The Impact of SSB Tax on Obesity in Australia

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Introduction
According to the Biennial report card, the rate of obesity in Australia is among the worst
globally. Specifically, 70% of Australia’s male population is overweight /obese whereas 56 %
of the female population is considered obese (Dow 2018). Overall, 28% of the Australian
population is considered obese. Based on the Organization for economic cooperation and
development, the Australian obesity level is 8.5 % higher than the organization’s average. It has
been decided that obesity is some of the cause for twenty-two diseases such as cancer,
gallbladder gout, and back pain among others. In addressing the obesity pandemic in Australia,
the government established the national obesity summit in the year 2018 to research and make
recommendations on the overweight problem. Some of the implemented health policies include
dietary guidelines, health star rating, healthy food partnership, physical activity, and sedentary
behavior guidelines, clinical practice, healthy weight guide among others (The Department of
health 2019). Overall, obesity is a serious problem that ought to be addressed through taxation.
According to Australian diabetes and obesity lifestyle study, data 2011-12 suggest that
obese patients annual costs amount to 2501 $ per individual while that individual with normal
weight do spend 1998 $ annually hence the assertion that obese patients spend more on health
care than normal-weight persons( Lee et.al 2018). Noteworthy, obesity costs impact the
community and third parties through high taxes to cover government expenditure on welfare and
health. According to Gratton institute survey, community ‘third party costs amount to 5.3bn
Australian dollars in the year 201-15. Additionally, owing to the overweight nature of obese
people, there is a high chance that employers will shun away from seeking their labor services
thus imposing high welfare costs on the government (Duckett & Wiltshire 2016). The treatment
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cost for obesity-related diseases on government hospitals is quite costly thus increasing
government expenditure. In an effort to curb rising health costs for conditions such as obesity,
the government could encourage the consumption of healthier food options through food market
regulation and subsidizing the costs of healthier food alternatives.
Economic theories seeking to explain why obesity exists.
Arguably, market failure is responsible for the rising cases of obesity. Is believed
that an unregulated market leaves no room for personal choice as the only reason for rising
obesity levels. The author argues that the government ought to provide a healthy environment for
its citizens through regulation, taxes, and subsidies (Veerman 2018). Basically, market failure
defines a situation whereby there is an inefficient distribution of commodities and services. It is
argued that government intervention gives rise to positive consumption externalities. In this case,
lack of government intervention through regulation, and subsidies causes inefficiencies in the
market thus exposing the consumer to unhealthy food choices due to cheaper unhealthy options.
In this case, market regulation by government benefits consumers when healthier food options
are available at cheaper prices. Due to the high cost of healthier foods and drinks, most of the
low and middle-income earners are unable to afford healthier food options thus contributing to
obesity It is important that healthier beverages are affordable for low and middle-income earners.
Essentially, the Australian government failed to regulate the prices of healthier food
options has left consumers with negative externalities such as cheap high calories food
supplements. Additionally, income has contributed to the consumption of unhealthy food options
thus contributing to obesity. Specifically, owing to the high cost of healthier food supplements,
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low-income earners are prone to purchase and consume unhealthy food options (Cawley 2010).
The fact that healthier foodstuffs are costlier than unhealthy foodstuff makes income a factor in
the rising obesity cases in Australia. Also, technological advances have contributed to unhealthy
consumption of foodstuff. This is because technological advances have encouraged massive
preservation of foodstuff and production thus supplying a lot of unhealthy food options for the
Australian population (Cawley 2010). The preservation of mass production of drinks has to lead
to the use of additives that are not healthy hence contributing to the obesity levels among the
Australians.
Also, the availability of unhealthy foodstuffs is on the rise due to the fact that they
are readily available and convenient for many Australians. There are more fast foods and sugar
content beverages establishments as compared to healthier food eating establishment. Most sugar
content b averages are found in most shops as compared to healthier drink alternatives. The fact
that many fast food outlets have provided convenience for most of the Australian population.
Some of the key success factors for fast foods is easy accessibility and proximity to markets
(Ibisworld 2019). In a perfectly competitive market, there is a free flow of information between
consumers and producers. However, perfectly competitive markets are largely theoretical and
hard to actualize. Due to lack of free information flow, consumers are bound to make unhealthy
food choices thus contributing to obesity instances in Australia Also, individual rational
decisions are not applicable to a group of people.consumer ignorance on the content of
sweetened beverages and foodstuff has contributed to the rising levels of obesity.
Additionally, purchasing strategies are responsible for poor eating decisions by most of
the Australian population Impulsive decision-making process in the purchase of unhealthy foods
thus contributing to the rising obesity levels (Cohen & Lesser 2016). From an economic
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