“A significant part of the problem for the states is that the costs of treating people are rising – Australians are getting older, and more of us are living with a chronic illness such as cancer, diabetes or heart disease. Take the impact of obesity – nearly two-thirds of Australia’s adults are overweight or obese, and one in four of our children – and this number is continuing to rise. It is costing Australia $56 billion per year. A tax on fresh food might gain some extra revenue in the short term, but in the long run the healthcare costs of treating Australians will hit the budget even harder.”
James Lawler President of the Australian Medical Students’ Association
A few years ago, I was in Gapuwiak, a remote Aboriginal community in the Northern Territory. The population is about 1000 Yolŋu people, and there is a small grocery store in town which is supplied by a barge which comes up the river from Darwin once a week. If you want to buy a head of lettuce (which isn’t all that fresh), it might cost you $10. Alternatively, you can go next door to the takeaway shop and get some hot chips for a few bucks.
I was there as a medical student doing a brief placement with a fly-in fly-out doctor. The burden of disease in this community was enormous. Every patient I saw had some combination of diabetes, heart disease, kidney disease and unfortunately, many kids were either obese or had very high blood sugar levels.
There are a range of factors as to why our Indigenous Australians are more likely to die before their non-Indigenous counterparts, but in Gapuwiak, every health professional and many people from the community pointed to the lack of available fresh food as the single most important factor.
A tax on fresh food might gain revenue in the short term, but in the long term the healthcare costs of treating Australians will hit the budget even harder.
Amid a discussion about broadening the GST, there is talk of extending the tax to apply to fresh food, which would not only hit people in rural and remote communities hardest, but would be a false economy overall.
When Tony Abbott went on a retreat with state and territory leaders earlier this year, the main item on their agenda was a crisis in healthcare funding. The 2014-15 budget had significant cuts to future projected hospital funding, which the premiers agreed was not sustainable.
A significant part of the problem for the states is that the costs of treating people are rising – Australians are getting older, and more of us are living with a chronic illness such as cancer, diabetes or heart disease. Take the impact of obesity – nearly two-thirds of Australia’s adults are overweight or obese, and one in four of our children – and this number is continuing to rise. It is costing Australia $56 billion per year. A tax on fresh food might gain some extra revenue in the short term, but in the long run the healthcare costs of treating Australians will hit the budget even harder.
So let’s turn the discussion on its head – instead of taxing fresh foods, which keep people healthier and cost our health systems less, why don’t we tax the things which make them sick in the first place? For instance, let’s tax foods which are high in saturated fat, and high in sugar content – a “junk food tax”.
We know this approach works when it comes to public health, because we’ve been doing the same with tobacco for years. For the last three years, the Australian government has increased the tobacco excise by 12.5 per cent each year, with a final increase to occur next year too. That’s because sudden increases in the price of cigarettes is one of the best public health methods we have to convince smokers to quit – they reduce consumption, increase quit attempts and reduce the number of smokers overall. And the extra revenue gained from the tax increases goes back to the states to help fund their hospitals.
Philosophically, this works similar to a goods and services tax too – tax people on consumption. If a smoker disregards the tax increases and continues to smoke, then he’s more likely to end up in our hospital system with heart disease or lung cancer – his increased tax contributions will contribute to the enormous cost of his hospital visits, surgery and medication. However it would still be better off if he stopped all together – the government estimates that health-related tobacco costs are worth $31.5 billion dollars each year, while we only make a fraction of that in total revenue from taxes. Of course, to stop people smoking altogether, these tax increases need to be supported by other public health interventions to help smokers quit, and Australia has been a world leader in this regard – from the graphic health warnings on our packaging, a range of services to help smokers quit, advertising campaigns and of course our plain-packaging legislation.
All of this is good news for our potential junk food tax. Diet is probably the leading cause of the total burden of disease in Australia, even more than smoking. More than 90 per cent of Australians are not eating the recommended fresh vegetables, only half are eating enough fruit, and the statistics are even worse for young people. Poor diet leads to a range of chronic diseases which are expensive for our health systems to treat, including cancer, heart disease and diabetes. On the back of this, why would we increase the GST on fresh food, when we could place a tax on the foods that make us sick in the first place?
The political reason seems to be that it might be hard and unpopular. Denmark introduced a tax on high-fat foods in 2011, only to repeal it in 2012 after a fierce campaign from food industry groups amid calls of a “nanny-state”. Mexico’s tax on soft-drinks has barely remained intact despite attempts from its lower house of congress to dilute the measure. Both sides of the Australian government have previously ruled out a junk food tax, and when the Australian National Preventative Health Agency set up a feasibility study in 2013, it was dismantled by the new Liberal Government the following year. At the very least though, we could probably tax soft-drinks, given a survey from the Obesity Policy Coalition showed that nearly two-thirds of Australians would support such a measure, and you would assume that a government that planned to take the revenue from such a tax and use it for other public health measures or to treat patients suffering from related diseases could sway public opinion.
And herein lies my optimism. Both sides of government now clearly look ready to have a discussion about increasing the tax base – the Coalition wanting to increase the rate and base of the GST, and Labor seem willing to propose anything which is not an increase in the GST. Wouldn’t it be bizarre if both sides continued to oppose a tax on junk foods, which could raise revenue at the same time as it made us healthier? Surely that’s a tax that we can all get behind.
James Lawler is the President of the Australian Medical Students’ Association.