Jane Hume (Victoria, Liberal Party) Share this | Hansard source

Thank you.

An opposition senator interjecting—

No, I did not. It is a terrible habit. So, at that stage, those excises accounted for just over 47½ per cent of the total retail price of the most popular brand and gave Australia the seventh highest after-tax cigarette price in the world.

Tobacco is one of the leading causes of preventable disease and premature death in Australia. The ABS data indicates that smoking rates in Australia dropped to 14.5 per cent among adults in 2014 and 2015, compared with 16.1 per cent in 2011 and 2012 and 22.3 per cent in 2001. The ABS data also demonstrated that significant gains have been made in reducing the prevalence of daily smoking in Aboriginal and Torres Strait Islander people aged 15 and over, which is down to 39 per cent in 2014-15 from 45 per cent in 2008 and 49 per cent in 2002. So headway is certainly being made with this particular community where there is entrenched socioeconomic disadvantage.

Australia has a broad range of tobacco control measures in place already and has sustained a multifaceted approach over the past several decades, which has helped to achieve the decline in national smoking prevalence. Interventions include excise increases, very effective education programs and campaigns, plain packaging of tobacco products, large graphic health warnings, prohibiting tobacco advertising and promotion, and providing support for smokers to quit the habit.

Ongoing tobacco interventions, including excise increases, are critical to ensure that the prevalence of smoking in Australia continues to decline. It is incorrect to assume that the rate of reduction of smoking prevalence can be maintained without additional tobacco control efforts. Evidence from Australia and overseas shows that when tobacco control efforts stall so does the decline in smoking prevalence.

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, while also discouraging potential smokers, including young Australians, from taking up the habit.

The adult daily smoking rate was 14.5 per cent of the population in 2014-15. This measure—increasing the excise on tobacco—will assist the government to make progress on the Council of Australian Governments' target to reduce the adult daily smoking rate to 10 per cent of the population, and to halving the daily rate of smoking among Aboriginal and Torres Strait Islander people by 2018. That is a target of the Council of Australian Governments.

Aboriginal and Torres Strait Islander Australians, people in remote areas and people on the lowest socioeconomic status all have higher rates of smoking compared to the general population. Although these groups will, undoubtedly, experience a decline in purchasing power if they keep smoking, they will also receive the income and health benefits from quitting.

This change sits alongside the numerous interventions that the Commonwealth has taken 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.

These bills will raise $4.59 billion across the forward estimates period. Goods and Services Tax receipts are estimated to increase by $430 million over that same period. The revenue gained from higher tobacco excise will be used by the government to provide a range of services but, importantly, that range includes health services. It is a very important measure. It is an important part of the government's comprehensive tobacco control strategy, which includes investment in anti-smoking social marketing campaigns, subsidies for nicotine replacement therapies and the introduction of plain packaging for tobacco products.

The government announced in the budget that it will strengthen the penalties for illicit tobacco offences and will provide an additional $7.7 million for the Tobacco Strike Team to combat illicit tobacco activity. The primary responsibility for the illicit trade in tobacco rests with the DIBP and the Australian Taxation Office. The DIBP received funding in the 2016-17 budget to tackle illicit trade in tobacco. Currently, there is no reliable estimate of the size of the illicit tobacco trade in Australia. The DIBP and the ATO are working to develop a reliable estimate.

Some commentators suggest that tobacco control interventions, such as excise increases and tobacco plain packaging, increase this illicit trade. There is, in fact, no reliable evidence that this is the case. However, there is international evidence to suggest that illicit tobacco market size does tend to be driven more by supply factors, including the cost of supply to market, which is very high in Australia, and also the level of law enforcement activity, the presence of corruption, the likelihood of detection, and the scale of penalties.

As such, tackling the illicit trade in tobacco should not involve weakening effective tobacco control measures; rather, it should be addressed by strong enforcement and compliance measures. Australia has a strong and active enforcement regime aimed at combating the illegal trade in tobacco products, and this is made stronger through the most recent budget allocations to Border Force. The trade in illicit tobacco attracts significant penalties under the Customs Act 1901 and the Excise Act 1901. Tobacco smuggling is punishable by fines and up to 10 years imprisonment.

Public health advocates say that the latest tax hike on cigarettes will cut smoking rates even further from the already steep falls that we have seen in recent years and could even lead to Australia becoming practically smoke free. The number of smokers in Australia has dwindled over recent decades. As I said, it was nearly one-quarter in the early 1990s and it is now closer to only 13 per cent. That is due to previous excise increases and public health measures like banning smoking in public areas and plain-packaging laws.

The chief executive of the Cancer Council of Australia, Professor Sanchia Aranda, said that price is an important factor in people's decision to smoke. She said:

Every time you increase the excise consumption goes down. We anticipate if there were four of these recurrent tobacco increases over time, that about 320,000 current smokers would attempt and be likely to quit as a result of all four increases, and about 40,000 teenagers would be deterred from taking up smoking. In the longer term that means tens of thousands of cancer deaths would be prevented.

Professor Aranda also that lung cancer was still the most significant preventable cancer in Australia.

But there is a view that increases in tobacco excise punishes those on low incomes. The reality is that tobacco tax increases are particularly effective in prompting people in those lower socioeconomic groups—those most disadvantaged in our society—to quit smoking. This is very important because disadvantaged groups tend to bear a disproportionately heavy tobacco death and disease burden.

There is also a claim that increasing tobacco excise would be a tax grab. But what does the community think? It is very hard to imagine any blatant tax grab being popular; however, the Newspoll research shows that 73 per cent of Australians support an increase in tobacco excise. That is not just the nonsmokers talking. Recently, Quit Victoria research showed that 60 per cent of smokers supported a tobacco tax increase—and why wouldn't they, when it can literally save their lives.

The tax grab theory has another major flaw: increasing tobacco excise is the most effective measure available to governments for reducing the social and economic costs of tobacco use. The World Bank and the World Health Organization say so, as do analyses of Australian trends in tobacco consumption done in the 1990s. So the health benefits of the tax are really what matter. The revenue should be seen as a fortuitous by-product, generating funds to reinvest in public health.

Some critics point to the tax increases potentially boosting the tobacco black market—and, yes, illegal tobacco is a very serious issue. But this can be addressed, and is being addressed, in this bill through tighter policing. Ultimately, as policy measures such as increased tobacco excise continue to denormalise smoking in our communities, the market itself will become far less lucrative.

Smoking is the leading cause of death and disability in Australia. If there were any other preventable cause of so many deaths—an infectious disease, terrorism or road trauma—the government would be expected to take action. This government is taking action. Quite frankly, the Australian people should expect nothing less of us.