Thursday, 10 August 2017
Red Tape Select Committee; Consideration
On 11 October 2016, the Senate established the Select Committee on Red Tape with a wide-ranging brief to inquire into, and report on, the effect of regulatory restrictions and prohibitions on the economy and community. This included economic and employment impact; compliance costs and burden; the effect of previous efforts to reduce red tape; and alternative approaches. As chair of the select committee, I can advise the Senate that our work to date has revealed the importance and scope of the task. It has also revealed very clearly the opportunity presented by reducing red tape to help facilitate employment and economic growth. Pursuant to this, I wish to provide senators with an outline of the recent report of the committee on its inquiry into the effect of red tape on tobacco retailing.
The committee looked at tobacco regulation from all perspectives, including the impact of the National Drugs Strategy, the National Tobacco Strategy, and the World Health Organization Framework Convention on Tobacco Control, to which Australia subscribes. All of these seek to control and minimise the use of tobacco. The committee heard about the serious adverse impacts of plain packaging laws and display bans on retailing. It heard how plain packaging has created considerable difficulties for retailers, who must spend a lot of time finding particular brands and brand variations among the many variables. This has the effect of consuming staff time and annoying customers for no tangible public health benefits.
The committee heard how retailers have had to invest in special, lockable cabinets that comply with display bands and storage requirements, costing tens of thousands of dollars. It heard how small retailers, which typically have a higher dependence on income from tobacco retailing, have been most adversely affected by these measures. It heard how there has been a significant increase in error rates in supply, delivery and sales of cigarettes because they look so similar. Retailers report that there has been increase of up to 30 per cent in staff time to unpack, check, store and find products required by customers. Staff have had to be retrained so that they know what the regulations are and to ensure the store complies. And, of course, all this costs time and money for which there is no pay-off in terms of additional sales margins or public health benefits.
The committee also heard how efforts to discourage consumption by making tobacco less affordable are having limited effectiveness at minimising use, but are resulting in increasing rates of tobacco theft and sales of illicit products. This is hardly surprising considering tobacco is an addictive product and, therefore, like illegal drugs which sell for exorbitant prices, tobacco sales are not as easily influenced by price signalling as would be the case of a non-addictive product. To enforce the Tobacco Plain Packaging Act, the health department is empowered to employ punitive measures up to and including civil and criminal penalties. But these measures are directed at legal products and retailers; those who sell illicit tobacco products have little to fear. The committee recognised that the consumption and retail sale of tobacco products both remain lawful activities.
Thousands of jobs continue to depend on the importation, distribution and retail sale of tobacco. Those involved in the sale of lawful products are law-abiding citizens who pay their taxes and are entitled to have their commercial efforts respected. The National Retail Association and MGA Independent Retailers expressed their concerns at the regulatory burden placed on their members who sold tobacco products, expressing the complaint that it was a bit like they were in the business of compliance with a little bit of retailing on the side. The Australian Lottery and Newsagents Association also expressed concern that excessive regulations not only were unfairly burdensome to retailers but also exposed employees to risk through inadvertent noncompliance. Retailers that operate in more than one state face differing regulations affecting signage, storage, display, licensing and definition of products, each with very significantly different compliance costs.
The committee considered the massive regulatory burden generated by public health concerns and found that it created a major impediment to lawful commerce and job creation, with questionable benefit in limiting tobacco consumption. Rather, overregulation was found to be damaging lawful businesses and causing a shift in sales from legal tax-generating retail to illegal importation and black market activity by organised crime, in much the same way as prohibition of alcohol and drugs helped establish organised crime in the US.
In its conclusion, the inquiry report recommended that state and Commonwealth governments undertake a cost-benefit review of their tobacco control measures. The report urged that this involve an emphasis on reducing unproductive and counterproductive regulatory measures that simply inhibit legal commerce but do little or nothing to reduce demand for tobacco or improve public health. Instead of red tape, healthier nicotine delivery mechanisms, such as e-cigarettes, for those who choose to use tobacco, were emphasised as a more effective approach to public health policy. I seek leave to continue my remarks.