Following the RBA's unexpected decision to raise the cash rate this week, it was interesting to watch the reaction from the east coast Premiers at the National Cabinet meeting the next day. Our own teflon-coated Victorian leader Daniel Andrews was particularly vocal, claiming that what the RBA was doing wasn't working to bring down inflation (note: it IS working, just not as quickly as everyone would like), and citing that his main concern was for home-owning families who would struggle to make mortgage payments.
However, no-one who observed Andrews' behaviour during the dark days of the pandemic would be fooled by this apparent display of empathy, where it quickly became apparent that he possesses about as much empathy as your average cane toad. What he is really worried about is that with state government debt about to hit an eye-popping $160 billion, every 0.25% increase in the cost of debt raises the annual interest bill by $400 million, which leaves him with less taxpayer cash to waste on things like buying a netball team, giving everyone $500 for uploading a copy of their power bill, setting up a new state electricity commission and state funerals for coffee shop owners.
While Victoria represents an extreme case, it does beg the broader question of how in this suddenly alarming interest rate environment, the states are going to be able to rein in debts racked up during the pandemic. Cutting spending too much at a time when most states are dealing with atrocious health systems, falling education standards and the urgent need for extra housing probably isn't going to be an option, so they're going to need to get bold and creative about raising extra revenue. And having recently been over to the USA and seen how they're doing things there, one obvious and rich vein of revenue is there for any government with the gumption to implement it - cannabis.
Of course, there are reasons that recreational drugs like cannabis and cocaine are currently illegal in most parts of Australia. As the comedian Jim Jefferies so deftly put it, they are similar to the reasons why ownership of guns is heavily restricted here. For every 1000 people who harmlessly enjoy the odd spliff now and again or who keep guns on their property to control foxes and other pests, there is one person who will develop mental health problems or go crazy shooting people down at Port Arthur.
However, there are fairly strong arguments that run counter to this and support the case for cannabis to be made legal. First of all, cannabis has been made legal now in almost half the states in the USA and while the stories of mass shootings coming from there hit the news with depressing regularity, any negative effects of legalising cannabis in terms of increased crime, addiction or other health effects certainly haven't been newsworthy. Also the legalising of cannabis has dragged its sale out of the shadows and in places like New York you can now easily purchase your products from clean, accredited dispensaries instead of some seedy back-street dealer.
Secondly, this wouldn't be the first time a state government has legalised something that might have adverse social effects. It's hard to imagine now with the abundance of poker machine-infested pubs and incessant gambling advertisements on the TV, but many forms of gambling weren't legal not too long ago. I remember moving to Melbourne at the start of 1992, at which time there was no casino or poker machines in the state, obviously no on-line gambling and pretty much the only things to wager money on were horse and greyhound racing. Sadly the subsequent liberalisation of gambling laws has led to social problems, but as state governments have become heavily addicted to the revenue, it's very difficult to see a reversal happening any time soon. But by the same token, could any adverse societal effects from legalising cannabis be worse than what the relaxation of gambling laws have created? The evidence from overseas would suggest not.
There are plenty of good reasons to justify legalising cannabis but if you needed any more, perhaps the government could give an undertaking that any taxes raised would only be applied to a particular area which needs urgent attention, which in Victoria frankly is not building train lines between outer suburban stations but fixing the public health system. A quick look online at government revenue raised by the Colorado government (a state with roughly the same population as Victoria) since it legalised cannabis in 2014 shows that over $2.4 billion has been collected, with annual taxes raised now running at between $300-$400 million a year. Surely that would go a long way to helping attract and train nurses, fix up emergency departments and bolster the ambulance system.
However compelling the arguments though I don't see Andrews buying them. First of all, taking cannabis can be fun and make you giggle uncontrollably, and fun and laughter are two of the things that Andrews seems to hate most in life. Secondly, why go to the bother introduce a fresh stream of revenue when instead you can just hit private business (another thing he hates) with more payroll and land tax?
I don't know what horrors he and Treasurer Pallas are proposing in the state budget in a few weeks to deal with the crippling state debt but I know its not going to be pretty. I just wish I could get hold of a nice joint to smoke to help me deal with the pain.
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