Policy Coalition, which is funded by the Victorian government, as well as a number of left-wing media commentators.

Let’s be clear: the figures on the incidence of obesity in Australia are alarming. On one set of figures, the proportion of Australians who are obese has risen from 19 per cent in 1995 to close to 30 per cent now. Rising obesity is found among both adults and children. 

So why wouldn’t we follow the lead of a number of other countries and regions by introducing a sugar tax? This typically takes the form of a tax on sugar-laden beverages that is generally high enough to noticeably increase the price of the product.

In some instances — in Britain, for instance — the tax rate depends on the sugar content of the product.

But here’s the thing. If we look at sugar consumption in Australia, it has actually fallen very significantly over time, particularly among children. Between 1995 and 2011-12, for instance, the consumption of sugar fell from 17.6 teaspoons a day to 14.2. (2011-12 is the most recent data point from the Australian Health Survey conducted by the Australian Bureau of Statistics.)

And here’s a further thing: the decline in the consumption of sugar among children (two to 18- year-olds) was even more dramatic: from 23 teaspoons in 1995 to 15.7 in 2011-12. 

Note also there was a 36 per cent decline in the consumption of sugary soft drinks over that ­period. The two product categories the consumption of which rose were sugar-laden yoghurt and flavoured milk drinks/milkshakes/smoothies — both promoted for their health benefits.

This is surely a conundrum for the advocates of a sugar tax, including the AMA. The consumption of sugar goes down, including sugary soft drinks, but the rate of obesity goes up.

It is a case of twisted logic to think that putting a regressive tax on sugary soft drinks — a bigger burden for those on low incomes — would make any real difference to obesity, particularly among children. It would seem that parents understand the message for their children and are mostly ­offering them water to drink. 

In fact, the Grattan Institute, another advocate of a sugar tax, estimates that sugary soft drinks account for only one-tenth of obesity in Australia. The introduction of a sugar tax could lower the average weight of obese individuals by half a kilo and reduce the rate of obesity by 2 per cent.

Whatever the reasons behind the rising incidence of obesity, it seems pretty clear that the consumption of sugar is not the most important factor.

What about the excise tax on cigarettes as an example of a successful sin tax? The distinction here is that smoking is clearly correlated with poor health outcomes and taxing cigarettes to reduce the incidence of smoking should have clear health benefits. (Mind you, governments count on reasonably inelastic demand because they are keen to receive the revenue.)

On the other hand, the causes of obesity are clearly multi-factorial, something that even the AMA acknowledges.

To include a sugar tax as part of a suite of measures would be a mistake, both because of its likely ineffectiveness and the potential neglect of other measures.

Mind you, it’s hard to get too excited about more government-funded cycling paths as part of the solution, another AMA thought bubble.

The AMA should stick to its knitting (whatever that is) because public policy advocacy is clearly not its strong suit.