Sugary brain farts

We need to change how government makes decisions

A brain fart is a massive, sudden release of stupid, according to the Urban Dictionary.

It could also be what happens when your “train of thought goes weird” or there’s a “gap, interruption, or uncontrolled shift in a chain of thought resulting in a lull, pause, and/or blank stare during oral communication and sometimes involving the loss of short-term memory.”

In Newfoundland and Labrador, we call that public policy.

Policy brain farts do one of three things.  They don’t fix the real problem or make it worse. They create another problem that wouldn’t have existed if it weren’t for the brain fart in the first place.  Or they do some combination of the two.

We’ve had plenty of examples.

The plastic bag ban didn’t tackle the real plastics pollution problem here, which is fishing gear.  What’s worse, as in other places, the ban shifted consumption of plastics to genuine single-use bags and other bags that are less friendly to the environment than the shopping bags. Worse, chasing after the fad policy of shopping bag bans distracted everyone from more serious problems in waste disposal in the province.

While you could add the whole Liberal oil and gas policy into the brain fart category, one bit stands out. In 2018, the Liberals said they would break NALCOR Oil and Gas off as a separate company.  There was no need to do it, but someone decided to create a new company anyway, without doing their homework. So, the politicians announced it anyway. When officials started looking into the scheme, they discovered something really obvious:  the equity stakes in Hibernia, White Rose, and Hebron couldn’t leave NALCOR.  They were part of Muskrat Falls financing.   

The result is that taxpayers now have a third energy company on top of the Enron rat’s nest of companies inside NALCOR and no clear idea of what they will do besides cost taxpayers money.   

The grandfather of all brain farts is Muskrat Falls, of course.  It could never deliver electricity at the lowest possible cost, but the politicians and bureaucrats went ahead with it anyway.

The scheme to pay for it through electricity rates did three things:  first, it turned electricity rates into a new form of taxation.  Second, it was the most regressive form of taxation since it hit low-income people – more than half the population – disproportionately harder than others.

Third, it spawned rate mitigation schemes.  The latest one froze electricity prices at 13.5 cents and made the government – instead of companies and consumers – liable for any increases beyond that level, even the ones needed even to maintain the system. Plus, the mitigation scheme might wipe out any benefit from Churchill Falls after 2041.

Brain farts have only one source:  politicians and their often- inexperienced staffers.  They are a sign that the way to make policy in the provincial government is badly broken.  If it worked properly, the system would either scrap bad ideas or find problems and fix them before the policy announcement went out the door.  Things weren’t always this way in Newfoundland and Labrador, but sadly, making things up as you go is the new normal on the top floors of Confederation Building.

The latest policy brain fart is the plan to tax sugary drinks.

The government announced it in the budget.  But, as finance minister Siobhan Coady admitted, they have no idea how the scheme will work. They will make it up as they go along, in other words.

It likely came from the Premier’s Office if not from the Premier himself.  The day of the budget someone from the Premier’s personal marketing company  – how many government contracts do they have now? – tweeted about a scheme in Britain to tax the companies that make sugary drinks.  What was really telling about this was the link, which led to Behavioural Insights.  They use psychology to change behaviour.  It’s popularly known as nudging. And it is something Andrew Furey is personally keen on.

Unlike the British plan, though, what Siobhan Coady announced last week was a scheme to raise money.  That makes it look like taxes introduced in some American cities and now under consideration in four American states.

Now five years ago, your humble e-scribbler suggested a sugary drinks tax as a way to bring in some new money.  Facts and evidence turned me around on this.  I was dead wrong. Here’s why.

The first thing you learn from researching this is that taxing sugary beverages to raise cash is just a bad idea.  There’s no way to make it better.

Sugary beverage taxes are regressive.  They only apply to a small base and the flat rate means the tax will hit lower income categories disproportionately hard.

It’s also bad health policy.

As the progress report from Britain (linked above) shows, even if you tackle all foods with added sugar, you will have a hard time getting anywhere.  In 2015, the British government set a goal of a 20% reduction in added sugar within five years.  After a comprehensive program, they reduced sugar consumption a mere three percent at the end of three years. They didn’t hit the 20% in five target.  

That’s not just because they set the target too high or picked too short a time frame.  Look at the evidence from three years of British experience.  Consumers switched their purchasing, just like in those places that banned plastic shopping bags. 

Look more closely at the Soft Drinks Industry Levy, which is the centrepiece of the whole scheme. The most-favourable assessments of that project credited the program with reducing consumption by a single sugary soft drink per household per week.  The British Medical Journal assessment incorrectly claimed it was one soft drink per person.

And, as the British program assessment showed, consumption went up in every income category.  It went up most in lower income households.  If Britain were like Canada, then that actually reversed a longer-standing trend for soft drink purchases. Soft drink consumption is going down in Canada. The most recent figure from Statistics Canada suggest that soft drink’s rank as a sugar source in personal diets in 2015 had fallen to close to half of what it was 11 years earlier.

Britain isn’t like Canada, as it turns out.  British grocers noted a major jump in soft drink sales last year. Growth was especially strong in those with artificial sweeteners, which come with their own health issues.

By the way, just to put the Brit drop in sugar consumption reported by the British dentists and medical doctors into a local context, the typical 355 ml soft drink in Canada contains *more* sugar (39 grams) than the reported 30 g saving in Britain per household.   In Newfoundland and Labrador, we apparently consume 45 million litres of soft drinks each year.  That’s based on the budget figures:  $9 million in revenue at 20 cents a litre. 

45 million litres of soft drinks means Newfoundlanders and Labradorians consume about 86 litres of soft drinks a year per person, on average.  86 litres is equal to 242 of those standard 355 ml cans.  If the local tax worked as well as the Brit scheme, at best it would kill off the sugar from less than one of those 242 cans.

Of course, the Brit plan is based on changing packaging.  It targeted manufacturers rather than consumers.  That’s not something likely to work in a market like Newfoundland and Labrador.  Soft drink makers did change their sugar content for a government representing 67 million people in one of the globe’s leading economies. They are not likely to change their production lines for a tiny market like Newfoundland and Labrador.

So we are back to a straight up tax on the poor.

Brilliant.

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Behavioural insights is a great idea.  It uses evidence to drive decisions and then measure results.  Of course, as we can see in the Brit progress report, departments can still present data in a way that masks what it is really going on so evidence-based decision-making, as it is called, won’t fix everything that ails government.

In Newfoundland and Labrador, we need to fix how government decides first.  The British introduced nudging after creating a think-tank within the Cabinet office almost 50 years ago.  They came up with ideas. Under Tony Blair, the Brits came up with a team of senior officials who figured out how to put ideas into action across complex organizations like government.  The guy who ran the team – Michael Barber – called the concept “deliverology.” 

Nudging or behavioural insights is a subset of that, really. It’s part of delivery.  And, most importantly for Newfoundland and Labrador, you need the other bits – the central policy unit and a delivery scheme and a coherent, rational policy-making system – before you get to stuff like nudging.  You need to see the whole board before you decide how to move one piece.

So not only is the sugar tax a really bad tax or health policy idea, but it also confirms that the provincial government’s policy-making system remains in the same mess it has been since 2003. That’s the only way brain farts keep making it into public announcements despite the evidence that they won’t work or, worse, will create a bigger problem than the ones they are supposed to solve.

We need to change how our government makes decisions.

Enough with the brain farts.

Even if they smell sweet, they are just massively stupid.