Zed Seselja (ACT, Liberal Party, Assistant Minister for Social Services and Multicultural Affairs) Share this | Hansard source

It is good to follow my good friend Senator Back in contributing to this debate. I might just pick up a little bit where Senator Back left off in terms of budget repair. I will go into some of the details on smoking rates and the like in a moment.

There is no doubt that budget repair is absolutely critically important. We have seen the announcement yesterday of over $6 billion in savings. That is very important. I commend Scott Morrison and Mathias Cormann for their work in continuing that work to find savings, because that is the main task. There is no doubt about it. When it comes to taxation, which I will move onto in a moment, we have rejected the Labor Party's approach in broad, which is to have a whole range of tax increases in a range of areas. If Labor had come into government they would have taxed a whole host of things more. One of those is, of course, investment in housing. The reason I make that point is that if you want people to do less of something you tax it more. That is what I am going to get into when discussing this bill. If you want people to invest less you tax it more. The Labor Party had that approach when it came to investment in housing and we see that as a shocking idea.

When it comes to taxing things like smoking, obviously there is a slightly different imperative, because we do actually want to see people smoking less—we do. We can put that into stark contrast with when there are tax grabs by the Labor Party on things like negative gearing and capital gains tax, because that is taxing investment and discouraging it. The government and I certainly want to see more investment in housing and in a whole range of other areas.

It is pleasing to be speaking to these bills, the Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016. As a senator for the ACT, I want to note the low rates of smoking we have here in the ACT—the lowest in the country. Figures from the Australian Institute of Health and Welfare show that in 2013 in the ACT we had a daily smoking rate of 10 per cent—which, as I will discuss in due course, is the target for smoking rates Australia-wide. Furthermore, in the ACT, we had the highest rate of people who had never smoked—with 65 per cent of Canberrans having not taken up the habit. I can certainly attest—as many others can—that this has all sorts of benefits for individuals, but there are also benefits from living in a relatively smoke-free city. Despite the fact that we have the lowest rates in the country, we would of course like to see those rates continue to decline, as they have in recent years.

The sad reality is that each year smoking kills an estimated 15,000 Australians and costs Australia $31.5 billion in social—including health—and economic costs. Governments of both parties have long fought to decrease smoking rates and the various health impacts that come from smoking. A range of methods have been used over the years to get these rates down. We have seen awareness campaigns, with organisations such as Quit working hard to help people stop smoking. We have also used various economic mechanisms to get smoking rates down by helping people stop and discouraging smokers from taking up the habit in the first place. These bills are another element of ensuring our success in getting smoking rates down continues.

There has been a sustained, concerted effort by all levels of government since the 1970s to improve health outcomes when it comes to smoking. Since the first health warnings were mandated on cigarette packs in 1973, it has been a long road to get where we are today.    Long gone are the days of smoking indoors, on planes, in workplaces and in restaurants. Particularly since the turn of the century, we have a good story to tell with getting smoking rates down. In 2001, 22.3 per cent of the population were smokers. In 2004-05 that had dropped by one per cent to 21.3 per cent. In 2007-08 we saw a further drop to 19.1 per cent. In 2011-12 we saw it drop to 16.3 per cent. And, most recently, in 2014-15 it has dropped even further to 14.7 per cent. So there has been great success here in getting good outcomes for smokers, with all of the flow-on health benefits for hundreds of thousands of people in our community.

Perhaps most impressively, amongst the most recent ABS figures there is a statistic that is very encouraging, which is that 52.6 per cent of Australians have never smoked. That means that we have a whole cohort of young people who have listened to the educational and awareness campaigns out there, know the health problems associated with smoking and are making the choice to not even try smoking in the first place. We know how addictive smoking can be. I have never been a smoker myself, but a number of family members have been and I have watched them try to quit, quit, take it up again and quit again. It is a very challenging addiction for many people to get over. So, of course, it is much better if our kids do not try it in the first place. I would emphasise that to young people. It is certainly a message I give my kids, and I hope that they take that advice. So far, so good—as far as I know. You never quite know what your kids are up to all the time, but I am pretty confident that none of them are smokers and I am very hopeful that none of them will be smokers. Certainly the message to them is not to engage in that habit.

A 2014 study on school students' use of tobacco found that smoking among 12- to 15-year-olds is at its lowest since 1984 when studies of this type began. Even more encouraging, the study found that 94 per cent of 12-year-olds have never smoked and 61 per cent of 17-year-olds have not had a cigarette either. So I think we can say that what was once one of our greatest health challenges is becoming less of a challenge, though of course we know that there is more that needs to be done.

Through COAG, all Australian governments have committed to getting the smoking rate down to 10 per cent. As I noted earlier, that is the rate here in the ACT—and of course we would like to get it lower than that. We have still got some way to go and I think it would be a significant achievement to get the rate to 10 per cent nationally. With that in mind, these bills will increase tobacco excise charged on domestic production and equivalent customs duties charged on imports by way of four annual increases of 12.5 per cent a year from 2017 until 2020. This will replicate the annual increases that were put in place from 2013 to 2016. In addition, adult average weekly ordinary time earnings based indexation of tobacco excise rates will continue. The next biannual indexation of tobacco excise will occur on 1 March 2017.

From 1 September 2016 the excise and excise equivalent duty rates on tobacco is approximately 61c per stick and $763.20 per kilogram of tobacco content. This equates to $15.26 in excise on a packet of 25 cigarettes, which retails currently for approximately $25.00. Ignoring biannual indexation, the 12.5 per cent increases will increase excise per pack of 25 cigarettes by around $2 each year. This means that, after the final increase in 2020, the excise component of a pack of 25 cigarettes will be $21.50. The increase in excise and duty will move Australia towards the World Health Organization's recommendation that excise should comprise 70 per cent of the price of a cigarette. All that said, it is difficult to say how this will precisely affect prices as cigarette companies may change their prices in other ways. But the central point remains that these bills aim to reduce the prevalence of smoking in Australia and thus minimise the harm of cigarette smoking to the community.

It has been very clear for some time, as we have been on this journey to reduce smoking rates, that increasing the price of cigarettes via taxation is one of the most effective ways of reducing tobacco consumption and preventing the uptake of smoking. Higher prices encourage smokers to quit or reduce their consumption and discourage potential smokers, particularly young Australians, from taking up the habit. There have been a number of significant increases in the tobacco excise, particularly since 2010, and the lowering of smoking rates over that time clearly demonstrates how this has worked.

As I have mentioned, the Council of Australian Governments have set a target of reducing the daily adult smoking rate to 10 per cent of the population. This commitment sits alongside a similar commitment to halve the daily rate of smoking among Aboriginal and Torres Strait Islander people by 2018. This measure will also assist the government to make further progress on these goals. It is one of the most unfortunate and troubling aspects of this discussion that Aboriginal and Torres Strait Islander Australians, people in remote areas and people of the lowest socioeconomic status all have higher rates of smoking than the general population. Certainly I understand, as does the government, that this means that there are challenges when we increase the excise. We understand that, for those who feel unable to quit, this does create a financial burden. It can be very tough; I acknowledge that. And that is one of the challenging parts of dealing with this issue. Obviously, the hope is that people will not end up spending so much money on smoking. The hope is that they will spend, in future, no money on smoking, as it encourages them to quit. So they will not only save the money they are currently spending on cigarettes but also gain all of the health benefits that flow from quitting smoking. They will have more money in their pockets and, hopefully, a much healthier lifestyle and a longer life. Hopefully, they will avoid some of the worst things that come from long-term smoking and that are linked to long-term smoking—particularly things like lung cancer, which of course has such a devastating impact on those who suffer from it.

As has always been the case in our efforts to reduce smoking, this change sits alongside the numerous interventions the Commonwealth has made to reduce the prevalence of smoking, including a comprehensive ban on tobacco advertising and promotion, retail display bans, Pharmaceutical Benefits Scheme subsidies for smoking-cessation supports, and extensive and continuing public education campaigns. As we have clearly established in this place during this debate, these efforts are working, so it is vital that we continue to make the changes we need to continue these great outcomes.

I note that of course these bills also play a broader role in this government's efforts to get the budget under control and to build a strong economic platform into the future. These bills will raise $4.59 billion across the forward estimates period. In comparison, goods and services tax receipts are estimated to increase by $430 million over the same period. The revenue gained from higher tobacco excise will be used by the government to provide a range of services, including health services. I know that in the other place they have been working through the Budget Savings (Omnibus) Bill 2016, and no doubt we will soon be debating it here. I particularly look forward to that debate. As I mentioned earlier, broadly, when it comes to issues around budget repair, our view in the coalition is that the primary way of getting the budget under control is to control spending—to limit spending growth and to find reasonable savings where we can find them. That is the best way to bring the budget back under control. As I also mentioned earlier, the exceptions to that are things like the tobacco tax, where we are taxing something that we would like to see less of, not taxing things like investment and economic growth and jobs, which, of course, we want to see more of. So there is a significantly different approach between the coalition and our opposition when it comes to taxation.

But, when it comes to these bills, of course, we are looking to see less tobacco consumed in this country. We are looking to see rates of smoking going down rather than coming back up again. These bills are an important part of that. This measure is an important part of the government's comprehensive tobacco control strategy, which includes investment in antismoking social marketing campaigns, subsidies for nicotine replacement therapies and the introduction of plain packaging for tobacco products.

The government also announced in the budget that it will strengthen the penalties for illicit tobacco offences and provide an additional $7.7 million for the tobacco strike team to combat illicit tobacco activity. This is a particularly important measure to ensure the effectiveness of the tobacco excise increase. I have heard from many here in my community in Canberra about the illegal importing of tobacco and the black market for cigarettes. Australia has a strong legislative and regulatory framework to control illicit trade in tobacco products. The Australian Taxation Office and the Australian Border Force will continue to have a strong ongoing role in monitoring and enforcement activity against illicit tobacco. This is an important fight, and we are going to continue to keep our borders secure and work against this illicit trade.

So it is clear that these bills are important for Australia's health and, of course, for our budget. The fact is that 15,000 people dying from smoking related illnesses is too many. Even though we have made great progress over the last few decades in getting smoking rates down, we certainly cannot be complacent. With a goal of reducing smoking to 10 per cent across all states and territories by 2018, we have a clear target to hit, and the entire suite of government efforts will continue.

History has shown that we need a range of policies to combat smoking. We need advertising campaigns and health awareness campaigns. We need to be in schools talking to young people and out in the community encouraging people to quit. But we also do need to combine these efforts with other measures, including the price signals contained in these bills. So that is what these bills do. Regular increases in the tobacco excise over the next four years will bring our policies into line with international standards. They will lift the price of cigarettes, which has been a proven way to get smoking rates down. Once again, I note that there are, obviously, impacts on those who struggle to quit smoking, and we will do what we can to encourage people and to assist people so that not only can their health improve as a result of quitting smoking but their bank balance can improve as well.

I would note once again, in closing, that I think we should be proud of the fact that here in the ACT we see the lowest rates of smoking in the country. We want to continue to bring those rates down, particularly for our young people, because it is such an addictive thing. Smoking is addictive. Nicotine is addictive. To avoid smoking in the first place, as a young person—to avoid being drawn into that—is a much better path than having the great challenges of quitting. We see it with family and friends; it is a tough habit to break. We commend those who do manage to do so. But I would advise people not to start smoking in the first place. That figure of 52 per cent of Australians now who have never smoked is good. We want to see that figure continue to go up, as we hopefully see a generation of young Australians for whom this is really not something that they do. I commend these bills to the Senate and look forward to their passage.