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Parliament House, Canberra: transcript of doorstop: recovery of $250 million tobacco tax windfall.

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Stephen Smith MP Member for Perth Shadow Minister for Health and Ageing


E & OE

Subject: Recovery of $250 Million Tobacco Tax Windfall

SMITH: Well, this time last week I introduced into the Parliament a Private Members Bill to start the process of the Commonwealth recovering up to $250 million worth of tobacco tax.

Late last week, the Prime Minister advised the Leader of the Opposition that the Commonwealth would not be pursuing this money, leaving essentially a windfall gain to the tobacco industry, either tobacco wholesalers or tobacco retailers.

The High Court invited the Commonwealth, invited the Federal Parliament, to legislate to recover these funds on behalf of consumers. The Federal Government should do this, recover up to $250 million worth of tobacco tax and use it for further anti-tobacco work or indeed for more general good public well-being, public health promotion campaigns.

This is a very disappointing decision from the Howard Government. It is bewildering that the Government would let a $250 million windfall gain sit with the tobacco industry rather than recovering those funds on behalf of Australian consumers and using the funds for good health outcomes and for good public works.

JOURNALIST: Is it constitutional to allow the tobacco companies to hold the funds?

SMITH: Well, it’s constitutional in the sense that, as the High Court said, the windfall gain will fall where it rests. At the moment we’ve got an unseemly legal contest between tobacco wholesalers and tobacco retailers seeking to establish their claims to the funds.

It’s certainly constitutional for the Commonwealth to recover the funds. In his advice to the Leader of the Opposition, the Prime Minister said that the Government was concerned about retrospectivity and also made the point that, in accordance with the Commonwealth-State agreement, it was for the States to put in place mechanisms for the recovery of these funds.


On the first point, no one is worrying about the retrospectivity as they fight before the courts to recover these funds, a fight between tobacco wholesalers and tobacco retailers. So far as the constitutional point is concerned, it’s only the Commonwealth who is able to legislate to recover these funds, available as a result of an oversight.

What the Prime Minister is doing is allowing a windfall profit of up to $250 million to go to the tobacco industry, the tobacco wholesalers and tobacco retailers, rather than recovering those funds and using them for anti-tobacco work or for good public health measures.

JOURNALIST: Can the States recover these funds?

SMITH: No, my advice and my view is, no the States can’t. This started originally with the High Court ruling unconstitutional the old State-based tobacco franchise fees. So, we started this exercise with the High Court saying it wasn’t open to the States to put a tax on tobacco.

The Commonwealth intervened, but in the course of that intervention, there was an oversight.

As a result of that oversight, up to $250 million worth of tobacco fees are sitting with tobacco wholesalers. They’ve been paid by consumers to retailers and now there’s a fight going on before the Court between wholesalers and retailers, essentially the general tobacco industry.

The Government should legislate, recover these funds on behalf of Australian consumers and then use the funds, up to $250 million, for good health outcomes, for further anti-tobacco work and for general health measures.

JOURNALIST: [inaudible] given the reason why?

SMITH: Well, in the Prime Minister’s letter to the Leader of the Opposition, which I’m happy to release today, he refers to retrospectivity and it being a matter for the States. There is no argument so far as retrospectivity is concerned. The High Court essentially invited the Commonwealth to legislate. No one’s currently worrying about retrospectivity as the tobacco industry itself fights to get its hands on the funds. I’ve made the point, in my view, only the Commonwealth has the constitutional and the legislative power to legislate to recover those funds and apply them for good public works.


Contact : Andrew Dempster - 0407 435 157 or 02 6277 4108