NEWSFLASH! In September I will join The Conversation as its Business and Economy Editor. I have been honoured to work at The Age for the past ten years, originally alongside the legendry Tim Colebatch, and for the past four years as economics editor in my own right.

At The Conversation, my job will be to make the best thinking from Australia's 40 univerisites accessible to the widest possible audience. That means you. From the new year I will also write a weekly column.

On this site are most of the important things I have written for Fairfax and the ABC over the past few decades. I recommend the Search function. The site is a record for you, as well as me.

I'll continue to post great things from The Conversation and other places here, and also on Twitter and Facebook. Enjoy.

Sunday, April 03, 2016

Hockey is wrong. It's time to tax soft drinks

The last civil exchange I had with Joe Hockey on Twitter was about soft drinks.

I had noticed that Mexico had just imposed a special tax on sugared drinks and asked the newly installed treasurer whether he would think of introducing one here.

He replied: "Why is your default more tax or more regulations to 'control' individual behaviour? How about the idea of personal responsibility?"

Two years earlier, he had had four-fifths of his stomach removed because he had been unable to control what he ate.

Personal responsibility is easy to speak about, hard to practise.

Sugar is one of the reasons.

It's not only turned into fat, but by manipulating the hormones insulin and leptin, it can turn off the feeling of being full. Dissolved sugar, in the form of soft drinks is far more damaging than sugar that's locked away in the fibres of fruit. It's instantly absorbed, and almost instantly makes us hungry again, dulling the receptors for the hormones that make us feel full.

One of the worst myths ever promoted by an industry association is that all we need is self-control. It's just a matter of counting calories. "All kilojoules matter, it doesn't matter where those kilojoules come from," is how the Beverages Council puts it. But some of those kilojoules drive hunger itself, making the very idea of self-control an exquisitely cruel joke.

Which is why Mexico taxed soft drinks. The investment bank Credit Suisse describes what's coming as sugar's "tobacco moment".

It says in the US the healthcare costs linked to type 2 diabetes amount to $US140 billion. The costs linked to tobacco are $US90 billion.

"If the sole objective is to reduce the consumption of full-calorie soft drinks, one does not need to reinvent the wheel," it says. "Tobacco and alcohol provide relevant test cases, and unequivocally show that, in both cases, taxation has been able to affect consumption on the downside."

Now Britain is following Mexico, treading where Hockey wouldn't.

Its treasurer, George Osborne, is part of a Conservative government that instinctively shares Hockey's reluctance to tax and regulate. Yet in his March 18 budget speech he overcame that reluctance to do what he could to turn the tide of obesity.

"You cannot have a long-term plan for the country unless you have a long-term plan for our children's healthcare," he told Parliament. "Experts predict that within a generation over half of all boys, and 70 per cent of girls, could be overweight or obese.

"I am not prepared to look back at my time here in this Parliament, doing this job and say to my children's generation: 'I'm sorry, we knew there was a problem with sugared drinks, we knew it caused disease, but we ducked the difficult decisions and we did nothing'."

From 2018 he'll tax sugared soft drinks at two rates: a high rate for drinks with more than 8 grams of sugar per 100ml, and a low rate for drinks with between 5 grams and 8 grams. Drinks with less than 5 grams won't face the tax.

He is delaying the start until 2018 to give the manufacturers time to reformulate their products. Some, such as Schweppes lemonade, are already below 5 grams and won't face the tax. Others, such as Sprite, are above it, but could be brought down to avoid the tax. Lucozade is just above 8 and could be brought below it to escape the highest tax. Pepsi and Red Bull contain an astounding 11 grams and will be harder to reformulate. But the manufacturers are likely to do what they can.

Should the tax be passed on to consumers? In Mexico sales of sugared soft drinks slid 6 per cent within a year. The UK Behavioural Insights team, Britain's "nudge unit", says just as important will be the signalling effect of the tax, the message it sends that sugared drinks are bad for your health and that there are alternatives.

There's every reason to believe it would work here. When Australia taxed unleaded petrol at a different rate to super, consumers switched. When we taxed carbon emissions, electricity providers switched. Prime Minister Turnbull gets it. "If you want people to do less of something, put up the tax on it," he is forever saying, usually in relation to something Labor is planning.

There's a chance we'll follow Britain, just as it might follow us on tobacco plain packaging. There's a chance we'll serve our children well.

In The Age and Sydney Morning Herald