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Tuesday, 15 June 2010
Page: 3207


Senator SHERRY (Assistant Treasurer) (1:31 PM) —I would like to thank senators from all sides and all political parties who have made a contribution to the debate on the Excise Tariff Amendment (Tobacco) Bill 2010 and the Customs Tariff Amendment (Tobacco) Bill 2010.

By way of reminding senators, on 24 April 2010 separate notices were placed in the Commonwealth government’s special notices Gazette, publishing the government’s intention to increase the rate of excise and excise equivalent customs duty applying to tobacco products from 26.22c to 32.775c for cigarettes and from $327.77 to $409.71 per kilogram for other tobacco, such as loose-leaf tobacco. In accordance with these notices, on 12 May 2010 my colleague the Minister for Health and Ageing, Nicola Roxon, tabled tariff proposals in the House of Representatives which support this 25 per cent increase.

The Australian Taxation Office and the Australian Customs and Border Protection Service have been collecting excise and excise equivalent customs duty at the higher rate since 30 April 2010. The legislation we are debating today will formally confirm the higher rate in legislation. This higher rate of excise has widespread support from the experts. In 2008 the government initiated two major reviews which looked at the issue of taxation for tobacco. Both the national Preventative Health Taskforce and Australia’s Future Tax System Review recommended a substantial increase in tobacco excise. The government has acted on this advice, and this action has been endorsed by the Australian Medical Association, the National Heart Foundation, Cancer Council Australia, the Australian Nursing Federation, the Public Health Association of Australia and Action on Smoking and Health, amongst other public health groups. The health benefits from the measure are clear. Cigarettes are toxic and poisonous. Every year in Australia over 15,000 Australians die from smoke related illnesses, and smoking is estimated to cause one in five of all cancer deaths.

The government knows that prevention is better than cure. Tackling smoking is one of the best investments in keeping people healthy that it could make. The tax increase alone is expected to reduce consumption of tobacco by around six per cent and cause two to three per cent of smokers to quit altogether. That is around 87,000 Australians. We hope that Australians use this tax increase as an impetus to make the decision to quit and further that it will discourage teenagers from taking up the habit, given that young people are more responsive to price increases in tobacco than those of an older age.

The increase in the excise rate applying to tobacco is part of the government’s comprehensive package to reduce smoking prevalence rates. In addition to the tax increase, the government has taken strong action against tobacco advertising by removing one of the last frontiers for cigarette advertising. The government will introduce legislation to ensure that cigarettes in Australia are sold in plain packaging by 1 July 2012—the first in the world to do so. This reflects a recommendation from the Preventative Health Taskforce. The revenue from this increase, along with existing revenues from tobacco, will be invested in better health and hospitals through the National Health and Hospitals Network Fund. That money is well spent, from anyone’s perspective.

I note that some senators have raised issues regarding support for smokers to quit. I can confirm this is a key priority that the government is taking action on. We are providing $115 million for two programs to tackle tobacco usage for Indigenous Australians. There is $85 million for social marketing campaigns, $294 million for healthier worker programs, which will include tackling tobacco usage in the workplace, and some $60 million per annum in subsidies for prescription drugs through the PBS to assist people to quit.

As senators have made mention of, the government has also received a recommendation from PBAC regarding nicotine replacement therapy, and we are considering that thoroughly, as we do all potential listings on the PBS. In his contribution Senator Xenophon asked how the government will measure the success of this measure. The Australian Tax Office clearance data and data from the Australia Bureau of Statistics will be used to show whether this measure has been successful. Obviously it is too early to provide any meaningful statistics. The government will monitor the data closely, and figures for May 2010 will be released by the ABS on 21 June 2010. The effectiveness of all campaigns is monitored and examined, and this will be improved through the prevention agency when that has been approved by the Senate. That agency will have an important role in oversighting the effectiveness. In addition, the statistical material that I have referred to will become available in time from the ATO and the ABS.

To conclude, I would again urge the Senate and the parliament to support the bills, to increase the excise and excise equivalent customs duty applying to tobacco. I acknowledge the support from all sides. I have to say that, on any measure, it is relatively rare. I thank all of the political parties—the Liberal-National Party opposition, the Greens, Independent Senator Xenophon, Senator Fielding’s Family First—for the very strong support this legislation enjoys. The passage of the bills will allow investment in better health and hospitals for all Australians. But I think critically and most importantly, ultimately, it will see a reduction in smoking levels in Australia. I thank the Senate.

Question agreed to.

Bills read a second time.