During our research into the extent of harm from cannabis prohibition that we published last week, we uncovered alarming data on harm from alcohol. And of course it is legal, and its regulation has been relaxed over the last decade or two. The question is whether we have become too liberal with our alcohol laws. Certainly compared with what we recommended for cannabis that seems to be the case.
The sources of harm are very different to that from cannabis, where harm arising from the role of the criminal underworld and from processing users through the criminal justice system dominates. For alcohol, the harm relates to violence, accidents and anti-social activity that arise from drunk behaviour in public places and in the home. Injury costs make up ¼ of the total costs from all drug use, and alcohol makes up the vast majority (82%) of these injury costs.
Lower productivity on the job is also a major impact for all kinds of drugs.
What’s most telling is just how much greater such harm from alcohol use is compared to all other drugs. According to a study done back in 2005 alcohol is 3 times as harmful to our society as all other drugs put together.
If we update the data into modern values, the harm from alcohol is estimated at over $6 billion per year. This can be compared with more recent estimates of harm from other drugs, which have a total cost under $2 billion. Of that, cannabis harm makes up around $1.3 billion and amphetamines at around $400 million. All together alcohol generates around 4.5 times the harm of the next most frequently used drug, cannabis.
This level of harm is mainly due to the sheer numbers of harmful alcohol users (over half a million), which dwarf the total dependent cannabis users (26,000) and P (1,400) users.
According to international estimates some 50% of the costs associated with alcohol are avoidable through stricter regulation. In 2005 the Drug Foundation, followed by the Law Commission in 2010, deemed the relaxation of alcohol laws of 1999 a failure and recommended that the harm from alcohol had to be confronted by two main measures:
(a) raising the age for purchase of alcohol back to 20 years old
(b) raising the price of alcohol
Both these recommendations were ignored by the 2012 Sale and Supply of Alcohol Act which merely puts some limits on alcohol advertising and required parents to give express consent for their underage children to drink.
So the question is should we revisit our alcohol laws?
(1) Raising the age of purchase
Since the relaxation of alcohol laws in 1999 there is good evidence of the ‘halo effect’; that teens are starting to drink even earlier;
- There was a significant increase in hospital presentations of intoxicated people aged under 20;
- There have been increases in the trends for rates of prosecutions for excess breath alcohol, road traffic crashes involving alcohol, and fatal road traffic crashes involving alcohol among several youth cohorts in the years after 1999;
- The increase in alcohol-related crashes among 15 to 19 year olds was higher relative to older age groups in the four years following the law change, and the higher rate of increase in road traffic crashes among the younger age group has continued since. 
It is important to say that we don’t know for sure whether raising the alcohol age would reduce underage drinking and reverse these impacts. However, it seems reasonable to expect some reduction in harm, particularly since the harm from alcohol is centred amongst young people.
That’s why we are asking what you think!
(2) Increasing the Excise Tax
A 50% increase in the alcohol excise tax (as recommended by Palmer) would result in a 10% price increase on average. Currently different alcohols are taxed at different rates (a policy that favours wine and to a lesser extent beer over spirits). It would make sense to smooth this out at the same time, so some prices will increase by more than others.
We expect that a 10% price increase would decrease demand for alcohol by around 5%. Again it is an inexact science about how much this would reduce the overall harm, and of course this analysis doesn’t take into account the social benefits that some people think they get from alcohol. However, as a ball park figure, a 5% reduction in alcohol harm would be worth around $300m to society.
Of course raising the tax also means more money for the Government coffers. Assuming the tax collect on alcohol excise is roughly $712m that would mean an increase in tax revenue of around $300m. This money could be used to augment the solutions put forward in our cannabis policy, essentially promoting education and treatment for all drugs as well as after school activities for teenagers. In fact, given the investment in these areas from cannabis reform, there would be a significant sum left over, which we would want to invest in a boost for mental health funding more broadly.
So reducing harm from alcohol consumption is still very much a live issue in New Zealand. The Opportunities Party is working up a policy response.
Follow the link here and let us know how you feel about the current law and what, if any, changes you would make.
 Based on an average price elasticity of -0.5 https://www.ncbi.nlm.nih.gov/pubmed/23883547