Many health and medical leaders have engaged vigorously in public debate following media reports raising concerns about Medicare rorts and waste.
Imagine if the sector had invested the same level of energy and outrage in protesting the health equity implications of the stage three tax cuts.
Croakey editor and health policy analyst Jennifer Doggett writes below that health groups must show greater leadership in advocating for fairer economic policies that will promote greater health equity.
Jennifer Doggett writes:
During Anti-Poverty Week, as the Albanese Government puts the final touches on its first Federal Budget, many thousands of Australians are anxiously monitoring rising floodwaters which threaten lives, homes and communities across south-eastern Australia.
Extreme weather events, which are becoming more frequent due to climate change, have a disproportionate impact on those already experiencing disadvantage, especially those who may struggle to afford healthcare and housing.
This adds weight to the case being mounted in some quarters for a re-think of the stage three tax cuts, legislated by the Morrison Government (and supported by Labor in Opposition).
Advocacy groups, thinktanks and a number of economists have all called for the tax cuts to be scrapped or tweaked, given the precarious economic situation in Australia and globally, as well as evidence they will undermine the Government’s ability to provide essential services.
As highlighted in Croakey last week, the Public Health Association of Australia (PHAA) is leading a campaign calling on the Government to scrap the tax cuts but this does not appear to be attracting strong support from health and medical leaders (to date, the PHAA’s petition has just 164 signatures).
Many health groups are very vocal on specific strategies to use economic and fiscal policy to influence behaviours – a sugar tax or tobacco tax, for example – but have been relatively silent on broader issues such as income taxation and wealth redistribution.
This flies in the face of evidence supporting the strong link between income inequality and health outcomes and undermines efforts to force governments to take health impacts into consideration when developing economic and fiscal policies.
Economic policies have a significant influence over population health outcomes, impacting both the overall level of resources governments have available to spend on healthcare and the distribution of income across society, which is in itself a health issue.
Australian public health experts Professor Fran Baum (University of Adelaide) and Professor Sharon Friel (ANU) have argued as far back as 2018 in Croakey for the health and welfare sectors to take a greater role in advocating for healthy taxation policies. They wrote:
“For the future we need a strong concerted campaign from a coalition of non-government organisations concerned with health and welfare to argue for a progressive taxation system that enables our governments to invest in those activities that evidence tells us will promote health.
“These activities include education across the life cycle, health services including disease prevention and promotion, public transport infrastructures, opportunities for meaningful employment and a strong social security system to protect people in times of need.”
This call is supported by recent international research demonstrating the strong link between income inequality and health outcomes in countries at all income levels.
For example, a literature review conducted by Professor Kate E Pickett and Professor Richard G Wilkinson found that:
“….the body of evidence strongly suggests that income inequality affects population health and wellbeing…..The evidence that large income differences have damaging health and social consequences is strong and in most countries inequality is increasing. Narrowing the gap will improve the health and wellbeing of populations.”
Even in wealthy countries such as the USA there is a clear relationship between income level and health status.
One study looked at the relationship between tax policy and health outcomes across US states and found better health outcomes in states that enacted higher tax credits for the poor or higher minimum wage laws and in states without a right-to-work law that limits union power. The authors argues that this supports a move towards a health-in-all-policies agenda.
Another study found that states with higher-than-average minimum wages had lower rates of smoking and obesity , compared to states with average minimum wages. And states with larger tax credits for the poor saw significantly better rates in indicators across the board — in all areas except smoking.
Michael Marmot calls for action
World famous epidemiologist and author of the “Marmot Review”, Professor Sir Michael Marmot (a former president of the British Medical Association), has also spoken out on the importance of health sector advocacy in debates on tax and economic policies.
Writing in The Lancet recently, Marmot described the difference between the public health and political perspectives on tax policy:
“Simply, the politician and I have different aims: he wants to lower taxes; I want to help create a society with greater equity of health and wellbeing.”
Marmot presented evidence from around the world demonstrating that cuts in public spending increase health inequities and lead to drops in life expectancy for people with the highest social and economic disadvantage.
He argued that the public health perspective is missing in the debate over taxation and economic policy:
“If cutting taxes means cutting programs that benefit health equity, particularly the health of the most deprived populations, surely we should want politicians, the journalists who report on them, and the general public to have equity of health and wellbeing as a central concern.
“A degraded discussion about taxation levels should not be the currency of political debate. Surely, a more worthwhile debate is how to increase and sustain health equity and wellbeing. In short, to build back fairer.”
Some experts are speaking out
While the health sector overall has not been vocal on this issue in Australia, some individual health experts, thinktanks and social justice groups are advocating for a re-think of the tax cuts.
Dr Ian Li, Associate Professor of Health and Labour Economics and the School of Population and Global Health at UWA, told Croakey that the topic of the stage three tax cuts and health impacts important, in particular because these cuts are predominantly of benefit to top income earners, at a time when inflation and the cost of living issues are rife, putting pressures on lower income households.
“Necessities like petrol, electricity and gas have been getting more expensive and there is no indication that prices will ease soon, so the less well-off will require more help but the tax cuts will not provide any relief to these households,” Li said.
“Take petrol prices, for instance. Poorer individuals are more disadvantaged by rising petrol prices than the well-off because the amount of money spent on petrol is a higher percentage of their budgets, because they tend to have longer commutes and because they have fewer opportunities to work from home.
“There are also other potential worries from neglecting the impact of taxation and economic issues in health policy formulation. As cost of living impacts household budgets, decisions will have to be made around what stays and what goes.
“Previous estimates of household responsiveness to economic pressures indicates that household consumption of goods like fresh fruit and vegetables, fresh milk, meat are sensitive to price and budgetary changes while being relatively insensitive for items such as tobacco and alcohol.
“In short, economic and taxation issues have great impact on health and well-being of the population because the good stuff is often the first to go when the household budget is squeezed.”
Professor Lisa Wood, of the Institute for Health Research at the University of Notre Dame, told Croakey that she agrees the tax cuts are likely to have an adverse impact on people already experiencing high levels of disadvantage.
“From the perspective of my research and evaluation work in the homelessness and welfare sectors, however, I am concerned about the potential steepening of the income disparity gradient in Australia,” she said.
“There are a growing number of people in Australia struggling to make ends meet, and unable to retain or find affordable rentals or accommodation options, nor meet rising costs of basic living, and homeless and emergency relief services across the country are already seeing a huge upswing in demand, and people new to homelessness or at risk of this.
“Tax cuts that have a skewed benefit for those who are already more financially secure run the risk of widening the divide between the ‘haves and have nots’ in Australia.”
Calls for a rethink
Professor John Quiggin from the University of Queensland has argued that the stage three tax cuts were planned and legislated on the basis of economic projections that now bear no relation to reality.
“No one now can see them as a sensible response to economic difficulties likely to worsen over the next couple of years,” he said.
This view is supported by The Australia Institute, which has stated that “there could not be a worse time to implement Scott Morrison’s scheduled $250 billion worth of tax cuts”, citing polling they commissioned which found that 61 percent of voters believe the Albanese Government should adapt economic policy to meet changing economic circumstances, even if that means breaking an election promise.
Non-health social welfare and justice groups have also been vocal on this issue; for example, the National Union of Students has pointed out alternative uses of the tax revenue that could be generated if the cuts are abandoned.
“According to the Parliamentary Budget Office, stage three tax cuts could cost up to $243 billion. With that money we could pay to lower the age of independence to allow greater youth welfare access ($5.3 billion), increase Youth Allowance ($5.7 billion), put dental and mental health on Medicare ($91.4 billion), and wipe student debt ($60.7 billion). Only then would we have made a healthy dent in that $243 billion estimate.”
The failure of the wider health sector to advocate on this issue raises broader questions about the role of health groups in economic policy discussions, including whether governments and policy makers will change their approach if health groups do not campaign explicitly for economic decision making to include health considerations.
According to Associate Professor Elizabeth Rigby and Assistant Professor Megan E. Hatch, developing health promoting economic policies will require leadership from the health sector, including a willingness to step into core and polarising debates about redistribution.
“Despite this movement toward a health-in-all-policies agenda, participants in economic policy debates rarely consider the health effects of the policies they are discussing,” they wrote.
“At the same time, cross-sector collaborations focused on health rarely include economic policies – the various taxes, redistributive spending approaches, and market-regulating laws that shape the distribution of economic resources.”
In particular, Rigby and Hatch argue for broadening the focus on non-health policies to include attention to economic policies that have an impact on low- and middle-income working families.
“To ignore these laws and regulations that shape the distribution of income in U.S. society is to miss an important part of the socioeconomic context that affects health and drives health disparities.”
One barrier to achieving this aim is what they call the “paradox of governance”, in which the policymakers with jurisdictional control over economic policies have different (and often competing) priorities and few incentives to incorporate health considerations into their work.
These authors argue that changing this situation will require strong leadership from the health sector.
“It will be necessary for the health sector – including public and private entities – to initiate and then take the lead maintaining efforts to incorporate economic policy in health in all policy initiatives. It is unlikely that economic policy makers would incorporate health considerations on their own.”
Lessons for Australia
Dr Arnagretta Hunter is a cardiologist and Senior Clinical Lecturer and Human Futures Fellow at Australian National University. She believes there is an “overt tension” about the role of the health sector in broader economic and social policy areas that needs to be explicitly addressed.
She said: “Given the crisis present in so many areas of the health system, it’s timely that we, as a sector, consider what it is we are trying to achieve – are we primarily focussed on doing things to people, or are we trying to improve health and wellbeing?
“If our goal is to improve health and wellbeing for our patients and communities, we need to be involved in policy beyond healthcare, particularly economic policy that informs risk of poverty, inequity and influences other social determinants of health, such as the environment, education and housing.
“We need to have a hard conversation about whether we want to focus our attention and resources on treating illness and disease after it’s begun to cause harm, with the ambulances at the bottom of the cliff, or whether we want to move some healthcare resources to the cliff top, reducing the likelihood of illness, reducing disease, and improving population wellbeing.
“Right now is a tremendously important time for this conversation – the health voice in economic debate should be a strong one, advocating and supporting a transition toward a wellbeing approach. This could result in one of the most important evolutions in the health care sector in a generation.”
The key message from both Australian and international research in this area is that without explicit advocacy from the health sector, it is unlikely that this evolution will occur and that future economic policy decisions will take health impacts into account or, conversely, that health policies and programs will address broader economic issues, such as income distribution.
This is clear from recent Australian health policies, such as the National Preventive Health Strategy 2021-30, which recognises that economic determinants are “some of the most influential factors affecting health and well-being” – but makes no recommendations on broad economic or taxation policies, beyond specific suggestions for increased tax on unhealthy products such as sugar-sweetened beverages.
If we want this situation to change, it is important for health groups to show greater leadership in advocating for fairer economic policies that evidence shows will promote greater health equity.
This would mean advocating for progressive taxation and income redistribution. The current debate over the stage three tax cuts would be a great place to start.
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