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Sweet disorder: Why New Zealand needs a sugar tax now

As obesity and diabetes rates continue their sharp upward rise, calls for a tax on sugary drinks are also on the increase. Today, in the first of a two-part series giving both sides of the debate, the Green Party’s Julie Anne Genter explains why she’s pushing hard for the tax.

Let’s start with what we all agree on. Obesity and chronic diseases have become the single greatest health challenge of the 21st century. For example, if New Zealand follows the obesity trends of the US, the risk of a child developing diabetes at some point in their life could be one in three. Not only is this preventable and tragic for the human being involved, but it is also incredibly expensive for our public health system.

New Zealand is struggling to deal with a looming crisis in our health system because we refuse to address the key things that are making us sick. When children are consuming such large amounts of sugar, it is clear there will be problems down the line. We need a targeted tax to reduce consumption and pay for the damage sugary drinks are causing to the health of our children. The Green Party is calling for a tax on sugary drinks to discourage their over-consumption and to change the public health environment in which people make their food and drink choices.

Making children’s teeth and the obesity problem all about personal choice or parental responsibility, which the Government and the NZ Initiative advocate, is proven not to work. We need to put the health and wellbeing of children ahead of the interests of the junk food industry. We agree with Health Minister Jonathan Coleman that there is no magic silver bullet to fix our health problems, but as 74 health professors wrote in an open letter, the evidence supporting sugary drinks taxes is far stronger than the evidence for any of the 22 strategies in the Government’s existing child obesity plan.

The Prime Minister’s own Chief Science Advisor, Sir Peter Gluckman, chaired an international commission on ending childhood obesity that recommended sugary drinks be taxed. When challenged on this, the Minister of Health fell back on Coca-Cola funded science that conveniently said a sugar tax wouldn’t work.

Let’s face it. As things stand, the industry’s goal is to sell as many fizzy drinks as possible, because that’s how they guarantee revenue growth. They will undermine efforts to improve public health by reducing the consumption of their products. It’s unsurprising that, like the tobacco and fossil fuel industries before them, they are investing in counter-campaigns to cast doubt on the effectiveness of such policies.

The companies that sell fizzy drink want them to be part of your daily routine, because that guarantees sales will continue to grow. And they’re on to a winner (in terms of profit) because your limbic system is designed to seek out sweet things. We evolved drinking only water, which is calorie free. Over time the impacts catch up with people, especially if they start young.

This doesn’t affect everyone in the same way. Poor, Māori, and Pasifika communities are disproportionately affected by diabetes and chronic disease. These severely affected communities would be hit harder by a sugary drinks tax. Initial evidence from Mexico shows lower income people are more price sensitive, and therefore the tax is more effective at reducing their over-consumption of sugary drinks. To avoid the policy being regressive, the money raised should be put into public health services and education that benefits these communities.

Producers and distributors of sugary drinks and junk food sell hard to low-income Māori and Pasifika communities, and children in particular, with very targeted marketing campaigns. New Zealand research has found that highly processed food is both the lowest in nutritional content, and the most profitable for producers and supermarkets. It tends also to be the most likely to be marked down and purchased by low income households. The moral and practical question is – why shouldn’t the companies that profit from products that are making many people sick over time start paying for part of the public health toll?

The Government’s response is weak – Coleman says the research doesn’t prove that sugary drinks taxes will reduce obesity. This is a silly objection, because so far there’s no proof anything will reduce obesity and chronic disease. They have been growing for decades. We have solid evidence of the main causes of the increase in chronic disease, seems like reducing over-consumption of sugary drinks is a logical place to start trying to reduce it. As with any policy, the impacts should be monitored and the policy adjusted to ensure it is as effective as possible. The longer we wait to start taking action, the more people will suffer.

I’ve engaged in debate with the NZ Initiative’s Eric Crampton and seen some of the work published by Jenesa Jeram [Jeram’s post arguing against the tax will be published tomorrow – ed.]. Their argument doesn’t dispute that the health costs of chronic disease are rising, or that diet and lifestyle factors are the cause of obesity and chronic disease. They assert that research doesn’t prove sugary drinks taxes will reduce consumption– because demand is inelastic. Inelastic is when demand changes very little regardless of price. In Mexico, where there is now a sugary drinks tax, the price change has resulted in a drop in demand.

There is evidence of a reduction in quantity demanded with an increase in price, it’s just not commensurate to the increase in price. Demand for cigarettes is also relatively inelastic, as is reduction in demand for petrol, in the short run. Yet we use excise taxes effectively (in conjunction with many other policies around availability, education, restricted advertising) to reduce smoking rates and help pay for the health costs associated, and economists advocate for carbon taxes to reduce climate pollution associated with petrol use.

So, it’s unclear why the low elasticity of demand with respect to sugary drinks would be a case for ditching the policy – there is evidence that it could be very helpful in reducing the harm associated with over-consumption, and there are examples from the UK already that the policy has resulted some food and beverage companies changing recipes to have less sugar. This has to be good for consumers.

Given that we need to take action on sugary drinks causing health problems, if the NZ Initiative doesn’t support a tax, what else would we do? I can’t see them advocating for more stringent controls: strictly limiting advertising and availability, or banning them altogether. I’m have yet to see a constructive contribution from the NZ Initiative that would help New Zealanders health or the food environment in which we make food choices.

The other line of argument the NZ Initiative might suggest is that we should ditch our public health system for a private, user-pays one and people with chronic disease should pay their own way. Given they are more likely to be on low incomes, I don’t think this will solve the problem, and I believe most New Zealanders value our public health system. Private health care isn’t working in the US.

To sum up, most people value health, and want their kids and themselves to live in an environment in which it is easy and enjoyable to make healthy choices. We don’t want sugary drinks being pushed on kids at every turn. It is irresponsible for the Government to continue to shrug its shoulders at the burgeoning health problems of Kiwis who doing their best. Taking advice from the NZ Initiative on sugar taxes might be good for Coca-Cola, but it isn’t in New Zealand’s best interests.

(NB: Coincidentally, Coca-Cola is a member of the New Zealand Initiative. I’m sure there’s no relationship between this and their advocacy.)

Tomorrow: The NZ Initiative’s Janesa Jeram argues against the tax.


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