Ideas@TheCentre – The Centre for Independent Studies


Ideas@TheCentre brings you ammunition for conversations around the table.  3 short articles from CIS researchers emailed every Friday on the issues of the week.

Free to be fat

15 June 2012

Susanne Eman, a mother of two from the United Kingdom, weighs 343 kgs and wants to be the world’s fattest person. Her target weight is 730 kgs, and she is well on her way to achieving her goal. Yet there are a number of anti-obesity campaigners who want to tax her fat dream. Taxes are not the answer. The obese should pay for their obesity – but they should pay market rates, not government taxes.

These campaigners also want to impose a ‘fat tax’ on meals such as Burger King’s 510 calorie bacon sundae and KFC’s 540 calorie Double Down. Last year, Denmark introduced a tax on butter, milk, pizza, oil and other foods containing more than 2.3% saturated fat. Hungary has also implemented a fat tax on foods with a high fat, salt or sugar content.

Fat tax zealots also want soft drinks to be taxed more and have convinced New York Mayor Michael Bloomberg to ban the sale of sugary drinks more than 470 ml. And in Australia, the Obesity Policy Coalition claims that more than 70% of Australians want fatty foods to cost more and healthy foods to cost less.

Fat taxes increase costs for everyone, irrespective of an individual’s girth, and importantly, do not take into account factors such as the lack of physical activity that contribute to obesity. Additional taxes imposed by the government on what we choose to eat and drink are clearly not the answer.

Rather, the additional costs of obesity should be borne directly by the obese and not by other taxpayers or businesses. This guarantees that people who are responsible and disciplined in managing their weight are not subject to a ‘fat tax,’ while ensuring the market charges the obese for the additional costs they impose on society. Some private sector businesses have started responding to the additional costs that obesity entails: several airlines require obese passengers to purchase a second seat, and insurance companies are factoring obesity into premium costs.

Susanne Eman should be free to be fat. She should pay for it too, but not through another new tax that will punish the healthy when they want to try a bacon sundae.

Andrew Baker is a Policy Analyst at The Centre for Independent Studies.

Australia’s Asian embrace

15 June 2012

Sam Roggeveen, editor of the Lowy Institute’s blog The Interpreter, recently suggested that coming to grips with the Asian Century may represent a ‘great national project’ for Australia. Embracing Asia ‘goes to the core of our national identity’ and cannot be done without political leadership, he added.

The Asian Century is not a pithy turn of phrase. It points to one of the most important geo-strategic shifts in world history. After approximately 500 years of European and American pre-eminence, power is rapidly moving back to Asian capitals and centres of commerce.

As profound as the changes heralded by the dawn of the Asian Century might be, it does not require a great nation-building response from Australia. We are already deep in an Asian embrace.

The rise of Asia is nothing new for Australia in the economic arena. From the resources sector to higher education, the Australian economy is already tied to Asia’s growing economies.

The top five destinations for Australian exports are China, Japan, Korea, India and Taiwan, and we are negotiating free trade agreements with China, Japan, Korea, India and Indonesia.

The Australian tourism industry is emblematic of the shift to Asia. While North Atlantic economies are depressed by ongoing financial meltdowns and paltry growth figures (around 2% in the United States and 0% in the Eurozone), Australia is increasingly drawing tourists from the rapidly expanding Asian middle classes.

Last year, Australia welcomed 542,000 Chinese visitors, and Tourism Australia projects that Chinese tourists could inject as much as $7 billion-9 billion annually into the Australian economy by 2020. With more than 2 billion newly prosperous Indian and Chinese middle-class consumers expected by mid-century, the importance of Asian markets will only grow.

Appreciation of the significance of Asia’s rise is not restricted to corporate boardrooms or elite defence and foreign policy circles. The latest Lowy Institute poll shows that Australians are aware of Asia’s importance to our prosperity and security: 68% of respondents said it was very important for Australia to be seen in a positive light by countries in our region.

Australia’s view of Asia is also becoming increasingly optimistic. Positive feelings towards Japan are at an all-time high, and China is increasingly viewed in a positive light.

Australia’s integration into Asia need not be a national project. It is already underway and will continue apace.

Benjamin Herscovitch is a Policy Analyst at The Centre for Independent Studies.

The state budget – motorways at 10 paces

15 June 2012

State budgets have become somewhat curious affairs in recent times. Apart from the headline items, the public is increasingly disengaged with state budgets and the likely culprit is the unbridled appropriation of state responsibilities by the Commonwealth.

That said, several components of the recent NSW budget should pique your interest. One is the imposition of ‘labour cost reduction targets’ in the NSW public service, equivalent to 10,000 jobs over four years (‘equivalent to’ here means ‘sounds better as’).

While popular, these messages do little to address underlying structural issues in the public service such as the ongoing chaos of endless restructuring, the general lack of employee accountability, and programs that are wasteful or needlessly complex. There are serious issues both with retaining talented candidates and removing underperformers. It’s a shame that dedicated and gifted public servants (and I know many) are let down by inconsistent government priorities, vague objectives, and inadequate tools.

Another area of interest is the continuing government tinkering in the housing market, this time realigning first homeowners’ concessions towards new dwelling construction. Unfortunately, previous evidence suggests that while these changes may affect housing construction in the short term, it’s likely that prices of new homes will ultimately increase to capture the additional grant.

What may be more welcome news for those crying themselves to sleep at night for want of infrastructure spending is the commitment to additional rail links in the northwest and southwest and a new motorway – though it’s not yet clear where the motorway will go. It makes sense for it to go to Sydney’s second airport, but no one knows where that will be either (other than in someone else’s backyard). Maybe call it the NIMBY Expressway and have it connect Marrickville to Badgery’s Creek – just as long as it doesn’t run through my suburb, as I don’t really want the noise.

The premier has committed only minimal spending for the new motorway, continuing a grand tradition of announcing major projects long before agreeing to spend any money. As our federal treasurer recently discovered, this lets you enjoy the benefits of a positive announcement but is easier to cut if lower tax receipts jeopardise your surplus. What a shame that NSW doesn’t have any Joint Strike Fighters to defer – we could have been in surplus already.

Speaking of fighters and roads, a brouhaha is looming over funding for the Pacific Highway upgrades. With the premier declining to commit to a 50/50 funding split with the federal government, he is essentially saying, ‘It’s my way or the highway.’

Let’s hope he is wrong and we can have both.

Simon Cowan is a Research Fellow at The Centre for Independent Studies.