A GST on fresh food is an exceptionally dumb strategy in the midst of an obesity crisis

This week’s ABS national health survey confirms obesity is Australia’s greatest public health crisis, with 63.4% of Australian adults or 11.2 million people now overweight or obese.

Alarmingly, these figures are certain to get worse, with the survey also finding an astounding one in four children are already overweight or obese before they turn 17.

Normally, when faced with clear evidence of a public health crisis, the rational response is for evidence-based policies designed to counter the problem.

When Australia’s road toll approached 4,000 deaths a year in the 1970s, governments responded to this public health crisis with evidence-based policies such as compulsory seatbelts and random breath testing which have cut fatalities by over two-thirds.

When the link between smoking and cancer became clear, governments both Liberal and Labor again introduced evidence-based policies such as higher taxation, advertising restrictions and plain packaging that have dramatically cut Australia’s smoking rate.

So there is something both absurd and alarming about a government that – in the midst of an obesity crisis that threatens to break the bank as far as health funding is concerned – pushes a policy that can only make the problem worse. No serious health expert believes the answer to the obesity crisis includes whacking a new tax on fresh food.

No serious health expert believes extending the GST to fruit, vegetables, milk, bread, meat and seafood will do anything other than tip the balance more towards junk food by making it more expensive to have a healthier diet.

And we’re not talking a few cents here. Malcolm Turnbull’s own Treasury figures show even just extending the existing 10% GST to fresh food would cost $6.3bn a year, an extraordinary impost that, as always with the GST, would fall hardest on those with the least to spare. And if the GST is raised to 15%, as media reports today suggest, then that hit climbs to $9.45bn a year.

Recent Natsem modelling commissioned by Acoss makes clear who would be the hardest hit by any broadening of the GST base: low-income earners.

The modelling found extending the existing 10% GST to fresh food would reduce the spending power of the lowest 20% by 2%, the middle 20% by 1% while the top 20% – those with most to spare – would lose just 0.6% of their purchasing power.

As Acoss CEO Cassandra Goldie pointed out:

Low- and modest-income households would clearly pay a higher proportion of their income, in comparison to higher income households through an increase in the GST, whether by increasing the rate or broadening the base by removing the exemptions.

Even without the GST, Australians don’t come anywhere near eating the recommended amount of fresh food. The ABS survey finds:

In 2014-15, just half (49.8%) of adults met the Australian dietary guidelines for recommended daily serves of fruit, while only 7.0% met the guidelines for serves of vegetables. Just one in 20 (5.1%) adults met both guidelines.

While nearly seven in 10 (68.1%) children aged 2-18 years met the guidelines for recommended daily serves of fruit, just 5.4% met the guidelines for serves of vegetables and barely one in 20 (5.1%) children met both guidelines.

No wonder the recent global burden of disease study already rates our poor diet as the biggest contributor to disease and illness in Australia, followed by obesity. It states:

Overall, the three risk factors that account for the most disease burden in Australia are dietary risks, high body-mass index and tobacco smoking.

Obesity and poor diet are the major factors behind the surge in diabetes in western nations, with over 1.1 million Australians now diagnosed with type 1, type 2 and gestational diabetes, and numbers growing by 100,000 a year.

Just last month the government acknowledged that healthier eating was critical to its national diabetes strategy, yet at the same time, continues to advocate for a change to the tax system that will completely undermine this by making healthier food more expensive.

The total annual cost impact of diabetes in Australia is already estimated at $14.6bn. How much worse will this get as the obesity crisis grows?

For a government that constantly complains about the growing cost of the health system, a GST on healthy food is an exceptionally dumb strategy that can only add to the health burden in coming years.

A government that really was serious about making the health system more efficient and cost-effective would cease its attacks on primary care, invest in preventive health and, above all, not be making it harder and more expensive for Australians to lose weight and have healthy diet by imposing a great big new tax on fresh food.