Coalition, Labor reject tax on sugary drinks

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By Leith van Onselen

In a paper released yesterday, the Australian Medical Association (AMA) called for a tax on sugary drinks in a bid to reduce Australia’s obesity problem. However, both the Coalition and Labor rejected the call. Here’s the AMA’s view via 9News:

“You wouldn’t dream of putting 15 teaspoons of sugar in your tea or coffee,” AMA president Doctor Michael Gannon told 9NEWS today.

“But that’s what is hidden inside these drinks”…

“Sugar is being consumed by many Australians (and) is making them unhealthy,” Dr Gannon said.

“There is potentially a great value in the deterrence that taxation will afford.”

And here’s the response from the Coalition, via The AFR:

“We do not support a new tax on sugar to address this issue,” a spokesman for Health Minister Greg Hunt told AAP on Sunday.

“Unlike the Labor party, we don’t believe increasing the family grocery bill at the supermarket is the answer to this challenge.”

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And here’s Labor’s response, via The New Daily:

Federal deputy opposition leader Tanya Plibersek too conceded the federal government should help tackle the “obesity epidemic” in the country but stopped short of supporting the tax.

“We don’t have a plan for sugar tax at the moment,” she told reporters in Sydney on Sunday.

The arguments for limiting sugar in beverages are strong.

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The Grattan Institute’s report entitled A sugary drinks tax Recovering the community costs of obesity showed that more than one in four Australian adults are classified as obese – up from one in ten in the early 1980s – whereas 7% of Australian children are now obese:

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In addition to personal costs, Grattan showed that obese people receive more healthcare than other people, with taxpayers funding most of the costs of those services at a cost of around $5.3 billion in 2014-15:

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Grattan also estimated that about 10% of Australia’s obesity problem is due to sugar sweetened beverages.

In a similar vein, Credit Suisse’s October 2013 report, entitled Sugar: Consumption at a crossroads, showed clearly that Australia has one of the highest sugar consumption rates in the world, clocking in at more than double the world’s average:

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It also showed that Australia is one of the most obese nations on earth:

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And that there is a direct link between sugar consumption and soaring health costs, with over 86% of doctors from around the world agreeing that sugar is linked to the development of obesity, type II diabetes, and non-alcoholic fatty liver:

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Moreover, the costs of diabetes on our health systems is particularly high:

“Diabetes type II is now affecting close to 370 million people worldwide, with one in ten US adults affected by it. The costs to the global healthcare system are a staggering USD 470 billion according to the most recent estimates from the International Diabetes Federation, and represent over 10% of all healthcare costs. In the USA alone, the healthcare costs tied to diabetes type II are estimated at USD 140 billion, compared to USD 90 billion for tobacco-related healthcare costs. even more worrisome is that these numbers are growing at a rate of 4% a year, much faster than for obesity (1-2%). By 2020, the annual cost to the healthcare system globally will reach USD 700 billion and the people affected will be close to 500 million…”

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Regular readers will know that I support measures to limit sugar in beverages, although I recognise that they are by no means a panacea.

In my opinion, there also needs to be a complete overhaul of Australia’s dietary guidelines, including Australia’s Health Star Rating System, which too often ignores the prevalence of sugar and the level of processing while demonising natural saturated fats.

The key focus of Australia’s health authorities should be to simply encourage Australians to avoid packaged and processed foods in favour of natural whole foods.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.