Higher booze tax doesn't faze students


Cranking up the excise on alcohol won't be enough to get binge-drinking university students off the sauce, according to an AUT University study.

In the first local study of its kind, researchers tested how much money Australian and New Zealand students were prepared to pay for alcohol.

The results showed that students were happy to pay higher prices for the same number of drinks, and would simply buy more if the strength of the alcohol was reduced.

"In this particular piece of research, the price was increased by as much as 25 per cent, with no significant change," said Andrew Parsons, associate professor of retailing at AUT.

"What we found is that taxation is going to have to be very, very high for it to actually work."

Excise, which rise with inflation each year, is used as a deterrent and to recover some of the health costs of alcohol and tobacco.

That's not small change - alcohol excise poured $669 million into government coffers last year.

The AUT study was analysed in the thesis of Masters business student Nicola Stephenson, who concluded that alcohol consumption hinged more on social norms than on price.

"Students believe that it is normal and expected for a student to get - in the words of one of my colleagues - wasted as quickly as possible," Professor Parsons said.

And unlike anti-smoking campaigns, he said, the Government was sending mixed messages about alcohol that were an "insidious" endorsement of those norms.

A DB spokeswoman said the brewery had not noticed any change in buying behaviour after previous tax increases, and was not expecting to see any after the latest rise last week.

Retailers Association chief executive John Albertson said each shopping chain would have its own policy to determine how much of the tax was absorbed and how much was passed to consumers.

But the question of price and consumption was interesting, he said, especially going by historical data.

"When you look at the per capita consumption of available alcohol in New Zealand, it hasn't really changed in the last 20 years," he said.

"One would have to suggest that price sensitivity isn't great."

The news of the New Zealand-specific research was welcomed by Alcohol Advisory Council chief executive Gerard Vaughan.

He said that international studies told a different story about price sensitivity.

"The average finding is that there is a relationship, and it is in the direction that the more expensive alcohol is, it will impact on consumer behaviour."

Mr Vaughan said that he wanted "robust discussion" around the emerging idea of minimum drink pricing.

That would force retailers to charge a minimum amount per standard drink, creating a solid bottom threshold for price-cutting and loss leaders.

Fairfax Media