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Enhancing Food Security and Physical Activity for Māori, Pacific and Low-income PeoplesChapter 2: Money available in households2.1 Potential uses of economic instrumentsDes O’Dea, Delvina Gorton and Cliona Ni MhurchuSummaryTwo ‘Economic Instrument’ interventions, involving either subsidies or taxationchanges, were proposed at the Enhance workshop in September 2008, and areassessed in this section.Proposed Intervention I: Removing Goods and Services Tax (GST) from healthy basicfoods.Conclusions:There are substantial objections to this proposed intervention. The most important, inthis context, is that it would be a very bluntly targeted instrument for addressing foodinsecurity issues. Households right across the income spectrum would benefit.Proposed Intervention II: Provision of a Smart Card, providing discounts on healthynutritious food.Conclusions:The use of a Smart Card is practicable. It is now used nearly universally in the UnitedStates for the issuance of ‘Food Stamps’ to poor families, and also for other benefittransactions. It has promise for improving food security, and also the nutrient qualityof food purchases. Entitlement to such a benefit, and the nature and amount of thepayment could take a number of forms.The two principal issues to resolve are:• The choice of foodstuffs to be subsidised - three possible options are 1) fruitand vegetables; 2) a ‘basket’ of specified ‘staple’ foodstuffs, such as fruit andvegetables, milk, cereals and cereal products, fish, meats; and 3) food itemsidentified as being of good nutritional quality by an agency such as FSANZ(Food Standards Australia and New Zealand). On the advice of members ofthe project team experienced in these matters the third option appears thebest.• Eligibility for a smart card - it is envisaged that there would be one card perfamily unit, and that the amount loaded on the card would be of the order of$5 per dependent child per week, or a similar amount for an eligible householdcomprising adults only. There are several possibilities for determiningeligibility. The best are either 1) Income tested eligibility. Similar for example tothe current Community Services Card, but excluding pensioners, or2) Universal eligibility. For instance, all families with dependent children,regardless of income. The advantages of the ‘Universal’ option are itssimplicity, and that it overcomes stigmatization issues. The disadvantages arethat it is expensive, and that much of this expenditure is directed to relativelywell-off family households. The ‘Income-tested’ option could carry ‘stigma’, butis better-targeted and also less expensive.11
Enhancing Food Security and Physical Activity for Māori, Pacific and Low-income PeoplesRecommendations are that the:• removal of GST from food in general, or from ‘healthy basic foods’, not beendorsed as an intervention for reducing food insecurity, and• concept of a Smart Card for subsidising food costs and thereby reducing foodinsecurity has attractive features and should therefore receive further detailedinvestigation.Problem DefinitionA proportion of households suffer ‘food insecurity’. That is, they are not always able tobuy the amount and quality of food desired. Possible contributory causes include:insufficient household income, and high prices of food.Food insecurity has consequences for nutrition and health. Foods consumed in afood-insecure household may be of high calorie content but low in other key nutrients.This can lead to poor health of household members, and inappropriate consumptionpatterns can also cause overweight and obesity with long-term adverse healthoutcomes. Measures that reduce food insecurity can therefore reduce health-carecosts and improve health outcomes. Such measures are potentially cost-effective.Two possible economic tools for dealing with the problem of food insecurity are:subsidising food prices, and increasing household incomes. For example, by reducingtaxes or increasing cash or ‘in-kind’ benefits.Two proposals on these lines emerged from the ENHANCE workshop in September2008 as appearing worthy of future research. These were:• Removing Goods and Services Tax (GST) from healthy basic foods. (Fromthe group discussing ‘Cost of healthy, nutritious food’.) This particularintervention has been proposed and discussed a number of times in the past(refer NZ Nurses Organisation debate). 1 2• Provision of a Smart Card or loyalty card, providing discounts on healthynutritious food. (From the group discussing ‘Money available in households’.)Note that it is not clear what was meant in the discussion by a ‘loyalty card’ inthis context, so the assumption made here is that the term was used simply asa synonym for a ‘Smart Card’; that is, an electronically coded card providingdiscounts on specified foods. Also, it is assumed here that the proposal for asmart card does not rule out, as either an alternative or a supplement, the useof paper ‘vouchers’. Such a scheme applied for many years in the UnitedStates in the form of Food Stamps provided to families meeting certain criteria.More recently the provision of these in the United States has been madelargely electronic – in the form of EBT - Electronic Benefits Transfer. 3There are significant differences between these two proposed interventions. The ‘GSTremoval’ intervention proposes a tax reduction of a specified amount. Also, it wouldapply to all purchasers of those foods exempted from GST, regardless of the incomeor other characteristics of the purchasing household.The ‘Smart Card’ proposal is more flexible in these respects. The subsidy rate forspecified foods can be varied as policy-makers think fit. Also, the intervention can betargeted to provide benefits to only those households with given characteristics. In this12
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