Independent Review of the Alcohol Levy Stage 1: Rapid Review

Overview

Manatū Hauora – the Ministry of Health, with the support of Te Whatu Ora and Te Aka Whai Ora, has commissioned Allen + Clarke, working with the New Zealand Institute of Economic Research, to review the use of the levy and its function under the new Pae Ora (Healthy Futures) Act 2022 following the recent health reforms.

The alcohol levy is raised from alcohol produced or imported for sale in Aotearoa New Zealand and allows Manatū Hauora – the Ministry of Health, to recover some of the cost of addressing the harm caused by alcohol. The levy has not materially changed since 2013. During that time, the health system has changed significantly, with last year’s health reforms expanding the Ministry’s responsibilities regarding the levy funding directed to address alcohol-related harm. Given these factors, it made sense to review how we set and invest the levy.

The review is being conducted in two stages. The stage one report, published in July 2023, was timed to inform the annual alcohol levy setting for 2023/24. It recommended retaining the alcohol levy at the current level until further analysis and more in-depth stakeholder engagement has been undertaken during stage two of the review.

The stage one review report highlighted that:

• the levy had not kept up with costs in real terms over time and would be significantly higher if it had been adjusted for inflation,
• the levy is proportionately very small compared to even the most conservative estimates of the cost of alcohol-related harm in Aotearoa,
• any possible future change in the levy settings would be unlikely to have a noticeable impact on the price New Zealanders pay for alcoholic drinks.

Stage two of the review will provide more in-depth analysis and recommendations to inform how the levy is set for the 2024/25, and future financial years. Awaiting the findings of stage two of the review will ensure any decisions regarding any changes to the levy will be informed by robust information and analysis. The second stage report is expected to be completed in late 2023.