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Wednesday, 22 August 2012
Page: 9690


Mr ZAPPIA (Makin) (10:59): I also welcome the opportunity to briefly speak on the Customs Amendment (Smuggled Tobacco) Bill 2012. Firstly, I want to respond to some of the comments made by the member for Wannon. He asserted that as a result of the funding cuts to Customs, we have seen a spike in the sale of illicit tobacco and that that is why we have such a black market.

Just for the record, the facts show that in the last three years there has been a decrease in the volume of illicit tobacco from the total amount of tobacco in this country. The statistics also show there has been an increase in detections by Customs as a result of their operations. It just highlights that the member for Wannon is incorrect with his assertion in respect to the role of Customs in this matter.

The bill amends the Customs Act 1901 to create new offences of smuggling tobacco products and for conveying or possessing smuggled tobacco products. The new offences carry a penalty of 10 years imprisonment and a fine of up to five times the amount of duty evaded. The tobacco industry is big business and, contrary to trends in some parts of the world, it is growing. In Australia, around three million people over the age of 14 years smoke. According to a 2011 Deloitte report, commissioned by British American Tobacco Australia Ltd, Philip Morris Ltd and Imperial Tobacco Australia Ltd, tobacco global sales in 2011 were estimated to be US$780 billion, having risen from around US$646 billion in 2006. That is more than 50 per cent of the total Australian economy.

Similar trends for tobacco sales occurred in Australia, with the 2011 Australian market value of $10.7 billion comparing with $9.4 billion in 2006. Of course, in Australia that increase is more due to price increases than an increase in sales volume. The same Deloitte report estimated that in 2011 there were 2.264 million kilograms of illicit tobacco sold in Australia, representing 13.4 per cent of the market, and that over the past four years almost $1 billion of tax revenue had been lost. I suspect, however, that the tobacco companies' concern is not for the government revenue lost but for their loss of market share.

Regardless of their motivation, the fact remains that a black market trade in the order of $1 billion per annum raises serious concerns for government, including concerns about the formation of crime syndicates, bribery, theft, corruption, money laundering and violence. Of course, those figures are calculated estimates as no-one ever really knows what the value of the illicit market is, because there is no form of accurate statistics in respect to that sector of the market.

Notwithstanding that, I note that in 2010-11 Customs and Border Protection made 55 seizures of smuggled tobacco products in sea cargo, consisting of 258 tonnes of tobacco and 82 million cigarettes, representing a potential revenue evasion of $135 million plus GST. A similar amount of potential lost revenue arose from seizures made in the first nine months of 2011-12, again highlighting that the point made by the member for Wannon is inaccurate.

How much tobacco illegally enters Australia will never be accurately known. But there is little doubt that it is big business run by large criminal networks. Tobacco companies argue that increasing the price of tobacco products encourages a black market in tobacco products. The companies argue that the higher value means there will be more demand for cheaper black market products and, in turn, more profits for illegal operators. I accept that there is some validity to that argument.

According to one report that I have read, the World Health Organization has predicted that by 2020 illegal tobacco consumption will outstrip legal tobacco use. In other words, by 2020 the illegal tobacco market, using today's figures as somewhat of a guide, will be in the order of $600 billion, $700 billion or $800 billion around the world. It is indeed big business. The concern is that when you are dealing with that kind of money then quite clearly you are also dealing with other criminal concerns that need to be addressed, if, for no other reason than the continuing use of tobacco in society presents societies around the world with some very, very serious concerns and problems in the years ahead.

Increasing the penalties for offences relating to tobacco products should be a deterrent. But penalties must be part of a suite of measures including pricing, packaging, advertising and health warnings. It seems, however, that the most effective counter-smoking strategy to date has been the campaign to make smoking socially unacceptable by banning smoking in public venues and public places. A good study in respect of the effects of making smoking socially unacceptable was carried out in the US. It was shown to be the most effective strategy in reducing tobacco consumption. Whilst warnings on packets have been useful and increasing the prices might have assisted, the reality is that the biggest inroads in reducing smoking across the world have been achieved by those places that have made smoking socially unacceptable. We have seen that here in Australia where we have prohibited smoking in workplaces and recreation places. In my view, that has been the most effective strategy applied by governments. It is those kinds of strategies that I believe we need to continue with. As I highlighted a moment ago, we are dealing with a major problem around the world.

I take this opportunity also to commend an initiative between SANE and the Australian government which was announced yesterday by the Minister for Mental Health and Ageing, Mark Butler. This initiative is designed to assist people with mental health issues to quit smoking. People with a mental health condition are more likely to be smokers, with as many as 30 per cent of Australians with a mental illness being smokers. I understand that the figures are much higher for severe mental health conditions. It is the case that those people who are the most stressed and quite often the most desperate are the ones that turn to smoking for some form of relief. The reality is unfortunately that it has the opposite effect—it just makes people more stressed. If you are down and out, it also means that you spend your money on cigarettes when you should be spending money on much healthier options. I particularly note that, in the fact sheet referred to in Minister Butler's media release yesterday, it was stated that diseases caused by smoking are the second-largest killer of people who have a mental illness. This is an interesting statistic. The fact sheet also showed that people with mental illness who quit smoking may need a lower dose of antipsychotic medication. Again, this is an interesting observation in the fact sheet.

Finally, I want to comment on the reaction of the tobacco companies to their loss in the High Court challenge to the Australian government's proposition to ensure that in the future cigarettes are sold in plain packaging. I note that the cigarette companies have now turned to the World Trade Organization and appealed to that body to try and prevent Australia from proceeding with plain packaging for cigarettes. This highlights how significant an issue this is for these companies. It is significant because of the profits being made from the sales of tobacco. It is clearly the case that their concern is not only for the losses that they might incur here in Australia but rather that they fear that other countries around the world might follow Australia's lead and also introduce plain packaging for cigarette products. These companies are prepared to go to the World Trade Organization claiming that this is a breach of some of the trade agreements that we have with other countries in an endeavour to stop the government from proceeding with this proposition. I certainly hope that appeal is also lost by these companies. I understand that it might take some years to resolve, and that will not stop the government from proceeding with the legislation that was passed this year. However, it is of concern to think that every attempt is being made by the tobacco companies to continue to sell their products which they know have serious consequences for users.

As members of this House would know, the effects of tobacco have been known by tobacco companies for decades. In fact, I understand that in the US—and perhaps in other parts of the world, including, I believe, even here in Australia—there have been some successful cases where action was taken against the tobacco companies. Even knowing that tobacco products have serious health effects on consumers, they continue to promote and sell their products wherever they can and in whatever way they can, and I have no doubt that they will stop at nothing to ensure that they are able to continue to do so.

This legislation, as I said from the outset, forms part of a package of measures which not only seeks to prevent the illegal and illicit marketing of cigarette products but is part of a more comprehensive strategy to try and reduce smoking throughout this country. I commend the legislation to the House.