Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary for Social Inclusion and the Voluntary Sector) Share this | Link to this | Hansard source

I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

Excise Tariff Amendment (Tobacco) Bill 2010

This Bill seeks to establish in legislation the increase in the excise applying to tobacco products.

On 29 April 2010, the Prime Minister and I announced that the excise on tobacco products would increase by 25 per cent on and from 30 April 2010. This has seen the excise on cigarettes rising from 26.22 cents per stick to 32.78 cents per stick, and the excise on other tobacco, such as loose leaf tobacco, from $327.77 per kilogram of tobacco content to $409.71 per kilogram of tobacco content. The excise-equivalent customs duty on comparable imported tobacco products has been increased by the same amount.

This legislation that I introduce today will confirm the increase in excise and, together with the Customs Tariff Amendment (Tobacco) Bill 2010, will provide an extra $5 billion over the forward estimates. This revenue, along with existing revenues from tobacco, will be directly invested in better health and hospitals through the National Health and Hospitals Network Fund.

Smoking kills over 15,000 Australians every year, and has been the largest preventable cause of disease and premature death in Australia. The social costs of smoking (including health costs) are estimated at $31.5 billion each year. Annually, over 750,000 hospital bed days are attributable to tobacco-related diseases.

Through tough action over the past two decades, including tax increases and bans on advertising, the number of daily smokers in Australia has been reduced from 30.5 per cent of the population aged 14 and over in 1988 to 16.6 per cent in 2007. This is important progress, but we can and must do better.

This measure alone is expected to cut tobacco consumption by around six per cent and the number of smokers by two to three per cent or around 87,000 Australians. Cutting smoking will save lives, take pressure off our hospitals, and deliver significant social and economic benefits.

Full details of the Excise Tariff Amendment (Tobacco) Bill 2010 and the Customs Tariff Amendment (Tobacco) Bill 2010 are contained in the explanatory memorandum.

I commend this Bill to the Senate.

Customs Tariff Amendment (Tobacco) Bill 2010

The Customs Tariff Amendment (Tobacco) Bill 2010 is the second of the related Bills which will increase the rates of duty for tobacco products.

The Customs Tariff Amendment (Tobacco) Bill 2010 contains amendments to the Customs Tariff Act 1995, in respect of imported tobacco products, that are complementary to the amendments to the Excise Tariff Act 1921.

These amendments increase the rates of customs duty for those subheadings in the Customs Tariff that apply to tobacco, cigars, cigarettes and snuff. The increase in the rates of customs duty is 25%, which is the same as the increase in rates of excise duty.

The increased rates of customs duty will apply to tobacco products imported from all countries, including those goods imported under any of Australia’s Free Trade Agreements.

These amendments will ensure that the rates for customs duty on imported tobacco products are the same as the rates of excise duty on those goods when produced in Australia. Again these amendments will reduce the numbers of smoking related diseases and fatalities in Australia.

As with the amendments to the excise applying to tobacco products, the amendments to the Customs Tariff will also take effect from 30 April 2010.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

I rise today to speak on the Excise Tariff Amendment (Tobacco) Bill 2010 and Customs Tariff Amendment (Tobacco) Bill 2010. These bills will see a 25 per cent increase in the cost of cigarettes and tobacco products aimed at reducing the number of people who smoke. This is the first increase above inflation in the taxation on tobacco in over a decade. Given that the total cost to Australian society of tobacco is estimated at $31.5 billion each year, reducing the number of people who smoke and the quantities that people smoke is vital. The decline in smoking rates in Australia—a fall of 40 per cent for men and 44 per cent for women between 1989 and 2007—has been amongst the largest in the OECD. It is a fact that the fall in tobacco smoking in the population aged 14 years and over, from 23.9 per cent in 1995 to 17.4 per cent in 2004, saw Australia with rates amongst the lowest in the world.

The coalition government made significant inroads into smoking prevalence and tobacco control. In 2004, Australia formally ratified the World Health Organisation Framework Convention on Tobacco Control, which provides a global policy framework for strong measures against the death and disease caused by smoking. Tobacco advertising was banned at all sporting events in Australia from 1 October 2006. Since March 2006, all Australian manufactured and imported tobacco product packaging has been printed with graphic coloured health warnings and the Quitline number and web address. Under the coalition government, pharmaceuticals to assist with quitting smoking were listed under the Pharmaceutical Benefits Scheme and nicotine replacement therapies, patches, gum and lozenges were designated GST free.

The legislation proposed responds to some of the recommendations of the National Preventative Health Task Force, which handed down its findings last September and which the government finally responded to in full on budget night. The bills also respond to Mr Rudd’s cash splash to the Labor premiers at the COAG health meeting on 20 April to ensure that his mates around the country signed up to his grand plan for health. The ‘local’ does not mean ‘local health plan’ that Kevin Rudd announced on 3 March and then conveniently used the Preventative Health Task Force as cover to help pay for his plan by raising excise on tobacco on 29 April. I quote:

The Rudd government today announced a comprehensive package targeting smoking and its harmful effects, including an increase in the tobacco excise of 25 per cent. This increase in tobacco excise will provide an extra $5 billion over four years which, along with existing revenues from tobacco, will be directly invested in better health and hospitals through the National Health and Hospital Network Fund.

It is a pity that the Prime Minister is searching for golden dollars for a hurried and doomed health and hospital plan that is more about spin than substance.

I would like to focus on this if I may. The health reform plan advertising campaign says:

Run locally, the new network will give local senior doctors and health experts a greater say …

We saw the Prime Minister at the National Press Club waxing lyrical about how his grand plan, where doctors were going to run these hospital networks locally. What a load of spin that was, because, like most things the Prime Minister says these days, sooner or later it will all come unravelled.

It is specifically stated at page 14 of the agreement that the Prime Minister drew up with the states in relation to health that the clinical expertise in relation to the local hospital networks will come from outside the local hospital network. Indeed, it says that wherever practical that is the starting point. So-called local doctors who will supposedly run these local hospital networks will come from outside—I stress: that is the starting point—the local hospital network. All this drivel we hear about a hospital network that is going to be run locally is just that: absolute, unadulterated drivel. This Prime Minister has once again—

Senator Stephens—I rise on a point of order, Madam Acting Deputy President. We are here debating the Excise Tariff Amendment (Tobacco) Bill 2010. I think that Senator Fierravanti-Wells has lost her way.

Michaelia Cash (WA, Liberal Party) Share this | Link to this | Hansard source

There is no point of order.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

I have not lost my way, because the Prime Minister is directly linking the money that he is raising from this exercise to his grand plan. So if he wants to tell us that he is going to use the money that he is supposedly raising from this new revenue on tobacco to pay for his grand plan, then I am fully entitled to talk about the grand plan, because that is supposedly where the money is going. In fairness, I am fully entitled to expose this plan for the fraud that it really is.

As I was saying, here we have this grand plan and the local doctors will be coming from outside the local hospital networks. This is deception of the utmost proportion and needs to be exposed. The government is running a deceptive advertising campaign, using our money. This is not even legislated yet and there they are, wasting almost $30 million selling a deceptive public campaign that is wrongly telling us ‘federally funded, locally run’. The campaign should be withdrawn and, at the very least, the government should correct the record.

It was not surprising to read in the Australian Financial Review on Wednesday, 9 June 2010, that the hospital ‘grand plan’ was among the key decisions that were taken without cabinet approval. The report said that the decision was made by the Strategic Priorities and Budget Committee, known as ‘the kitchen cabinet’ or ‘the gang of four’. The article went on to say:

… ministers arriving at cabinet meetings were given folders that they could look at, but not take out of the room, containing decisions already taken by the SPBC that they were expected to endorse without discussion.

I wanted to place that on the record, because it is very, very important that this charade that is now being played out in the public arena about this so-called grand hospital plan which is going to be run locally is exposed. Just like we see with the mining industry, Mr Rudd is spending millions of taxpayers’ dollars to argue his partisan political case on health, and he is just not telling the truth.

I will now go back to the issue of tobacco. According to the World Health Organisation, tobacco is the second highest cause of death in the world. It is responsible for about one in 10 adult deaths or five million deaths each year. As awareness of the negative impacts of smoking tobacco has increased, the proportion of people who smoke has declined Yet tobacco contains an addictive stimulant in the form of nicotine, which does mean that quitting smoking can be very difficult. According to data released in 2007 by the Australian Bureau of Statistics, Australia still has one of the lowest smoking rates in the OECD, with around 17 per cent of people aged 15 years and over smoking every day. However, Indigenous Australians are far more likely to smoke, with those in remote communities even more likely to do so. One in five Indigenous deaths is attributed to smoking—that is, 20 per cent of the Indigenous population. Higher rates of smoking can also be observed within lower socioeconomic communities and in other disadvantaged groups.

The National Preventative Health Taskforce identified that around 41 per cent of pregnant teenagers, 38 per cent of unemployed people, 34 per cent of people unable to work, 32 per cent of people with a mental illness, 78 per cent of male prisoners and 83 per cent of female prisoners are smokers. These are all groups where price increases for tobacco should have a real impact. The coalition government was often criticised for not doing enough for preventative health, and today I would like to set the record straight on a number of things. I would like to remind the chamber that the Leader of the Opposition, Tony Abbott, was a very successful health minister from 2003 to 2007 and, among his achievements in preventative health were: an estimated annual expenditure of $443 million on vaccines in 2007-08 under the National Immunisation Program—an increase from $13 million in 1996; over $715 million committed to improve Australia’s responsiveness to national emergencies; various programs in relation to trauma response, skin cancer awareness and—directly relevant to today’s debate—the coalition committed around $715 million from 1996 to 2010 to support national smoking cessation activities, including $25 million over four years to reduce smoking rates amongst youth through the youth tobacco campaign.

There has been a lot of discussion about, allegedly, Tony Abbott’s record not being successful. I think that the facts prove that he was very successful and had many achievements as Minister for Health and Ageing. Other achievements: when we came into government in 1996, we increased spending on health by $19.5 billion per year to $52 billion a year by 2007 and we made a record investment in public hospitals. Increasing the private health coverage from the low 30 per cents to the mid 40 per cents was, I think, one of our most successful achievements. As I said, immunisation rates rose. The fall in smoking rates over Mr Abbott’s term as health minister is an achievement in that portfolio that the Prime Minister and Minister Roxon ought to look at emulating.

The coalition acknowledge that increasing the cost of cigarettes and tobacco has proven to be a financial incentive for people to quit smoking, thereby reducing the long-term strain on the hospital and healthcare system. This coalition, when elected at the next election, will continue this commitment to the Australian people. Ours is a genuine commitment to resolve to improve services in public hospitals and to improve the coverage of private health insurance beyond the 10 million people who have private health insurance now in our country, because we want to ease the burden on our public system. We want to make sure that mums and dads who are waiting long periods of time in emergency departments in the early hours have better and faster access to health professionals. We want to make sure that we continue our work in government to improve health outcomes.

We have some very good statistics in this country when contrasted with similar countries and that is something we can be very proud of. We have a lot of graduating doctors coming through the system. While some medical students have expressed concerns about when they will be trained and where they will be doing their internships, these people have not just popped out over the two-year mark of the Rudd government; they are people who went to university because of new places created when Tony Abbott was health minister and when we were in government. So we want to make sure that after the next federal election we fix the mistakes this government has made in health.

There has been a lot of waste of money in health. We cannot go beyond the spectacular failure that we are seeing with the GP superclinics. Thirty-seven GP superclinics were promised by this government before the last federal election. How many are now operational? Two and a half of the 37 superclinics are now operational. Then they said, ‘We are going to have another 25.’ They have the most deceptive information on their website about this—and we trawled this through the recent estimates hearings as well. If you go on the government website, you will see this great map of Australia with the GP superclinic locations—all 37 of them. They do not say in the print—they do not say anywhere—that only 2½ are operational. They are giving the impression that their GP superclinics are all out there and all up and running.

When you look at how these superclinics are going to work, they keep telling us: ‘No, no, no. We’re not into big bureaucracy.’ But you only have to look at one of the GP superclinics—and again we trawled this through the recent estimates hearings—to see the absolutely amazing bureaucracy that each of these superclinics is going to have to go through to be established as a GP superclinic. There are going to be steering committees, there are going to be advisory committees, there are going to be local reference groups and the bureaucracy will just go on and on and on. How are we actually going to get better outcomes for people? Whether it is for smoking or diabetes or anything else, one only has to look and ask oneself: how is this litany of bureaucracy actually going to deliver better health outcomes for this country? That is the real question.

How can it, with the Rudd government having thrust this country into enormous debt? We started with over $20 billion in the bank. This is a government which, instead of spending money on health, is wasting money on all sorts of things—pink batts, the BER, useless school facilities, overcharging. There is a whole litany of wastage of money. Look at the state of today’s economy and the billions of dollars in interest each year that we will have to pay just to pay off Labor’s debt. The budget deficit for this coming year is a massive $40.8 billion, the second biggest since World War II. The Rudd Labor government will need to borrow $700 million a week—that is, $100 million a day. That is, somebody said, the value of two jumbo jets a day to fund its reckless and wasteful spending. What is this going to do? It is going to put upward pressure on interest rates and on the cost of living for Australian families.

Do you know who is going to end up paying for all this reckless spending? I notice that in the public gallery today there is a group of young people. I say to them: your generation is going to pay the debt of this government. You will be paying this debt off for years and years. So, when you are doing that, think back to Mr Rudd and today. This is always the legacy of a Labor government. It is always red ink and it is always a lot of spending. It will make it a lot harder to invest in health and the sorts of programs—like tobacco, which we are talking about today—when we see a Labor government that thrusts this country into debt. As I said, this will be the burden that future generations will carry.

We want to invest further in health at the same time as managing the Australian economy responsibly. We do not oppose these bills. There is a lot more that needs to be done in this area and in health generally. There needs to be a massive redirection of investment in health, and the coalition is the only party at this election that will stand to serve the Australian people in getting better health outcomes for everybody in Australia.

Helen Kroger (Victoria, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Excise Tariff Amendment (Tobacco) Bill 2010 and the related Customs Tariff Amendment (Tobacco) Bill 2010. As we have heard, the aim of both of these bills is to finally and retrospectively legitimise the appropriation measures the Rudd government introduced on 29 April, when it raised the tobacco excise by some 25 per cent overnight. The coalition will not oppose these two bills. I do not think anyone would suggest that smoking is not a terrible habit that causes social and personal problems, including the direct effect on health and the burden it places on the health system. Yet I do wish to comment on this legislation, which I support, despite having reservations about the purpose, target and effectiveness of this measure.

The increase in excise is budgeted to raise $5 billion over the next four years. Without this increase in excise the Rudd Labor government has no chance of returning the budget to surplus in the near future. So it makes one question what the actual reason behind this is. The policy was announced overnight and it makes one question whether it was thought through before it was drafted. It brings to mind so many other policies the government has introduced over the last 12 months that have failed because they were poorly thought through, rushed through this place and then very irresponsibly implemented.

It is clear that the government, when putting its budget papers together, understood the financial mess that it had created and which we are now dealing with. All governments have two courses of action when getting into debt: they either reduce their spending or raise taxes, whilst delaying the implementation of perhaps expensive programs such as the shelving of the much mooted ETS. The $5 billion tobacco tax and the $9 billion resources tax are both polices made on the run and should be seen for the desperate tax grabs that they both are. The Australian people are not fools and they see both of these proposals as such. The rush to implement both of these policies is in part responsible for the complete failure of the Rudd government to articulate, demonstrate and sell why they are good public policies. I question how they can sell an increase in tobacco tax as a way to lower tobacco consumption whilst suggesting that a hike in mining tax will actually increase the amount of mining investments.

But let us refer to the measure itself, which Mr Rudd has referred to as a ‘crackdown’ on smoking. Mr Rudd announced in a press release:

This measure alone is expected to cut total tobacco consumption by around six per cent and the number of smokers by two to three per cent—around 87,000 Australians.

As we know, the Prime Minister is rather inclined to use over-the-top language. He is a tad florid in the way he likes to describe things. In the past we have heard him articulate a war on everything—a war on inflation and unemployment, a war on pokies, a war on drugs in sport and a war on bankers’ salaries. It is interesting, though, that he has promised a mere crackdown on tobacco. He is clearly learning that a declaration of a war on everything does not translate to the development of good public policy and its implementation.

Putting this notion aside, one can only hope that the measure will deliver on the desired outcomes. There is absolutely and unquestionably no doubt that smoking is bad and puts immense pressure on the Australian economy. It is estimated that the Australian economy loses around $5.4 billion in lost productivity each year and we all hope that this measure will indeed stop people smoking. But it would be irresponsible of us in this place not to question whether this legislation will achieve that aim.

As a Liberal, I am a strong supporter and advocate for the use of market instruments to deliver outcomes. Price incentives are generally the most appropriate measure to create a change in people’s behaviour, but there are exceptions to this rule—and this is especially the case when we are talking about social behaviour, particularly addictions. Most Australians who have smoked or who still smoke would have all said the words ‘I’ll give it up tomorrow’ and have meant it. They know that their habit affects their health, their lifestyle and their families. Some medical research suggests that nicotine addiction is as powerful, or even more powerful, than heroin addiction. Senator Fierravanti-Wells has already talked about the effect of nicotine’s addictive nature.

If this is the case, then understandably quitting is a serious challenge that some will struggle with. Research also indicates that there is a high incidence of smokers in socially disadvantaged communities, including the Indigenous population. It concerns me greatly that people in these communities will not have the capacity or support that may be necessary to reduce—or, ideally, quit—smoking and they may possibly spend less on essentials, such as food, in order to support their continuing smoking habit. In effect, for many of these people an increase in excise will just disadvantage them further.

It is true that, since Australia took a tough stance on tobacco, smoking rates have continuously declined. It is heartening to see that especially in the younger population people are less likely to become smokers today. I am absolutely proud of the stance that the former coalition government took. It is through education that among the younger generation, the 18- to 24-year-olds—who are well and truly represented in the gallery here today—there is a culture of intolerance to smoking. That is something I applaud and something we have to endeavour to encourage and continue. Recent ABS data shows that only 23 per cent of 18- to 24-year-olds are smoking, compared with 36 per cent in 1990. So there has been a dramatic decline. The number of Australian smokers has declined overall by 24 per cent in the same period. Education is a critical component in the fight, and I am concerned that in this legislation there is only a modest attempt to address this.

In the recent budget, the Rudd government announced an investment of an additional $27.8 million over four years in the rebadged National Tobacco Campaign targeted approach, bringing the total amount to be spent in this campaign to $85 million in total over the next four years. When you work this out per smoker this equates to only an extra $2.30 per smoker per year to help them quit their habit. Considering the significance of what we are talking about here, it is a drop in the ocean. We need to put this in the context of $126 million that is being spent on advertising a shelved ETS, a vilified mining tax, an irresponsible NBN proposal, COAG health reform that is, as Senator Fierravanti-Wells aptly described it, without substance or sense and a PPL scheme that has not passed this place yet. One has to question the motivation of this government, and it seems to be linked more to the timing of an election.

The other area that seems to have been given little consideration is the potential impact on illicit trade. There does not seem to be any reference to it in the bills, the Bills Digests or the budget papers, which is concerning. This so-called crackdown on tobacco does not include any new funding or initiatives for addressing a possible increase in the illegal trade in tobacco. According to a recently published study, illicit trade is a huge problem. The consultants PricewaterhouseCoopers have found that the illegal tobacco industry is costing the nation some $600 million a year in lost revenue. This is a huge black market that is happening out there every day. They estimate that more than 12 per cent of all tobacco consumed in Australia is illegal and thus escapes excise. These figures were published in February, long before the increase in excise was announced. Even back then, the study said that avoiding tax was what drove illegal tobacco sales. Any increase in excise should include the consideration of the incentive for criminals to sell illegal tobacco on the black market. It should be addressing this very significant problem.

In Senate estimates we learnt that the federal government has no plans to tackle the illegal trade in tobacco which this tax hike will surely exacerbate. There will be no extra resources allocated to help Customs and Border Protection combat the expected surge in this trade. I have also been advised that illicit tobacco is an unhealthier product, if that is possible, because it contains a lot of contaminants and chemicals in addition to those found in legal tobacco. The other part of the government’s so-called crackdown on tobacco is its intent to introduce plain packaging. Whilst this is covered with a different set of bills, it impacts on the effectiveness of the legislation before us, as it will be a lot easier for providers to sell illicit tobacco.

Any genuine measures to improve the health and wellbeing of Australians are a good thing, but we must look at whether this legislation is actually the best way to achieve this outcome. As was demonstrated under the former coalition government, education is critical and should be front and centre of all endeavours to reduce the incidence of smoking. No government should hide behind the easily uttered claim of improving health outcomes whilst there is the very real danger that this measure will not live up to its expectations and will become only a means to increase tax.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I welcome the government’s move to increase the tobacco excise. I do have reservations, though, in the context of the whole issue of preventive health and I believe that this debate ought to be seen in that context. I do welcome that cigarettes are more expensive and that this will lead to a decline in consumption but I am concerned about the overall policy framework in relation to this. I am grateful for the advice and material provided to me over my years both in this place and in my former role in the South Australian parliament by Action on Smoking and Health, in particular its executive director, Anne Jones, who has been a tireless campaigner on the health effects of smoking.

Michelle Scollo and Margaret Winstanley, two of Australia’s leading tobacco researchers, have estimated that in the 50 years between 1950 and 2000 smoking killed approximately 679,000 Australians and in 2004-05 the social cost of tobacco was $31½ billion. Raising the excise on tobacco products and therefore increasing the cost to consumers is a good deterrent, but the deterrent must be seen in the context of a range of other policies.

It concerns me that it has been shown that there is a real difficulty in reducing the rate of smoking amongst young women and teenage girls and that, in some respects, the rate of smoking for that group has gone up. It reminds me of work carried out by Malcolm Galdwell, who wrote TheTipping Point a number of years ago. He talked about social phenomena and how difficult it was to get a change in behaviour. In his book, The Tipping Point, a chapter on teenage smoking was quite instructive about the difficulty in getting the message across and the way that social marketing campaigns had not worked in the United States a number of years ago in relation to tackling teen smoking. I think we should learn from that sort of research and learn from the mistakes of the past in getting the message across to young people.

I note that the government will be raking in an extra $5½ billion in revenue. That is a good thing in the context of what the social objectives are. What is not so good is that the government has committed just $5 million of that to support Quitline and another $27.8 million over the next four years to address social marketing of tobacco. The government is also considering a subsidy for nicotine patches—something I have long campaigned for, which I believe will make it easier for people to quit smoking. I note a study in the British Medical Journal back in August 2000 on the effectiveness of interventions to help people stop smoking and findings from the Cochrane Library. It made the point that, overall, nicotine replacement therapy:

... increased the chances of quitting about one and a half to two times ... whatever the level of additional support and encouragement.

So it is about having that critical mass, in a sense, of a range of measures that actually get people to that tipping point of wanting to quit smoking. I think it is important that the government uses a proportion of these funds, this $5½ billion, to ensure that nicotine replacement therapy is subsidised.

If the government wants to lower our smoking rates, it needs to be serious about providing smokers with that support. The stories I have heard from those who work as Quit counsellors were that they were inundated with calls for help and support and that quit lines around the country have had trouble coping with that. I commend the work that Quitline and the counsellors do at the frontline in assisting people to quit smoking. They need to be adequately resourced, and it is a concern that the government is only throwing scraps at this problem in the context of the revenue that they are getting.

I agree with public health experts, such as Professor Fran Baum from Flinders University, an internationally acknowledged expert in preventative health, who says that we do not spend enough in this country on preventative health. Three per cent of the health budget goes towards preventative health. Whilst it looks good for governments of whatever persuasion to be opening up hospital wards and making more beds available, let us stop people getting sick in the first place. Let us have the philosophy that it is much better to have a fence at the top of the cliff rather than the best equipped ambulance at its base.

My concern with this legislation, the Excise Tariff Amendment (Tobacco) Bill 2010 and the Customs Tariff Amendment (Tobacco) Bill 2010, is that there is an opportunity here to make a considered effort with respect to prevention measures, but I do not believe the government is doing anywhere enough in relation to that. I understand the coalition’s view, in that they do not want to hold this up, but my view is that we should hold this up until we get some more specific undertakings from the government, better funding for Quitline, better funding for nicotine replacement therapy and more money to address social marketing of tobacco. We know how insidious and how cunning tobacco companies are in marketing their wares on, for example, Facebook and in social marketing media in order to continue to get young people to take up smoking—the tobacco addicts of tomorrow. The government needs to be mindful of the money that is going to Quitline and ensure that they have enough resources to assist people.

The revenue from this increased tax can help offset some of the costs associated with tobacco use, such as health care for people with tobacco related illnesses. But let us stop people taking up smoking in the first place or encourage those who do smoke to quit. I believe that subsidising nicotine replacement therapies is a vital part of preventative health care. I still think that there is not enough emphasis on prevention in terms of the overall health framework. I agree with Professor Baum and others who say that we do not have enough of an emphasis on prevention.

The way that tobacco products are sold and marketed also has a huge impact on preventative health, in the way that spending more now to stop people taking up smoking will save money in the long run. There seems to be a blinkered approach by governments—and I am not singling out this government; I think it is just one of the issues of modern government—in that they do not look beyond the next election cycle or the forward estimates, the four-year cycle. However, we know that if we stop people smoking now there will be significant benefits to public health and to the health budget in years to come. It may be 10 or 15 years, but there are still significant benefits in terms of fewer people getting emphysema, lung cancer, gangrene and a whole range of smoking related diseases.

This needs to be seen as part of a broad package. Legislation restricting the sale of tobacco products and stating how they can be displayed and marketed is generally establishing control by state governments. This has resulted in a patchwork of laws across the country, with some states far ahead of others in areas such as the visibility of tobacco products in retail outlets. My home state of South Australia has been lagging behind on this and has been awarded the ‘dirty ashtray’ award for the second year in a row by the Australian Medical Association for the Australian state or territory that made the least progress in combating smoking during 2009-10. I note that on World Tobacco Day the South Australian government made some announcements to the effect that they would be tightening that up, but we have still been lagging behind the rest of the country.

The Commonwealth does have a role to play in this. When it comes to tackling the visibility of tobacco products, the Commonwealth does have the power to deal with it. It can use its various Commonwealth powers—under trade practices laws, for instance—to ensure that there can be further restrictions at a national level if states are lagging behind in relation to that. I think it is something that ought to be done in the context of this big change in terms of tobacco excise.

I have some specific questions to the minister in relation to this. Can the minister advise, in the context of this package of measures, how the government proposes to measure declines in smoking rates amongst various demographics on an annual basis? That information ought to be made available. In terms of demographics, it should include various age groups—teenage girls, for instance—and Indigenous communities.

I acknowledge that, with respect to Indigenous smoking rates, the government recently announced some initiatives which are welcome and should be commended. But how do we measure the success of any measures—not only in terms of our smoking rates overall, but also in terms of specific demographics where there has been a real difficulty in getting smoking rates down? I think that Senator Stephens is aware, more than most, of the devastating effect that tobacco has had on Indigenous communities, and that is why it is good that the government has been moving on that recently in terms of additional measures.

I think that it is also important that the government indicates how it will determine the efficacy of measures such as the $27.8 million set aside to address tobacco’s social marketing. How will that be measured? What independent, objective yardsticks will there be to determine the effectiveness of those measures? And what assurances do we have that, if quit lines are struggling to keep up with the additional demand of people wanting to quit smoking, there is a mechanism to ensure that those quit lines will not be starved of revenue, in order that they can adequately deal with those who want to quit so that they do not get left on hold or called back a couple of days later, as has occurred on some occasions, because the very fine staff of quit lines around the country have been struggling to keep up with demand?

Further, what is the government planning to do in terms of antitobacco ads or tobacco control ads to encourage people to deal with issues such as this? In other words, what campaigns will there be? What emphasis will there be in terms of targeting social networking sites? And how will we deal with the issue of tobacco companies using ways and means to get around bans on tobacco advertising? I think Senator Stephens may well be aware of the tricks that tobacco companies have got up to in terms of Hollywood movies where smoking is featured. There has been a suggestion, which I have been an advocate for, that, if a movie depicts smoking in a favourable light—and this is not about censorship—then at the very least there should be some antitobacco ads before the film is screened as a way of neutralising or dealing with that impact.

So these are some of the questions that I would like answered. How effective will this be? How will it be measured? Will quit lines be getting a look in? And what time frame is there for nicotine replacement therapy to be looked at by the government? I understand that it is being considered, so a time frame for that would be welcome.

My preference is that we should wait to deal with this bill until we receive firm undertakings from the government, because I do not believe that the money that has been set aside for prevention measures is reasonable, given the revenue that the government will be bringing in, and given the nature of the problem and the need to reduce our smoking rates as quickly as possible, particularly amongst young people.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

Let me start by saying that the Australian Greens welcome this legislation—the Excise Tariff Amendment (Tobacco) Bill 2010 and the Customs Tariff Amendment (Tobacco) Bill 2010. It is a key recommendation of the Preventative Health Taskforce and has been endorsed by bodies such as Cancer Council Australia, the Australian Medical Association, the Australian Nursing Federation, the Heart Foundation and the International Union Against Cancer.

Tobacco use, as we know, is the single biggest preventable cause of death and disease in Australia. Over three million people—around 18 per cent of Australians aged 14 years and over—still smoke, with almost 2.9 million smoking on a daily basis. Around half of these smokers who continue to smoke for prolonged periods will die early—half of them in middle age, when children and grandchildren depend on them and while they are in the most productive years of their working lives.

Between 1950, when clear evidence of the dangers of smoking became available, and 2008, more than 900,000 Australians died because they smoked. My grandmother was one of them. This toll will exceed the million mark within a few years. With a huge body of evidence now providing clear evidence on the most effective means of reducing smoking, both at the population level and in clinical settings, there is no reason to allow the smoking epidemic to continue for another 60 years. If the prevalence of daily smoking is reduced to nine per cent or less by 2020, experts believe that smoking will continue to decline quite rapidly until it is no longer one of Australia’s major public health issues. Achieving this target will require a dramatic reduction in the number of children taking up smoking and a doubling of the percentage of smokers trying to quit.

Smoking resulted in an estimated 15,511 deaths in 2003, and the cost to the Australian community was around $12 billion—and that is in tangible, net costs in 2004-05. This figure includes items such as spending on healthcare services, subsidies for drugs for people sick because of smoking, and extra spending on staff to replace people ill and away from work or who have left the workforce because of smoking related illnesses. Intangible costs in 2003 totalled more than $19 billion. While the intangible costs of tobacco, such as the loss of enjoyment of life and the pain and suffering of smokers and their families and friends, are not things that can be easily measured, they must—absolutely must—be taken into consideration and cannot be ignored.

A report by the Department of Health and Ageing assessing the returns on investment in public health in Australia estimated that the 30 per cent decline in smoking between 1975 and 1995 had already prevented over 400,000 premature deaths and saved costs of around $8.4 billion. Modelling on the impact of reductions in smoking on healthcare expenditure indicates the potential for substantial further savings. Now, 25 years after the introduction of the first series of policies to discourage smoking, the use of tobacco products in Australia is at a historic low. But in this country we are still left with the scenario in which a product remains on sale which is addictive, kills one in two regular users, causes cancers and cardiovascular and respiratory diseases and has myriad other harmful consequences. It harms non-users and damages the health of children and the unborn child.

In 2010, some 60 years since we had unequivocal evidence about the dangers of smoking, cigarettes will still kill some 15,000 Australians, including 1,200 in my home state of Western Australia. Smoking remains our leading cause of preventable death. It causes 20 per cent of Indigenous deaths. The toll from smoking remains greater than the combined toll from road deaths, illicit drugs, suicides, murders, poisonings, diabetes, drownings and HIV-AIDS. We should be asking ourselves why it has taken 40 years to ban tobacco advertising. Why, until now, has there been no tobacco tax increase beyond the CPI for a decade when it was demonstrable that this was the most effective means of reducing smoking?

The Greens support this legislation, but we also call on the government to be a powerful voice amongst international leaders. We must be vigilant about the growing epidemic in developing countries as cigarette manufacturers cynically focus their attention from the developed to the developing nations, where there are fewer constraints on smoking and the communities are less aware of the dangers. Although smoking killed 120 million people in the 20th century, it will kill a staggering one billion people in the 21st century if nothing is done to check the increase in smoking in other countries.

Back home, we need increased funding for well-run public education and further support for disadvantaged groups. We acknowledge the recent further commitment of $5 million in funding for Quitline, but the Greens believe that more has to be done to target the most vulnerable groups of smokers. Smoking rates are rapidly declining among the more affluent but continue to be substantially higher among groups with lower levels of education and those living in disadvantaged areas. Indeed the decline in smoking rates among adults living in the most disadvantaged areas appears to have levelled off. In other words, we need to refocus efforts there.

Smoking rates among Aboriginal and Torres Strait Islander people are more than double those in the rest of the community. Among children living in households where at least one person smokes, those who live in disadvantaged areas are almost four times more likely to be exposed to second-hand tobacco smoke indoors than children living in some of our more well-to-do suburbs. Almost one in five pregnant women report smoking during pregnancy, including 42 per cent of teenagers and 52 per cent of Indigenous women. This poses risks to the mothers and has long-term and far-reaching effects on their offspring.

Quitting smoking provides extra funds in individual and family budgets which could be directed towards other household expenditure. The levels of improved fitness that result from giving up smoking can help people to make other lifestyle changes. Given that spending on tobacco products can increase financial stress, prevent the accumulation of wealth and contribute to the perpetuation of intergenerational poverty, tobacco control should be regarded not just as a health policy but also as a key strategy to help socially disadvantaged areas.

We can and should be doing more. The Preventative Health Taskforce calls for all remaining forms of promotion of tobacco, including marketing at the retail level, to be eliminated. They also call for a mechanism for the regulation of tobacco products. They say that all retailers of tobacco products should be licensed, with a limit on the number and types of retail outlets. They say that no tobacco products should be sold to children, that consumer information should be better targeted and that there is no gain in simply continuing a national advertising campaign and believing you can tick the box and move on. We need to focus on getting the right message to the people who need to hear it most. This includes ensuring appropriate programs and services are in place for disadvantaged groups.

The public, particularly children, need to be protected from exposure to second-hand tobacco smoke. I note that laws on that issue differ around the country. To further reduce smoking requires a dramatic reduction in both the number of children taking up smoking and an increase in the number of people trying to quit. In Australia, the challenge is to halve the rate of smoking uptake and double the percentage of adult smokers who quit each year. If this could be achieved, smoking prevalence will reduce to that nine per cent by 2020, which I mentioned earlier, and then continue to decline quite rapidly.

In addition the Greens support the recommendations made by the Preventative Health Taskforce. We want to see further regulation of the tobacco industry with measures such as ending all forms of promotion including point-of-sale displays. We want to see an increase in the frequency, reach and intensity of education programs that personalise the health risks of tobacco and increase a sense of urgency about quitting among people in all social groups. We must ensure that all smokers in contact with the Australian healthcare system are identified and given the strongest and most effective available encouragement and support to quit. We must provide access to information, treatment and services for people in highly disadvantaged groups who suffer a disproportionate level of tobacco related harm. We also believe there must be an increase in the understanding about processes of social diffusion against smoking—how being a non-smoker and smoking cessation can become more ‘contagious’—so that these processes can be accelerated among the groups that are still smoking at significantly higher levels.

We believe these sorts of initiatives are absolutely essential. Like Senator Xenophon we support the funding of these measures through the additional funding collected through this increase in tax. Every year, 30 per cent to 40 per cent of smokers attempt to quit, but only one in 10 of these attempts to quit tends to succeed. Cancer Council Australia and many others tell us that tobacco control measures will reduce relapse rates and can help intending quitters to break their addiction. We know that, in the past, there has been resistance to progressive tobacco control. Some of it was based on a set of attitudes that were clearly unsupported by evidence and were based on what we think were poor excuses for inaction. While coordinated efforts to reduce the disease burden of tobacco have made Australia a challenging market for the tobacco industry compared with nations where there are fewer controls, almost one in five Australians continues to smoke, with Australian households spending more than $10 billion on tobacco products per year.

Finally, Cancer Council Australia say that increasing the price of tobacco products will decrease consumption in low-income groups more than in high-income groups. They point out that tax increases can cause financial stress for people on low incomes who continue to smoke. We believe that a proportion of the revenue from this tax should be given to support people on low incomes to quit through a variety of measures. We believe it is essential that we make sure that the groups that I have identified as still smoking at levels which are far too high are specifically targeted with marketing campaigns and also with serious funding. That will enable them to quit smoking and will also discourage new smokers, and children and young people, from taking up the habit.

This habit kills people, and that is why we support this tax increase. We all know that when we are dealing with these sorts of issues we need a variety of measures, so the Greens support this legislation. But we strongly encourage the government to make sure that the other measures that we all know are essential in dealing with this issue are properly funded so that we achieve the aim of reducing smoking to nine per cent, because the evidence shows that once you get to that point smoking will rapidly decline. The Greens very strongly encourage the government to ensure that significant investment is made in these measures.

Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I would like to thank senators from all sides and all political parties who have made a contribution to the debate on the Excise Tariff Amendment (Tobacco) Bill 2010 and the Customs Tariff Amendment (Tobacco) Bill 2010.

By way of reminding senators, on 24 April 2010 separate notices were placed in the Commonwealth government’s special notices Gazette, publishing the government’s intention to increase the rate of excise and excise equivalent customs duty applying to tobacco products from 26.22c to 32.775c for cigarettes and from $327.77 to $409.71 per kilogram for other tobacco, such as loose-leaf tobacco. In accordance with these notices, on 12 May 2010 my colleague the Minister for Health and Ageing, Nicola Roxon, tabled tariff proposals in the House of Representatives which support this 25 per cent increase.

The Australian Taxation Office and the Australian Customs and Border Protection Service have been collecting excise and excise equivalent customs duty at the higher rate since 30 April 2010. The legislation we are debating today will formally confirm the higher rate in legislation. This higher rate of excise has widespread support from the experts. In 2008 the government initiated two major reviews which looked at the issue of taxation for tobacco. Both the national Preventative Health Taskforce and Australia’s Future Tax System Review recommended a substantial increase in tobacco excise. The government has acted on this advice, and this action has been endorsed by the Australian Medical Association, the National Heart Foundation, Cancer Council Australia, the Australian Nursing Federation, the Public Health Association of Australia and Action on Smoking and Health, amongst other public health groups. The health benefits from the measure are clear. Cigarettes are toxic and poisonous. Every year in Australia over 15,000 Australians die from smoke related illnesses, and smoking is estimated to cause one in five of all cancer deaths.

The government knows that prevention is better than cure. Tackling smoking is one of the best investments in keeping people healthy that it could make. The tax increase alone is expected to reduce consumption of tobacco by around six per cent and cause two to three per cent of smokers to quit altogether. That is around 87,000 Australians. We hope that Australians use this tax increase as an impetus to make the decision to quit and further that it will discourage teenagers from taking up the habit, given that young people are more responsive to price increases in tobacco than those of an older age.

The increase in the excise rate applying to tobacco is part of the government’s comprehensive package to reduce smoking prevalence rates. In addition to the tax increase, the government has taken strong action against tobacco advertising by removing one of the last frontiers for cigarette advertising. The government will introduce legislation to ensure that cigarettes in Australia are sold in plain packaging by 1 July 2012—the first in the world to do so. This reflects a recommendation from the Preventative Health Taskforce. The revenue from this increase, along with existing revenues from tobacco, will be invested in better health and hospitals through the National Health and Hospitals Network Fund. That money is well spent, from anyone’s perspective.

I note that some senators have raised issues regarding support for smokers to quit. I can confirm this is a key priority that the government is taking action on. We are providing $115 million for two programs to tackle tobacco usage for Indigenous Australians. There is $85 million for social marketing campaigns, $294 million for healthier worker programs, which will include tackling tobacco usage in the workplace, and some $60 million per annum in subsidies for prescription drugs through the PBS to assist people to quit.

As senators have made mention of, the government has also received a recommendation from PBAC regarding nicotine replacement therapy, and we are considering that thoroughly, as we do all potential listings on the PBS. In his contribution Senator Xenophon asked how the government will measure the success of this measure. The Australian Tax Office clearance data and data from the Australia Bureau of Statistics will be used to show whether this measure has been successful. Obviously it is too early to provide any meaningful statistics. The government will monitor the data closely, and figures for May 2010 will be released by the ABS on 21 June 2010. The effectiveness of all campaigns is monitored and examined, and this will be improved through the prevention agency when that has been approved by the Senate. That agency will have an important role in oversighting the effectiveness. In addition, the statistical material that I have referred to will become available in time from the ATO and the ABS.

To conclude, I would again urge the Senate and the parliament to support the bills, to increase the excise and excise equivalent customs duty applying to tobacco. I acknowledge the support from all sides. I have to say that, on any measure, it is relatively rare. I thank all of the political parties—the Liberal-National Party opposition, the Greens, Independent Senator Xenophon, Senator Fielding’s Family First—for the very strong support this legislation enjoys. The passage of the bills will allow investment in better health and hospitals for all Australians. But I think critically and most importantly, ultimately, it will see a reduction in smoking levels in Australia. I thank the Senate.

Question agreed to.

Bills read a second time.