All the evidence (eg) shows that increasing the price of harmful substances is the best way to decrease their use and, particularly, their abuse. Minimum pricing is one effective measure to do that for alcohol. But John Key disagrees. Based on … nothing. He hasn’t even taken the time to understand what minimum pricing is.
Here’s Key showing he doesn’t actually know what minimum pricing is:
“Does it mean a supermarket couldn’t loss-lead … or does it mean that there’s actually a minimum price for a unit of alcohol?”
It’s the latter, John. But one of its effects is the former.
Now, this is where, in Key’s own words he reveals that with respect to his financial literacy, he doesn’t have any. He says minimum pricing doesn’t work (remember, this is the thing he has just said he doesn’t understand) because:
“What typically happens is people move down the quality curve and still get access to alcohol”
Um. John, the point of minimum pricing is that moving down the quality curve no longer means moving down the price curve. The minimum price is set at the level above what is currently the dirt-cheap, ethanol plus sugar cost.
And, here’s where Key really shows he doesn’t understand basic economics, minimum pricing doesn’t increase the price of alcohol above the minimum, so why would it force consumers to drink lower-quality booze – the good stuff hasn’t got more expensive and the crap stuff is no longer as cheap.
Honestly, I don’t know why people listen to the guy with the worst growth and debt records in New Zealand history as if he is some kind of expert on economics. He doesn’t have a clue.
Or, maybe there’s a reason he’s spouting bullshit. Fonterra. It produces a whole lot of surplus ethanol as a by-product of its production. A lucrative by-product. That stuff ends up as the alcohol in those dirt-cheap RTDs.
It would be interesting to know what kind of communications Fonterra has had with the Government over alcohol pricing.
I have to admit, I was pretty skeptical of minimum pricing – it seemed like wowserism. But, having taken the time to look at the research, it seems like a well-targeted measure to reduce alcohol abuse. And reducing alcohol abuse, the research shows, is the big low-hanging fruit left to improve health and living conditions for those on low incomes, and to reduce crime.
That’s the thing about informed decision-making. Sometimes it reveals that your knee-jerk reaction was wrong. It would be nice if National would try it now and then.