James Paterson (Victoria, Liberal Party) Share this | Hansard source

I warmly welcome the opportunity to contribute to this important debate on an important piece of legislation—the Excise Tariff Amendment (Tobacco) Bill 2016—being put forward by the Turnbull government. After decades of advertising, education and taxes, every Australian now knows that cigarettes are bad for your health. It would be hard not to realise that, given the mountain of effort being put in by governments around the world, particularly in Australia, on educating people about those risks.

Personally, I have never been a fan of smoking, whether it is cigarettes, cigars, cigarillos, or any other smoking products. They just do not agree with me. I have never been able to bear smoking myself, but I do recognise that there are other people who do smoke and enjoy it—and I will come to that later.

My late nan was a very heavy smoker for many years, and late in her life she suffered emphysema as a result of her smoking. I have to say it was not a very pretty thing to watch—it was very sad to see her health decline as a direct result of decisions that she had made during her life.

So I am not sad, and I do not think anyone in Australia would be sad, to see the continuing decline of smoking as a habit. That is something I think we should all welcome. The adult daily smoking rate in 2014-15 was 14½ per cent. While that is still a high figure, it is certainly a dramatic improvement from the figures only a few decades ago. COAG has agreed to a bipartisan intergovernmental target of 10 per cent, and I think that is a reasonable target although I am sure all Australians would hope that in due course no Australians will be choosing to smoke.

The excise on a packet of cigarettes today is about two-thirds of the total value of a packet of cigarettes. Today a packet of 25 cigarettes retails for about $25, and about $15 of that $25 is excise which is collected by the government. This measure proposed by the government will only increase the proportion of a packet of cigarettes that is collected by the government. It is somewhat ironic that in many ways it could be argued that the government profits from the sale of cigarettes more than tobacco companies do. Given this, it is vitally important that the government should take complementary action at the same time to combat illicit tobacco. When we charge an extra dollar of excise we increase the incentive of people to buy, sell and traffic in illicit tobacco, which, by its very nature, avoids excise.

Illicit tobacco is a serious problem around the world and it is a serious problem in Australia. A report by KPMG this year estimated that the revenue lost to government from the illicit trade is more than $1 billion a year. From a public policy standpoint that is obviously a very serious problem, but it is not the only problem from illicit tobacco. Illicit tobacco also fuels criminal behaviour, including organised crime, bikie gangs and international criminal syndicates. It hurts law-abiding small businesses, who find it very difficult to compete with people who are able to charge much lower prices for illegal products because they choose not to pay the excise they should. The quality of the illicit product, such as you can measure the quality of a tobacco product, is vastly inferior to the quality of a legal product and is even worse for human health than legal tobacco products.

Predominantly the illegal tobacco that we have in this country is now imported—it is mostly sourced from overseas and it is mostly smuggled into Australia using various means. However, there is still, as there has been for some time in this country, a domestic illegal tobacco growing industry. As reported by Rob Harris in the Herald Sun in April this year, the Australian Taxation Office conducted a raid and seized a record $15.4 million worth of illegal tobacco growing on a northern Victorian farm. A community tip-off led to the ATO raid on what they described as a large and sophisticated growing and processing operation near Kerang. This tobacco that was seized amounted to about 30 million cigarettes—and this is just from one farm in one area of northern Victoria. It demonstrates the strength of the illegal tobacco industry here in Australia and the importance of cracking down on it.

This government takes the threat of illicit tobacco very seriously. That is why we established the Australian Border Force tobacco strike team—to crack down particularly on that imported tobacco—and that is why the ATO continues to investigate, raid and crack down on the domestic growing of illegal tobacco. In the latest budget, as a complementary measure to the legislation we are discussing today, the government announced that it would provide an extra $7.7 million for the tobacco strike team to help crack down on illicit tobacco.

I want to make two wider points about this debate and policy. Ultimately, tobacco is a legal product in Australia. Although I strongly disapprove of it and strongly encourage people to not start smoking in the first place—and if they are smoking today, I strongly encourage them to quit smoking—ultimately, I think we have to accept that there will be some people who, even understanding the very serious risks of smoking, will still choose to smoke. In a free society, people must be able to make decisions which we disapprove of, as much as we counsel them against it. While ever we decide that tobacco remains a legal product—and I am not aware of any proposals, at least before this chamber, to make it illegal—we have to accept that some people are going to smoke, and that is their choice.

There are people who still do choose to smoke. I have spoken to people who, understanding the risks, still think it is worthwhile and something that they enjoy or because they are addicted have difficulty giving it up. This ties into my second point: that there are two potential solutions to this problem. The first is the government driven approach. This is something which has been used quite effectively in Australia over the last 30 to 40 years to significantly reduce the rate of smoking. There is no doubt that there has been a great success in this area. We have used quite high levels of taxation, taxpayer funded advertising and education in the community, particularly through our schools, to educate people about the dangers of smoking and to encourage them to quit. The result of that has been a significant reduction in the rate of smoking.

What we have noticed though in recent years, particularly over the last decade, is that the rate of reduction of smoking has begun to plateau as we get down to the more hardcore smokers,—who are committed and understand the risks; who bear the cost and continue to smoke. That is why the government has, in a bipartisan way, considered some other, more exotic measures, to address this, such as plain packaging of tobacco products, as a way of getting through that barrier and further reducing smoking. That is why this government has decided to further increase excise. Excise has certainly been an effective approach and I will be supporting this bill for that reason.

However, I think it is important that, while we support these measures, we acknowledge that there are some drawbacks for these measures. I am concerned, as I know many Australians are generally, about property rights in this country and the need and importance of protecting those property rights. I think that property rights are not just confined to physical land and property and that the seizure of that by government should be protected by our Constitution and our courts; also that intellectual property is property and that it should also be protected. We should be aware that the plain packaging legislation and the High Court decision that followed effectively removed the ability for companies to use a property right which they created. We should be mindful of the limitations of that. We may still decide that it is a worthwhile thing, but we should be aware of the costs of that.

Another thing which I think we have to be particularly aware of in the taxation space is that excise taxes on products like tobacco—but not only tobacco; including alcohol as well—disproportionately affect lower income people. These are taxes which are not levied according to their ability to pay; not levied according to income, wealth or any other measure. They are levied according to a lifestyle choice which people make: to smoke or, in other cases, to drink. The evidence shows that lower income earners disproportionately still choose to smoke. When we increase these taxes, we are, in effect, increasing what is a regressive tax. I know, when we debate other taxation measures in this place, some people who favour an increase in the GST—I am not one of them, but some people do—have come up against resistance that it would be regressive and would impact the poor less. The GST, at least, applies relatively equally to everyone; tobacco excises apply disproportionately to the poor. That is something that I think we need to be very conscious of.

The second thing is that we are running into the limitations of the approach we have taken over the last 30 to 40 years. We have reduced it dramatically, but the rate of reduction has started to slow. I think that means we should start to look at wider measures and other measures to address this. One which I think we should consider is a more free market approach—that is using choices that people are already making in their lives, enabling them to make those choices that are healthier choices than smoking conventional cigarettes. In this area, we have a range of new products that technology has brought to us, including e-cigarettes and other forms of smoking, sometimes called reduced-risk products, which use technology to reduce the impact of tobacco smoke and particularly the burning of tobacco, which is very toxic to inhale. This is a free market approach because it does not rely on mandates or taxes; it relies on choices.

In Australia right now, it is not lawful to sell e-cigarette products, but there are many people who have chosen to take up these products because they prefer them to cigarettes or as a measure of reducing their reliance on cigarettes, or just as something which is more convenient than cigarettes. That is even with them not being lawful. I think we have to look very seriously at whether or not we should legalise these products, and there is an application, I understand, before the Therapeutic Goods Administration right now to legalise an e-cigarette style product as a tobacco cessation measure—as a measure to get people off tobacco. I think that would be a very good thing.

So I just want to summarise some of the research and views on this issue. It is fair to say that the public health lobby in Australia are not supportive of e-cigarettes. They are very sceptical about them. People such as Emeritus Professor Simon Chapman, a noted sociologist and advocate of tobacco control, have been very much opposed to allowing e-cigarettes to be legalised, as have bodies such as Quit Victoria, who last year called for e-cigarettes to be clarified to be illegal—for their retail sale to be banned in Victoria—and, interesting, for smoke-free laws to be extended to cover all e-cigarette use. That is an interesting one given that what is emitted from an e-cigarette is water vapour. We should be concerned about second-hand smoke. That is an issue. You can get cancer from second-hand smoke; that is what the science suggests. You cannot get cancer from e-cigarette water vapour, though. There is no evidence of that, so it does seem strange to me that we would apply laws designed to limit second-hand smoke cancer from conventional burning of tobacco to a water vapour which carries no tobacco at all. In fact, it only delivers nicotine to the user; it does not even deliver it into the atmosphere around them.

Thirdly, there are calls to ban advertising and promotion of e-cigarettes. Again, I understand what is perhaps the rationale behind this, but one of the limitations of banning advertising is that advertising is information. It allows people to learn about new products, and it would allow, for example, retailers of e-cigarettes to notify current smokers that they may be able to reduce the risk and harm to their health by switching from cigarettes to e-cigarettes. That is Quit Victoria's position.

The Heart Foundation in the ACT are also opposed. They have lobbied to make sure that e-cigarettes are more strictly banned than they are and to prevent them. I think that is broadly representative. The Cancer Council of Australia has issued concerns. Professor Ian Olver, writing for the Cancer Council's website, said that there is not sufficient evidence that electronic cigarettes would help smokers to quit, and there are also concerns that electronic cigarettes could keep smokers addicted to tobacco by providing a nicotine hit in smoke-free places. There are also concerns that e-cigarettes may, in the words of some, 'normalise' the use of cigarettes. I am not sure that there is sufficient evidence to back that up, but that is the view of some in the public health industry.

But I have to say one of the puzzling reasons for opposing the sale of e-cigarettes put forward by Professor Ian Olver is that it might allow tobacco companies to continue to be profitable and to continue to exist. I think that is a very strange reason when our focus should be on public health. I think, actually, it would be a good thing if cigarette companies got rid of their old products and moved towards newer products which are healthier and safer. They may still have some risk but, I think, certainly pose less of a risk than cigarettes. I think that would be a very welcome development, but some people are opposed to allowing these products to be legal because it would continue cigarette companies' profitability and allow them to continue to exist.

The Australian government, I think it is fair to say, has taken a generally sceptical approach to e-cigarettes. The TGA issued, in March last year, some preliminary commentary on e-cigarettes. They described them in the technical detail of how they work, and they said that at the moment there is not a great deal of evidence to support their use—certainly as a nicotine replacement therapy. But since the government issued that view I think there has been a development of the evidence base in this area, and I am encouraged by the developments. As the National Health and Medical Research Council in Australia has said, there is a widely held belief that e-cigarettes are likely to be less harmful than tobacco cigarettes because they expose users to fewer toxic chemicals. They say that there is some preliminary evidence which supports that view, so I think it would be fair to describe the NHMRC as cautiously open to the potential benefits of e-cigarettes, although, as I said, the Australian government's position is generally sceptical about the construction of e-cigarettes.

I want to refer to an excellent article written by my former colleague at the great organisation the Institute of Public Affairs Simon Breheny. It was in The Daily Telegraph in March last year. He reviewed some of the evidence available on this at that time. He cited one article published in August 2014 in the peer-reviewed Journal of Public Health. What the journal concluded was that the use of e-cigarettes can reduce the number of cigarettes smoked and the withdrawal symptoms. In an article for BMC Medicine last year, Peter Hajek of the Wolfson Institute of Preventive Medicine said:

Although there is no doubt that smokers switching to electronic cigarettes (EC) substantially reduce the risk to their health, some tobacco control activists and health organisations discourage smokers from using EC and lobby policy makers to reduce EC use by draconian regulation.

One thing which I think is becoming increasingly clear is that Australia is getting out of step with the rest of the world on this, and particularly the United Kingdom. The United Kingdom have been quite forward-looking on this issue and have been—and their public health community in particular—much more willing to contemplate this. Public Health England, which is a government body, has said:

In a nutshell, best estimates show e-cigarettes are 95% less harmful to your health than normal cigarettes, and when supported by a smoking cessation service, help most smokers to quit tobacco altogether.

The UK Royal College of Physicians have made a statement on this. They say:

The RCP recognises that electronic cigarettes and other novel nicotine devices can provide an effective, affordable and readily available retail alternative to conventional cigarettes. These innovations could make harm reduction a reality for smokers, as proposed in our 2007 report.

There are other reports on this, a lot of academic reports, that are now suggesting that, in the UK in particular, people have begun to take up e-cigarettes as an alternative to smoking and that they have reduced their reliance on conventional cigarettes, and I think that is a really good thing. Pleasingly, there is also now evidence in Australia that this may be the case. Even though in Australia it is not currently legal to smoke e-cigarettes, to sell or to buy them, some people have imported them from overseas in a personal capacity and smoked them here. As part of a joint research paper by the Australian Catholic University and the University of Melbourne in 2015, they did a survey of 1,242 smokers. Eighteen per cent of those smokers reported that they had already given up smoking by using e-cigarettes, and the report found that e-cigarettes were also helping those who continued to smoke to cut back on the number of cigarettes they smoked. As Dr Aziz Rahman, the lead researcher, said:

E-cigarettes are becoming an increasingly popular method of giving up smoking, especially for middle-aged smokers. As cigarettes contain more than 4,000 toxic chemicals and cancer causing agents, e-cigarettes are a better choice, in terms of a harm reduction strategy.

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If the safety of e-cigarettes is proven in the long run, they may assist healthcare providers to address smoking cessation challenges more effectively.

I think this is a very encouraging area of development. I think we could in our lifetime see the end of conventional cigarette and tobacco smoking, and it could be replaced by a much safer alternative of e-cigarettes. I think that is a really welcome development and I hope that the government in Australia will be welcoming of that development and will help facilitate the development rather than block the development, as some in the public health community have lobbied for them to do.