Friday, 16 March 2012

The Alcohol Industry - A case study of health versus wealth

Nat O'Connor: The recently completed (Feb 2012) Steering Group Report On a National Substance Misuse Strategy has taken a public health approach to the issue of alcohol, and it estimates the costs to Irish society of dealing with alcohol abuse to be €3.7 billion. At the same time, the alcohol manufacturing and retail industry provided €2 billion in VAT and excise to the State, as well as 50,000-60,000 direct and indirect jobs.

There’s just no way to reduce the €3.7 billion of social harm and retain the same levels of tax and jobs. One of the recommended societal goals is to reduce alcohol consumption by nearly a quarter (page 7), which would have to significantly affect the alcohol industry.

It's a good case study of a genuine dilemma facing the Government about how to curb the societal harm and economic costs from alcohol abuse while minimising the loss of jobs or tax revenue from the alcohol industry.

Minority reports from both the ABFI and MEAS disagree with the steering groups findings. This suggests that the alcohol industry sees the report's recommendations overall as a financial threat, although it would be unfair to infer from this that the industry is unwilling to deal with the issue of abuse.

Table 7 (page 78) gives the breakdown of the €3.7 billion cost to society:
• €1.2 billion (32%) Costs to healthcare system of alcohol-related illnesses
• €1.2 billion (32%) Alcohol-related crime
• €526 million (14%) Alcohol-related road accidents
• €330 million (9%) Output lost to alcohol-related absence from work
• €197 million (5%) Alcohol-related accidents at work
• €167 million (5%) Alcohol-related suicides
• €110 million (3%) Alcohol-related premature mortality

The economic role of alcohol production and consumption is addressed too (page 71):
• €7.2 billion personal expenditure on beverages
• €2.9 billion turnover in drinks manufacturing, including €1 billion in drinks exports
• The on-trade provides 43,629 full-time job equivalents, and off-licences another 2,850.
• Manufacturing and retail provide €2 billion in VAT and excise.

Alcohol consumption in Ireland (at 11.3 litres per capita) is higher than the OECD average of 9.1 (page 64), but more significantly, Irish adults binge drink more than any other European country, with one quarter of Irish adults binge drinking every week (page 7).

A summary of some of the recommended actions (listed in full on pages 54-62) are as follows:
• Increase the price of alcohol over the medium term to ensure that alcohol becomes less affordable, using excise, including linking excise more closely to alcohol content;
• Minimum pricing per gram of alcohol;
• Increase enforcement of some existing laws, including physical separation of alcohol in mixed retail outlets;
• Develop proposals for an all-island initiative in relation to alcohol issues;
• Allow the HSE to object to the granting of a court certificate for a new licence or renewed licence;
• Introduce a statutory code of practice on the sale of alcohol in the off-licence sector;
• Develop a system to monitor the enforcement of sale, supply, delivery or online advertisement of alcohol to minors, with particular emphasis on age verification;
• Consider the possible need to strengthen the legislative controls on distance sales;
• Establish standards for mandatory server training programmes in the on-trade and off-trade sectors;
• Engage with EU colleagues to explore the feasibility of introducing common restrictions on advertising on a European level.
• Restrict alcohol advertisement generally, including a 9pm watershed for tv and radio, alcohol ads for over-18s cinema screenings only, and prohibition of all outdoor advertising of alcohol;
• Phase out drinks industry sponsorship of sport and other large public events by 2016;
• Introduce appropriate hospital procedures to provide alcohol testing of drivers who are taken to hospital following fatal/injury collisions;
• Monitor and regularly publish the volume of driver alcohol testing by An Garda Síochána;
• Introduce a ‘social responsibility’ levy on the drinks industry;
• Reduce the low-risk weekly guidelines to match the UK levels;
• Develop and implement more detailed clinical guidelines for health professionals relating to the management of at-risk patients;
• Increase information on alcohol products sold in Ireland to include grams of alcohol, calorific content and health warnings;
• A wide range of preventative measures, especially targeted at high risk groups, particular communities, and children and families of those abusing alcohol;
• Encourage the provision of alcohol-free venues for young people, with an emphasis on those most at risk (e.g. Youth cafés, alcohol-free music and dance venues and sports venues);
• Further integration of alcohol strategy with other national addiction and mental health strategies;
• Various clinical guidelines and protocols;
• Improve detoxification services;
• Continue to implement and develop, as appropriate, epidemiological indicators and the associated data collection systems and a research programme to examine the economic, social and health consequences of alcohol and the impact of alcohol policy measures.

Of course, some of these actions, particularly local action and prevention, may require additional financial resources at a time when the Government is still battling a massive deficit. Yet, the economic gains of tackling alcohol-related harm may be a good social investment that will pay dividends in later years.

From an equality perspective, excise increases will disproportionately affect people on low incomes. While there are good arguments in favour of using price to disincentive negative behaviours (i.e. pignovian taxes), this compounds poverty and an already unfair distribution of income. Ideally, we should ensure a minimum adequate income for everyone in Ireland before relying on flat taxes to dissuade people from alcohol abuse. There is also a risk that people with an alcohol addiction and/or related mental health problems will simply spend more of their incomes on alcohol and less on everything else. Therefore education and other action to support people in tackling alcohol addiction will be crucial, and this will require significant investment in healthcare and social support services, not least specialist interventions with the highest risk groups.

Many of the recommendations, particularly the earlier ones, will cost money to the alcohol industry to implement. Not least the call for a ‘social responsibility’ levy on the drinks industry, which could help pay for the required healthcare and social services. So the stage is set for conflict between the long-term health costs and the short-term economic benefits of alcohol to the Irish economy and society.


Anonymous said...

Why do debates on alcohol never acknowledge its pleasures? Do we drink purely in order to create jobs and raise taxes?

Nat O`Connor said...

@ Anonymous

The MEAS (link above) make that point, as their name suggests: Mature Enjoyment of Alcohol in Society.

I certainly don't mean to close off a wider debate about alcohol and quality of life, I was simply struck by the dilemma facing the Government.

Irish alcohol consumption is not the highest in the world, but our binge drinking is the worst in Europe and the cost of paying for this through public services (A&E, Gardai, etc) is largely a waste of public money that could be used for more productive purposes. Yet, ironically, if the measures taken to curb alcohol abuse are too tight, then we will loose jobs and tax revenue (and increase welfare costs), thereby reducing the available public money anyway.

It's a good example of how tricky it can be for a Minister to get the balance right when trying to achieve some social goal.

It's also an example of the limits of government, and the need for wider society to support a policy for it to be successful. And that in turn would require a very different style of government, based on transparency and frank public engagement on the details of policy.