Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I am pleased this morning to rise to speak on the Excise Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017 and the Customs Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017. These bills increase the rate of excise and tariff on tobacco products other than cigarettes. I am glad that these bills have bipartisan support across the chamber. I agree with the honourable member who just spoke, the member for Blair, as I also want to see the rates of smoking driven down in this country. In fact, I would like to see them driven down to nothing. I agree with him that both sides of politics must tackle the scourge of smoking and drive those rates down. And I agree with him that the additional revenue we will get will help repair the budget deficit that we have to tackle.

However, I would note what we are actually doing. We are increasing the price of cigarettes by 12½ per cent, 12½ per cent, 12½ per cent and 12½ per cent over the next four years. We are going to drive the retail price of cigarettes to $40 per packet. I would hope that, when many Australians see the price of cigarettes at $40 per packet in the shops, they will make the decision that this is the time to quit. If that happens, we will have been successful.

But my concern is that we will be basically creating a prohibition by price. And, where the wholesale price of a packet of cigarettes is the equivalent of one Australian dollar in Asia, where there are hundreds if not thousands of tobacco wholesalers that lawfully sell the products in those countries for $1, and the retail price is $40 in Australia, we create the risk that we are going to turbocharge the illicit and underground market; we are going to turbocharge smuggling; we are going to turbocharge black-market cigarettes; and we will be giving a leg-up to organised crime.

Already, the estimate is that about 14 per cent of all cigarettes sold in this country today are from an illegal source or a counterfeit source that avoids the customs tariff. That is $1.6 billion lost to government at the moment. I think almost all of us would have stories around our electorates of small tobacconists selling this unlawful product. We hear common stories. A packet of cigarettes, unbranded or counterfeit, can be bought for $10, I would suggest, in almost every electorate in this country. The real danger is: if we put these cigarettes up to $40 a packet, what will that do to this market?

There is a real risk, because of the price-sensitive nature of cigarettes, that we may merely be trading one health hazard for another. It is wonderful that we have heard the great results of fewer and fewer teenagers taking up smoking. But is it the fact that, as we are making cigarettes more and more expensive, they are only diverting to other drugs instead?

With that, I support this legislation. I want to see the scourge of cigarettes driven from this country. I want to see the smoking rates that we have, which have declined in recent years, decline even further. But we need to remember that, if we are going to do this, we will be increasing smuggling. We will need to put more resources into law enforcement. There will be greater cost to society in other areas. We must monitor this situation very carefully because history tells us what happens when you go down the track of a prohibition, and with this legislation we are going to prohibition by price. I hope my concerns and fears are proved incorrect. But this is something to monitor. We need to give more resources to our law enforcement officials to enforce that. I hope that I can come back here in a couple of years and say that I was wrong and celebrate that we have driven smoking rates down in this country.

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