Excise Tariff Amendment (Tobacco) Bill 2016, Customs Tariff Amendment (Tobacco) Bill 2016 - Second Reading

Senator IAN MACDONALD (Queensland) (18:31): As Senator Gallagher, the previous speaker, has said, the Excise Tariff Amendment (Tobacco) Bill and the Customs Tariff Amendment (Tobacco) Bill increase the tobacco excise charged on domestic production and the equivalent customs duty charged on imports by way of four annual increases of 12.5 per cent a year from 2017 until 2020. The increases will take place on 1 September in 2017, 2018, 2019 and 2020, and are in addition to existing biannual indexation to the average weekly ordinary-time earnings. Again, as the previous speaker said, each year smoking kills an estimated 15,000 Australians and costs Australia some $31.5 billion in social and economic costs—the social costs, of course, include health. Smoking rates have been decreasing, but evidence suggests the need for continual and varied interventions to further decrease smoking rates and consolidate the gains that have been made.

I enter this debate rather patronisingly. Thirty or 40 years ago I was smoking up to 60 cigarettes a day. I must say I was not 'smoking' 60 a day—I would light 60 a day, and, in the high-stress job I was in at the time, I would put down the cigarette I had just lit and one would already be burning in the ashtray. But I was one of the lucky ones who was able to give it up. I found it relatively easy when I put my mind to it, but I acknowledge that a lot of people still have trouble giving up the evil habit. About 20 years after that—20 years ago now—I had a heart operation. I have an artificial valve in my heart. At the time, I remember the surgeon saying to me, 'Are you a smoker?' and I said, 'No, I gave it up 20 years ago.' He said, 'That's lucky, because if you were still a smoker I wouldn't have wasted your time or the health system's money by even bothering to try and operate.' He would have just said, 'Tough luck; bear it.' So there are certainly benefits to a decrease in smoking. The increase in the price of cigarettes will reduce the rate of smoking in Australia further, and the lower smoking rate will reduce those social and economic costs associated with smoking that I spoke about.

These bills may attract criticism from the tobacco companies, which argue that an increase in tobacco excise rates will increase the size of the illicit tobacco market. A few years ago, in my role as chairman of the Legal and Constitutional Affairs Legislation Committee, I was approached by the tobacco companies along those lines. They were not so concerned back then about the increase in excise, although they did not like it—what they were worried about at the time was the huge increase there would be in illicit tobacco products. From the tobacco companies' point of view that meant they would make fewer sales because people would be using chop-chop or other illicit tobacco products on which no duty and no excise—no government revenue—had been raised. The tobacco companies, quite sensibly and maturely, made the point to me and to the government at the time that if we were going to increase the excise we needed to at least increase surveillance—increase the ability of the law enforcement agencies to address the illicit trade in tobacco products.

That was a few years ago. Another of the concerns the tobacco companies raised with me at the time was that there were three or four different Commonwealth agencies, such as the tax department, the Customs people and a couple of others, who all had a particular role to play but there was a difficulty with coordination. One agency could do something, but could not do everything. That is not a very good way of explaining it, but it gets across the argument that was put to me at the time. And there were real problems at the time with this lack of coordination within these government agencies who could attack the illegal tobacco products.

Since that time, and as a result of representations made, I know that the Taxation Office and the Australian Customs and Border Protection Service have adjusted their regulatory frameworks to better control that illicit trade in tobacco, because it is okay for us to stop the legal trade in tobacco products and reduce the incidence of smoking, but if those who are smokers can get it at a fraction of the price down the road at some illegal chop-chop shop then not only are we not saving anyone's health but we are not saving any money for the government and the taxpayer. That is why it is important to note that in the proposal before the chamber today the government has announced it will strengthen the penalties for illicit tobacco offences and provide an additional $7.7 million to the Tobacco Strike Team to combat illicit tobacco activity. That is a welcome initiative. It is something I welcome. I am sure the tobacco companies will also welcome it, although I am sure they will not be terribly happy with this increase in the price of tobacco.

In debating this legislation and urging support for it and acknowledging, as I do, rather patronisingly, that people should give up because it costs so much, I am reminded of a letter that I received from a friend. He is someone who was a friend long ago but who I had not caught up with for some time. He wrote me quite a long letter about his views on smoking. He says, in part: 'Cigarettes at the supermarket are just over 80c each'—this, I might say, is a letter written in March before the latest increase—'and about 25 per cent more at a servo or a newsagent, and about 85 per cent of that goes in government tax'. He then goes on to talk about his disdain for any party or politician that might increase the cost. He is retired and is carer for his wife, who has a disability, and he sort of indicates that this is one of his few real pleasures in life these days. I mention that in this debate only to show that we should, in legislating appropriately, as we are, also think about the people who have different views.

I am just trying to summarise some of the things he said. He does have some quite substantial figures on the cost of smoking to him. He says that he believes it would be much cheaper if he were smoking an illegal leaf, like marijuana, or even ice. He said it would be much easier for someone like him to smoke marijuana and ice, and much cheaper. Again, I think that is something that we have to bear in mind. There are other aspects of his letter that I would like to read but, unfortunately, I only just thought of this as I was speaking and I wanted to acknowledge my friend for making those points to me and I wanted to let him know that at least I have read and understood his concern. Notwithstanding that, the government, in its wisdom, and the Labor Party have agreed that prices should go up to try to discourage smoking and also with a view to revenue.

There is a lot of evidence around about the fact that this increase will lessen the incidence of smoking and the health problems which follow from it. I did mention in my contribution the fact that illicit tobacco may become a more attractive proposition for criminal gangs, and it is important that the government does increase funding to the Tobacco Strike Team to combat that. It is also important to understand the point my friend was making: with the cost of legal tobacco being so high—and, as I say, most of the cost of cigarettes these days is government tax—it does make younger people in particular look at the prospect of smoking illegal substances or, worse still, using substances like ice. Whilst we do this with all the right reasons, the right thought, the right principles and the right procedures, we should also just bear in mind that this is making the use of illicit drugs a more attractive proposition to some. I can only say to the government that we must ensure that state and federal governments do whatever they can to address the scourge of illicit drugs at the same time that they address the health problems caused by cigarette smoking.

It always seems strange to me that, when it comes to controlling illicit drugs or enforcing the laws against them, every schoolkid seems to know where you can get marijuana or ice, yet the police never seem to be able to catch the distributors of those dangerous drugs. I can never quite understand why the police, with their intelligence, are not able to find out what every schoolkid seems to know.

But I digress a little bit. To go back to the Excise Tariff Amendment (Tobacco) Bill and the Customs Tariff Amendment (Tobacco) Bill that are before the chamber: they are important pieces of legislation, not only for the nation's health but also for the nation's revenue. They are part of a budget proposal and some recent legislation that will help the government address the budget deficit that this country has faced for several years now, and I congratulate Mr Morrison on that aspect of his work, in doing what he can to try to get the budget back on track, where it should be.

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