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Tuesday, 1 June 2010
Page: 4808

Mr CHESTER (7:11 PM) —I rise to speak on the Excise Tariff Amendment (Tobacco) Bill 2010 and related bill and to join in the broader debate about harm minimisation and prevention measures to reduce the devastating impacts that cigarettes and other tobacco products have on our community. This is significant legislation because of its social and economic impacts for the broader community. The previous speaker—before she got carried away with all the rhetoric about how life was created around about the time that Kevin Rudd came onto the planet—referred quite seriously to the fact that a million lives have been lost since the 1950s. As someone who has lost a close family member—my father passed away almost three years ago from lung cancer—this is a matter of personal significance to me. I think everyone in this place has lost a loved one to preventable diseases associated with tobacco use.

Smoking is an insidious habit with a deadly outcome. Having said that, tobacco remains a legal product in Australia. Balancing that fact with the fact that people may choose to undertake activities which we know are bad for them is an issue that I think deserves further exploration and consideration in a broader national debate. In her second reading speech, the minister reflected upon the impact of tobacco on our community. The statistics are quite damning. She argued:

Tobacco is perhaps the most deadly legal product available in Australia. It is the leading preventable cause of disease and premature death in Australia.

In 2003 it was estimated that smoking results in approximately 15,000 Australian deaths a year. This is more deaths than murder, illegal drugs, motor vehicle accidents and alcohol combined.

Tobacco related diseases are also responsible for approximately 750,000 bed days in hospitals every year.

The total cost to Australian society to tobacco is estimated at $31.5 billion each year.

The impact on the health sector, because of chronic disease presentation in all forms, is a major issue for our government and our community.

Given the enormous cost of tobacco products to the community, it does make sense for governments at all levels to take steps to reduce the incidence of smoking. There has been some success in that regard over many, many years. Back in 1945, from the figures that I have been able to research, the male smoking rate was 72 per cent. Just think about that: almost three out of four men smoked. It was an accepted practice. It was common. It was just a normal part of growing up, to a large extent. My father was one of those who, as a young 14-year-old fellow, took up smoking. He and his brothers—of which there were many—all took up smoking in their early teens.

By 2007 that figure had fallen to 21 per cent, but most of the big gains, the more dramatic drops, were made prior to the 1990s. Figures have not reduced naturally at the same rate since that time. There have been drops of about four per cent in each of the past two decades. People, I think, are resistant to change in this regard. Some people are resistant to all the messages that have been put forward in various public health campaigns and they are also, I believe, resistant to the fact that the product price has been increasing. I will touch on that a little bit later on. We may get to the stage where, no matter how much we are charging for this product, people will find a way to get their tobacco product in one form or another.

Public campaigns to reduce the incidence of smoking have largely enjoyed a bipartisan approach at state and federal level over many years. I think the previous speaker referred to the fact that Australia has led the world in reducing the incidence of smoking. Some of the past government measures that have been aimed at reducing the number of smokers have included health warning labels, bans on marketing of tobacco products and bans on smoking in public places. Quite recently, even Victoria introduced a ban on smoking in cars when children are present. I am happy to say, as a former chief of staff of the Victorian Nationals, that it was a policy initiative I pushed very hard with the member for Northern Region, Damian Drum. The argument was that young children are basically captives in those cars—they have no choice about how they get themselves around—and should not be exposed to the dangers of passive smoking simply because their parents or friends have the habit. There have also been bans on smoking in public places generally and there have been graphic advertising campaigns and increases in the excises charged by governments.

On this point, it was argued in the House by the Minister for Health and Ageing that the findings from the National Health Preventative Taskforce supported increasing the price of tobacco. I am not arguing with those findings. The report said:

Increasing prices is one of the most effective measures that government can take to reduce tobacco consumption and prevalence.

Australia’s Future Tax System Review also looked at the issue of tobacco taxation and concluded:

There is a strong case for a substantial one-off increase in tobacco excise. Australian retail prices for cigarettes are moderate by international standards and taxes constitute a relatively small share of the retail price.

In her second reading speech, the minister went on to indicate that higher taxation makes a significant contribution to cutting smoking rates and that this has been shown to be particularly effective with young people, whom you would normally expect to have lower disposable income and would be more directly affected by an increase in price. Obviously, a key focus of any campaign to reduce the incidence of cigarette smoking is to target our young people, to target the next generation of addicts.

The measures in the bill add significantly to the cost of tobacco products and will increase government revenue over the budget forecast period. The government’s decision to increase the excise and the excise-equivalent customs duty rate by 25 per cent means that the increased tax on a packet of 30 cigarettes is about $2.16. This will push the price of a packet above $15. The government argues that it is part of a comprehensive package against smoking, including what it bills as a world-first decision to ensure that cigarettes in Australia are sold in plain packaging by 1 July 2012. I note the member for O’Connor raised some concerns about pending legal action from the industry and issues of consumer law.

On the point of the plain packaging, the cigarette industry throughout its history has shown a remarkable resilience and capacity to evolve with the times and to get around whatever legislation it is faced with that is aimed at reducing its marketing. I am sure the clever marketers within the tobacco industry will develop some form of slip-on packet or some sort of slip-on sheath, if you like, to promote their product. You can just imagine the scenario where there will be a black-and-white packet of cigarettes for sale and you happen to get a free container to put the cigarettes in—a container which will have the brand’s material splashed all over it. I am not sure whether the legislation can overcome that issue or whether the drafters of the legislation even considered that point. It seems almost self-defeating, though, if you have a black-and-white packet and the industry is out there giving away free coveralls or sheaths, if you like, to continue to brand their product to the marketplace, particularly to younger smokers who may be attracted to whatever product the industry happens to be giving away at the time.

That concern aside, the issue of the excise and the revenue generated for the government is significant. The total tobacco excise in 2008-09 was $5.6 billion and it is forecast to grow to $6.3 billion by 2013-14. Even though the minister has indicated that she expects the number of smokers in Australia to fall by two or three per cent—the previous speaker referred to an estimate of 87,000 people—the revenue to the government will actually increase over that forecast period.

I believe we need to keep having a broader debate about how we approach this whole issue of prevention and harm minimisation for cigarette smokers and whether we are serious about trying to reduce the actual number of smokers in the community over the longer term. As I said, the decline has been significant over the past 60 years, but the actual rate of decline has reduced in recent times. There are a few facts we need to consider from various pieces of research over the years. During my research on the bill, I found information suggesting that nearly half of smokers under the age of 30 had started smoking by the age of 15. I therefore believe it is critical that, in any public awareness campaigns we undertake, we really target young people and this myth that it is somehow cool to smoke.

The great difficulty we have in that is that the industry is so clever at product placement now. You see it in the movies and you see it in pop culture—it is very difficult to overcome that issue. I do not know how we are going to overcome it when there are Hollywood stars promoting an image of smoking that dates back decades and continues. The industry today has even more reason to engage in product placement and more surreptitious marketing of their products to get young people involved and to get young people hooked on their product.

On that point, tobacco is regarded as being more addictive than heroin or cocaine. People become addicted out of habit or in response to stress or they are physically addicted to the nicotine. I want to touch on that point a little bit later on. Smoking is also more prevalent among lower income groups and Indigenous Australians, with the average person smoking between 100 and 120 cigarettes per week. As previous speakers have indicated, Australia has a relatively low prevalence of smoking. In comparison to the rest of the world, I think we come in third behind Sweden and Canada. The points I want to make about these facts deal specifically with the issue of addiction. We are talking about addicts a lot of the time. We are talking about people who are taking up the habit and staying in the habit over a long period of time and about the fact that smoking addiction is more prevalent among our poorer households.

If you take some really rough figures and say that a smoker may smoke, say, four packets per week of 30 cigarettes each it works out to about $60 a week, which is somewhere in the vicinity of $3,000 a year and about $150,000 over a 50-year smoking career. That is a huge loss of income to a household over that period of time. I do have some degree of sympathy for addicts. As I referred to earlier, I grew up with a father who smoked throughout his whole adult life. He had a great deal of difficulty in kicking the habit. I do have some sympathy for the people who are addicted to nicotine. For some people it is almost impossible for them to break the habit. It is reasonable to question the point of whether increasing the excise is actually well directed to reducing the incidence of smoking in the community. By its nature as a flat tax it does have a higher impact on our poorer families in the community. Obviously a higher percentage of total household income is literally going up in smoke amongst those poorer socioeconomic groups as well as amongst our Indigenous community, which, as we heard previously, has a higher incidence of cigarette smoking.

I understand that cynics could say that the people choose to continue smoking. It is a voluntary tax and you do not have to pay it. If you give up the habit you do not have to pay the tax anymore. For someone who has never smoked that is an easy path for me to take. But, having seen my father and other close friends in great difficulty trying to give up the habit, I have more of an appreciation that these people are addicts. If the research is even close in saying that smoking is more addictive than heroin or cocaine, this is a product which is very difficult for some people to give up even if they want to.

When we are talking about people who are addicted to products like cocaine and heroin we have a whole range of supporting mechanisms in our community to assist them to get off that particular illicit substance. But when it comes to cigarette smoking we seem to take a rather more blunt instrument in the sense that we just keep pumping the prices up and hoping that the smokers will drop off by the pure weight of the financial impact on their lives. I am not convinced that that is the best way to go, particularly when you look at the unintended consequences. Perhaps in some of our poorer socioeconomic households you may have a mum and dad who still manage to find money for the smokes. I am not sure whether the kids in those households are getting the best and fullest opportunities to achieve the potential that they would have if their parents were not using so much of the household disposable income on cigarettes. I do understand that some of the cynics would say that they choose to continue that smoking, but I think we need to recognise how difficult it is for some people to give it up.

I believe if we are determined to reduce the number of smokers we really need to look at the issue of the nicotine patches. I understand they are not on the PBS for everybody—for veterans it costs $5.40 to purchase nicotine transdermal patches that have a dispense price of $54.78. Our Indigenous and Torres Strait Islanders pay $33.30 for the same product and, as far as I am aware, other people pay the full price. Nicotine replacement therapies are regarded as one of the best ways to break the habit.

I do accept that the real price increases and reductions in affordability have been regarded in the past as the most significant policy intervention to reduce tobacco consumption, particularly for young people on limited budgets. But some people, as I have referred to, simply cannot give up tobacco products and we continue to hit them harder with this excise. I am not sure when we start trying to be a little bit smarter in how we target those people, the genuine addicts, who, no matter what price we charge, will find a way to get their cigarettes or other tobacco products.

The other consideration I want to raise briefly in the time that is left to me relates to the increased cost of cigarettes and, as a result, the likelihood of an increase in illegal tobacco products. I want to refer to an article which appeared in the Age on 30 April this year by Lindsay Murdoch and Geoff Strong, which I thought was quite a good one in that it referred to the concern that perhaps an increased excise will end up, inevitably, making it more attractive for illegal tobacco products to get on the marketplace along with the consequent influence of organised crime. The article said:

Sydney University professor Renee Bittoun runs Australia’s only dedicated smoking cessation clinics in two of Sydney’s hospitals. She believes illegal tobacco, both locally grown and imported, is widespread and could account for a quarter of all tobacco being smoked in Australia.

I have no figures to back that up. I am just referring to the fact that the professor has given her opinion in that regard. The article continued:

Bittoun fears that the government’s increase in excise will further increase illegal tobacco’s market share, doing even more damage to the lungs of those who inhale its smoke.

That point is relating to the fact that health officials say that there is a dense fungal contamination found in tobacco products, usually because of the way it is cured. They believe that has a toxic response in lungs, liver, kidneys and skin and in allergies including bronchitis and asthma. This is in addition to lung cancer issues relating to the smoking of all tobacco products. It is an interesting point that the professor has raised. In the article she said:

“It is not hard to grow and, given it looks like big spinach, might not normally attract much attention. I have been told the Tax Office loses $400 million a year in excise due to illegal crops. Given the size of government excise, chop chop is very cheap and it is often sold under the counter by weight by unscrupulous tobacconists, grocers and even service stations.”

As I said, I do not have any additional research to add to that opinion but it does seem to make sense that, if you are forcing the price up of the legal product, there would then be more opportunities for illegal operations, and the value of the product is such that it will draw the attention of organised crime. The article went on to say:

Indeed, a 2008 report by the Royal Canadian Mounted Police identified 105 organised crime groups involved in illicit tobacco trading. Most of the groups were also involved in either drugs or weapons smuggling, or both. According to PricewaterhouseCoopers, tobacco smuggling has been linked to organised crime in Australia, including drugs, money laundering, identity fraud and stolen car rackets.

I do not seek to be alarmist or to take away from what I believe are the government’s good intentions in reducing the incidence of tobacco use in the community, but I think the point is well worth considering, particularly the issue of whether the plain packet legislation will actually be effective in the community or whether it will just be subverted by the industry as it comes up with its own way of putting a cover over the top of the plain packet. I am sure that those packets can be easily manufactured and made freely available, particularly to young smokers.

I also have concerns, which I have already raised, about how long we should keep on targeting people who are addicted to cigarettes through tax increases without looking at other ways to assist them if they are genuine in trying to give up. I understand that the government will be providing more funding for public health awareness campaigns, which is one of the few forms of taxpayer funded advertising I agree with. We see a lot of propaganda campaigns run by governments, but I believe that public health campaigns aimed at reducing the incidence of cigarette smoking would be welcome and have bipartisan support now and for many years to come.

I finish on a more optimistic note. The chairman of the Preventative Health Task Force, Rob Moodie, has a different view on the issue of chop-chop use that I referred to earlier. He says:

It is much easier in Australia to manage illegal tobacco than it is in … Europe, for example.

He goes on to say:

… policing illegal tobacco is going to have to be dealt with, but increasing the excise is likely to be a key tool to encourage smokers to give up.

As I said at the outset, I think we are dealing here with a very important social and economic policy area. The impact on the community and also the impacts on the government in terms of the health budget are very significant. I thank the House for the opportunity to speak on the bill tonight.