Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

I understand it is the wish of the House to debate the order of the day concurrently with the Customs Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017. There being no objections, the chair will allow that course to be followed.

Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

I rise to speak on the Excise Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017 and the Customs Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017. These amendments amend the Excise Tariff Act 1921 and the Customs Tariff Act 1995 to harmonise the rates of excise and excise-equivalent customs duty applying to different tobacco products. The bills ensure that tobacco products in cigarette form and those containing other tobacco, such as roll-your-own tobacco, receive a comparable duty treatment. This effectively means roll-your-own tobacco attracts the same rate of excise per kilogram as tobacco as cigarettes.

Labor will agree to support these bills. This measure is yet another example of the Turnbull government adopting Labor's previous tobacco excise measures. It is always important to remember that changes to limit the scourge of smoking in Australia have been championed by Labor. Historically, Labor has been committed to ensuring the reduction of smoking rates in Australia and improving the health outcomes of Australians. Labor is mindful that this government has a long way to go when it comes to fair budget repair—another reason we will support this legislation. The government's 2017 budget was a budget for millionaires and multinationals rather than for working and middle-class Australians, and we have repeatedly made that case. We will support these measures in the House, but we will continue to hold the government to account. We are pleased they are following our lead in this regard with this legislation. It is critical that we reduce smoking rates in this country, to improve the health outcomes of all Australians, and deliver a fair budget for all Australians.

I will take the opportunity to talk about smoking rates and the commitment we need to undertake and have undertaken in the past in relation to tobacco consumption and smoking reduction measures. The Australian Institute of Health and Welfare's 2016 National drug strategy household survey released on 1 June 2017 found that the use of roll-your-own cigarettes had risen from 26 per cent of smokers in 2007 to 36 per cent of smokers in 2016. Between 2013 and 2016, roll-your-own tobacco use in smokers in their 30s had jumped from 29 per cent to 37 per cent—an alarming statistic. The reduced comparative cost of roll-your-own cigarettes is due to the current more favourable tax treatment of roll-your-own tobacco. It's believed to be a contributing factor and I agree with the experts in that regard. By better aligning the tax treatment of roll-your-own cigarettes with tailored cigarettes, it's hoped that the increased use of this type of tobacco will be halted and, indeed, reversed.

This measure will result in a gain in excise and excise-equivalent receipts of $360 million over the forward estimates period—a welcome addition to budget repair. Imported goods such as imported tobacco are known as excise-equivalent goods and attract an excise-equivalent customs duty collected at the borders of Australia. This applies at the same rate as the excise duty on locally produced goods. Goods and services tax receipts are estimated to increase by $35 million over the forward estimates period from this budget measure—again, welcome. These increases are in addition to the decision made in the 2016-17 budget to increase tobacco excise on all tobacco products. We welcome this revenue, although we don't welcome the other unfair measures imposed by this government and their wrong economic priorities.

The bills before the House today are to harmonise the rates of excise and excise-equivalent customs duty applying to different tobacco products. It's done by four annual adjustments of the duty rate from 1 September 2017. The legislation amends the Customs Tariff Act 1995. Section 19AB(2) is to be replaced with the following words:

The amount worked out under subsection (1) is to be rounded to 5 decimal places (rounding up if the sixth decimal place is 5 or more).

I'm often wary of the government's ability to draft legislation, but I'm relieved that they do in fact know the correct method of rounding decimal places as enshrined in this legislation!

Labor has taken the lead in driving smoking rates in this society to historic lows. We've implemented plain packaging laws, and our leadership on tobacco excise is demonstrated and has historically been demonstrated. It was under a Labor government that Australia was the first country to produce plain packaging for cigarettes, which took effect from 1 December 2012. Despite legal challenge after legal challenge, the World Trade Organisation recently upheld Australia's right to impose plain packaging label restrictions on the sale of tobacco products. Labor's leadership on this matter is undeniable, with Bloomberg reporting recently:

The decision could usher in a new wave of global tobacco restrictions from other countries that have sought to deter smoking among their citizens through the use of plain packaging rules.

France, Hungary, Ireland, New Zealand, Norway, Slovenia, the UK—all have adopted in their own way their own plain packaging rules. Similar laws in relation to this matter in Canada, Turkey, Singapore and South Africa are all on the cards following Australia's lead.

Under a Labor government, not only was Australia the first country to introduce plain packaging for cigarettes but we also introduced a number of key measures that I think are important to put on the public record in the context of this bill. We increased the excise rates applying to tobacco products by 25 per cent as part of the 2010-11 budget. We introduced legislation to restrict advertising on tobacco products on the internet in line with advertising in other forms of media. We invested $61 million towards the national tobacco campaign Every Cigarette Brings Cancer Closer. There was $27.8 million over four years for social media marketing campaigns targeted at high-risk and hard-to-reach groups. We also invested $14.5 million over three years from 2008 towards the Indigenous Tobacco Control Initiative, funding 18 pilot projects in Indigenous communities around the country. And we invested a further $10.7 million in 2010. We took it up through the COAG process, investing $100.6 million towards the National Partnership Agreement on Closing the Gap in Indigenous Health Outcomes, tackling Indigenous smoking measures. We introduced the first-ever national Aboriginal and Torres Strait Islander-specific antismoking television campaign: Break the Chain. We provided $5 million for one-off funding for Quitline in 2009-10 and invested $102.4 million to support the provision of nicotine replacement therapies and other quit-smoking supports through the PBS.

This shows that Labor has historically been a strong supporter of programs to reduce tobacco use. In November 2015 Labor continued this commitment through our original excise tobacco rate increases. We announced we would deliver a further four 12.5 per cent excise rate increases, commencing 1 July 2017, if we were elected at the last election. This is all about making sure we can reduce tobacco consumption in this country.

The government has followed our lead in this legislation; it copied our plan. It announced in May 2016 that the 2016-17 budget would have an annual increase in tobacco excise, an excise-equivalent customs duty rate of 12.5 per cent, on 1 September in each of the years from 2017 to 2020.

Labor will support the passage of these bills through the House. I think Labor's leadership in this area, in combatting tobacco smoking, was clearly reflected in the data recently released by the National Drug Strategy Household Survey. According to the survey, the proportion of Australians who have never smoked has risen from 60 per cent in 2013 to 62 per cent in 2016. And it's a fact that 98 per cent of Australian teenagers have never smoked. Simon Chapman, emeritus professor in public health at the University of Sydney, summarised this victory perfectly in an article he did for The ConversationI commend everyone to have a look at it—by saying:

While it was always going to be hard to show even further decline in teenage smoking from what was an already very low level, it’s happened again—

and that's very welcome.

Younger people also continued to delay when they first smoked their first full cigarette.

From 1995 through to 2013, the age increased from 14.2 years to 15.9 years. By comparison, between 2013 and 2016 the age jumped significantly from 15.9 years to 16.3 years. The effectiveness of the plain packaging initiative is undeniable.

There are troubling statistics—I want to finish on this note—that have emerged from the 2016 National Drug Strategy Household Survey that reinforce why Labor is supporting these bills. For instance, one in eight Australian adults still smoke daily; smoking is still killing 15,000 Australians a year. We need to do much, much more. This government was the government that mothballed the Australian National Tobacco Campaign in 2013. That campaign, which you might know as the 'Every cigarette is doing you damage' campaign, had been in existence since 1997 and had been hailed around the world as world's best practice; it was very effective. This is why I come back to the data. The data we have seen clearly shows there's no statistical fall recorded in the total smoking levels; they'd simply dropped out or levelled off between 2013 and 2016, from 12.8 per cent in 2013 through to 12.2 per cent in 2016. This stagnation perfectly aligns with the government's failure to commit to a new national media campaign on smoking.

Another commitment we made at the last election was an additional $30 million in funding to help groups that contribute to smoking at alarming rates, including Aboriginal and Torres Strait Islander peoples and those with mental illness. Labor urge the government to continue to follow our lead when it comes to improving the health outcomes of Australians, especially taking the initiative to help those who continue to smoke at alarming rates—including Aboriginal and Torres Strait Islander people and those suffering from mental illness. Labor will support the passage of these bills through the House, and we will continue to hold the government to account to reduce smoking rates in this country, to improve the health outcomes for all Australians and to deliver a fairer budget for all Australians.

Craig Kelly (Hughes, Liberal Party) Share this | Link to 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.

Kelly O'Dwyer (Higgins, Liberal Party, Minister for Revenue and Financial Services) Share this | Link to this | Hansard source

First, I'd like to thank all of those members on both sides of the chamber who have contributed to this debate. To ensure that cigarettes and roll-your-own tobacco receive comparable taxation treatment, the government will amend the Excise Tariff Act 1921 and the Customs Tariff Act 1995. The Excise Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017 and the Customs Tariff Amendment (Tobacco Duty Harmonisation) Bill 2017 adjust the rate of excise and excise-equivalent customs duty on roll-your-own tobacco over four years, with increases occurring on 1 September each year, starting in 2017. This matches the timing for other changes to tobacco rates, therefore minimising compliance costs.

The adjustment will address the disparity in the duty applied to cigarettes and roll-your-own tobacco. This disparity occurs because the duty on cigarettes is a set amount per stick, which assumes each cigarette contains 0.8 grams of tobacco, while duty on roll-your-own tobacco is applied to the actual tobacco content at a per-kilogram rate. However, the average cigarette contains less than 0.8 grams of tobacco. As a result, the average manufactured cigarette is subject to a higher rate of duty than a comparable cigarette made from roll-your-own tobacco. Adjusting the per kilogram excise and excise-equivalent duty rate to better reflect the average tobacco content of manufactured cigarettes will improve the fairness and efficiency of the taxation system. It will also ensure tobacco is subject to comparable duty treatment regardless of form. I commend these bills to the House.

Question agreed to.

Bill read a second time.