Key misjudges mood on alcohol reform

JOHN HARTEVELT
Last updated 05:00 28/08/2011

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John Hartevelt

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OPINION: Prime Minister  John Key must have regrets. Promising to resign rather than allow change to the retirement age would be one.

He may also rue an off-hand remark to American diplomats about the Kiwi "socialist streak".

He should also be sorry – although he probably isn't – for having ruled out an increase in the alcohol tax, as suggested by the Law Commission, because there are sound economic arguments for steep excise taxes to meet the cost issues linked to alcohol.

The public health arguments are overwhelming, and for Key, crucially, the politics aren't as frightening as they once were.

Concern over our "binge drinking culture" has never been so great. Terrifying statistics suggest the country is awash with booze. Half of all males aged 15 to 24 are counted as drinking so much that they're at risk of damaging their health.

But the challenge for any government is convincing Kiwis it's fair they should pay more for their hard-earned post-work pint. Kiwis typically think that if there's a problem with alcohol, someone else is causing it.

And it's true that we don't have particularly high alcohol consumption rates compared to the rest of the world – behind Australia and Canada, but in front of the United States and South Africa.

National is also disinclined to increase taxes on anything, no matter what. But Key has worked hard to build a reputation for common sense.

He bumped up GST and sold it to voters as part of a package to discourage wasteful spending and encourage savings and investment.

His government has also pushed through a three-step rise in tobacco taxes.

It has fostered, and then capitalised upon, a climate that's happy enough with a dash of fiscal austerity and understands the need to pay down debt.

The polls suggest the mood to tidy up the books is so strong that most of us are prepared to accept a new capital gains tax.

If ever there was a time that voters could accept or even support increasing the tax on something "bad", it's now.

It's not as though a bit more tax on booze is going to bring the economy to a halt.

And wouldn't the government love a few hundred million extra dollars to impress the ratings agencies. But Key and Justice Minister Simon Power punted too early on this.

The commission's apolitical recommendations crashed into National's safety-first politics and it was off the table within the hour.

What a waste.

POLITICAL STOCKS

UP: Murray McCully. Carefully navigated his way around a handful of banana skins last week. RWC ticket sales look like they might just make it, and a couple of supposed minor embarrassments in the foreign affairs portfolio turned out to be not so embarrassing after all.

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DOWN: Labour. Food price stats out this week were up for the sixth month in a row, with fruit and vegetables a massive 16% up on last year. But where was Labour on the issue, and why are its poll numbers not moving?

john.hartevelt@fairfaxmedia.co.nz

Twitter: @jhartevelt

- Sunday Star Times

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