Labour wants to be fiscally responsible and seems arctic cool on Phil Goff's GST-off fruit and vege policy. But they may be about to switch horses at just the wrong time

Back in 2011, then-Labour leader Phil Goff went to Mana to announce a new policy - taking the GST off fresh fruit and vegetables. He described it as a "game-changer". Problem was, however it may have changed people's eating habits, it was no political game-changer and as we know Goff slid to defeat in that year's election.

When David Shearer arose from 'the battle of the Davids' to be the party's new leader he signalled a focus on things economic and education and a disinterest in anything that could be labelled as "nanny state". From Goff's menu of policies, only a capital gains tax earned much praise. The GST-off fruit and vege idea has never been completely dismissed, but it was placed firmly at the back of the chiller.

As recently as Monday, Shearer was saying, "If we can't afford policies then they will have to go. GST off fresh fruit and veg is one thing we're looking at,"

But Shearer may be missing a populist -- and healthy -- trick on this one. The Vote debuted on TV3 last night (it's my new venture, hosted by Guyon Espiner and Duncan Garner) with a debate on whether it's time to tax unhealthy food. There have been some encouraging comments today about the show, but little about the substance of the moot.

Frankly I was shocked that viewers voted 54% to 46% in favour of a new tax. When on earth did New Zealanders vote for more tax? And for the government to tell them what to do?

It's nanny state gone mad! ... But seriously, the result was unexpected by both us and the debaters. Now this is not a poll, there's nothing scientific about it. But it's a substantial (self-selected) sample and an issue politicians should turn their mind to.

It seems there's genuine public concern about obesity and a desire to see politicians take a lead, one way or another.

Food taxes are a coming trend around the world. Several European countries have introduced them -- Denmark has gone so far as to introduce AND ditched a fat tax. Many Danes simply crossed the border to buy their fat in Germany.

But Hungary, Norway, France and others have taxes; David Cameron in Britain has said he's interested in the idea and New York mayor Michael Bloomberg is on a crusade against soft drinks. The motivations are mixed - often dressed up as health measures, it's hard to believe it's a coincidence that these new taxes just happened to seem a good idea around the time of the GFC.

The food industry is of course horrified by the trend, arguing all things are fine in moderation and there's no bad food, just bad diets. Most of all they hate the comparison healthy food campaigners draw with tobacco.

They have a point of course - tobacco in any form is optional, food is not. However on the other hand, fast food is as optional as tobacco.

Where the comparison works though is the cost pressure it's putting on our health system. Obesity -- heavily influenced by our diets -- costs us around $1.5 million a day in healthcare alone. And that's not mentioning lost labour productivity and the tragedy of early death. We are the third fattest country in the OECD.

As with tobacco, education only goes so far. But cost has cut smoking rates and could have a similar impact on unhealthy foods, especially soft drinks. As popular as the fizz is, there's really nothing nutritional about it. It does seem a rich target for public health campaigners and a pretty easy low-hanging tax fruit. (Although if it was a fruit, you wouldn't want to tax it!).

The Vote result suggests the time may almost have come for some sort of unhealthy food tax. My understanding is that Labour was very close to adopting such a policy under Goff, but it was decreed too big a political risk.

It would still be a huge punt - especially considering how unpopular it could be in Labour's South Auckland voting base. But a soft drink tax at least could be presented as a life-saver to those fizz-heavy communities.

The easier, and probably more popular, option would be simply to reaffirm its commitment to taking GST off fresh fruit and vege; it's easy to criticise it from a tax  and lost revenue point of view but much harder to complain about from a health standpoint. It's unquestioned that price does influence buying behaviour.

The arguments against include the fact the produce prices vary a lot regardless of tax - one flood in Queensland and the price of this or that is back to the pre-tax level.

But it was telling to see how many people online, on facebook and Twitter - regardless of which side they voted for - liked the idea of taking tax OFF healthy foods. Heck, everyone's going to prefer lower tax to a new tax, but there seemed to be a strong mood for action.

The Greens want this, so Labour might want to look again in that vege chiller and taihoa on dumping that policy lest it end up abandoning it just as its time has come.


Comments (6)

by Matthew Percival on March 28, 2013
Matthew Percival

I'm surprised it was only 54% given who I anticipate would watch such a show!

I wonder how effective this policy would be. We have markets all over New Zealand, at many of which fruit and vegetables are sold "Straight off the Farm". Given the cash nature of these businesses I'll take a punt that not many of them are charging GST on their product. 

Happy to be corrected but my feel on this one is that GST free fruit and vegetables are already available at the markets.

There is also no guarantee that a GST cut would be passed on to consumers. Indeed if there is a lack of fruit and vegetable consumption (which would be suggested by being the 3rd fattest population in the OECD) cutting the price of fruit and vegetables to get people into your supermarket would not appear to be a viable strategy. Indeed a superior strategy may be to cut prices further in another area (perhaps "unhealthy" food) to get the people in and then make your money on the fruit and veg.

I like the intent of the policy but I think it would make stuff all difference.

by stuart munro on March 30, 2013
stuart munro

In his enthusiasm to avoid 'can't afford' policies Shearer has basically lost the game already. At current interest rates and returns, NZ buying the state assets that are being hocked off is not only viable but sensible. He needs to stand up to this gutless pack of bankers who screw beneficiaries but aim to give Comalco large cash payments with no repayment required. Key wouldn't do it with his own money.

by Fentex on March 30, 2013

It's a nonsense. The amount of money is insufficent to change peoples habits for the reason eat poorly is not about their casdh wealth. It's about their time wealth, personal preferences bourne of experience and state of mind.

The usual suspects often attracting blame, such as McDonalds and KFC are not particularly cheap and could afford to be considerably more expensive.

All that this tax would acheive is to further impoverise the poor for the satisfaction of a few egos.

If politicians want to tax someone to improve the publics lot why not aim elsewhere?

by Graeme Edgeler on March 31, 2013
Graeme Edgeler

When on earth did New Zealanders vote for more tax?

Lot's of New Zealanders have voted for more tax. They also vote against less tax quite often as well.

The government before this one was elected on a policy of increasing taxes. This government was re-elected in an endorsement of an increase in the GST.

Have our political journalists really got so little sense of recent political history?

by BeShakey on April 05, 2013

"I like the intent of the policy but I think it would make stuff all difference."

"It's a nonsense. The amount of money is insufficent to change peoples habits for the reason eat poorly is not about their casdh wealth"

This was back when GST was 12.5%, I'd imagine the effect would only be larger now that GST has gone up.

by DeepRed on April 07, 2013

The issue also overlooks the supermarket duopoly of Foodstuffs and Progressive Enterprises. Somehow it's not food producers who are creaming it. And if only The Warehouse had succeeded with its Extra division...

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