Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I am pleased to rise to speak on the Customs Amendment (Collecting Tobacco Duties at the Border) Bill 2018. It was very interesting to hear the member for Blair giving us a lecture about budget surpluses, especially when we are coming up to the 30th anniversary of when Labor last delivered a budget surplus. We have to go back all the way to 1989—

Mr Tim Wilson interjecting—

That's right. The good member for Goldstein, in front of me here, wasn't born.

Mr Tim Wilson interjecting—

Well, he was probably still in primary school. The Minister for Defence Industry, at the dispatch box, may have been also in primary school back then, 30 years ago. Is that correct?

Dr Leigh interjecting—

The member for Fenner over there was obviously giving these lectures back then, 30 years ago, telling us how wonderful the free market is, before he decided to get his insights into the Labor Party and realised that those ideas that he wrote so well about in so many of those publications no longer fit into the modern Labor Party and that if he wanted to sit over there he had to disown all those rules.

Then, of course, we have to remember that they did get close. The member for Blair was right: they did get close. I can remember sitting in this chamber and having the then Treasurer, the now member for Lilley, stand up and say, 'Those four budget surpluses that we're announcing tonight—' It was completely mythical. Yet we have Labor members coming into the chamber trying to lecture this coalition on budget surplus. We have done the hard work. The budget surplus is within months of being achieved. Then we have the long, hard haul back to try to pay down that debt that has been run up over recent years and which first started with that unfortunate decision of the Australian public to elect the Rudd government, when everything started to go pear-shaped.

Back to the specifics of the bill: years ago, when we had much higher levels of import duty in this country, licensed bond stores were very common across a wide range of goods. That was where an importer, when the goods entered the country, rather than paying the duty at whatever the rate was on that particular commodity, rather than paying that duty up-front to the Australian customs agency on the importation of goods, would place those goods in a licensed bond store. They would defer the payment of the duty until they took the goods out of the bond store.

Over the years, as duties have come down across the economy, those bond stores are no longer as prevalent as they were in the past. One area where they are still prevalent is tobacco. If a tobacco importer were to import those goods, rather than paying the excise duty at the time of the importation, they would go into a licensed bond store. That licensed bond store has to have additional security. There are additional costs and paperwork. Setting aside the additional capital required to pay that money out and the cost of the interest, it is far more efficient for that duty to be paid upon importation. As the Black Economy Taskforce pointed out, there is also the risk of goods disappearing from that bond store and entering the market without that duty being paid. Therefore I agree with this recommendation of the Black Economy Taskforce that we close that possibility and ensure that when tobacco goods are imported into this country the duty is paid at the time of importation.

But in doing that we are adding to the cost—we need to be up-front about this—of the companies that lawfully import tobacco products. The problem we have created by attempts to decrease the rate of smoking—which I fully agree with—is that as we've increased the price of cigarettes we have gone down a route of de facto prohibition by price. It's a problem we have. You can buy a packet of cigarettes overseas in many markets in South-East Asia for around a dollar a packet. They are lawfully made. I can remember about 12 months ago I was going through the duty-free airport at Dubai and having a look out of interest—I'm not a smoker and I don't buy cigarettes—just to see what the price was. I could buy a packet of Benson & Hedges, with about 30 in the packet, for the equivalent of $1.60 a packet, lawfully, from a retail establishment. We know the wholesale price is a dollar.

We've created this huge opportunity for black market operators in the space of illegal tobacco importation. So, every time this parliament puts legislation in to increase the costs of lawfully sold tobacco, we have to admit that we are creating more opportunities and incentives in the black market. We need to ensure that we are adequately financing our law enforcement officials and border protection agencies to crack down on illegal tobacco imports; because, as has been proven many times throughout history, when you go down the track of prohibition, the unintended consequences cause more problems than what you're trying to solve.

I will leave my remarks there, today, on the issue of illicit tobacco. I would like to note that I am a fervent antismoker. I'd like to see cigarettes completely abolished from the Australian landscape. But I understand you need to be very careful when you try to do that by prohibition. We've got to continue to work on education programs, because, ultimately, that is the only way to change habits. And we've got to continue to ensure that we give the resources to our law enforcement officials to crack down on illicit and illegal tobacco being sold, as it is being sold across our nation in almost plague proportions. I thank the House.

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