Is a sugar tax a practical solution for Australia’s obesity crisis?

Australian public policy think-tank the Grattan Institute has released a report recommending the government introduce a tax on sugar sweetened beverages (SSBs) "to recoup some of the costs of obesity to the community".

The institute considers the best course of action to be an excise tax of 40 cents per 100 grams of sugar on non-alcoholic, water-based drinks that contain added sugar. This would exclude fruit juice and milk-based drinks, on the basis that while these have some nutritional value, soft drinks and other water-based sugary drinks do not.

Why not a tax across the board on all products containing added sugar?

Why only sugary drinks and not lollies, biscuits, cakes or chocolate? For some products, the same argument applies. Most yoghurts and all ice cream, for example, contain added sugar, but there’s an argument to be made that the calcium content provides nutritional value. And why not lollies? To answer that, you need to compare the sugar content in a lollypop, or a standard serve of lollies to the amount of sugar in the average soft drink.

A Chupa Chup contains 10g of sugar. Two Allen’s lolly snakes, a standard serving size, contain 11g of sugar. An original Tim Tam contains 8g. Compare that to a 375ml can of cola that contains a whopping 40g of sugar and it’s easy to see why SSBs are a problem.

The WHO recommends adults get only 10% of their daily energy requirement from added sugar, which works out at about 55g. So, an average can of soft drink provides nearly the entirety of an adult’s recommended sugar intake, while a 600ml bottle contains more than the recommended amount at 64g. That’s 16 teaspoons of sugar in one go.

Recent research from the University of Sydney shows that 55% of adults and 70% of children between the ages of 4 – 19 in Australia exceed their recommended daily sugar intake. For children, a third of that sugar comes from SSBs, while for adults the proportion is around 25%, so SSBs are an even bigger issue when it comes to childhood obesity.

Another problem with SSBs is that many people don’t view them as a treat or ‘sometimes food’. Soft drinks are often viewed as part of a meal, while sports drinks, flavoured waters and fruit drinks are seen as healthy, even when the evidence is clear — they aren’t.

It seems like a natural step to take to introduce a tax that encourages people to limit their intake of SSBs. It worked with cigarettes and petrol, so why not?

Is a sugar tax a sensible first step to combat obesity?

There’s no denying that something needs to be done to combat the growing problem of obesity. According to the Australian Institute of Health and Welfare (AIHW), 63% of Australian adults, nearly 2 in 3, are overweight or obese. And 25% or 1 in 4 Australian children are too. Obesity is the 2nd highest contributor to the nation’s overall burden of disease. The Grattan Institute estimates that obesity costs Australia $5.3 billion every year, which includes both the cost of health care and the loss of productivity cost, as obese people are less likely to be employed or pay taxes. And this might be a conservative estimate, when you consider that a 2015 PWC study put the cost in 2011-2012 at $8.6 billion.

The Grattan Institute is the first to admit an SSB tax is not a ‘silver bullet’ fix for obesity. The report’s authors, Stephen Duckett and Hal Swerissen say "that would require a suite of new policies and programs". In a 2014 McKinsey Global Institute economic analysis of obesity, an SSB tax was only one of 74 interventions that were recommended to tackle the problem. The analysis also concluded that "no single solution creates sufficient impact to reverse obesity: only a comprehensive, systemic program of multiple interventions is likely to be effective". And more recently, the Australian Medical Association (AMA) released a position statement on obesity, in which a ‘sugary drinks tax’ was just one of 17 recommendations.

Ideally, the revenue raised by an SSB tax, which the Grattan Institute estimates would be around $500 million a year, would go towards some of these additional recommendations for tackling and preventing obesity. In which event, the SSB tax would better enable the government to put in place other new policies and programs to create a multipronged solution to the obesity epidemic.

And if SSB manufacturers want to avoid the tax, they can, by reformulating their products to contain less sugar. After it was announced that the UK will be introducing a sugar tax on SSBs in 2018, Tesco decided to lower the sugar content in its own brand soft drinks.

Or is it nanny state nonsense?

Barnaby Joyce certainly thinks so. The Nationals leader and deputy prime minister called the idea of a sugar tax "bonkers mad", adding, "If you want to deal with being overweight, here’s a suggestion — stop eating so much and do a bit of exercise. There’s two bits of handy advice and you get that for free."

It’s not surprising that the Nationals leader would come down hard against a policy that might negatively impact sugar cane farmers. However, the Grattan Institute says that 80% of the sugar produced in Australia is exported, meaning the impact on the industry would minimal.

In a statement released by the Australian Beverages Council, CEO Geoff Parker says SSB sales are already declining in Australia and there’s no evidence that SSB taxes have had any impact on obesity rates in countries where they have already been introduced. And he says, "Soft drinks can absolutely be enjoyed in moderation. Food and beverage consumption is a personal choice, not a revenue raiser."

This is an argument echoed by opinion columnists everywhere; that such a tax imposes on our personal freedoms — and moreso for the poor. As the ABS shows, lower income households spend more money on sugary drinks than higher income households, so our low income earners would be hit the hardest by such a tax.

A moot point anyway?

With outspoken resistance from the deputy prime minister, Australian sugar cane farmers and the soft drink industry, it looks like anyone attempting to introduce a sugar tax in Australia would have a real fight on their hands. The sugar lobby may be too strong to overcome.

Australian Health Minister, Sussan Ley, has said the government does not support a sugar tax, but will continue to consider the evidence, while Treasurer Scott Morrison hasn’t ruled it out, saying that, for now, his focus is elsewhere.

On the other hand, Greens leader, Senator Richard di Natale, says if the government doesn’t act on the Grattan Institute’s recommendations, the Greens will put forward their own private members bill.

A sugar tax might not be the best solution to the problem. And it’s doubtful that it will make much of an impact on obesity in isolation. But it’s a good first step to combat the problem, especially if the money raised is reinvested into the creation of further public health programs. One point that everyone agrees on is that something needs to be done to combat obesity, because the standard advice – "eat less and exercise more" – isn’t working.