BEARD, Mr Tim, Acting Head, Housing and Specialised Services Group, Australian Institute of Health and Welfare

DAVIS, Ms Jacqueline (Jackie), Assistant Secretary, Tobacco Control Branch, Department of Health

HEWITT, Ms Moira, Head, Tobacco, Alcohol and Other Drugs Unit, Australian Institute of Health and Welfare

SOUTHERN, Dr Wendy, Deputy Secretary, National Programme Delivery Group, Department of Health

CHAIR: I now welcome representatives from the Department of Health and the Australian Institute of Health and Welfare. I remind committee members and officers that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policy or factual questions about when and how policies were adopted. I invite each of you to make a brief opening statement, and then the committee will ask questions.

Dr Southern : Chair, I do not have an opening statement. We are ready to answer questions.

Mr Beard : AIHW would like to make a very brief statement. Just by way of background, AIHW is an independent corporate Commonwealth authority. We were established in 1987 and we sit under the Health portfolio, so we work very closely with our colleagues at the Department of Health on the National Drug Strategy work. We are a statistical organisation and we are responsible for collecting a diverse range of health and welfare statistics.

A very large focus of our work is the National Drug Strategy Household Survey. I will give a little bit of background on that survey for your benefit. It is undertaken every three years. It has been undertaken on a three-yearly basis since the mid-1980s. AIHW has been managing the survey since 1998, so we have been responsible for the last six iterations of that survey, the last one being in 2013. It is a household-level survey drawn from the Australian population. That means that individuals are randomly chosen from within households across the nation. It should be noted that people living in institutional accommodation—for example, nursing homes—are not included in that, so there is a limitation there. It is a relatively large survey compared to a lot of other comparable surveys. It covered about 24,000 individuals in the last iteration, in 2013. As I mentioned, we work very closely with the Department of Health on this survey under the National Drug Strategy. It is in fact funded by the Department of Health, but the responsibility for the overall management of the survey is AIHW's.

The fieldwork is subcontracted to experts in survey collection work. That has been Roy Morgan Research's responsibility for the last six surveys, so we have worked with them on every survey we have done to date. When we get the information from Roy Morgan we analyse it and tidy it up as need be. We analyse the survey data and produce public national reports every three years, as well as some specific, detailed reports alongside some of those—for example, one-off bulletins on different topics.

We have provided quite a lot of detail in the attachment to our submission, but I will just give you the sort of headline about what is collected under that and what the main findings were. In 2013 we asked two sets of questions: one about illicit branded tobacco and one about unbranded loose tobacco. The illicit branded tobacco questions were really asking people about tobacco products that did not include the new plain packaging with graphic health warnings. That really was split into two questions. The first question asked whether the respondent had seen any of those products over the previous three-month period. Those who responded 'yes' to that question were asked whether they had actually purchased them and, if so, in what quantity. There is an interesting timing quirk with that question because the 2013 survey was carried out in the last half of 2013, just over six months after the plain packaging laws had come in. So there is a slight limitation to the results of that survey because our analysis was based on the assumption that people had recalled the three-month period accurately. So if they thought back beyond that three-month period to something that was seven or eight months before, they may have erroneously answered that question by saying they had purchased an illegal product when it was actually a legal product at the time. That is just a limitation that we thought worth pointing out.

The second set of questions was a little bit more detailed. They were questions about unbranded loose tobacco, which is also known as chop-chop. We have actually used that phrase in the survey so that people realise that it is exactly the thing we are talking about. There are two preliminary questions asking whether people have seen or heard of that type of tobacco, and then another question about whether they have smoked it. Those who responded 'yes' to both—those who have both seen or heard of it and smoked it—were asked another seven questions about how often they have smoked it, whether they smoked other types of tobacco alongside and a few questions about the frequency and volume they purchased over the preceding 12-month period. One thing that is really important to note about all of the questions we ask in the survey is that the questions focus very much on the appearance of those products. We are not asking about whether people have an opinion about whether those products are legal in and of themselves. I guess that is another limitation to what we have asked in these surveys.

Just to give you a very quick run-down of the main findings from 2013: as I said, the attachment has much more detail, but the main findings we had were that nearly one in five—about 18½ per cent—of smokers had seen tobacco without the new plain packaging and graphic health warnings over the previous three months. Then when you drill down to the smokers who had actually purchased that type of tobacco over that three-month period, nearly 10 per cent had purchased that type of tobacco. Having said that, the volume of purchases, we found, was very small, and only one in 20 who said that they had purchased that type had purchased 15 or more packets over that three-month period. When you look at the relative rate of smoking, that is quite a small volume. The main findings from the unbranded loose tobacco found that just under four per cent—3.6 per cent—of smokers reported that they currently smoke unbranded loose tobacco, about one-third were aware of it and just under 17 per cent said that they had smoked it at some time with a period undefined.

In conclusion, I want to thank you for your interest in this survey. Our attachment, as I said, has a lot more detail. We would be very happy to answer questions you have in general about the survey and how the information is put together or about the specifics of the data that is in that attachment.

CHAIR: I will start off on your National Drug Strategy Household Survey. In some of the questions you ask in that you are asking someone to admit that they have committed an unlawful activity. Do you have some concerns that people give inaccurate responses to such questions if someone rings up and says, 'I'm calling on behalf of the government; would you like to admit that you have done an illegal act?'

Ms Hewitt : In relation to the questions on tobacco, as Tim Beard pointed out, those questions are based on the appearance of the products, not on whether they are perceived to be, or are, illicit or illegal. So, for those specific questions, I do not think that that is an issue.

CHAIR: But when you drill down to if people have currently smoked unbranded tobacco, I would imagine that those people would be aware that the unbranded tobacco is an illicit product. Therefore, would it be likely that they would underestimate in what they actually say?

Ms Hewitt : My understanding is that one of the reasons the questions were developed in the way that they were is that not everybody would be aware that the tobacco that they were smoking was illicit tobacco, regarding whether it was branded or unbranded. There may be underestimations, but there may be overestimations in some other areas as well, depending on the time period that people are answering about and depending on where they purchased those cigarettes or loose tobacco.

Mr Beard : It is probably also worth pointing out that, within the documentation we provide to respondents of this survey, we make it very clear that their information cannot be used to prosecute them or to take any action against them for admitting that they have committed a crime—not just in illicit tobacco use but illicit drug use.

CHAIR: I understand that, but do you think that there could be a perceived natural tendency for people not to admit that they have committed an activity or purchased an illegal product?

Mr Beard : It is a possibility, but, certainly from the statistics we have seen over the last 18 years worth of data, we have found that people tend to be quite willing to admit, knowing that the survey is anonymous because they actually put their survey in a sealed envelope before it is returned. So not even the person who has dropped it off knows what they have answered.

CHAIR: But there would still be a lot of people that do not have a great trust of government. If you rang up to do a survey asking, 'Have you cheated on your taxes?' I am quite sure that you would get some underreporting.

Mr Beard : That is a distinct possibility. I guess there is no real way of measuring it, unfortunately.

Ms Hewitt : That is right. We cannot quantify that.

Mr Beard : But we certainly have a consistent methodology with which we can track trends across the different types of alcohol and drug use. So we are certainly pretty happy with the methodology in terms of what it is providing in prevalence rates. But, yes, there is no way really of getting to that, and, as Moira pointed out, there are other elements of the survey that have limitations that could make the data move in the opposite direction.

CHAIR: What I put to you also is with increasing ethnic diversity, with an increasing number of people that are born overseas and other countries do not potentially have the transparency of government that we do so I imagine that some are dictatorial and authoritarian countries. People from those backgrounds may be less likely to want to admit in a survey that is somehow related to government that they have been engaged in an unlawful activity.

Ms Hewitt : That is true. That may be the case but we have no way of quantifying that or knowing that. We can only look at the trends over time. I think it is a challenging area to do those estimations. There are different methodologies. Different surveys are looking at different subpopulations or populations so you are going to get different results. Unless you can do other sorts of studies or research to validate that, you are not going to have a clear-cut result. Confirming that would be speculation on our behalf but we do not actually have that information.

CHAIR: Human nature would indicate there would be a possibility for people not to admit or own up on a government sponsored form that they are committing some sort of unlawful activity.

Ms Hewitt : There may be some people that do that but there are other people, as Mr Beard said, who are very willing to part with that information providing their data is secure. Again, we cannot quantify that.

CHAIR: Where you ask the same questions over time to have some consistency, is it possible that the results could also be skewed by what is reported in the media at that particular time? For example, if before you do your study, there is a big expose on TV of a big particular raid of explicit products and unbranded products or something is being written about it in the paper at that time, is it a possibility that could also skew the results?

Ms Hewitt : Again, yes, there would be possibly some influence of that but it is not something we can measure in the survey itself. It can have a positive effect or a negative effect and you cannot determine the direction of the effect.

CHAIR: Taking all those things into account, on your figure 2 in your submission it says: 'you currently smoke unbranded tobacco'. If I look at that, that is sitting at around 10 per cent for the year 2007. You have got a slight decline from maybe 12 per cent down to 10 per cent. Would you take from those results that the unbranded market is currently around 10 per cent of all tobacco smoked?

Ms Hewitt : 'Currently smoke it', was around 3.6 per cent of smokers.

CHAIR: I just want to make sure I am interpreting this properly. You have got there in figure No. 2: 'smoked unbranded tobacco in their lifetime.'

Ms Hewitt : Yes.

CHAIR: You have got that around roughly the 50 per cent mark.

Ms Hewitt : It is 'aware of unbranded tobacco', around 50 per cent mark in 2007 decreasing over time. 'Smoked unbranded', yes.

CHAIR: That is a subset.

Ms Hewitt : Yes.

CHAIR: So you have got 'currently smoked' so I should be looking at the third column, where you have got the smokers that currently smoke that and it is between three and five per cent.

Ms Hewitt : Yes. Just to clarify, those two columns are for those smokers who are actually aware of unbranded tobacco so it is a subset of the first lot.

Senator LEYONHJELM: I have some similar questions about the survey. When was the fieldwork conducted? Was it in 2013?

Ms Hewitt : It was from July to December 2013.

Senator LEYONHJELM: So it was an extended period, was it?

Ms Hewitt : Yes.

Senator LEYONHJELM: Was it done by Roy Morgan?

Ms Hewitt : It was done by Roy Morgan Research, yes.

Senator LEYONHJELM: I have seen the questionnaire. One of the things I am curious about, and this also applies to the Roy Morgan component of the KPMG study on illicit tobacco consumption, is this use of the word 'branded'. What we have heard is that a large proportion of the illicit tobacco market is in fact branded—it is just that it is not Australian plain package branded. Do you think that is a confounding factor?

Ms Hewitt : In the 2013 survey?

Senator LEYONHJELM: Yes. In either case but, yes, you can speak about your survey of course obviously.

Ms Hewitt : My understanding is that if you are talking about unbranded or branded tobacco that is brought in from overseas, through duty-free or from returning travellers—

Senator LEYONHJELM: No, in the questionnaire there is no definition of what 'unbranded' means. We are a multicultural society and in fact, in technical terms, the majority of the packs that are being smuggled into Australia, so the evidence was, actually have a brand; it is just that they are not the known brands that we have and they are not in plain packaging—they are in white or colourful brands. For the understanding of the respondent to the survey, when you use the word 'unbranded', do you think there is likely to be a confounding factor as to what that is interpreted to be? I have to say, this is not unique to your survey; it also applies to the other one.

Ms Hewitt : My understanding was that specifically why we were asking around the appearance of the packaging was because people might not be aware some of those packages were illicit tobacco. So we were asking about the appearance of graphic warnings for that very reason. I think that would reduce the likelihood of confounding.

Senator LEYONHJELM: I cannot recall exactly what the change over was there. All legally branded packs had to be off the shelves on 1 December 2012, was it? Is that correct?

Dr Southern : Yes.

Senator LEYONHJELM: So there was absolutely nothing in the way of carryover of old stock or whatever?

Dr Southern : The transition period was from October to December 2012. After 2012, the only product that should have been available for sale was plain packaged.

Senator LEYONHJELM: So that was from 1 December 2012, was it?

Dr Southern : That is correct, yes.

Senator LEYONHJELM: We are talking seven months plus for the fieldwork so the respondents would have had up to 12 months of experience in the market with plain packaging. Am I right there?

Ms Hewitt : Yes, but, as Mr Beard noted, there is the potential for recall bias. Often people cannot remember if they did something in the last three months or the last six months, and there may have been some recall bias in the length of time for those particular questions.

Senator LEYONHJELM: Yes indeed, I understand. What I wondering is we have heard this morning evidence that demand for illicit tobacco, illegal tobacco increased subsequent to the introduction of plain packaging and it still is growing. The scenario that was presented to us by the retailers was that people were no longer asking for their brand but for the cheapest product on the market, essentially. Their argument was, when they are buying the cheapest product that is on sale legally and are still acutely sensitive to the price then there is a greater inclination for them to look to the illicit market. My question to you is: can you tell, do you have any data that might suggest the next time you do a survey—and I assume it will be this year—that there may be changes that reflect what the retailers are telling us.

Ms Hewitt : No, we do not have any such data at the moment.

Senator LEYONHJELM: The reason I ask is that your tables on page 5 of your submission—'Aware of unbranded tobacco', 'Smoked unbranded tobacco in their lifetime', 'Currently smoke it', and the two categories among those aware of unbranded tobacco—are showing steady declines. The KPMG study showed an increase up until the most recent period, and anecdotally the argument is that it is going up too. So somebody is wrong. I am trying to figure out who might be wrong in this instance. Why do you think there is a decline from 2007 to 2010 and then to 2013 in awareness of it and smoking of it when the other survey and the anecdotal evidence say that it has actually gone up until recently?

Ms Hewitt : I think it is because the surveys are targeting very different populations, and possibly the time period when they are collecting the data is different as well. In fact, in the KPMG report—I think on page 76—there is actually a summary of the differences between the surveys, and I think one of the critical differences is that the National Drug Strategy Household Survey focuses on trying to get evidence at a population level—that is including nonsmokers as well as smokers—and we are looking at the population through households, whereas in the survey that is done for the KPMG report they are focusing on smokers, so they are targeting qualified smokers who, I would assume, are invested in their habit and perhaps have more knowledge of the market than the general population.

Senator LEYONHJELM: Yes, the KPMG study is to find out, amongst the population of smokers, what is their source of tobacco products. That is right. But you are both ending up with similar objectives as to what percentage of the market is attributable to illegal tobacco and legal tobacco. You are showing a declining trend, and at the same time we are seeing a decline in smoking. To accept that that is an accurate reflection, you have to accept not only that people are smoking less but also that they are more inclined to smoke legal products. The KPMG study would seem to suggest that it is going the other way: that maybe people are smoking less—I do not think that is in dispute—but that they are actually smoking more of the illicit product. The retailers were certainly quite adamant about that this morning. I am just wondering whether this issue about the definition of 'branded' and how the respondents are interpreting the words 'branded' and 'unbranded' would influence that. Do you think it is that you are right and they are wrong?

Ms Hewitt : I do not think it is a question of, 'We're right and they're wrong.' I think it is a question that there are different methodologies and it is a very challenging area to estimate when there are a lot of unknowns. When it is, as you said, illicit—illicit importation, illicit acquisition or illicit use—there are a whole range of different factors that make it hard to get to the nub of what the real data is. So I do not think it is a matter of, 'They're right and we're wrong.' We are looking at different things.

Senator LEYONHJELM: All right. Even on your figures—I just have to make sure I get the right figures here, because there are a lot of them floating around. If you have some more questions, Chair, I will get my head around the numbers I want to ask you about.

CHAIR: You have a note at the bottom of table 6 in your submission. It says:

Note: Survey questions relating to unbranded loose tobacco were modified in 2010 and only asked respondents about awareness and use of unbranded loose tobacco whereas in 2007 and 2013 respondents were asked about awareness and use of unbranded loose tobacco and unbranded cigarettes.

Can you just confirm exactly what the questions were in those two surveys.

Ms Hewitt : I can confirm what they were in the 2013 one because I have them with me.

CHAIR: Can you just read out what the question was, please.

Ms Hewitt : For the 2013 survey?

CHAIR: Yes.

Ms Hewitt : The unbranded.

CHAIR: This is a written question on the survey that someone fills in.

Ms Hewitt : Yes. I have it here:

Have you seen or heard of unbranded tobacco (also called 'chop chop'), usually sold loose in plastic bags either as tobacco or rolled into cigarettes?

The options are 'yes', in which case you continue with the questions, and 'no', in which case you skip onto another section.

CHAIR: There is no other definition? It is unbranded, loose and 'chop chop'? That is the wording of the survey?

Ms Hewitt : That is the wording for that particular question, yes—for the unbranded.

CHAIR: And there is no other definition anywhere for anyone to find what you mean by 'unbranded'?

Ms Hewitt : I am trying to check that. At the moment I cannot see it. I will have to take that on notice.

CHAIR: Take on notice if there is any other definition of what that is for someone to read in the survey. Could you also take on notice what the question was in the 2010 survey—you said the survey was modified.

Ms Hewitt : Could you repeat those.

CHAIR: Certainly: could you see if there is any definition elsewhere in the survey. The words from the survey were 'unbranded' and 'chop chop', in brackets. Obviously it is then up to that person's interpretation as to what you actually mean by that. That may not cover all definitions. As we have seen here earlier today, with some of the other participants in the inquiry, they have a branded box of cigarettes. It is branded. It has names and labels and everything on it. The question is whether people would consider that as unbranded or 'chop chop', even though it is an illegal or illicit product.

Ms Hewitt : Yes. And the exact wording for the 2007 and 2010 surveys?

CHAIR: Yes, because you do note that this should be taken into account, comparing the 2010 results with 2007 and 2013.

Ms Hewitt : Yes.

Senator LEYONHJELM: I have found one table that I would like to ask you about and I am still looking for another one. In table 3, on page 9 of your submission, you have:

Have purchased tobacco products which do not have the new plain packaging with the graphic health warnings.

That addresses my question of calling it branded or unbranded. So that is 9.6 per cent. This is the bit I was looking for, and I have not found it: would you conclude that that includes loose tobacco, chop chop, or do you think that is a separate issue?

Ms Hewitt : Yes, it is a separate issue. It is a separate question.

Senator LEYONHJELM: I had to read an awful lot of information for this inquiry, so I cannot remember where I saw it, but what is the percentage of people who have said that they have purchased loose tobacco, chop chop?

Ms Hewitt : The unbranded tobacco—it was 3.6 per cent who currently smoke it.

Senator LEYONHJELM: Why couldn't you add that 3.6 to 9.6?

Ms Hewitt : I think they are two separate issues.

Senator LEYONHJELM: Well, I am putting myself in the shoes of a respondent. On the one hand we are talking about unbranded, which might just be loose tobacco. On the other one you are asking them about tobacco products which do not have the plain packaging warnings, which would include the white ones, but they are branded, and all that sort of stuff. Why wouldn't you add the two together?

Ms Hewitt : You could have a person who does both, smokes both.

Senator LEYONHJELM: Yes, indeed. That is an answer I am looking for. Why not do it?

Ms Hewitt : That would be the main reason: because there is a statistical methodology that you have to apply.

Senator LEYONHJELM: Yes, indeed. But if you did that you would end up with 12 or 13 per cent—not that much less than what KPMG is coming up with.

Ms Hewitt : But that would be an incorrect thing to do statistically.

Senator LEYONHJELM: I agree, but we are looking for methodology reasons why KPMG is coming up with 14 per cent and you are coming up with 3.6 per cent. That is what I am looking for.

Ms Hewitt : I think it is primarily because the questions are different, the surveys are different and the population that they are surveying is different. The methodology is different.

Senator LEYONHJELM: Yes, indeed, but they are both coming up with what share of the tobacco market is attributable to the illicit sector. They are both arriving at an answer. Now, because the answers are so distinctly different, what you are saying is, 'They have different methodologies, different populations and so forth.' But they are still coming up with two distinctly different answers quite a long way apart. I am just trying to understand what the reason for that might be. If their methodology is wrong, what is wrong with it? If your methodology is wrong, what is wrong with it? You cannot both be right; that is what I am saying.

Ms Hewitt : I am not going to comment on their methodology, because I do not have enough detail in my head about what their methodology is and how they have actually applied it. I would have to take any questions or give an opinion on that on notice and get a bit more background understanding of what their methodology is and whether it was a valid scientific and appropriate methodology. But, in terms of ours, I think it is definitely a robust methodology. Clearly, if you are looking at different things for different purposes, you can come up with very different results, but it does not necessarily mean one is right and one is wrong. They could be both right, but you are looking at different things.

CHAIR: Could I just jump in there.

Senator LEYONHJELM: Go ahead.

CHAIR: If I were to ask you the question, 'According to your survey, what is the percentage of tobacco sold in the country, as a total share of the market, that is illegal chop chop, unbranded or from an illicit or illegal source?' do you believe that your survey actually answers that question?

Ms Hewitt : Absolutely not.

CHAIR: Or are you answering other questions altogether?

Ms Hewitt : No, we are not answering that question at all. We could not even look at that.

Mr Beard : That is because it is person level as opposed to volume level. We cannot really get to the crux of how much tobacco is illicit if people are consuming—

CHAIR: So if someone grabbed your survey and said, 'Based on your survey results the illicit share of the market is X,' you would say that that is not what you are measuring?

Ms Hewitt : Absolutely.

Mr Beard : It does give a good indication of where it might lie within a certain range, and, as you pointed out, adding those two numbers together is something you could do. But, as Ms Hewitt pointed out, it is not statistically robust. Having said that, we do not know how much of that proportion lies in the middle. It is a reasonable thing to assume that, if you put the two together, you would get a number slightly bigger than 9.6 per cent. We just do not know how much bigger.

Senator LEYONHJELM: Understood. Just out of interest, what else is included in this survey? It is not just about smoking, is it? It is about drug consumption in general—is that right?

Ms Hewitt : It is about alcohol, illicit drug use and misuse of pharmaceuticals. We have copies of the 2013 survey here, which we can leave if you are interested.

Senator LEYONHJELM: Can we agree to accept that.

CHAIR: Yes.

Senator LEYONHJELM: Thank you. That would be nice.

Mr Beard : We also have copies of the public report, if you would like to have that too.

Senator LEYONHJELM: That would also be nice. Thank you. At the risk of displaying my ignorance and not having read the spots off your submission, it is all done by mail—am I right? The respondents send it in and Roy Morgan Research does the fieldwork—is that correct?

Ms Hewitt : Roy Morgan Research does the field work. It is not done by mail. It is done by what we call a 'drop and collect' method. Field workers went out and recruited people who then filled in a paper form and sent it back. In some iterations of the survey there has been an online component or a telephone component, but not in the 2013 survey. It was all a drop and collect methodology, and that was mainly around what was felt to be the best way to get better response rates.

Senator LEYONHJELM: Do you have any feel for how long a respondent requires to fill it in?

Ms Hewitt : The average is around 35 minutes.

Senator LEYONHJELM: Do you have any feel for the impact of literacy on response rates?

Ms Hewitt : I would have to take that on notice to see if we have any information on that.

Senator LEYONHJELM: I am just wondering, I am not making any suggestions, it is just that 35 minutes to complete a written survey would potentially have implications for response rates according to literacy.

Ms Hewitt : I do not think we would have a specific literacy measure but there might be other measures that could be proxies for that that would give us an indication. I would expect that it would have some impact.

Senator LEYONHJELM: I agree. I have to say the fact that your results did not identify any distinction between Indigenous and non-Indigenous would worry me a little bit because there is evidence that smoking rates overall are substantially higher amongst Indigenous people and, therefore, you might expect interest in and awareness of the illicit tobacco market is greater.

Ms Hewitt : I think we found that, over a lifetime, there is a difference. It is a very small difference for current smokers. Part of that is due to the reliability of the low numbers that we have for the Indigenous data and, therefore, the reliability of that data.

Senator LEYONHJELM: Yes. I can imagine that sampling would be an issue.

CHAIR: I want go to table 4 again. The third question asks: 'Have you purchased tobacco products which do not have the new plain packaging with the graphic health warnings?' You have that over the five quintiles—the first quintile being the most disadvantaged and the fifth quintile being the most advantaged. Those results seem to be jumping all over the place; there is no consistent trend. Anecdotally, I would have thought the people who are most sensitive to price, being the most disadvantaged, are more likely to purchase tobacco products which do not have the health warnings on them. Those products being illegal, and sold at a reduced price, their purchase by the most disadvantaged would be more prevalent. But your results seem to go the other way and are up and down between the different quintiles. Could you offer any thoughts about why that is?

Ms Hewitt : I would prefer to take that on notice and get back to you with a more comprehensive answer.

CHAIR: I take it you have a statistics background.

Ms Hewitt : My background is in epidemiology.

Mr Beard : Statistics.

CHAIR: Then maybe the question is best addressed to you, Mr Beard. If you were looking for a way for the government, over a period of time, to try to measure the size of the illicit market could you suggest a methodology that could be used?

Mr Beard : There is a lot in this survey that can add to that discussion. We were having a discussion earlier about the findings of the 2013 survey. In my opinion, because it was only seven or eight months after plain packaging came in, we have not had long enough to see any substantial differences. The running of the 2016 survey is going to be a very interesting thing to keep an eye on in terms of illicit tobacco and whether these numbers come up. The evidence you have seen this morning would, at least anecdotally, be reinforced by that if that evidence was to come to the fore. The 2016 survey, which is being run later this year, will give you a lot of information. Unfortunately, we have to wait another year for those results to be available.

In terms of a broader statistical way of measuring this type of information I have not had a very intimate look at the KPMG report but what they are doing is probably the most appropriate way to measure this type of information—without going into the details of exactly what they have done. A targeted survey asking those sorts of questions to people who are intimately familiar with the topic is probably the most appropriate way of collecting that type of information and tracking it over time. So that is exactly what is being done. I cannot speak to the way it is being done or how appropriate it is, but as we have mentioned a few times today, in terms of trying to compare it directly with our information, that is a mistake that—

CHAIR: You are basically saying we are comparing apples and oranges?

Mr Beard : Yes, absolutely. They are similar concepts but they have to be taken as very different surveys.

CHAIR: You cannot line them up and say that one is wrong and one is right. You are saying that they measure different things?

Mr Beard : That is exactly right.

CHAIR: Have you read through the KPMG report?

Mr Beard : Yes.

CHAIR: Do you have any criticisms of any of the methodology used?

Mr Beard : No, I do not really have any criticisms. The key point to pull out from that is that Roy Morgan Research also runs theirs and we think of them very highly because we have used them in our last six surveys, as well. So I would be very surprised if they had made any major methodological errors, without knowing the detail. I have read the report but I am not across all of the details of it. So I would say that it has come from a very trustworthy source. Roy Morgan is obviously independent of the funding behind that, so I do not think there should be too much concern—they are experts in the field and they know how to collect this type of information. But, yes, as we have pointed out they are very different surveys and should be taken as such.

CHAIR: For the 2016 survey, have the questions you will be asking been finalised, or is it something you are still working on?

Ms Hewitt : We are in the process of finalising them now. In fact, we are about to go out to pilot them soon. I do not have the changes with me, but there are some changes to some of the tobacco questions. Although we are very much focusing on the need to maintain trend data—key trends data—so we will try to keep the questions the same. There is also the introduction of some questions on e-cigarettes. They will not be finalised until we have been through the pilot study, but we have been working with—

CHAIR: These would be additional questions that you would add in?

Ms Hewitt : Some of them are additional. The e-cigarette questions are new questions, but there are also some changes and refinements to the tobacco questions. I do not have a copy of that with me. But the pilot testing is expected to occur from mid-March to the end of April. The main study will commence in June, so it is probably in May that we will have finalised the questions.

CHAIR: When would the results from the 2016 survey be publicly available?

Ms Hewitt : The results of the 2016 survey are likely to be publicly available in 2017. The key findings at least will be out by around April or May 2017. Again, I do not have the date in my head at the moment. But it will be mid-2017.

CHAIR: So we are still a good 12-plus months away?

Ms Hewitt : We are. The field work, the collection of the data, will be occurring from June to November this year.

Senator LEYONHJELM: I have some questions for Dr Southern and Ms Davis. Without wishing to get into policy areas, which, as the chair has noted, we cannot ask you about, you have an interesting comment on page 5 of your submission—that you have an aspiration for Australia to be 'the healthiest country by 2020'. What tobacco related parameters would indicate we are 'the healthiest country by 2020', if you are successful in that?

Dr Southern : Australia: the healthiest country by 2020 was the report of the National Preventative Health Taskforce. What we are looking for is a reduction in the prevalence of tobacco smoking and exposure to tobacco smoke. Those targets are set out in the National Tobacco Strategy, which is a document that was developed through the COAG processes.

Senator LEYONHJELM: So there is a target in there for the proportion of the population that is still smoking by 2020?

Dr Southern : That is correct. The number is 10 per cent by 2018.

Senator LEYONHJELM: One of the questions that arise out of that is whether or not current policy settings are appropriate—and this is where treading on dangerous ground! Some of the evidence we have heard this morning would suggest that the legal tobacco market is suffering at the hands of the illicit tobacco market. Whether there is actually an overall reduction is another matter, of course, if you add the two together. I do not think I am going to argue with anybody that overall the trend is downwards—I do not think I want to go on that one. The question of course is whether the rate of change, the rate of decline, is being helped or hindered by whatever the size of the illicit market is. Do you have any thoughts on that?

Dr Southern : In the discussion earlier this afternoon we heard about the difficulty of actually measuring the size of the market. What you and I are talking about now is more about the prevalence of smoking—

Senator LEYONHJELM: Overall consumption.

Dr Southern : Overall consumption, and I guess the household survey is one measure of prevalence that we will be looking towards in the 2016 survey, because that will cover both smoking of licit and illicit products. On the basis of the evidence we have available to us, we do not see an impact of illicit tobacco on the prevalence rates, but that is from the totality of evidence and data that is before us and we certainly recognise that trying to unpick some elements of that is difficult. But the rate of reduction in prevalence suggests that there is a continuing decline—that it is below trend. But I am unable to point to any evidence that would suggest that the illicit tobacco is actually propping that up if you like, and that in the absence of illicit tobacco you would see a greater decline.

Senator LEYONHJELM: I think I put a question on notice at estimates for someone in your department to come back to me with the long-term rate, because the data we have looked at would suggest that the rate of decline in smoking has been consistent for quite a long period and is not gone up or down—that rate has continued. I think someone is on notice to come back to me with some numbers on that.

Dr Southern : Yes, and that would be us.

Senator LEYONHJELM: The figures and graphing I have seen suggest that the long-term trend has been maintained and has not altered for a couple of decades, from memory. I guess the question then is one of policy options. Taking a flight of fancy for a moment, let us suppose that those figures that I have seen that suggest a very steady rate of decline are accurate. Let's suppose you thought that the rate of decline should accelerate—we would like it to accelerate. I am not a smoker, so I am not cheering for it not accelerating. The question then is whether the levers that are being pulled are the appropriate levers. Is the rate of tax increases achieving this 'healthiest country'? Is the plain packaging achieving the 'healthiest country'? Is the current obstruction to e-cigarettes achieving the 'healthiest country'? In order to do that we need very good data, would you agree?

Dr Southern : I would agree. We are all looking towards a good reliable set of data both on prevalence—and I think we do have good data on prevalence from the household survey and other sources. We have agreed that looking at the illicit market is an area where we do need better data. The health department, AIHW and colleagues in the Department of Immigration and Border Protection and the Australian Taxation Office are certainly looking at ways that we can improve that data.

Senator LEYONHJELM: Although they have other reasons—organised crime are involved in it; there is a revenue loss to the government. They are looking at it for other reasons. Your perspective is whether or not it is contributing or detracting from the objective of the healthiest country. My point is that you do acknowledge that we need very good quality data, not data that is challenged or under dispute.

Dr Southern : Absolutely.

CHAIR: Would anyone like to make a final concluding statement? Dr Southern, in conclusion, if you had your hands on controls of the levers of government policy, what would you like to see done to further reduce the rates of smoking in the country? You have two minutes.

Senator LEYONHJELM: Here we go!

Dr Southern : I have two minutes? I am also a public servant, and while I would give policy advice to ministers, if asked about these things, I think my opinions on this are probably something that I will hold close.

CHAIR: I wanted to make sure we had the opportunity. I thank you all for being here today. That concludes this segment.