Key: Minimum alcohol price might backfire

Prime Minister John Key said that if a minimum price was set for alcohol, it would change the quality of alcohol that people drank, but not the amount. Photo / Thinkstock

Prime Minister John Key says he is not convinced a minimum price for alcohol would work because it could force people to drink poorer quality liquor, instead of drinking less.

The Justice Ministry is researching the efficacy of a minimum price for beer, wine and spirits overseas, and was due to report back its findings in September.

Mr Key said there were various models for a minimum price policy, but an attempt to introduce one scheme in Scandinavia failed.

He said it was uncertain what a minimum pricing scheme would entail: "Does it mean that a supermarket couldn't loss-lead... or does it mean that there's actually a minimum price for a unit of alcohol?"

Mr Key believed that if a minimum price was set for alcohol, it would change the quality of alcohol that people drank, but not the amount.

"What typically happens is people move down the quality curve and still get access to alcohol."

Alcohol watchdogs said minimum pricing was effective at raising the price of drinks that were high in alcohol relative to its cost - such as cask wine.

But retailers would be able to absorb the cost of a minimum price, so it would be ineffective unless accompanied by excise taxes.

Mr Key said he did not think an excise tax would prevent people from "pre-loading", or binge drinking before entering bars and pubs.

This went against advice from the Law Commission, which recommended a 50 percent tax hike to push up the price of alcohol by an average of 10 percent.

A Herald DigiPoll found that 56.5 percent of New Zealanders opposed a minimum price for alcohol, while 40.6 percent supported it.

The Maori Party has called for the initiative to be introduced in alcohol reforms which are due to return to Parliament later this month.

But the Government did not want to commit to a decision before the ministry finished its research.