ECONOMIC RESEARCH PAPER

Alcohol in Australia

Alcoholic in Australia

Introduction

Australian society has been facing a variety of negative impacts of Alcoholism which has brought many problems in the society. These aspects are specifically understood because of the overall condemnation. Alcoholism is drug addiction which has both physical and mental dependence over the alcohol (Heien . D, 1995). The basic physical problems arise are, Alcohol related illnesses, memory lapse after episodes of drinking, withdrawal symptoms after stopping the use of alcohol. The new evidences show the phenomenal drinking rate of Australians which is causing high rate of brain damage and shows the estimate of two million Australians which are at risk of the permanent alcohol-related brain damage (Shakeshaft .A, 2012. p243-257). This paper will highlight the impacts of Alcohol over the economic positioning of the country through reasonable factual analysis.

Australia's Alcohol Consumption, Rates and Costs

The consumption of Alcohol is at harmful levels among the young people of Australia. The per Capita consumption to a considerable extent is related to the prevalence of the heavy usage of alcohol, which in result associates to the negative impacts (Babor et al 2003, p31). The per Capita consumption in the region of Australia is comparably high than the other countries. It ranked on 34th from other 185 nations in WHO report. The most recent estimation of per capita alcohol has shown these results;

The annual cost of the problems related to the community alcohol issues are considered to be $7.6 billion, tangibly $5.5 in the year of 1999. The major portion of the cost is because of the reduction of workforce because of the absenteeism which is a result of alcohol related issues. The cost is partly considerable from the net government revenue of the alcohol taxes and has estimation of around $5.5 billion (DSICA 2005). It has also contributed in broadening the economy of the country with $18.3 billion in the year of 2004-05 by giving employment to around 205,000 people.

Relevant Economic Theory

Negative consumption externalities

Various negative impacts would arise over third parties, with consumption of certain goods, as demerit goods. The example to this includes the consumption of alcohol, if much of alcohol is consumed by an individual and get intoxicated and start harming third parties property, it arise the negative consumption externality (Heien . D, 1995). This reduce the level of MSB leaving negative impact over others considering the socially efficient alcohol consumption, less than the level of consumption of free market.

There lay various solutions to reduce the negative consumption externalities which include the imposition of indirect taxes and also setting of low prices, controlling of supply with licensing system by imposing fine on alcohol consumption.

To reduce consumption the government can impose taxes which should be equal to the external marginal cost. Through this tax imposition, the occurring of consequences would make producer in internalizing the impacts. It is shown below in the graph that the cost of consumption has become additional cost which results in output decrease shift from Q to ...