14 May, 2009

Beer, Smokes Up

Of all the headlines surrounding this week's budget, that's one we didn't see, and Malcolm Turnbull doesn't like it. While he makes a good point about the dangers of plunging into debt, he struggles for credibility because he is the embodiment of the culture that got us into this mess. You see, Malcolm Turnbull is a merchant banker. And you can take that any way you like. He's also a part of the government that threw incentives at people to go and get 30 year mortgages. I'm not entirely sure why that's good, but the country taking out a ten-year mortgage of sorts is bad.

The centre-point of Turnbull's reply to the second Rudd/Swan budget is his opposition to Labor's plan to save money by means-testing the private health insurance rebate which was put in place by the previous Liberal government. It's a scheme that some have argued is just middle class welfare and it could even be argued that the rebate never really existed since health insurance premiums went up by the same amount as the rebate the week after the rebate came into effect. (Yes, Australian politics does sometimes play like a sit-com.)

Turnbull's alternative to the means test – in fact the only alternative he offered in the entire speech – is a 12.5% increase in cigarette taxes. That's the big idea from the investment expert in his first budget reply as leader of the party of sound economic management – the single most clichéd budget ploy ever.

Here's how he put it:
“So there's a tough choice for a weak Prime Minister: Raise $1.9 billion by making health more expensive and putting more pressure on the public hospital system, or by adding about three cents more to the price of a cigarette and taking pressure off the public health system.”

The problem is that this is no choice at all. The projected revenue raised from any increase in tobacco tax assumes consistent sales of cigarettes. That can't possibly take the pressure off the public health system. If the tax hike encouraged or forced people to give up, then it wouldn't raise the revenue. You can't have it both ways. If I can work that out, who needs a merchant banker?

I have no sympathy for smokers having to pay more for their habit and never have. And I have had on-and-off flings with the daemon weed so I'm not without empathy. But the success of anti-smoking campaigns means that bunging a few more cents on the price of a gasper is not the easy way to make a lazy couple of billion that it used to be. More importantly, if any government of any persuasion is serious about promoting health and discouraging smoking, then it's time to stop looking to smokers as national benefactors. The “sin tax” has always been an easy way for governments to look like they are combatting a problem they can't ban, while at the same time necessitating such behaviour in order to make their budgets work. Yes, Malcolm Turnbull is so concerned about reducing pressure on the public health system that he's going to take another $1.9 billion in taxes off smokers (not to mention the amount they already pay) and hope that enough of them keep smoking enough to pay the extra taxes.

The Liberals are right to oppose Labor's knee-jerk alco-pop tax. But the idea of looking to an ever-diminishing population of smokers to save the economy makes a mockery of that opposition and of their claims to care about public health and their assertions of economic know-how.

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