By Andrew Starke
New research has shown the social cost of alcohol to the Australian community has been vastly overstated and then endlessly repeated by the mainstream media in opinion pieces and editorials.
Recent estimates put the annual cost at more than $15 billion but alcohol and hospitality industry bodies have today (July 8) hit back at this figure, citing new academic evidence.
A paper to be unveiled by economist Dr Eric Crampton of the University of Canterbury at a conference in Canberra next week exposes flaws in the methods used to determine this figure, concluding that at least 75 percent of this total would be dismissed by mainstream economic method.
The new report shows that ‘at most, only $3.8 billion of the headline figure can count as costs borne by such external parties’.
“The $15 billion estimate of the annual cost of alcohol is meaningless from an economic and policy perspective, and the use of this figure must now be abandoned,” said the Chair of the National Alcohol Beverage Industries Council (NABIC), Peter Hurley.
“Continued reliance on it to justify further regulation will result in a misallocation of resources and effort.
“This new research using a more rigorous method exposes previous findings by academics of a $15 billion figure as alarmist.
“These academics have failed to apply mainstream economic modelling to calculate the cost of alcohol and it’s time that governments and others involved in public policy recognised this.
“In the past 15 years, there has been no analysis of the benefits of consuming alcohol.”
NABIC is comprised of the six Alcohol Beverage Manufacturing & Retailing Industry Associations: Australian Liquor Stores Association (ALSA); Australian Hotels Association (AHA); Brewers Association Australia & NZ (BAANC); Clubs Australia & NZ (CANZ); Distilled Spirits Industry Council (DSICA); and Winemakers Federation of Australia (WFA).
The new analysis states that ‘no estimate of any activity’s value, and no policy implications, can be derived from an assessment limited to the downside risk of an activity’.
“Given the cost per annum of alcohol is no more than $3.8 billion and the comparable tax take on alcohol is more than that amount, there is no justification for increasing the size of the Government revenue pie,” said Hurley
“There have been even more bizarre figures of alcohol having a social cost of $36 billion coming from the anti-alcohol movement.
“Clearly we should leave this to experts in economics, rather than health advocates.”
The research was commissioned by NABIC to, in its words, ‘develop a more balanced view of the costs of alcohol, embracing mainstream economic methodology’.