Summary
In 2023, the Ministry of Health, with the support of Health New Zealand, commissioned Allen + Clarke, working with the New Zealand Institute of Economic Research, to review the use of the alcohol levy and its function under the new Pae Ora (Healthy Futures) Act 2022.
The levy is raised from alcohol produced or imported for sale in New Zealand and allows the Ministry to recover some of the cost of addressing the harm caused by alcohol. At the time of the review, the levy had not materially changed since 2009.
The review has been 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 previous level until further analysis and more in-depth stakeholder engagement has been undertaken during stage two of the review.
The stage two report, this report, was published in June 2024.
The second stage report makes several recommendations for updating how the levy is administered and invested. These include:
- increasing the Ministry of Health’s capacity to monitor and assess levy spending across the health entities.
- developing an investment framework to create criteria for levy investment and the ability to measure outcomes against strategic priorities.
- strategic governance structures to help set the priorities and direction of levy investments
- undertaking a full assessment of current and potential levy-funded activities to ensure all activities meet the strategic direction and investment criteria.
- Increasing levy funding.
On 10 June, Cabinet confirmed an increase to the alcohol levy from about $11.5m a year to about $16.6m a year, effective from 1 July 2024. This reflects that the levy has not kept pace with inflation and has not been increased since 2009.
The review’s recommendations will inform the Ministry of Health’s approach to administering and allocating the levy going forward, including setting criteria for investment.