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Wednesday, 28 February 2018
Page: 2326

Mr CRAIG KELLY (Hughes) (18:18): I'm pleased to rise to speak on the Treasury Laws Amendment (Illicit Tobacco Offences) Bill 2018. I start my contribution to this debate by admitting that I am a fanatical nonsmoker—with the greatest respect to some of the other members currently in the chamber. My nose is extraordinarily sensitive to cigarettes. If someone lights up a cigarette 100 yards away from me, my nose can actually sense it. It causes me discomfort and irritation. So I would be very glad to see the smoking rate in this country driven down to zero and for all those involved in the tobacco industry to put their productive and entrepreneurial works and skills into other efforts. However, the policies that have been adopted by this parliament, and they were bipartisan policies, were to go down the track of trying to reduce the rate of smoking—something that, as I said, I'm all in favour of—by effectively introducing a prohibition by price.

I can remember standing in this chamber a couple of years ago when we had a similar debate on this, and there were members of the Labor Party who refused to acknowledge that, if we were going to increase the retail price of cigarettes by increasing the excise on them, this would lead to a surge in black market activity. There were members of the Labor Party that simply refused to accept that fact. What have we seen since? We've seen that this actually has done exactly that. There must be an acknowledgement by this parliament that, if we are going to go down the track of introducing what is effectively a prohibition by price, that will result in a lot more black market activity. It will create a profit motive for those involved in smuggling activities, attracting them to cigarettes, and we will have to respond by putting a substantial portion of the increased revenue that the Commonwealth is going to receive into law enforcement activities. That's why this bill should be commended, because that's the problem that it tackles.

I had the fortune to go on a delegation overseas last year. I went through Dubai airport. I had a look at the cigarettes to see what the prices were. I could have bought a packet—or several packets; it was three cartons packed together, and it was on special—of Benson & Hedges for A$1.67 in Dubai airport. Yet the bipartisan policies of this parliament are going to increase the price of a packet of Benson & Hedges up to $40 with the excise increases. Already—some may be able to inform me a little bit better—I understand a packet of Benson & Hedges at the moment is around $25 in Australia, the highest price of cigarettes in the world. That, of course, can only attract black market activity, with such massive discrepancies in the manufacturing costs of a packet of cigarettes. You can buy them lawfully in an overseas country, which is a big difference from illegal drug smuggling, where illegal drugs are produced unlawfully in the country of origin, sold on the black market unlawfully and shipped unlawfully to Australia. The whole process is illegal, but, when it comes to cigarette smuggling and importation, the manufacture and sale of those cigarettes in the country of origin is a lawful activity. It only becomes unlawful when those cigarettes are shipped to Australia and a fraudulent customs declaration is made.

We can see how this has fuelled the illegal activities of the black market from the work of the Tobacco Strike Team. In their first two years of operation, they seized more than 400 tonnes of illegal tobacco, worth more than $300 million in lost duty. The coalition were the ones that put forward the money to fund that Tobacco Strike Team, so it's very pleasing to hear members of the opposition suggesting that we should increase or continue the funding for that when it was the coalition government that actually put that funding initially. The Labor Party were the ones that introduced the original excise increases but did nothing to crack down on the increase of illegal activity, which anyone with common sense would have understood would be the natural consequence of such a policy.

That's why this bill deserves support. We are increasing the penalties for illegal activity. We know that the illegal activities are going to ramp up every time we ratchet up the duties and the excises. Every time lawful cigarettes become more and more expensive, there'll be greater and greater black market activity. So, if we are going to go down that track, which is the bipartisan position of this parliament, we have to respond and put the appropriate resources into law enforcement to make sure they have the resources they need and also to make sure that the penalties are appropriate. That's what this bill does—it increases those penalties, and they do need increasing. I know in my electorate that you can drive to almost any suburb and go into a tobacconist and purchase an illegal packet of cigarettes for around $10—less than half the price of a lawful product. What will happen when we make the price of those lawful cigarettes $40? It will only, again, further incentivise the black market.

The question is: is this having a great effect on the reduction in the rate of smoking? An article in The Australian on 14 August last year noted:

The number of smokers in Australia has increased for the first time since anti-smoking campaigns ramped up a generation ago, casting doubt on the effectiveness of further taxes on cigarettes.

It continues:

An unexpected standstill in the national smoking rate since 2013, combined with rapid population growth, has pushed up the number of regular smokers by more than 21,000 to 2.4 million according to Colin Mendelsohn, an expert in public health at the University of New South Wales, who says Australia’s "punitive and coercive" policies to curb smoking have "run out of steam".

So, if we are going to continue to drive down that rate of smoking that all of us, whichever side of this chamber we sit on, want to see, this bill goes a long way to going down the track of increasing penalties, but we also have to acknowledge that a lot more needs to be done in this space. We need to look at what resources our Australian Border Force need. We need to continue the work of the Tobacco Strike Team to ensure that they are appropriately resourced. That is the only way we are going to continue to drive down the rates of smoking in this country. I commend the bill to the House.