This Bill seeks to establish in legislation the increase in the excise applying to tobacco products.

On 29 April 2010, the Prime Minister and I announced that the excise on tobacco products would increase by 25 per cent on and from 30 April 2010. This has seen the excise on cigarettes rising from 26.22 cents per stick to 32.78 cents per stick, and the excise on other tobacco, such as loose leaf tobacco, from $327.77 per kilogram of tobacco content to $409.71 per kilogram of tobacco content. The excise-equivalent customs duty on comparable imported tobacco products has been increased by the same amount.

This legislation that I introduce today will confirm the increase in excise and, together with the Customs Tariff Amendment (Tobacco) Bill 2010, will provide an extra $5 billion over the forward estimates. This revenue, along with existing revenues from tobacco, will be directly invested in better health and hospitals through the National Health and Hospitals Network Fund.

Smoking kills over 15,000 Australians every year, and has been the largest preventable cause of disease and premature death in Australia. The social costs of smoking (including health costs) are estimated at $31.5 billion each year. Annually, over 750,000 hospital bed days are attributable to tobacco-related diseases.

Through tough action over the past two decades, including tax increases and bans on advertising, the number of daily smokers in Australia has been reduced from 30.5 per cent of the population aged 14 and over in 1988 to 16.6 per cent in 2007. This is important progress, but we can and must do better.

This measure alone is expected to cut tobacco consumption by around six per cent and the number of smokers by two to three per cent or around 87,000 Australians. Cutting smoking will save lives, take pressure off our hospitals, and deliver significant social and economic benefits.

Full details of the Excise Tariff Amendment (Tobacco) Bill 2010 and the Customs Tariff Amendment (Tobacco) Bill 2010 are contained in the explanatory memorandum.

I commend this Bill to the Senate.

The Customs Tariff Amendment (Tobacco) Bill 2010 is the second of the related Bills which will increase the rates of duty for tobacco products.

The Customs Tariff Amendment (Tobacco) Bill 2010 contains amendments to the Customs Tariff Act 1995, in respect of imported tobacco products, that are complementary to the amendments to the Excise Tariff Act 1921.

These amendments increase the rates of customs duty for those subheadings in the Customs Tariff that apply to tobacco, cigars, cigarettes and snuff. The increase in the rates of customs duty is 25%, which is the same as the increase in rates of excise duty.

The increased rates of customs duty will apply to tobacco products imported from all countries, including those goods imported under any of Australia’s Free Trade Agreements.

These amendments will ensure that the rates for customs duty on imported tobacco products are the same as the rates of excise duty on those goods when produced in Australia. Again these amendments will reduce the numbers of smoking related diseases and fatalities in Australia.

As with the amendments to the excise applying to tobacco products, the amendments to the Customs Tariff will also take effect from 30 April 2010.