If obesity was a virus, governments would mobilise to eliminate it. Yet, the news that New Zealand is now the third-fattest country in the world has done little to convince us that drastic action is required.

In fact, we're going backwards. This year, the budget for battling obesity was shaved by 10 per cent, just months after junk food was allowed back into our schools. The government, laudably, announced an extra $15 million in August for school sport, but cut anti-obesity and nutrition programmes to do so. This is myopic.

Since 1977, we have gained an average of nine kilograms each; there are twice the number of obese people and three times the number of extremely obese people. Ministry of Health statistics show that 26.5 per cent of adults are now obese, and 36.3 per cent are overweight. Obesity is drastically higher among Maori and Pacific people (41.7 per cent and 63.6 per cent) and our children are getting fat: a third are now overweight or obese.

We have an attitude to health that is pharmaceutical and medical. We spend billions each year on treating chronic disease, without addressing the core problem. The health effects of obesity are well known: it causes Type 2 Diabetes, stroke, heart disease, cancer, liver disease and problems with joints and bones. Type 2 Diabetes is the leading cause of blindness and kidney failure.

The direct cost of obesity to the New Zealand health system has been calculated at $450 million a year. However a recent Australian survey looked comprehensively at the overall economic effects of obesity in that country and concluded the disease cost them $58.2 billion per year.

In the United States, two thirds of the population is overweight or obese and chronic illness now accounts for 75% of the $2.3 trillion cost of their health system. That cost is predicted to nearly double to $4.1 trillion a year by 2016. (The scale of this is enormous: PriceWaterhouseCoopers has estimated that it would cost just $1.2 trillion a year to fix global warming.)

We cannot continue like this. It is unaffordable and it is immoral. Treating disease is costly and difficult. Obesity and most other chronic illness is preventable. The following are five simple actions we can take to dramatically improve our nation's health:

Tax junk food

If we really want the world-class tax system that our government is promising, then it must allocate costs where they lie. The leading cause of obesity, the junk food business, is thriving — and we're paying for it because the market is blind to the true cost. Price differences between healthy products and harmful ones are negligible, as the taxpayer picks up the tab later. Around the world, tax shifting is at the cutting edge of macro-economic policy. It discourages harmful industries, pays for the damage they cause and creates markets for better products. In Germany, for example, a switch from taxing income to taxing non-renewable energy created 250,000 new jobs in the renewable-energy sector and reduced CO2 emissions by 20 million tons. It works. It has recently been shown that for every ten per cent rise in the cost of cigarettes, there is a four per cent drop in sales of cigarettes. It has taken us 50 years to halve the rate of smoking in developed countries: we don't have that long with obesity. In one study of vending machines, sales of low-fat snacks increased by 80 per cent when the price was halved. In another, sales of carrots doubled in high schools when the price was lowered. In China, increasing the price of fatty pork by 10 per cent reduced people's fat intake by up to 11 per cent. In Australia, fruit, vegetables and fish are exempt from GST. In Canada, there is a GST exemption on basic groceries and a tax of seven to 15 per cent on soda, candy and confectionary. Right now, we pay the difference between the nominal price of junk food and the rapidly increasing cost to society. That simply isn't fair.

We need more PE in schools

That $15 million for school sport is a good start, but what is really needed is a systematic approach. We need more physical education in the curriculum, across the board. In recent years we have become obsessed with the academic performance of our children, but exercise actually improves their academic performance. Our brains create more neurons while we exercise, improving cognitive function and memory. In a new programme in New York City, the fittest students increased their test scores by a third; the least fit barely improved at all. And in Illinois, the Napperville School District went from one of the worst performing school districts in the country to one of the best in the world after instituting a programme in which students did 30 minutes of exercise a day. It's a free lunch: get the kids exercising!

Get junk out of schools

David Kessler, the former commissioner of the FDA, likens the effect of junk food on the brain to that of drugs: the levels of fat, salt and sugar overload the brain, causing a loss of control, a lack of satiety and an obsession with food. "If you take a society and you put fat, sugar and salt on every corner," he said recently on Radio New Zealand, "you're going to get obesity." (The interview is available as an MP3 on www.radionz.co.nz and makes fascinating listening.). Moreover, weight gain and eating habits are laid down during childhood. If a child is used to eating a lot of junk food, they will always crave that food. Yet, junk food is back in our schools. The result? Food manufacturers told the New Zealand Herald recently that they had already noticed an uptick in the amount of junk they were selling to schools. This is outrageous. We don’t sell our children alcohol, cigarettes or drugs. In terms of the effect on their future health, junk food is precisely the same.

Improve urban design

Increased driving, motorways and urban sprawl lead to drastically lower levels of exercise. Bizarrely, research has shown that people who drive have less time at home than those who catch public transport or cycle, while they sit in traffic on long commutes. In New Zealand, half of all children are driven to school each morning, with 67.5 per cent of parents saying they live too far from school and 23 per cent saying roads are too dangerous. We have to make it easier and friendlier to walk or cycle. Our cities need to be less big box, more small shop. In Auckland, for instance, I’ve had personal experience of how terrifying it is to cycle to work. Traffic is increasingly hectic and drivers are aggressive. We need more cycle paths and walking tracks. Councils need to build more public tennis courts, basketball courts and rugby fields. It’s an investment: in the long term it will save us a fortune.

Incentivise healthy lifestyles

In the United States, congress is considering the Personal Health Investment Today (PHIT) Act and the Workplace Health Improvement (WHIP) Act. The PHIT Act allows Americans to use their health dollars to pay for exercise costs. The WHIP Act makes the cost of exercise tax deductible for companies. In Japan, the government has called for a 25 per cent reduction in the number of overweight people in seven years. People aged between 40 and 74 now have an annual waistline check; overweight people are offered nutritional and exercise advice. Companies and local governments who do not meet targets will be fined. This is smart thinking. The Wellness Council of America has calculated that for every $1 spent on health and wellbeing, almost $6 is returned to the economy. We must make the shift from treating disease to promoting and measuring well-being. If we don’t, obesity and other "lifestyle diseases" will cripple our society and our economy.

Phillip Mills is executive director of the Les Mills organization, which operates businesses in New Zealand and exports widely throughout the world. He is co-author of Fighting Globesity - a guide to personal health and global sustainability. Random House, 2007.