Misunderstanding the policy process

Policy development happens through a complex interplay of politicians' directives, civil servants' work, and civil society input. 

Bryce Edwards is director at The Integrity Institute, which has been pretty critical about anyone's involvement in policy processes other than the bureaucracy and anyone considered to not have a financial stake in an outcome. 

Last week, BusinessDesk found the Institute's trust deed. Or, rather, decided it was worth checking over at the Company's Office to see what it says. And the whole document is really weird. Things that ought to be operational decisions for the Director are instead hard-coded into the deed. The rest is a combination of direction to do the obvious and specific targets they want investigated, like going after Transparency International. 

I'd threaded the thing; you can't link directly to a Companies Office filing. 

There's been a fair bit of tu quoque over this. But the best take I think thus far is from Deb Te Kawa. A snip:

Sometimes, those who claim to defend democracy are the ones who misunderstand it most. The Integrity Institute’s recent campaign, ostensibly about exposing undue influence over policy, has revealed something more troubling: a fundamental confusion about how policy advice, participation, and legitimacy actually work in democratic systems.

The policy advisory literature has long since moved past the myth of the neutral bureaucracy. As Craft and Howlett (2012) argue, modern advisory systems are pluralised and layered. Policy advice no longer flows solely from within the state. It emerges through dynamic interaction between political actors, ministerial advisers, public servants, and external stakeholders: including iwi, hapū, academics, commentators, lobbyists, consultants, contractors, industry and community interest groups, and civil society. This is not a breakdown in integrity. It is a shift in how democratic knowledge is produced and contested; a shift that has been underway since 1996, when we began correcting for the distortions of the 1980s’ new public management reforms.

Rather than engage with this shift, the Integrity Institute appears to reject its premise. In targeting Federated Farmers, the Institute frames visible, declared advocacy as inherently suspect. Yet publishing policy platforms, meeting with ministers, or advocating for sector interests is entirely within the bounds of democratic practice. As Craft and Halligan (2020) remind us, robust advisory systems must accommodate both internal and external sources of advice. To treat advocacy as corruption is to misread the core architecture of modern policy-making.

This conflation is not just technically inaccurate. It is democratically dangerous. Legitimacy in policy does not come from insulation. As I have been exploring in the Waitangi Tribunal Thursdays series, and arguing in The Practical State, it comes from contestability, transparency, and deliberative engagement.

Whether it’s iwi asserting rangatiratanga, unions calling for fairer conditions, or academics and researchers offering empirical insight, the presence of diverse voices is a safeguard, and not a threat. As the policy advisory literature insists, multiple advisory channels are vital for balanced decision-making in complex societies.

The real question, then, is not whether influence exists. It always does. The question is: what kind of influence, under what conditions, and with what visibility? The distinction between transparent, procedural engagement and opaque, privileged access is not semantic. It is constitutional. Effective oversight requires more than tracing contacts. It demands a grounded understanding of procedural fairness, institutional independence, and the layered nature of advisory input.

With that particular critique in mind, let's have a look at a different campaign. 

One that Guyon Espiner has been running, on the public dime, at Radio New Zealand, and at RNZ-Newsroom co-production The Detail. 

In his telling, shadowy alcohol industry influence stymied admirable public health efforts to adopt new and stricter Canadian low-risk drinking guidelines.

He's had a lot of airplay on this. If you're reading this in New Zealand, you've been forced to pay for it. 

So what is that shadowy influence?

David Farrar has the correspondence. 

The Brewers Association wrote to Ministry of Health asking for details on a review of the low-risk drinking guidelines. And there was also correspondence on the use of the alcohol levy - a small levy imposed on every bit of alcohol sold, used to fund various harm-reduction efforts. Producer levy schemes tend to have producer involvement. 

The Brewers also pointed out what looked like an error on the Health NZ website (recall that Health NZ is the operational arm, Ministry is policy). They thought that some proposed Canadian guidelines had actually been implemented. 

Health Canada had commissioned a third party to produce revised alcohol guidelines. That was a couple of years ago. Those proposed guidelines have not been adopted or ratified by Health Canada. And two different Ministers of Mental Health and Addictions, in late 2024 and early 2025, have confirmed that the 2011 guidelines remain the ones in place. 

Health NZ thought that Canada had tightened its guidelines and was taking this as basis for tightening ours. 

The Brewers pointed out an error. The Ministry of Health saw that error corrected. And Guyon Espiner deemed the whole thing an example of influence that needs to be stopped. Of course, on his podcast interview with The Detail, he hedges a bit - saying he's only raising questions and noting how interesting it is that a framework convention bars industry discussion with government in the case of tobacco but not for alcohol. Not that he's campaigning to get the framework convention extended to alcohol. 

Let's go back to Deb's piece. 

As Craft and Howlett (2012) argue, modern advisory systems are pluralised and layered. Policy advice no longer flows solely from within the state. It emerges through dynamic interaction between political actors, ministerial advisers, public servants, and external stakeholders: including iwi, hapū, academics, commentators, lobbyists, consultants, contractors, industry and community interest groups, and civil society. This is not a breakdown in integrity. It is a shift in how democratic knowledge is produced and contested;

The Brewers found an error. Min Health made the same mistake Espiner did, potentially based in motivated reasoning - wishing that the Canadians had given NZ an excuse to tighten guidelines here. 

That error was corrected, because we don't stick bureaucrats in towers and ask them to hand down advice from on-high. There is interaction. It is helpful. It makes things suck less. 

Some campaigners, like Edwards, and like Espiner, seem not to like it when that interaction results in policies that they like less. They seem to view it as inherently corrupt. At least Edwards isn't doing it on public funding. 

David Farrar's post with the correspondence went up on the 25th. 

The day before that, I submitted a column to Newsroom on the topic, because I'd first caught this on their site - they co-produce The Detail. I sent it through on Wednesday of last week for my usual slot on Tuesday - earlier than usual, because it was critiquing some of their work and I wanted to give them time with it. 

After asking that I add a lot more detail on the evidence around moderate drinking, they decided not to run it. There was an in-house view that Espiner had sufficiently couched what he'd said on The Detail. Perhaps there was a background worry that publishing a critique would make a likely press council / BSA complaint about The Detail piece more viable; I wouldn't know. 

I brought the piece back to 800 words; it was in Monday's Post as a full-page print piece (and presumably Press etc). An ungated version is here. I confirmed bits of the correspondence with the Brewers Association in the interval. 

The full piece I'd sent to Newsroom is below; it's a lot longer than the version at the Post, in part because they asked me to add a fair bit of content. 

I only saw Deb's piece after all this. But it's been rolling around in my head since then. The policy process really isn't what some of these campaigners seem to wish it were. 

Anyway - the piece that Newsroom declined. I declined to write a substitute piece for them for this week. 

Opposing bars

Health and police make a habit of trying to block licenses and license renewals for bars along Courtenay Place. 

Tom Hunt and Rachel Thomas at The Post have been checking into one bit of it. 

Health NZ has been claiming that there are 'just under 200' licensed premises in the area so the region is dangerously overserved; they pull out the number when objecting to licenses. 

Two owners started asking questions about the number. 

When asked to supply a list of the 200 premises, a Te Whatu Ora spokesperson asked, “are you actually questioning that there aren’t 200 licensed premises in this region?”, before treating it as an Official Information Act request.

That eventual response showed there were just 142 premises within the radius – leaving 58 phantom licences. Te Whatu Ora has now released that list, which actually includes 87 premises.

They include Molly Malones, which closed in 2015, Strawberry Fare, closed since 2016, and Reading Cinemas, closed since 2019.

At least three bars on the list were owned by publican Jordan Mills and his family: Siglo shut this year, Hummingbird closed in 2021 and Public Bar and Eatery shut in 2017. In each case Te Whatu Ora or its predecessor cited the 200 figure in evidence before the district licensing committee, he said.

Standard public health playbook really.  

The alcohol levy review - an ongoing OIA saga

I keep a bit of a watching brief on the old BERL social cost of alcohol figure. It turns up in weird places. 

As aide memoire, BERL produced the number as commissioned work in the late 2000s that was meant to follow the method set by Collins & Lapsley in Australia. 

The Collins and Lapsley method has a few problems. But BERL compounded those problems with choices that seemed designed to generate a larger number for the tallied social costs. 

For example, Collins & Lapsley had aetiological tables that tried to attribute the fraction of different disorders that might be attributed to alcohol use. Their tables had a few disorders where the aetiological fraction was negative because drinking reduces the incidence of that disorder. BERL decided that, because they were only looking at harmful drinking, it was ok to just set all those cells in the table to zero rather than maintain a number showing benefits (and consequent reductions in net harm). 

Matt Burgess and I went through the BERL report, seeing what the number would look like if more standard method were followed. For example, BERL counted as social cost to the country every dollar spent on alcohol, including every dollar spent on excise, by those drinking more than about 2 pints of beer a day. Drinkers' spending on beer is a social cost only in the sense that private costs are part of social costs. And since benefits enjoyed by drinkers would need to be netted for any sensible net cost figure, the whole thing was a bit suspect. 

BERL responded to the critique by updating the figure to no longer count as a social cost drinkers' spending on alcohol excise, but let the rest stand. 

Brad Taylor joined Matt and me for an update to the review in 2011, when we went through the underlying Collins & Lapsley work. We adjusted upward the revised BERL figure, but the majority of the BERL-tallied costs were either double-counting or costs far better considered private than external and social. 

BERL provided an updated figure in 2018, but it turned out just to be the old figure multiplied by GDP growth over the period. Which could be fine if the initial number were sound (it wasn't) or if alcohol social costs scaled with GDP (they don't necessarily, and especially where alcohol consumption was declining over the relevant period). 

And the whole thing is a bit silly where the measured social cost really doesn't matter. The policy question is always whether any intervention, whether excise or otherwise, provides net benefits. Interventions can fail to do so despite very high measured social cost; they can also provide benefits even if social costs are low. The only reason for generating large social cost numbers is to motivate "something must be done" responses. 

Anyway. 

The number turned up again in last year's "Independent Review of the Alcohol Levy Stage 1: Rapid Review". The work for the Public Health Agency was undertaken by NZIER and Allen + Clarke. 

The work included this section:

90. The cost of alcohol-related harm to New Zealand society is significant. This section provides a summary of existing estimates of the cost of alcohol-related harm in Aotearoa New Zealand. 

91. The most recent study to quantify the social cost of alcohol in Aotearoa New Zealand was conducted by BERL in 2009. Commissioned by ACC and the Ministry of Heath, the report aimed to quantify the social cost of alcohol and drug related harm looking at the personal, economic, and social impacts. While the estimate of the social cost of alcohol-related harm in Aotearoa New Zealand published by BERL in 2009 and updated in 2018, or rather the methods used to generate it, have been criticised by some commentators, it has been widely cited in the alcohol-harm research and policy space in New Zealand over the last 14 years (BERL, 2009; Nana, 2018). The Law Commission’s 2010 report on the review of the regulatory framework for the sale and supply of liquor also cited the BERL 2009 report. 

92. In 2018, the updated estimate of the social cost of alcohol, based on the BERL methodology, was calculated to be $7.85 billion per year (Nana, 2018). This estimate included costs resulting from justice, health, ACC, social services, unemployment, and lost productivity. Intangible costs such as years of life lost from premature death, lost quality of life, child abuse, sexual abuse, and impacts on victims of alcohol-caused crime are also relevant to assessing the overall impact of alcohol-related harm on society. The 2018 update did not include intangible costs. A recent Australian Study found that in Australia $48.6 billion AUD of intangible costs could be attributable to alcohol (National Drug Research Institute, Curtin University, 2021). 

This section seemed particularly poorly undertaken. Citing the 2018 figure seemed particularly odd where the thing was just the old number multiplied by cumulative GDP growth. 

It's also incorrect to say that the 2018 update didn't include intangible costs. Intangible costs of lost life and lost quality of life were included in the 2009 figure, and the 2018 figure just inflated the old number by GDP growth.  

Paragraph 91 alludes to that 'some commentators' have criticised it, but said nothing about the nature of those critiques or who made them. Were the concerns trivial or notable?

Meanwhile, the bibliography included these two relevant references that weren't included in Para 91:

Crampton, E. (2018). The alcohol cost ‘zombie’ has returned. 

Crampton, E., & Burgess, M. (2009). The Price of Everything, The Value of Nothing: A (Truly) External Review Of BERL’s Study Of Harmful Alcohol and Drug Use (Working Paper No. 10/2009).

The 2009 piece was my original critique of the BERL figure with Matt; I'd have preferred the updated critique from 2011. The 2018 column had my initial guess that the updated BERL figure was just an inflation and population growth adjustment; my 2019 column had Ganesh Nana's confirmation that the new figure was the old figure inflated by cumulative GDP growth. So I'd have pointed to the 2019 column instead. 

But the authors clearly knew about my critiques. That they were in the bibliography suggested that there might have been more fulsome discussion of those critiques in earlier drafts. 

On 6 September 2023, I sent an OIA request to the Ministry of Health asking for all early and working drafts produced by NZIER [Paragraph 14 of the report said that NZIER undertook the analysis of existing data and evidence]; for correspondence between and notes from conversations between MoH, HPA, Allen + Clarke and NZIER regarding NZIER's analysis; and, for any peer review of the report. 

On 15 September, MoH replied saying that the correspondence would be extensive and that I needed to refine the request if I wanted to get anywhere. 

I replied immediately asking them to prioritise delivery of early and working drafts, and any peer review. I also suggested prioritising correspondence and relevant notes from meetings between and among MoH, HPA, and Allen + Clarke regarding the NZIER report. 

On 6 October, I reminded MoH that the refinement of my request only asked that they prioritise two parts of the request, and should not have triggered a clock reset; the requested information was due.

On 17 October, I had a reply from the Public Health Agency's Ross Bell. He noted that they'd considered the refinement as having triggered a time extension. But more substantively, they refused early and working drafts, as well as peer reviews, under 9(2)(g)(i) to protect free and frank expression of opinions. 

I proceeded immediately with the Ombudsman. 

On 16 November, the Ombudsman's Office commenced investigation. 

On 13 December, the Ombudsman's Office advised that the Ministry was prepared to reconsider its decision with respect to final drafts and asked whether that would be sufficient. I wouldn't know until I'd seen any released documents - if the released drafts let me see what had happened in the relevant section, that would be fine. If they didn't, I'd need to see more. I'd have to wait. 

On 2 February, a Senior Investigator at the Office of the Ombudsman noted that the Ministry had advised it would be providing a partial release, and asked whether I wished that they review the withholding of the earlier drafts; I noted that I couldn't know until I'd seen what they would release.

On 4 March, the Office reported that they were still chasing the Ministry about the later drafts. 

On 11 March, the Ombudsman advised that he had sent a letter to the Ministry recommending that the documents be released immediately and apologise for the delay.

At close of business on 14 March, the Ministry of Health released the later drafts. Ross Bell, Group Manager, Public Health Strategy & Engagement at the Public Health Agency, apologised for the delay and any related inconvenience.  

While those drafts did include some annotations from "KT" and Te Whatu Ora, they did not provide much light on what had happened with the section on alcohol social cost. The earliest draft was substantially similar to the final. 

So I still cannot really tell what happened. 

The bibliography references to the critiques suggest that, at minimum, those references were included as a citation in an earlier draft of Para 92. It's possible that an earlier version included more substantive discussion of those critiques, but it's hard to say.

I've asked the Ombudsman to form a determination around those earlier drafts' discussions of the costs of alcohol-related harm.

I suspected that the first draft from NZIER included substantive discussion of the relevant arguments. NZIER aren't idiots; they know this stuff. It's in the bibliography, so it was there at some point. 

If there had been more substantive discussion, was it excised at request of Allen + Clarke, or at request of the Public Health Agency?

In either case, the effect is a document sent to the Minister, advising on the alcohol health levy, that provides a fairly one-sided view on alcohol social costs. 

I yesterday received an additional bit from the Ministry, which might speak to the Public Health Agency's views on things:

Kia ora Eric,

Further to the below email sent to you containing the reconsidered documents of your OIA (ref. H2023031477), the Ministry has identified a paragraph pertaining to yourself in one of the early draft documents. While the Ministry is maintaining its position on withholding the early draft documents under 9(2)(g)(i) of the Act, the following excerpt is being released to you under section 16(1)(e) of the Act: 

So it seems that early drafts did include substantive discussion of my critique of the BERL figure, and that someone caused it to be erased.

I'd also note that I was discussant at the NZAE meetings on the BERL paper in 2009. It was standing room only, because my critique of the BERL paper had already been released. The Ministry could consider asking any economist in the room whether my critique was just a me-thing, or whether the profession broadly shared my concerns.

I did that work as an academic in the Department of Economics at Canterbury, five years before I joined the Initiative, and two years before doing any industry-funded work. The funded 2011 work [funded by NABIC] discovered an error in the earlier unfunded work that had us revise upward the earlier estimate of alcohol social cost. 

I note that Ross Bell, now relevant Group Manager at the Public Health Agency, was Executive Director of the Drug Foundation when the BERL figure was originally being critiqued. 

Here is the issue of the Drug Foundation's "Matters of Substance" newsletter that included discussion of the controversy around BERL's number. It would be surprising if Bell were not aware of the difficulties with BERL's figure. He had the masthead editorial on the issue of their newsletter in which my critique of the BERL figure was discussed. 

I'll look forward to seeing whether I can get any further with this via the Ombudsman. 

In the meantime, it looks pretty obvious that the Public Health Agency was very happy to put a biased document up to the Minister as advice - whether they requested that outcome directly, or had Allen + Clarke do it.

A provisional health warning on advice from the Public Health Agency may be in order. At least until we can figure out what the heck is going on over there. 

And a reminder that government-commissioned reports face censorship regimes. If the Ministry doesn't like what it says, well, the offending bit gets disappeared. As an offending bit here seems to have been disappeared. 

Morning roundup

The morning's worthies.

• Medsafe allows low-dose CBD over-the-counter. +1 for Medsafe. Unfortunately, no CBD products are here approved and we don't just automatically approve medicines that have been approved by trusted overseas agencies. -50 for NZ.
• Danyl McLauchlan's alt-centrist manifesto, or at least steps toward one. 
• A presidential succession horror story
• A post-mortem on the Gino case. I keep remembering back to my time at Canterbury, and how the administrator appointed as Pro-Vice Chancellor, and the leftists in Accounting, wanted Econ to catch up with the times and start teaching all the "people aren't rational" stuff that's since fallen apart in replication or was downright fraud. 
• Wellington has more than enough problems of its own without central government funded busibodies trying to close all the bars. 
• Take a bow, Australia, Canada, Willie Jackson - and compatriots. Y'all have made news too much of a hassle to be worth the trivial amounts of revenue associated with linking to news. 
• Will be interesting to see what the next Wellington LTP looks like. Council could avoid the scenario that Castalia has put up, or at least some of it. If they're spending hundreds of millions on Town Hall, they could decide from day one just to demolish the opera house and the Fowler Centre.

NZ Alcohol excise, in context

The Tax Foundation provides some helpful context for NZ alcohol excise.

Well not directly; NZ isn't on this map. But we can add it pretty easily.

O'zapft is! 🍻💸 #Oktoberfest pic.twitter.com/grM1lNSUpd

— Alex Mengden (@amengden) September 19, 2023

So let's add New Zealand.

Excise on beer is $35.451 per litre of pure alcohol.

A 330mL bottle of 5% beer then has $0.58 NZD = €0.32 in excise at current exchange rates.

If NZ were a European country, our excise on beer would be three times the median - at least of the set of countries here listed. There are 28 countries listed. The fourteenth and fifteenth highest have excise of  €0.10 and €0.09. 

We'd be tied for fourth-highest with Sweden. 

Perhaps helpful context. NZ's prohibitionists sometimes like to complain that excise here is less than Finland. Finland is the highest in Europe, at six times the European median. 

FWIW I still like the idea of replacing NZ's messy excise tables. 

Beverages with less than 2.5% alcohol get taxed at 53.170 cents per litre of beverage. Beer and other stuff that's between 2.5 and 6% alcohol gets taxed at $35.45 per litre of alcohol contained in the beverage. Then there are goofy rates for wine, assessed per litre beverage at $2.84 for wine that's 6-9% and $3.55 per litre of beverage for wine between 9% and 14%. And stuff over 14% gets charged $64.57 per litre of alcohol.

It's a convoluted way of assessing a higher excise rate on spirits and higher concentration alcohol, but with a distortion favouring wine over beer - and charging a lower per-unit-alcohol charge on 14% wine than on 9% wine. 

If you put the whole thing on same basis per litre of alcohol in the beverage, evaluating at the top of the range of alcohol concentration, very low-alcohol stuff gets taxed at $21.27 per litre of alcohol; beer is $35.45, wine just at 9% is $31.51, wine at 14% is $25.32, and spirits are $64.57. 

There's a simpler and less distorted way of getting an increasing average excise rate while having a single marginal rate per litre alcohol, regardless of what it's in.

Just exempt the first 1.27% of alcohol from any taxation. 

Why 1.27%? If you drink bathtubs of water that had no more than 1.27% alcohol in it, you'd die of water poisoning before you died of alcohol poisoning. So it makes for a nice cutoff. Ken Henry pointed it out ages ago in a tax review. 

A $45 per litre alcohol excise, across the board, with the first 1.27% exempted, would have the same excise on low alcohol and on 6% beer. It would have a higher excise on wine than is currently the case - the excise in a litre of 14% wine would increase from $3.55 to $5.73. And excise on spirits would come down. $45 would have the thing pivot around current excise on 6% beer. 

Or you could calibrate the thing to pivot at current excise rates on wine. That'd be fine with me too. 

At $37/litre of pure alcohol, the excise on a bottle of 8.9% wine would be about where it is now, excise on a bottle of 14% wine would increase from $3.55 to $4.71, but excise on everything else would drop. 

The current setup is basically war on people who prefer cocktails to wine. I don't know why policy should pick a side in that. I like both.

In other Tax Foundation news, the 2023 International Tax Competitiveness Index is out. NZ dodged a bullet. Labour would have wrecked GST. But we will maintain our Number 1 status. 

🌍 2023 International Tax Competitiveness Indexhttps://t.co/Akuy0M6Ol9 pic.twitter.com/5A6METe9Ug

— Tax Foundation (@TaxFoundation) October 19, 2023

Morning roundup

The morning's worthies:

• NZ alcohol policy basically gives a veto over licensing to the Medical Officer of Health and to the Police. Sucks when you get a prohibitionist in charge of either. And why are so many NZ prohibitionists named Palmer anyway?
• Josh Gans on copyright status of AI-created works. 
• Grimes set up an AI trained on her own work. It tweets. Grimes notes, "The degree to which this bot has mastered my internal monologue is terrifying to me"
• Michael Reddell on RBNZ forecasting. I think it's a damned shame we didn't get NGDP markets for NZ; Simon Bridges murdering iPredict may have cost us considerably. Thanks again Simon. 
• A reminder that it was Don Lavoie who coined the term "knowledge problem" for Hayek's fundamental insight, not Hayek himself. Even if you think you're familiar with the term, please read this. 
• Immigration NZ continues to be an absolute mess. It's only partially the bureaucracy's fault. They'll have had whipsawing policy directives from the Ministers. First it's clamp down and don't process visas because Labour hates immigrants. Then the inevitable bad consequences from blocking migration, so they get told to stick every employer into the high-trust accredited employer visa programme to speed up processing - which pushes actually trustworthy employers into the same queue with a bunch that really really aren't. And the inevitable consequence of that. Absolute mess. Herald, Stuff. The Stuff piece is particularly good. 
• RBNZ figures that migration might now be reducing inflationary pressure rather than adding to it - easing labour supply bottlenecks.
• In today's edition of "China is actually a more stable and reliable trade partner than the US," Trump promises 10% across-the-board tariffs if elected. Shouldn't US foreign policy aim at encouraging deeper trade links with the US and reduced reliance on China?
• Action on Smoking and Health is getting fed up with BS coming from Health Coalition Aotearoa.

Afternoon roundup

Some of the worthies as I attempt to get the tabs down to a more manageable level...

• Michael Reddell keeps documenting the problems at RBNZ. They make stuff up when reporting to the Finance and Expenditure Committee. "But it gets harder to believe such a pro-incumbent bias is playing no part (consciously or unconsciously) in their words and actions."
• Most polled restaurant owners would make covid-infectious employees show up to work. Great advertisement for restaurants. 
• If a rezoning increases your property value by more than 7 times, then either council's supplying free-to-users infrastructure that ought to be covered by charges on users over time, or it isn't zoning anywhere near enough land, or both. 
• One reason for crypto-regulation: add a large fixed cost to a low marginal cost service to protect incumbents. 
• A link tax won't save the newspaper industry. 
• Helen Clark chats Ukraine war with Australian defence expert Mick Ryan. 
• NZ's alcohol licensing authorities still are J-Curve deniers.

Youth vaping rules

If youths are vaping, it's not for want of rules prohibiting supplying youths with vape.

The rules are broadly modelled on the rules around supplying minors with alcohol.

The Sale and Supply of Alcohol Act has a fine of up to $10k on licensees selling alcohol to minors and up to $2k for others.

The SmokeFree Environments and Regulated Products Act [I'll still call this SFEA out of habit, not SFERPA] has a fine of up to $10k for a business selling vape to minors and of up to $5k for others.

For alcohol, it's a defence to have believed on reasonable grounds that the customer was not under the purchase age - like if they provided a very credible fake ID. See 239(6).

Same deal for vape (and cigarettes, and other regulated product) at 40(4) of SFEA.

For alcohol, there's exemption in licensed premises if the minor is accompanied by parent or guardian and is supplied by the parent or guardian (240). No such exemption for vape as there aren't licensed premises.

Section 241 of SSAA prohibits alcohol supply to minors anywhere, on pain of a fine of no more than $2k, unless supply is by a parent, with consent of a parent, or if there were reasonable grounds for not believing the minor to be a minor. 

Section 41 of SFEA prohibits vape supply to minors in public places on pain of a fine of no more than $2k. There's a defence if the minor supplied a credible fake ID (4), or if the kid just took your stuff without your knowledge and where you took reasonable precaution to avoid it. 

So a parent at a restaurant can order a beer for their 17 year old, and can give permission for their kid to be supplied with one in a public place or a private place. A parent cannot give permission for their child to be supplied with a vape in a public place. 

But, there are no restrictions on providing a vape to a minor in a private place like a living room.

I don't know that there's a good case for tightened restrictions on access by minors. I also wouldn't support restrictions on kids getting a frappucino. Nicotine without combustion isn't that different from caffeine.

But if the government or an incoming government really wanted to do that, it could have parts of the vape rules more closely mirror the alcohol rules in prohibiting supply to minors regardless of whether it's a public or private place. If it did so, it really ought to also copy over the exemptions for supply by parents or guardians. 

Section 343 of SSAA makes it an offence for a minor to purchase alcohol from a licensed premise, subject to a fine of not more than $2k. Presumably this gets invoked if someone did use a fake ID and put the shop at risk. This bit could also be ported over, if you think that fining kids for trying to buy a vape with a fake ID is a good idea. Don't think it causes much harm, as compared to fining kids for possession. 

But worst of all would be if National, spurred on by Mike Hosking's crusade against vaping on Newstalk ZB, put in Australian-style restrictions. We'd wind up with a giant black market in vapes, and more harms because of it. The current regime has product notification rules that ensure that ingredients are notified, and if something's found to be a problem, they'll know what products carry it. Black market vapes aren't in that regime.

Morning roundup

The morning's worthies, as I try to trim the tabs...

• Alcohol available for consumption, per capita, continues its long slow decline.
• Noah Smith on how America became the build-nothing country. The rant would apply well in New Zealand too.
• Great piece on minimum wages and crime, wading through a mess of seemingly-conflicting results. 
• Nikki Mandow with some nice examples of co-governance working well.
• Another solar plant planned. Just the electricity market working as it should. 
• Genesis power cutting its carbon emissions and planning more low-carbon generation. Just the electricity market and ETS working as they should. 
• NZ emissions increasingly decoupling from GDP growth. Just look at this track. 

Afternoon roundup

The morning's worthies:

• A virtual art gallery of DALL-E created works. My favourite:
  
  The link gets you the annotated guide, as well as a link through into the gallery so you can walk around for a look.
• A stress test run for the ECB shows that climate change really isn't a prudential issue for central banks. Doubt it will encourage Adrian Orr to stop tilting at this windmill.
• More experts warning about MoH's advice on Covid testing. MoH currently only notes that a negative test isn't required for ending isolation. MoH should be advising people that there's substantial risk they're still infectious if they're testing positive. It was about two months ago that Anne Wyllie was describing the Ministry of Health's advice as 'dangerous misinformation'...
• Dodger Stadium is banning Roger Owen from throwing peanuts to punters.
• Aged care facilities are short on nurses and having to shut down beds. Labour seems generally of the view that it's bad for the sector to rely on migrant nurses. It'll be interesting to see how this one ends; it has a lot of potential to end badly. How many people will be pushed out of care?
• Marc Daalder has a modest proposal.
• Some fun and absurd trolley problems.
• The Gods of the Copybook Headings return to Germany.
  
• Lindsay Tedds works out the implications of Alberta ending its indexation of tax brackets. NZ really really should start indexing its tax brackets, or insist that the RBNZ do its one big actual job so it doesn't matter as much.
• Immigration restrictions don't just impinge on the liberty of those abroad. They are also a substantial hindrance on the liberties of those already here. Just ask Ilya Somin.
• Chloe Swarbrick is pushing for a lot more controls on alcohol. She's citing the BERL figure as part of the motivation. I wish people would remember that BERL's $7b+ figure isn't from a report. Their old $4.9b figure was from a report, which was severely flawed. They then multiplied that old figure by GDP growth over the period to get the new number. That's it. The initial number was nonsense but even if it had been right, the inflation requires that alcohol harm be a constant proportion of GDP. Wouldn't you even want to check whether consumption had dropped over the interval? The Greens like to claim to be evidence-based...
• Starting salary for lifeguards in Wellington, requiring a 40-credit certificate that can be done from age 16 on the job, is $51,663. It matches the starting salary for teachers with a Bachelor in Teaching. The lowest rung on the Lecturer scale at Canterbury is $82,882 and would generally require a PhD. So spending 8 years training for a PhD, after finishing NCEA at age 18, means forgoing half a million dollars in lifeguard salary as compared to starting lifeguarding at age 16.

Afternoon roundup

I've got tabs, they're multiplying. And I'm losing all control - why can't Chrome be as good as it was a decade ago?

So time to clear them. The worthies:

• The ag sector's plan for dealing with ag emission pricing was released yesterday. I'm still thinking through this one. It is definitely not a first-best. Trying to figure out whether it's a second-best or a fifth-best. Executive Summary here, full report here. Stuff covers it here and here, and here with very minor comment from me. And here's BusinessDesk.
• Prohibitionists get mad that Emerson's Brewery donated to a breast cancer research fund. I'm pleasantly surprised that there's a cancer charity that cares more about cancer than about anti-alcohol activism. 
• Labour's proposals around supermarkets are populist nonsense. I worry that they're a foreshadowing of what's coming down the track for more sectors. Labour's falling in the polls, the next year will bring some horrible combination of high inflation and higher unemployment, and an election's due for 2023. Populist stuff like this will be tempting. 
• If water takes were under a cap-and-trade regime, this sort of thing would be better policed.
• A Grand Inquisitor has been appointed who seems likely to be very diligent. 
• America's welfare system has some worse EMTR cliffs than New Zealand's.
• The Ministry of Health continues to be a dangerous clown-show. 
• Winnipeg has a new slogan: 'It's made from what's real.' Bartley Kives ahs a thread of alternatives...
• Set density restrictions on bars and outlets, create rents for incumbents. Tullock's Trap. 
• The Commerce Commission has published submissions on regulatory barriers to entry in key building supplies. The Affordable Building Coalition's submission is very good.
• Maybe it would be a good idea to make it easier for foreign-trained GPs to practice in New Zealand? Maybe?
• There's maybe one degree of separation between everyone in New Zealand but come on.

Afternoon roundup

The browser tabs. I think they're conspiring against me. They're multiplying. I have to get rid of them, before they get rid of me. They'll do it too. 

• Me, chatting over on RNZ nights with Bryan Crump about my favourite economist, Gordon Tullock. We really didn't have enough time. 


• Some fun history from PolitikWebsite on personalities in the 80s reforms, as part of an obit for Stan Rodger


• Ottawa is letting British Columbia decriminalise possession of small quantities of cocaine, opioids, and methamphetamine. One to watch!


• Huh. Turns out that warnings of a lot more tobacco smuggling weren't just pipe dreams from Big Tobacco.


• Another study finding correlations between better aging and higher alcohol use.


• NZ loses its top score for budget transparency. Not unrelated, a former Treasury official takes issue with Treasury's Budget at a Glance. 


• Building material costs continue to blow out. If only it were possible to bring in substitutes from overseas and have councils willing to sign off on their use. If only...


• New RBNZ Chief Economist Paul Conway says the bank is thinking hard about the role monetary policy should play in addressing climate change. Inflation's at 6.9%..

Afternoon roundup

The worthies on the closing of the browser tabs:

• A database of global film subsidies. Remember that the only winning move is not to play. 


• "Somewhat perversely, some local councils and contractors are putting workers back on the shovel, because that way they can get Ministry of Social Development funding to train up six workers – whereas using a diesel excavator would train only one person."


• The latest Neumark metastudy on minimum wages.


• Can't kill a zombie stat. RNZ repeats the dodgy BERL alcohol cost number. So does Stuff. Remember: the $7.8b number is just the old dodgy number from over a decade ago, multiplied by GDP growth over the period. That's it. It starts with a dodgy number, then inflates it using a dodgy method that requires that alcohol cost be a constant fraction of GDP. Me on this in the Dom, a couple years ago. 


• Looks like there are going to be delays to any NZ sanctions regime on Russian-held assets. I really don't know why we have an Overseas Investment Office if they can't even figure out how to do this. 


• Lots of NZ kids don't really know how to write or do math.
• Government is subsidising new boilers for some greenhouses and food processors. There is absolutely no need to do this. Process heat is in the ETS. 

Afternoon roundup

The closing of the browser tabs, so the poor thing can reboot, brings some worthies:

• Work from home is proving sticky in New York. The number of workers going into NYC offices is well under half of what it was pre-Covid. They're looking to turn underused commercial skyscrapers. That's what living with Covid looks like, in places that have been living with it longer than us. I don't think removing NZ's traffic light settings are going to return us to December 2019. 
• Nice. Now do contracting for PCR testing. 
• Face it. The NIMBYs are going to try to block your development in court no matter what you do to appease them. Spread the costs of inevitable lawsuits across more dwellings.
• It's not cancel-culture, it's cancel technology. 
• The Parliamentary Commissioner for the Environment warns against locking into hydrogen. Always the danger with winner-picking: you might bet the wrong one. Why not just let ETS prices take lead?
• Oh this is neat. ORBIS gives you the travel time between places in the Roman world. Rome to Alexandria in July? 14 days by fastest route and by cheapest route. Rome to Londinium? 39 days by cheapest route; 27 days by fastest route. 
• Fix the select committees already. 
• Covid testing is cheap relative to the alternative, but costs are still adding up for businesses.
• The return of the shibboleth.
• This looks fun: Townscaper.
• NZIER's tallied up employment, contribution to GDP and such for the alcohol sector. Here's the media release from the NZ Alcohol Beverages Council, and here's the report. We have 134 distilleries! There's a lot of the usual drill in portraying employment as a benefit rather than a cost, but it's a useful compilation of a pile of stats. I expect I'll be regularly googling the blog here to re-find the link to it. 
• Paranoia about the Mont Pelerin Society. Alas, it's just not that influential. 
• Would that more public goods could be coin-operated. 

Afternoon roundup

The afternoon's closing of the browser tabs:

• Markets in everything: pretending to be other people so they can have a vax pass and you can have eight shots. Some people are willing to pay $200 to have a 60x increase in their odds of real bad stuff when they catch Covid. FFS. 
• The TVA is getting back into nuclear power. One of these units, the BWRX-300, looks to have a generation cost around NZD $75/MWh. That's getting into viable-in-NZ territory. 
• With zero notice, Statistics New Zealand killed NZ.Stat: the interface for access HES and a few other datasets. Infoshare is thankfully still available. I'm talking with other folks about setting up an external mirror of Infoshare, in case SNZ does this kind of thing again. Crazy. Will be writing my Newsroom column next week on it. Statistics New Zealand found however many millions of dollars it took to run a roadshow across the country on whether and how they should be measuring spiritual wellbeing, but wound up five versions behind on core systems. Priorities man. 
• RBNZ running inflation at 5.9% lets Labour claim generosity with a 6% minimum wage hike.
• Councils that like to plead poverty oughtn't put resource into this kind of thing. 
• Superb piece by James Graham summarising the lit on rent control. I expect to point to it a lot in future. 
• Shutting down immigration did not kickstart the Oz economy: Grattan institute.
• More evidence that moderate alcohol consumption is associated with higher wellbeing later in life. 
• UK rules mean Reddit and Twitter will either have to block adult content in the UK entirely, or come up with an age verification setup. Couldn't they just answer some simple questions that only adults can answer instead?

Teetotaling documentaries

The latest anti-drinking documentary will be on tonight. Would for a world in which we'd also get documentaries from former teetotalers extolling the merits of light to moderate drinking. Instead we just get ones going the other way. 

In anticipation of some of what we might expect to hear:

1. Price elasticity of demand varies by whether you’re looking at moderate or heavier drinkers. Heavier drinkers are less price responsive. Hiking excise does more to get moderate/light drinkers to cut back than it does to get heavy drinkers to stop. It doesn’t make sense to use a linear excise tax to address a harm that’s heavily nonlinear in consumption. It’s like trying to stop speeding by increasing petrol excise on the theory that speeding uses more fuel. Excise on spirits in New Zealand, if we were ranked against the European Union, would have New Zealand at third or fourth highest.
2. When you’ve got something that has minor baseline costs but harms that rise sharply with consumption, you need some kind of two-part tariff structure. Basically, use excise to offset the low-level stuff but use other targeted policies for the rest. There are available proven policy tools that directly address harms. The 24/7 sobriety project, run in South Dakota and then expanded to other states, imposes a monitored non-consumption condition on parole/probation for offenders who’ve shown a pattern of alcohol-related crime. In South Dakota it was aimed at repeat drink drivers. The thing just works. New Zealand is set up to do it. We have the Drug & Alcohol Courts that could be perfect for it. But the thing that makes the project work in the US is the certainty of spending a night in the cells if you breach the condition. Here it’s all airy. You’ll have to talk to your probation officer who may or may not do anything, and if he does something, who knows whether the judge will impose a night in the cells or not. It’s the certainty of a very small penalty that drives better outcomes elsewhere, and here we’ve just been reluctant to do that for whatever reason. I think I’m the only one the country that beats the drum for this one, and it’s just bizarre. It works. When Mark Kleiman talked with the NZ Drug Foundation about it circa 2014, he noted that some parolees coming off the programme asked to be kept on it to help them stay on the straight and narrow. There are some folks who just have a very very bad relationship with alcohol. Excise isn’t the way to solve that. 
3. Measures of social cost are kinda dumb just on their own. You might as well tally up all the money people pay for skis, lift tickets, food while they’re at the hill, the time off work, the ambulance and hospital and ACC bills and call that the social cost of skiing. Would it help with anything? No. You certainly wouldn’t ban skiing on the basis of it. But regardless of the number you come up with, it’s entirely possible that some safety measures pass cost-benefit analysis. Whatever the social cost of skiing, it might make sense to put padding around the pillars that hold up the chair lifts so people don’t hurt themselves too badly when they crash into them. If the measure is cheap, it could be worth doing regardless of whether the social cost of skiing is a big number or a small number. And even if the cost is a big number, putting a $1000 per lift ticket tax on skiing would be stupid. Similarly, regardless of some shonky tallied total social cost figure that ignores benefits, some measures could easily be cost effective. Like 24/7. They have to be evaluated on their own basis. Why spend time and effort on a process that’s just designed to come up with a big number to drive blunt policy measures when you could instead weigh up whether particular promising interventions really stack up?
4. There's likely to be complaining about alcohol advertising and such. That's all already regulated. And it's hard to see that more regs would pass muster - at least on the evidence I'd seen as of 2014 when I wrote this. 

I worry that watching tonight's show might require heavy drinking. And it's late enough at night that my usual barman will be in bed (it's a school night) and unavailable to make me a Manhattan. Maybe I could request one earlier in anticipation. 

Who pays sin taxes?

Freshly out in the NBER working papers.

Who pays sin taxes? You probably can make a pretty good guess:

We find that sin good purchases are highly concentrated with 10% of households paying more than 80% of taxes on alcohol and cigarettes. Total sin tax burdens are poorly explained by demographics (including income), but are well explained by eight household clusters defined by purchasing patterns. The two most taxed clusters comprise 8% of households, pay 68% of sin taxes, are older, less educated, and lower income. Taxes on sugary beverages broaden the tax base but add to the burdens of heavily taxed households. Efforts to increase sin taxes should consider the heavy burdens borne by few households.

Results will apply a fortiori in New Zealand. 

They note that, in New York, a 1.75L bottle of vodka might be as cheap as $11.99, including $7.97 in tax - all USD. If that bottle is 40% alcohol, that's 700mL of alcohol. 700mL of alcohol, in NZ, draws $39.64 in excise. And of course GST on top of excise. 

They note that House Democrats proposed doubling federal excise to $2.00 per pack, on top of state taxes with a median $1.78 burden per pack. New Zealand's excise is $1.045 - per cigarette. So $20.91 per pack.

The most heavily-taxed clusters in our sample are the Everything cluster, which comprises only 2.5% of the population yet pays 27% of all existing sin taxes (around $288 per adult per year); and Smokers, who comprise 5.5% of the population and pay 41% of all existing sin taxes (around $211 per adult per year). The groups are quite similar to one another, except that the Everything group purchases a large amount of alcoholic beverages (primarily beer and spirits for 9.4L of ethanol per adult per year or 10.2 standard drinks per week), while the Smokers purchase almost none. Both groups purchase more sugary beverages than any other cluster (157-170L per household per year or about 1.5L per person per week). Both groups also purchase about a half pack of cigarettes per day, but with substantial dispersion across households (the top 20% of households in these groups purchase at least one pack per day). Demographically, these two groups look similar to one another: they are older, lower-income, lower-education, less likely to have children or belong to racial or ethnic minority groups. They are most likely to be between the ages of 55-64 and least likely to be below age 35.21 Because many of these households are in the lowest-income bin (< $25,000 per year), their overall sin-tax burden as a share of income can be significant. It averages 2% of income for the Everything group and 1.5% of income for the Smokers group. The hypothetical SSB tax would add another 0.2%-0.3% of income on top of that.

The usual claim is that while excise is regressive, the health benefits are progressive. Of course, the ones paying a ton in taxes aren't the ones enjoying substantial health benefits.  

Thanks to Paul Walker for the pointer. 

Another day, another J-curve

From the Mayo clinic:

During a median follow-up of 8.9 years, we documented 8652 incident cases of all-cause death, including 1702 cases of cardiovascular disease death, 4960 cases of cancer death, and 1990 cases of other-cause death. After adjustment confounders and amount of alcohol consumed, higher DHS was significantly associated with a lower risk of all-cause mortality, cardiovascular disease mortality, cancer mortality, or other-cause mortality (Ptrend<.001, Ptrend=.03, Ptrend<.001, and Ptrend<.001, respectively). We observed that the amount of alcohol consumed have different relationships with the risks of all-cause mortality and cause-specific mortality among participants with distinct drinking habits, grouped by DHS. For example, in the joint analyses, a J-shaped association between the amount of alcohol consumed and all-cause mortality was observed in participants with unfavorable DHS (Pquadratic trend=.02) while the association appeared to be U-shaped in participants with favorable DHS (Pquadratic trend=.003), with lower risks in those consuming greater than or equal to 50 g/wk and less than 300 g/wk.

DHS here means a Drinking Habit Score based on whether one drinks with meals and drinking at least 3 times per week. 

So all-source mortality risks are minimised by drinking with meals at least three times per week, with consumption no less than 5 standard drinks per week and no more than 30 standard drinks per week. 

The benchmark I keep in my head, from the older DiCastelnuovo metastudy, is that risks are minimised at about a standard drink a day (a bit less for women, a bit more for men), with risk back up to abstinence-baseline at around 4 standard drinks per day (a bit less for women, a bit more for men). And remember that the "sick quitter" confound is already considered in the DiCastelnuovo work. 

The latest from Mayo is entirely consistent with what we'd expect, for those who pay attention to the literature rather than the prohibitionists. But it's great to see this work continuing to bear up in repeated studies. 

Afternoon roundup

A very long overdue closing of the browser tabs brings these worthies:

• There's now a big solar plant running in South Taranaki. Remember: this is the ETS and the electricity market working. The electricity market doesn't care about the source of the power; it pays the going rate. The ETS increases the cost of thermal and especially increases the cost of coal. This plant's from Todd Energy. 
• If I'm reading this right, we could have a free trade agreement with India if we had more liberal immigration settings. That sounds like win-win, post-Covid. Unfortunately, political pressure in India leans against free trade unless it also helps make migration easier, and the current New Zealand government hates migrants and migration. 
• Alcohol & Drug use, crime, and a proposal for Victoria building on both RAND's 24/7 study and New Zealand's Drug & Alcohol courts.  
• Hungary's communist revolution didn't much affect intergenerational mobility. Greg Clark and co-authors look at surnames there 1949-2017 and find social mobility under communism was about the same as social mobility post-communism. 18th Century nobles families still do well. Romani do poorly under both. Did you know that Nicolas Sarkozy's Hungarian minor-nobility origins is indicated by the y at the end of his name?

24/7 Sobriety

A few stories this week reminded me of South Dakota's 24/7 Sobriety programme.

• There's concern about fewer offenders attending rehab programmes while in prison;
• Repeat drink driving remains a problem; even on-duty police seem to have the occasional problem. 
• At least some very vulnerable people are being placed in emergency housing alongside "gang members, and people with drug and alcohol issues", with predicable negative outcomes. 

I've previously talked about South Dakota's 24/7 programme. RAND's research on it is here. Bottom line: no-alcohol conditions as part of probation or parole, monitored, with certainty of a short sentence for violation, results in reduced alcohol consumption among those with demonstrated abuse problems, and consequent reductions in offending.

I don't know how many of the more violent people in emergency housing near very vulnerable people are on parole or probation that could have come with a monitored and enforced no-alcohol condition. 

And I wonder whether running 24/7 here might improve things. A short spell in the cells for breach of no-alcohol conditions could result in net reduction in nights in cells by reducing reoffending.