Listener: 11 March, 1978, republished in Economics for New Zealand Social Democrats.

Keywords: Health; Regulation & Taxation;

Note: The numbers in this column are out of date, but the sentiment remains true.

‘The trouble with New Zealand,’ he said as he leaned on the bar, ‘is that we have far too many scrounging on the state.’

I had heard it all before, and was absent-mindedly gazing at the jugs of beer in front of him. A variety of news items flitted through my mind. The traffic officer who thought half the accidents he attended involved a drunken driver. The Auckland policeman who said nights were easy while the beertanker drivers were on strike. The orthopedic surgeon whose ward is 60 per cent full of the consequences of accidents involving alcohol. The hospital which has 25 per cent of its non-geriatric beds filled with patients directly suffering from the abuse of alcohol. The 53,000 New Zealanders who are alcoholics. The half a million New Zealanders who have a close friend or relation who is a liquor addict. The loss of production from hangovers and deteriorated performance from drinking is over eight times the loss of production from industrial disputes.

‘The scroungers just don’t care how much they cost us,’ he said, filling his glass again.

I thought, the costs to society for alcohol abuse have been estimated to be between $600m and $700m a year. The average jug of beer costs the state $1.75 or so in health, social security expenditure and extra production costs.

‘There must be hundreds and thousands of these scroungers.’

It is estimated that 150,000 (or five per cent of) New Zealanders drink 40 per cent of the alcoholic liquor. Their abuse probably causes more than half the social costs over $1,900 a year per big drinker.

‘They just go around enjoying themselves, and giving hardly anything back.’

Exactly. Beer tax amounts to only 25c a jug.

‘They should pay for the damage they cause.’

An interesting proposal. Of course the alcoholic does not have the money to pay for his treatment. The young drunk who crashes his car is not able to pay for hospital costs for himself and his victim. But we could charge alcohol users before the event, by putting a levy on all alcoholic drink to cover the cost to the state of the abuse. After all, the Accident Compensation Commission levies employees and car owners. Why should it not levy drinkers?

‘Then our taxes would be lower. ‘ His first jug was empty.

Another dollar fifty of extra taxes, I thought, steadying myself by gulping a glass. But my friend was perfectly correct. We could reduce income taxes by over 10 percent if drinkers paid the full cost of their alcohol abuse. Even moderate drinkers would be better off, because although they would pay more for their beer they would be more than compensated by the higher take home pay.

‘Tell you one thing, if they had to pay for their scrounging a lot would stop doing it.’

Agreed. Higher taxes on liquor would reduce consumption. There would be less abuse, fewer accidents, more hospital beds available for waiting list patients, lower prices and less human misery.

‘But you economists never do anything about real problems like scroungers and taxation. All you talk about is education.’

Why blame economists? It is the political and social will we lack to tackle the liquor problem. As for education, certainly that is too often the refuge for politicians and rogues. French experience suggests that it would take an education programme over a generation to change attitudes to liquor consumption. Over that 20 years we could spend $13,000 million mopping up the mess.

‘Instead a working man spends hours earning the money to pay the taxation to support scroungers.’ He had finished his second jug by now.

The average New Zealander works two weeks a year to pay the costs of others’ alcohol abuse. Two weeks’ work to payoff the national hangover. You might call it our lost fortnight.

‘You guys oughta do something about it.’

I said, ‘Shall I drive you home?’