Published in The New Zealand Herald, 5th April 2021
New Zealand, like other affluent societies, is suffering the health consequences of our harmful consumption patterns. Thus, a recent report from Diabetes New Zealand shows that nearly 5% of the population suffers from diabetes and close to 20% are at a pre-diabetic stage. These numbers are likely to double over the next 20 years, with associated heath costs rising to nearly 10% of GDP and a quarter of Pacifika people suffering from the condition. The rising level of obesity, and our consumption patterns particularly sugar, lie behind these trends.
On the face of it, our system is not well geared to dealing effectively with this emerging health scenario; not only are we failing to make a sufficiently determined attempt to arrest or slow down this apparently inexorable rise in illness and disability associated with our harmful consumption patterns, but also, as the request for funding from the Diabetes New Zealand report shows, we are up for some major costs, and these will have to compete with many other demands on the taxpayer’s dollar. We see this every day at the Auckland District Health Board.
However, there is one feature of our system that is ripe for development and adaptation in dealing with these issues, and that is the Accident Compensation Corporation (ACC).
ACC is coming up to its 50th. anniversary. It is a social insurance scheme built on the insight that injury sustained at work – later extended to other areas of life – was a cost of employment inflicted on workers in industries such as forestry, farming, manufacturing, and construction, the burden of which they had to bear, rather than the industries that employed them. This was seen as unjust. It also provided no incentive for industries to improve their injury track record. Out of these key insights was born our current ACC levy and compensation system which attempts to cover the costs associated with injury, whether suffered at work or elsewhere.
Since the time of ACC’s founding the great change in the health profile of developed (and even developing) countries has been the shift from infectious diseases to conditions largely associated with our way of life, such as cancer, heart disease and stroke, and diabetes. These are in major part associated with our lifestyle, which includes the consumption of a range of potentially harmful products such as alcohol and tobacco and items containing sugar, salt, and saturated fat.
While these consumption patterns are obviously enjoyable and to an extent willingly engaged in, they are also encouraged and promoted by the industries that profit from them. In other words, as with ACC 50 years ago, the food and beverage industries are, through the promotion of consumption lifestyles, laying a major burden of harm on the community by way of illness, disability and premature death, a burden that is not internalized into the cost structure of these industries but is instead carried by the taxpayer through the health system.
It would be perfectly possible to extend the ACC levy system from industry-specific injury risk profiles to risk profiles for different illnesses like diabetes, both to fund the treatment arising from these consumption patterns, and to help modify them by incorporating the real costs of community harm in the prices of these products. As with the current ACC system, this would perform a double duty: it would cover treatment costs for illness, and also help reduce the health impacts of these harmful features in our consumption patterns.
But there are possible downsides. For example, the most disadvantaged sections of the population, as represented in the bottom 20-40 percent of the socio-economic distributions, are likely to be consuming more harmful products, and those products are likely to be a higher proportion of their disposable income than for higher-income people. Thus, any levy on these products could be seen as regressive in its impact. However, there are alternative less harmful products, and lower-income people are more likely to switch because they would be more susceptible to the income effects of levies on these products; in other words, they would be less able to afford these products and would in time switch to cheaper equivalents that escaped the impost.
And levies on harmful products do not necessarily rebound to the disadvantage of manufacturers either. The British government imposed a sugar tax on beverages in the United Kingdom. A recent review of this initiative in the British Medical Journal shows that, while sugar consumption declined by ten per cent, volumes of sales did not, since manufacturers reduced the sugar content of their products rather than suffer a downturn in sales.
As with ACC in its current format, this extension could work for all stakeholders. Above all, we might at last deal with a feature of our lifestyle that, on its present trajectory, could in future generations roll back many of the great gains in health we have achieved over the last century.
Elected member, Auckland District Health Board, and Emeritus Professor of Population Health and Social Science, University of Auckland