Alcohol floor price

Parliament house flag post

Alcohol floor price

Posted 9/06/2011 by Matthew Thomas

There are indications that the Government is considering introducing a nationwide floor price (or, minimum unit price) for alcohol. Such a mechanism would make it illegal for a retailer to sell alcohol below a certain price per standard drink. The move appears to be primarily in response to the problem of cheap cask wine and its contribution to alcohol-related harm in Indigenous town camps in the Alice Springs region.

Minimum unit pricing has not yet been implemented anywhere in the world, despite the Scottish Government’s recent attempts to introduce such a scheme. In 2008, in response to evidence of significant and increasing alcohol-related harm in Scotland, the Scottish Government set about developing a comprehensive framework for tackling alcohol misuse. As part of a package of measures, the government introduced a proposal for a minimum price on alcohol. On 25 November 2009, following extensive consultation, Scotland’s Health Minister, Nicola Sturgeon introduced a Bill that would have ensured that alcohol could not be sold below a minimum price per unit to be specified by Scottish Ministers and subject to the control of the Scottish Parliament.

Despite strong support for minimum pricing from a range of health organisations and campaigners, the proposal was rejected by Scottish Labour, the Liberal Democrats and the Tories. When the Bill was ultimately passed on 15 December 2010, the minimum unit pricing measure was not included.

There is well regarded research evidence to suggest that minimum unit pricing could prove successful in reducing alcohol consumption and harm. In 2007, Sheffield University researchers were commissioned by the UK Government to conduct an independent national review of evidence on the relationship between alcohol price, promotion and harm. The alcohol pricing and promotion policy options appraised included across-the-board price increases, policies setting a minimum price per unit of alcohol (floor prices) and policies restricting price-based promotions in the off-trade sector (such as banning ‘buy one, get one free’ offers).

In keeping with existing international research findings, the study found that general price increases were effective in reducing alcohol consumption, health-care costs, and health-related quality-of-life losses in all population subgroups. Benefits in terms of reduced deaths and illnesses and subsequent gains in quality-adjusted life years were found to be roughly proportional to the magnitude of consumption reduction. Were a ten per cent general price increase to be implemented in the UK, then it was calculated that this could reduce alcohol consumption by 4.4 per cent and deaths by 1460 per year ten years after policy implementation.

However, it was found that the introduction of a floor price of £0.45 per unit of alcohol would result in a similar reduction in consumption of 4.5 per cent with the added advantage of an increased number of deaths avoided (1970 per year). Further, it was determined that minimum unit pricing would target harmful drinkers, while not having a significant impact on consumer spending for moderate drinkers.

Some critics have questioned this last finding, suggesting that because of dependency issues and social factors, hazardous and harmful drinkers are less likely to be responsive to price changes than moderate drinkers.

Nevertheless, much of the existing evidence supports the contention of the Sheffield University researchers. While it is difficult to establish a causal relationship between alcohol price and consumption, and there is no direct evidence of the effect of a minimum unit pricing mechanism, the available evidence suggests that price changes generally do lead to changes in consumption habits. That is, even if hazardous and harmful drinkers are less responsive to price increases than other drinkers, the research evidence indicates that their alcohol consumption would still decline.

Although there is evidence to suggest that the imposition of a national floor price on alcohol could help to achieve the Australian Government’s goals, the mechanism raises a number of issues.

First, the licensing of alcohol retailers in Australia is the responsibility of the states and territories. Hence, the Government would require their cooperation to introduce a uniform alcohol floor price. Alternatively, the Commonwealth would have to legislate to override state and territory regimes. An appropriate Commonwealth head of power would need to be found for the latter approach.

Second, from a legal perspective it could be argued that imposing a floor price would limit the free movement of alcohol products between other countries and Australia.

Third, it would need to be determined how a minimum price on alcohol products should be set and subsequently varied; would this be by the Parliament (as per the Scottish Government’s proposal) or by an independent authority?

Fourth, the introduction of minimum unit pricing would probably need to be accompanied by measures that restrict various forms of alcohol discounting. In response to minimum unit pricing, retailers could introduce or increase promotional activities, such as ‘three drinks for the price of two’ offers, that do not breach the minimum unit pricing requirements. This would, of course, undermine the intent of the minimum unit pricing scheme by making alcohol available at significantly reduced prices through other means. This leads onto another, related issue, that is, the need to closely police any minimum unit pricing scheme and the licensed premises responsible for its enactment.

Fifth, measures would need to be taken to counter the potential for drink substitution in Indigenous communities (and elsewhere). In the face of increased cask wine prices, problem drinkers could turn to cheaper alternatives, such as methylated spirits, or distil their own alcohol.

Generally speaking, it should be noted that discussion of an alcohol floor price in Australia tends to cloud the underlying issue of how alcohol is taxed. The current taxation arrangements are inconsistent and result in low rates of taxation on certain beverages.

A feature of alcohol taxation in Australia is that the amount of tax, per litre of alcohol, varies greatly. Further, as discussed in this Parliamentary Library paper, apart from the tax incentive favouring low alcohol beer—whereby via a threshold, the amount of tax per litre of alcohol increases with the alcohol content of beer—there is little or no rationale for the differences in rates. The Library paper advocates a single rate of tax per unit of alcohol, as does the final report on Australia’s future tax system (the Henry Review) and the National Preventative Health Taskforce.

Arguably, then, the best possible single option for reducing alcohol related harm among all Australians would be the introduction of a volumetric system of alcohol taxation.

Image sourced from:


  • 21/01/2014 3:48 PM
    johnseomaven said:

    There should be a policy or law to enforce alcohol retailers or manufactures and its employees to take training and certification exams. The advocacy to lessen and prevent underage access to alcohol should start from responsible alcohol retailing training for companies such as wholesalers, manufacturers, and distributors.

  • 21/01/2014 3:48 PM
    Matthew Thomas said:

    Thanks for reading the post and for your comments, John. You are right to suggest that cheap alcohol and its contribution to alcohol-related harm is ultimately a social issue. As such, it is important to understand why some people drink more alcohol than is good for them, and to tackle these causes wherever possible. However, it may also be argued that the problem is in large part a result of market failure, in which an insufficiently regulated alcohol market, combined with a dysfunctional alcohol taxation system, has resulted in alcohol being sold too cheaply, causing significant individual and social damage. In such a situation, there is a case to be made for government intervention to correct the market failure and improve the market’s efficiency. In this instance, that would mean ensuring that alcohol (a drug) cannot be sold below a price that demonstrably contributes to the problem of alcohol-related harm. You may be interested in a paper a colleague and I have recently written (see;fileType=application%2Fpdf#search=%22library/prspub/433029%22) in which we consider the question of when governments are justified in intervening in society and the market to limit people’s choices for their own good (in this case, potentially through ensuring that alcohol is not sold below a certain price).

  • 21/01/2014 3:47 PM
    John said:

    You cover off a lot of issues. I think at the end of the day it comes down to a social issue that cannot be effectively controlled or manipulated with a economics-style pricing mechanism.

Thank you for your comment. If it does not require moderation, it will appear shortly.
Facebook LinkedIn Twitter Add | Email Print


Flagpost is a blog on current issues of interest to members of the Australian Parliament

Parliamentary Library Logo showing Information Analysis & Advice




refugees asylum immigration Australian foreign policy Parliament elections climate change social security women welfare reform taxation Indigenous Australians Australian Defence Force welfare policy school education higher education private health insurance health financing emissions trading Senate Australian Bureau of Statistics employment people trafficking Asia statistics Middle East illicit drugs gambling health reform federal election 2010 Australian Public Service income management Medicare disability Sport United Nations environment industrial relations constitution transport politics criminal law Afghanistan health forced labour food public service reform aged care aid Australian Sports Anti-Doping Agency World Anti-Doping Agency United States federal budget Carbon Pricing Mechanism dental health international relations governance regulation Fair Work Act voting law enforcement electoral reform OECD Australian Electoral Commission WADA child protection poker machines Australia in the Asian Century steroids National Disability Insurance Scheme detention 43rd Parliament slavery health system leadership domestic violence parliamentary procedure International Women's Day accountability defence capability multiculturalism ASADA Australian Federal Police labour force people smuggling debt New Zealand Australian Crime Commission pharmaceutical benefits scheme political parties coal seam gas Human rights crime China Census election results UK Parliament Papua New Guinea banking corruption pensions children's health Aviation federal election 2013 foreign debt gross debt net debt Senators and Members ALP Newstart Parenting Payment Youth Allowance sea farers United Kingdom energy food labelling Australian economy violence against women vocational education and training military history by-election High Court skilled migration mental health Federal Court terrorist groups science social media Higher Education Loan Program HECS federal state relations youth paid parental leave same sex relationships customs planning doping health risks Gonski Review of Funding for Schooling sex slavery Special Rapporteur Northern Territory Emergency Response social policy ANZUS Rural and regional trade unions Foreign affairs election timetable Indigenous royal commission Productivity firearms public policy Population ADRV terrorism transparency research and development welfare ASIO intelligence community Australian Security Intelligence Organisation carbon tax mining employer employee renewable energy regional unemployment fishing European Union family assistance United Nations Security Council forestry Drugs welfare systems Indonesia children Constitutional reform local government codes of conduct terrorist financing homelessness Parliamentary remuneration money laundering Trafficking in Persons Report social inclusion paternalism environmental law US presidential election nutrition ODA Defence sitting days electoral divisions Southeast Asia administrative law universities TAFE Ireland citizenship asylum seekers early childhood education Canada Financial sector national security fuel disability employment Tasmania integrity standards NATO Australian Secret Intelligence Service sexual abuse World Trade Organization Australia public health housing affordability bulk billing water health policy Governor-General US economy export liquefied natural gas foreign bribery question time speaker superannuation public housing expertise climate Intergovernmental Panel on Climate Change Department of Agriculture Fisheries and Forestry Pacific Islands reserved seats new psychoactive substances synthetic drugs UNODC carbon markets animal health middle class welfare constitutional recognition of local government referendum consumer laws PISA competition policy US politics language education baby bonus Leaders of the Opposition citizen engagement policymaking Australia Greens servitude Trafficking Protocol forced marriage alcohol entitlements ministries Hung Parliament social citizenship maritime Iran regional students school chaplains federal budget 2011-12 salary Medicare Locals primary care Building the Education Revolution marine pollution sustainability prisons police deaths in custody electoral margins electoral pendulum electoral redistribution redistribution NSW redistribution WA redistribution ACT electoral boundaries ASEAN Sustainable Development Goals Double dissolution Senators safety vehicles MYEFO Pathology tertiary education Taiwan Xi Ma meeting family violence government financial advisers financial planners Financial System Inquiry Murray Inquiry China; Economic policy; Southeast Asia; Africa housing Speaker; House of Representatives; Parliament High Court; Indigenous; Indigenous Australians; Native Title ACT Indigenous education Norfolk Island External Territories emissions reduction fund; climate change child care funding refugees immigration asylum procurement Indigenous health e-voting internet voting nsw state elections 44th Parliament 2015 ABS Age Pension Death penalty capital punishment execution Bali nine Bali bombings Trade EU China soft power education Fiji India Disability Support Pension Antarctica Diplomacy by-elections state and territories Bills anti-corruption fraud bribery corporate ownership whistleblower G20 economic reform innovation Members of Parliament Scottish referendum Middle East; national security; terrorism social services Criminal Code Amendment (Misrepresentation of Age to a Minor) Bill 2013 online grooming sexual assault of minors ACT Assembly smoking plain packaging tobacco cigarettes Asia; Japan; international relations Work Health and Safety Migration; asylum seekers; regional processing China; United States; international relations fiscal policy Racial Discrimination Act; social policy; human rights; indigenous Australians Foreign policy Israel Palestine asylum refugees immigration political finance donations foreign aid Economics efficiency human rights; Racial Discrimination Act employment law bullying Animal law; food copyright Australian Law Reform Commission industry peace keeping contracts workplace policies same-sex marriage disorderly conduct retirement Parliament House standing orders prime ministers First speech defence budget submarines workers Somalia GDP world heritage political engagement leave loading Trade; tariffs; safeguards; Anti-dumping public interest disclosure whistleblowing Productivity Commission limitation period cancer gene patents genetic testing suspension of standing and sessional orders live exports infant mortality honorary citizen railways disciplinary tribunals standard of proof World Health Organisation arts international students skilled graduate visas temporary employment visas apologies roads Italy national heritage NHMRC anti-dumping Rent Assistance obesity evidence law sacrament of confession international days DFAT UN General Assembly deregulation Regulation Impact Statements small business Breaker Morant regional engagement social determinants of health abortion Members suspension workplace health and safety marine reserves hearing Victoria astronomy resources sector YMCA youth parliament Korea rebate Australian Greens presidential nomination Racial Discrimination Act political parties preselection solar hot water Financial Action Taskforce Horn of Africa peacekeeping piracy Great Barrier Reef Stronger futures political financing political education Social Inclusion Board early childhood National Quality Framework for Early Childhood Education and Care Murray-Darling Basin sanctions Norway hospitals republic President Barack Obama Presidential visits qantas counselling Korean peninsula Work Choices biosecurity hendra federalism federation preselection therapeutic goods Therapeutic Goods Administration plebiscites computer games pests suicide nuclear COAG Ministerial Councils floods ADHD stimulant medication advertising electricity extradition conscience votes poverty preventative health rural health coastal erosion Parliamentary Budget Office work-life balance

Show all
Show less
Back to top