A ‘Minimum Unit Price’ policy refers to the setting of a minimum or lowest price at which a standard drink of alcohol can be sold.
In 2014, the Ministry of Justice1 found that 72% of all spirits and 39% of all wine was sold in off-licences for $1.20 or less per standard drink. As at November 2017, cask wine is sold for as little as 74 cents per standard drink. Given alcohol is the drug that causes the most harm in New Zealand, it is not right that a 1L bottle of spirits (with 29 standard drinks) can currently be purchased for less than $27.
RTDs can also be very cheap when sold individually. Currently, many drinkers can purchase a single RTD bottle or can from an off-licence for approximately $1.50 (or half the price of a bottle of water). Because an RTD may contain approximately 1.4 standard drinks¸ this means the cost per standard drink in an RTD is about $1.07.
By having a minimum unit price, the lowest price of a standard drink could be specified which would affect many products for sale in New Zealand. For example, a minimum price of $1.20 would mean that the lowest an RTD containing 1.4 drinks could be sold is $1.68 and a $7.00 bottle of wine could not be sold below $8.60.
Minimum unit pricing would affect off-licences the most
Although a minimum unit price per standard drink would apply equally to on- and off-licences, price increases would generally be seen at off-licences in New Zealand. This is because many of the prices of drinks at on-licences would already reach the minimum unit threshold.
However, on-licences may have special promotions whereby the prices of drinks are substantially reduced (e.g. happy hours). Research2 has looked into whether a minimum unit price should also introduced at bars, pubs, etc. The study found that introducing minimum unit prices in on-licences as well as off-licences is estimated to be substantially more effective. Implementing minimum prices across all types of premises would also reduce the likelihood of switching from off-licence drinking to on-licence drinking.
Profits are kept by the alcohol industry
Unlike excise taxes, minimum unit pricing does not create revenue for the Government.
In fact, it is the alcohol industry which benefits and some people are concerned that this could result in greater profits or spend on marketing. However, if alcohol consumption is reduced then health gains and cost savings can be made. The Ministry of Justice review found that a minimum unit price of $1.00 per standard drink would result a net benefit to the society of $318 million over a ten-year period, and a minimum price of $1.20 per standard drink would result in savings to society of $624 million over ten years.
Other countries are already implementing a MUP policy
After a 5-year legal battle in Scotland, the UK Supreme Court has allowed Scotland to proceed with its MUP policy. It was introduced on May 1, 2018. The minimum price is set at 50p per 8g of alcohol. This equates to approximately a $1.20 MUP (as NZ standard drink is 10g alcohol).
A MUP policy has been implemented in Wales, looking to be in force mid-2019. Wales are currently consulting on the level of MUP per standard drink.
NORTHERN TERRITORY, AUSTRALIA
Northern Territory in Australia have implemented a MUP policy, set at A$1.30 per standard drink (to be adjusted for inflation). This took effect July 1, 2018.
Canada has had a minimum price for a number of years, showing positive results such as reduced alcohol consumption hospital admissions, fewer offences for impaired driving, and less alcohol-attributable mortality and morbidity3-6. Research published in 20177 has further shown that minimum unit pricing reduces alcohol-related harm (acute and chronic hospital admissions relevant to alcohol use) the greatest among those with lower incomes, which aligns with a social justice goal of reducing inequities in harm.
MUP policy is currently being debated in Ireland. The draft legislation proposes 10 Euro cents per gram of alcohol. This equates to a $1.70 MUP in New Zealand.
What about New Zealand?
In 2014, the New Zealand Ministry of Justice undertook an investigation into Minimum Unit Pricing following the Law Commission’s review. However, a policy has not been pursued at this stage.1,8