Tuesday, 19 May 2015

Host responsibility - dairy edition

Since the New Zealand healthists seem determined to rocket us down the slippery slopes from tobacco to alcohol to sugar, let's think about how host responsibility might apply to dairies.

Bars are prohibited from serving alcohol to those who are already intoxicated. That's host responsibility. The healthists want to ban dairies near schools from selling sweet stuff to kids. But is it really all kids who are the problem here, or just the obese ones?

Host responsibility should mean, if applied appropriately here, that dairies shouldn't be banned from selling lollies to kids, just to obese kids. Just like bars aren't banned from selling beer to all people, just to intoxicated ones. They'd have to use a judgement call on who's over-the-line, just like bartenders do. Maybe there could be a training programme.

You'd probably need additional penalties for thin kids who intermediate and on-sell lollies to their friends.

To be clear: I totally oppose this. But do I oppose it more than a blanket ban on all kids buying lollies? Do you?

Note too the great classist implications of banning kids from buying from dairies near schools but not from supermarkets or high end chocolate shops. Maybe we need to refine the host responsibility proposal to target only obese kids who look poor. Because that's what's really intended, isn't it?
But not high end chocolate milk?


  1. Eric:

    As you know, the RBNZ's goal is not to make housing affordable - which would be outside its mandate - but to ensure financial stability. I haven't looked, but I am pretty sure that is part of its mandate.

    Second, given that up until recently the govt did not want to know about AKL house prices, I fail to see how this can be cast as a problem of central bank independence. The RBNZ acted on a perceived threat to financial stability *in spite of* the government's view that everything was hunky-dory. That *is* central bank independence. Are you afraid that national will now reprimand the bank for its intransigence?

  2. Sure. But where is the evidence of systemic risk? November's report said all was fine.

  3. That sounds like a complaint regarding transparency at the bank, not about the bank over-stepping it's mandate.

    Correct me if I am wrong: You are concluding that the bank is directly addressing house prices because it has (in your opinion) not effectively communicated to the public the financial risks it perceives in the housing market. That is quite a conclusion to leap to.

    Now, if the National government does follow your line of reasoning and reprimand the bank, personally I would put the blame on the government, not the RBNZ.

  4. The November Financial Stability Report provided the results of stress tests incorporating a 12% unemployment rate and a 40% drop in house prices. It showed no problems for the banks - or at least none that provided systemic risk.

    The RBNZ has provided nothing between November's report and the new LVRs indicating why the situation has changed. No new stress tests, for starters. Where's the evidence that, in New Zealand, investor-owned properties are so much more risky than owner-occupied ones that they warrant this kind of treatment rather than looking at the bank's capital requirements instead?

    Or, to put it another way, is there anything that, in your view, RBNZ would be precluded from doing under its financial stability mandate?

  5. When parliament delegates regulation-making powers to another body, the body must act within the limits set or the regulations will be ultra vires. So, the RBNZ can regulate for financial stability, but presumably, for its actions to not be ultra vires it is incumbent upon it to specify how its actions relate to financial stability. To restate Eric's point: can we paraphrase Muldoon on the Economic Stabilisation Act 1948 and say that the RBNZ can do anything it wants, as long as it hangs its hat on financial stability? That isn't the spirit of central bank independence.