Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill

Thank you for the opportunity to speak on Part 1 of the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. What Part 1 of this bill does is allow for four substantive 10 percent increases in the excise duty on tobacco products. This is being done in the name of harm reduction, to reduce the harm caused by tobacco smoking in New Zealand. It is being done in a way that, as has been discussed in earlier readings of this bill, actually follows the evidence for using tax increases or price increases to reduce the prevalence of smoking in a much stronger way than previous increases have done. That is because it allows for four successive increases in price. What the evidence tells us is that each time we have a price increase, then associated with that is a spike in quitting activity, whether that be people contacting organisations like Quitline, whether that be acquiring nicotine replacement treatments—or a whole host of quitting activities. We also know that as a result of those quitting activities many people do remain tobacco-free as a result of those quit attempts, although the nature of addiction being what it is, many people also go back to using cigarettes and other tobacco products after those quit attempts. But what we also know is that there is a brief period of activity after each increase, which then tails off, and we return to a steady level of tobacco consumption, albeit hopefully lower than what it was previous to the increase. So with these consecutive increases, what we should then see are consecutive periods of quitting activity from people who are currently using tobacco, and they will assist in progressing New Zealand towards the goal of being smoke-free by 2025.

But it is important to also note that this, being a tax increase, does generate additional revenue for the Government. Treasury estimates that this legislation will raise an additional $528 million for the Government over the next 4 years. What I found interesting is that for a piece of legislation that the Government has proposed in the name of health and in the name of harm reduction, this bill went not to the Health Committee but to the Finance and Expenditure Committee, and, in fact, the reports, the regulatory impact statement, and the departmental report were prepared by Treasury not by the Ministry of Health. That is more appropriate for a bill that is designed purely as a revenue-gathering exercise, rather than an exercise in improving the health and well-being of New Zealanders. The chair of the Health Committee is looking at me a little bit perplexed and is perhaps concerned that I might be suggesting this is not a health measure and is, in fact, just a revenue-gathering exercise. I do not believe that, Mr Hutchison. I do know that this is being done with the best intentions—the right intentions. But it does also raise money for the Government, and it comes at an interesting time.

It is interesting that the Government has chosen now, rather than the year before, or the year before that, or even going back to the days when National was in Opposition, to support a bill like this. Of course, what we do know is that the Government has been having a lot of trouble raising the revenue it requires, because the economy is so sluggish at the moment. So this does have a positive benefit for a Government that is having a lot of trouble in its economic management at the moment. It is having some difficult getting the economy moving along. This measure does have an additional benefit for the Government in that it does raise some more revenue. That, of course, then begs the question of what the Government ought to do with that revenue. It is true that there are a number of measures that the Government could be undertaking in order to further tackle the prevalence of tobacco smoking, and to further advance New Zealand towards that goal of being smoke-free by 2025, that, in fact, would be a very, very good use for this money.

There is a range of things that the money being raised from the sale of tobacco could be used for, whether it be through GST, and whether it be through excise tax. Obviously, there is the expenditure on the treatment of people who have diseases that are related to smoking. There is, of course, tobacco. We know that tobacco is related to all the big four killers—not just the big four killers, but the big four creators of cost in the health system—cardiovascular disease, diabetes, respiratory disease, and, of course, cancer, which is well documented. Of course, a lot of the money raised from the duties, excises, and GST on tobacco products needs to be used to pay for those treatments. It also needs to be used to boost the health promotion activities that the Government ought to be carrying out in order to convince people to not start smoking in the first place, and also to quit.

Of course, what we know is that one of the other initiatives that has a strong evidence base behind it is social marketing, which encourages people to quit. In fact, if that social marketing was aligned to these tax increases, it would have an additional effect in encouraging people to give up smoking. Unfortunately, the truth is that the Government has reduced its spending on those social marketing initiatives, despite the fact that it is increasing its revenue from the sale of tobacco.

There is a third area that needs to be covered as well, and this, perhaps, does not get as much consideration or debate in the public. That is the fact that people who do get a disease that is related to smoking of tobacco products are less productive. They are less able to work. They, therefore, pay less tax. So there is a burden on the New Zealand taxpayer because of that loss of productivity that is related to tobacco smoking as well, and that ought to be covered off by the money raised through tobacco taxation too.

There is an important question that the Government ought to answer: what is it planning to do with this additional money? Is this just making up for its economic failures? Is this just a way of filling the hole created by its unaffordable income tax cuts, as we have seen with the range of other levies and costs placed on the New Zealand taxpayer through indirect taxation that does not come through income tax, and making up for that loss of revenue from income tax, or will this money be used to get us closer to that goal of making New Zealand smoke-free by 2025? I would appreciate an answer from the Minister in the chair, the Minister of Energy and Resources, on those questions, because I think they are important questions.

People do accept that increasing the revenue that the Government takes from tobacco is an effective method for reducing the harm caused by tobacco, but it does have an impact, particularly on low-income people who are addicted to tobacco products. And I note that Treasury actually acknowledges in its regulatory impact statement that the nature of addiction is that even if a product becomes more unaffordable, people may continue using it because they are addicted to it, and they do not necessarily make what most people might consider a logical decision about their use of that product. So given that that is the situation, it would be fair for the Government to do more in terms of supporting people to quit, encouraging people to quit, and making sure that the types of replacement therapies, social marketing, and all the other things that go along with encouraging less use of tobacco amongst the population of New Zealand would all be good things to be funded out of this money. So I do ask the Minister, if he feels inclined to get to his feet, to answer those questions on Part 1 of this bill.

I rise to take a call on behalf of New Zealand First on the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. We spoke on this bill yesterday, and it is back in the House again today. Some of you will recall that yesterday, on behalf of New Zealand First, I expressed our concerns that this would be simply a tax take. As we have heard, $528 million over 4 years—a huge amount of money, over half a billion dollars—will be going into Government coffers. We certainly are hopeful, and expect that it will be the case, that a significant amount of the funding that comes out of this measure will go into the required health measures to actually help with the reduction of smoking in our country.

While I was sitting in for the Rt Hon Winston Peters on the Finance and Expenditure Committee on a few of the days, we did actually flesh out some of the unknown factors in all this. One of the ones that somewhat surprised me was that this always does refer to New Zealand becoming smoke-free by 2025. So there is the feeling out there that there will be no more smoking in another 12 or so years. In actual fact, the definition of “smoke-free” from the officials was that by that stage it would mean that where there is currently something like 16 percent of New Zealanders who smoke, it would be slashed by about a third, down to something like 5 or 6 percent of New Zealanders who smoke, which would still leave 50,000 or 60,000 people in this country smoking. So it cannot really be called smoke-free, because even at 2025 there will still be 50,000-plus people who are defined as being smokers in this country.

In that situation, it is perhaps a little bit more levelling in terms of what the true situation is. But we do also have a situation with foreign tourists. Of course, New Zealand is promoting itself heavily in markets like China, Taiwan, Japan, Korea, and all through the Asian countries, and that is a potentially huge growth market for tourism to New Zealand. Of course, they do have a high percentage of smokers coming from many of those Asian countries. So, again, New Zealand will always have a situation where we cannot become 100 percent smoke-free, because if we are going to expect to have several million tourists a year coming to this country, and a significant chunk of those tourists are coming out of many of those countries where there is still a reasonably high level of smoking, then that will not be the case. If we were to turn it off flatly, many of those tourists simply would not bother coming to New Zealand, and that would be a huge problem.

I think we have to be a little bit realistic here. It is an admirable aim, but what we are basically saying is that we are trying to cut the rate of smoking of domestic residents in this country, of New Zealanders in this country, by about a third, from 15 or 16 percent down to about 5 percent. At that point in time, that would significantly reduce by more than 100,000 people the amount of people who are smoking. In that respect, I would certainly hope that if you multiply those 100,000 people out across the health system and consider the effects of smoking—we have the chairman of the Health Committee here, Dr Hutchison, and I know that this is a subject dear to his heart—over the next decade and the next 12 years, if that can be significantly reduced in terms of the effects on their health, the reduction in what happens in terms of their health, the extension of their lives, and increasing their life expectancy, then that certainly is a good thing.

It did worry me a little bit, too, that this bill was being seen only by the Finance and Expenditure Committee, and it seemed to be being seen only in terms of dollars, but I certainly hope that Dr Hutchison and the Health Committee will take it on board. Actually, I hope that his committee monitors this. I have known Dr Hutchison for many, many years, because he was a doctor in Mairangi Bay and I used to go to his practice. I know how he is committed to good health. So I certainly hope, Dr Hutchison, that you will follow this through and that you are fighting with your Minister of Finance, Bill English, for an allocation of increased funding—the increased funding that comes out of these taxes year on year, 10 percent year on year—for the necessary health projects to reduce smoking. Thank you.

I am pleased to contribute to this Committee stage debate on the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. Yesterday when I spoke on this bill, I talked about the numbers of New Zealanders who die from smoking-related illnesses or from passive smoking—the inhalation of other people’s smoke. It sits at somewhere around 4,500 to 5,000 people per year who die prematurely because of the effects of tobacco. So I applaud the Government’s efforts to make tobacco harder to purchase, which is what this bill will do.

This bill amends the Customs and Excise Act—and I am speaking to Part 1—to increase by 10 percent the excise on tobacco every year for the next 4 years. So, effective from 1 January 2013, 1 January 2014, 1 January 2015, and 1 January 2016, there will be a 10 percent increase in the excise on tobacco. That will help to put the product itself further out of the reach of young people, and that is an important step.

But I have to go back to some points I made yesterday, and which my colleague Iain Lees-Galloway has made again this evening, that if this were truly a health measure with health-related objectives in mind, perhaps the first objective in the regulatory impact statement written by Treasury would not read: “This analysis assesses options to increase tobacco excise to help achieve the objectives of responsibly managing Government’s finances to achieve its fiscal strategy goals;”. Objective number one: to achieve its fiscal strategy goals. This is a tax grab. This is not about health. Had it been about health, it would have come to the Health Committee. It might have been introduced by the health Minister. It is in the name of an associate health Minister, the Hon Tariana Turia, but even she was not present. She was clearly involved in some other activity and was not able to move the second reading of the bill herself, so it fell to the Hon Chester Borrows.

There are a number of people in the National Government who will be hoodwinked tonight into getting up and saying how good this will be for the health of New Zealanders. I expect Dr Hutchison, the chair of the Health Committee, to be one such hoodwinked. I am anticipating Dr Hutchison’s speech. In fact, I will be seriously disappointed if Dr Hutchison does not get up and tell us how good this is for people’s health. He used to be a doctor—he used to be a doctor. So I would expect him to get up and say that.

I am very pleased, for health reasons—and so is the Labour Party—to support this bill, but the thing I find missing in Part 1 of this bill, which is the part currently under discussion, is the thing that might persuade me that the Government had health measures in mind and not simply managing the Government’s finances to achieve its fiscal strategy goals. Certainly, secondly, it does have “achieving the Government’s goal of making effectively New Zealand smoke-free by 2025;”. Treasury had such trouble with that sentence that it could not even express it properly. The syntax is all skew-whiff. But, anyway, the first objective, clearly, is about achieving the Government’s fiscal strategy goals. If it were not that, if it were seriously a health measure—and I am pleased that Dr Hutchison is coming up to the Table to get a copy of the bill so that he can prepare his arguments in rebuttal of this—it would say in Part 1 of the bill, surely, would it not: “We are going to take this money, which Treasury calculates will be a substantial amount”—that amount that my colleague quoted before, and I am just struggling to find it—

💬 Dr David Clark: $528 million.

It was $528 million over 4 years. It would say in Part 1, if it were serious: “A proportion”—I am not going to be greedy and say all of the $528 million over 4 years, but a proportion; let us say a tenth—“would be dedicated to assisting people to give up smoking.” Assisting people to give up smoking—in other words, putting money back into Quitline, putting money back into the products that assist people who are addicted to nicotine to withdraw from it, to manage it in the course of that withdrawal, and to successfully give it up. That would be something to really praise the Government about, had it been serious about this being a health measure. But for all my examination of Part 1, I cannot find anything that says that these four substantive 10 percent increases are going to be put back into health. They are not. They will be used to paper over the cracks of a disparate and an unsuccessful economic strategy.

Although we support the bill, for health reasons—and I am sure that there will be one or two well-intentioned members of the Government who support this bill for health reasons—there are others who are simply saying: “Here is a tax grab. Here is something that we can do, because we are falling terribly short in our projections on what we are going to get from asset sales. So we are not going to get the money that we expected to get, the market is low, our assets are depreciating by the day, and we are not going to get the funds that we thought we would get from asset sales, and therefore we need additional forms of revenue. What can we do? We will hike up the cost of tobacco, make cigarettes more expensive, and we can do it under the guise of it being good for people.”

This is a cynical measure. However, having spotted the cynicism, which one could spot at 500 paces—at 500 paces—we are prepared to support the bill for all the right reasons, and, in fact, recognise that what should be in here is some mechanism for delivering the revenue gathered from these four 10 percent increases back into health and health protection for New Zealanders.

There is more to be said about this. The bill is currently inadequate. It serves one purpose and one purpose only, as a tax grab. If we are lucky, it will have a by-product that will be good for New Zealanders, but it was not drafted with that in mind. If it had been, it would have been drafted differently. Thank you.

I am very happy to take a short call on this Committee stage of the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill, and I am saddened that the Opposition think that members of the Government would be cynical about this in any way. This is a bill that is designed purely and simply to improve the health of New Zealanders, by reducing smoking. This Government is committed to reducing smoking harm in this country. This is about increasing tobacco excise taxes by 10 percent, as Part 1 of this bill outlines in detail. The increases over the next 4 years, which altogether will add up to a very significant additional burden, send a very clear message and a strong incentive to smokers in order to encourage them to quit. In the meantime, the Government is providing in Budget 2012 $20 million over the next 4 years for the Pathway to Smoke-Free 2025 fund, which helps fund programmes to discourage smoking and help smokers quit. I think that what we are hearing from the other side is—

💬 Scott Simpson: Claptrap.

—claptrap. It is time that we focus on some of the details. So I will be looking forward to some other speeches that focus more on the details of Part 1 coming forward. Thanks.

It is a pleasure to take a call and, in particular, to follow up on the contribution from Paul Goldsmith, because he did state—and he is the first Government member to speak in this debate—that the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill is a bill intended to improve the health of New Zealanders. That has been one of the topics that has been debated in this Committee stage of the bill, and also in the second reading debate that we held earlier this week.

I think it is interesting, is it not, that there does seem to be general support from the House for this bill. I think all parties will be voting for it—I am not sure about New Zealand First, but all other parties will certainly be voting for it.

💬 Brendan Horan: Have to wait and see.

We will have to wait for someone to come back. But despite the general support for the bill, none the less there are many suggestions about improvements to the bill that have been canvassed both in the debate and also by the Finance and Expenditure Committee and by many of the submitters. It is an unusual thing, it seems to me, that in the select committee’s report it refers to amendments to the bill that it would have made had they been in scope. I think that is an interesting point, is it not, because it suggests that there are further public policy measures that we as a nation ought to be taking around control of tobacco-related harm and that this bill does not do the things that we need it to do. Iain Lees-Galloway has mentioned that it is a better approach than has been used to excise tax increases in the past, and I would agree with that. I think it is a step forward. But, given the opportunity that the bill presented, it is unfortunate that it did not go further.

I quote again from the letter to the New Zealand Medical Journal from Associate Professor Nick Wilson and George Thomson from the Otago school of medicine from earlier this week. They very clearly raised the question that has been raised by several speakers over the debate in this stage and earlier about what the purpose is of the bill. In fact, what they said in their letter was: “We suggest that Parliament makes it explicit in the tobacco tax legislation that: the primary purpose of the current Bill is to reduce smoking so as to prevent harm to health and to prevent premature deaths, rather than to increase Government revenue.” They also say that the purpose clause that they suggest would say that “The Bill is a key part of the Government plans for achieving a smokefree nation in 2025.” So that is placing into statute, in fact, that goal.

If, indeed, the linkage that Paul Goldsmith has mentioned tonight is the Government’s intention—that that is what this Government is about—then I invite the Minister in the chair to bring a Supplementary Order Paper to the floor of the House to add exactly that kind of purpose clause. It has been drafted for the Government by the professors at Otago medical school.

I think it is apparent, is it not, why that confusion has arisen. Those who believe that the bill is, or ought to be, about reducing smoking-related harm would then look at the options that were canvassed by the various agencies who were supporting the select committee on this bill and note that the option that was selected for inclusion in the bill, and which is reflected in the bill that has been reported back, was the option that actually had the least positive impact on improving New Zealanders’ health. So either there is some kind of goal confusion going on, and one suspects that that may be the case—and if that is the case, then perhaps a purpose clause along the lines suggested by those Otago professors would be helpful to everyone, to the public and to the Government, and would be clear about what it was that it is trying to achieve—or else there is something more insidious, and that is certainly the theory that we have heard espoused in the debate tonight. The Government is able to settle that point, if it was to take up that suggestion about inserting a purpose clause.

The select committee rejected the more aggressive measures that would have had a more positive effect on health, and in doing so it also made some further comment in its report to this House about, in fact, its doubt about whether the measures that were being passed into law would be adequate to meet that 2025 goal. It suggested that there should be some ongoing monitoring by the Government of progress towards that goal, with a view to determining whether further measures are required. Again, the Minister in the chair may or may not be in a position tonight to indicate what the monitoring regime is that the Government intends to put in place to determine whether or not progress is adequate towards that goal. Again, that would be a useful insertion into the bill by the Government—the monitoring regime that it intends to use to determine whether or not these measures are achieving the goal. There is certainly a lot of doubt about that point. It was raised by virtually every submitter to the select committee, and, certainly, all of the experts. Indeed, the advice from the officials themselves suggests that the measures in this bill will not be adequate to achieve that purpose. I am certainly very keen to hear from the Minister about what that monitoring regime will be.

I also want to touch on one other point in relation to Part 1, and that is the matter of duty-free tobacco concessions. This is the issue on which the select committee said that had it been in scope it would have recommended an amendment to the bill to change the duty-free concessions. I think what that suggests is that the recommendation that the select committee does make, which is that the Government needs to consider this matter—to consider the consistency of the duty-free concessions with that smoke-free Aotearoa goal—is clearly another point that we want to hear from the Minister on. What is it that the Government is going to do to assess that consistency? What is the legislative programme that we might expect to see to close that gap?

I think the evidence is pretty clear, as New Zealanders move through airports or otherwise access duty-free stores or duty-free supplies, that the availability of duty-free tobacco and tobacco products is increasingly an anachronism in an environment where our strategy as a nation is to denormalise tobacco. Well, the massive stands of cigarettes that we see in duty-free stores—I guess we do not see them now, but that we are used to seeing—actually are the epitome of the normalisation of that product. This is a point that does not, perhaps, affect very large numbers of people, but it is an important symbolic step towards the goal that the Government has adopted of having a smoke-free nation. I look forward to the comments from the Minister in the chair on exactly what it is that the Government will do to close that gap.

This Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill is a tax-grab. The Government needs to be commended for sticking with this and coming this far.

Certainly, what is interesting is the regulatory impact statement by Treasury. It is quite fascinating. It says: “It does not assess and compare tobacco excise increases with other revenue, savings and expenditure options Ministers have considered in preparing the 2012 Budget.” That clearly tells you that they do not want to measure it, or benchmark it, against anything. Two other parts are very interesting: “Analysis to inform a decision on tobacco excise increases for Budget 2012 has included: the impact of recent excise increases on Crown revenue and on consumption patterns; likely revenues from options to increase tobacco excise; initial information on likely distributional impacts … The analysis has not included”—has not included—“a range of other issues due to time and resource constraints.”

I wonder how serious the Government is about this. It has no information here on the “overall economic and fiscal impacts of smoking (eg: health and other welfare effects on smokers, their families” and other impacts, and so on and so forth, and “disability services linked to smoking … impact on the economic welfare”, and so on and so forth. We know full well that there are screeds and screeds and summaries of information on the impacts of smoking. So the Government is just clearly trying to offset this, take the money, and run—$528 million.

We heard the “Minister of Prisons” today going on about saving $170 million. I am not too sure how you comprehend not expending money on people’s welfare and trying to avoid smoking, and going and building new prisons.

💬 Hon Simon Bridges: Rubbish!

It is more than rubbish. It is this new edict of the right expecting that they can take money off the working class and just do what they like with it.

Tobacco in this country was a tool of the colonisers—that is what it was—and it has continued to be a tool of the colonisers, of the Government. It seriously was—it was. I say to this person over here, Andrew Williams, who was talking about the Asians, that it is well known and scripted, if you are enough of an international scholar and understand what happens to indigenous peoples, that when people in a settler society are being oppressed or dominated by the majority, they do three things: they drink beer, they go for sugar, and they smoke. That is the poor man’s correction, the working class’s correction. The big-time colonisers grew bigger cigars, and they smoked cigars because it was a pecking order thing. And I can assure you that in a lot of these modern countries that are coming into their own, that is the first thing they do—they chase sugar, they smoke, and they drink beer—because it is the poor man’s way to say that they are going up in society. And we would be damned by a Government that does not recognise that and wants to stop, you know, any brave movers.

I want to commend the great doctor over there, Dr Hutchison, because he stuck with us when we knocked the smoking out of those restaurants and bars, when Simon Bridges wanted to carry on smoking in restaurants in Tauranga.

💬 Hon Simon Bridges: Oh!

Yes, you did. I remember you saying that. And does it matter now? It is a great thing. So why do we not get serious about Part 1 and ensure that it is knocked right out. We should be working towards that.

You know, Quitline and Auahi Kore cannot even pay their phone bills, and you are going to flog the money off them—$528 million. Auahi Kore—there are a lot of volunteers who run around in those cars. They tell me that it takes 4 weeks to disconnect a heavy smoker and for them to even start to practise and be honest about not smoking—4 weeks. It takes a lot of money. But you take it from me, sonny—that is what happens.

The CHAIRPERSON (Eric Roy): Order! [Interruption] Order!

Oh, sorry, Mr Chair. Kia ora, Mr Chair. Dear sir, be assured that that is what people do when they come out from the boondocks: they chase beer, they eat sugar, and they smoke cigarettes—and we should be aware of it. There are more than enough Māori and Pasifika people who have respiratory diseases and who have smoked themselves to death, and it will continue—it will continue. The worst situation in relation to this bill is that there is not any money being put back in to help correct it and to help support the correction. The doctor knows that. That is why he is chewing on his glasses.

It is a delight to follow my colleague the Hon Parekura Horomia, who has put his finger on a number of important issues addressed in the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. He has really brought home some of the issues that continue to affect many members of our population, and he has drawn attention to the need to have those issues addressed more seriously than in the kind of haphazard way that the National Party has sought to address them over the years—or not address them. I remind us all that it is not so long ago that Bill English himself opposed such a revenue increase by the then Labour Government, saying that “the Government did not ever say it would do it … that is the Government’s standard, not ours.” He washed his hands of it. He labelled it a tax increase and said that “It is a tax on the poorest people of New Zealand, it is an increase that is far too large, and that is why we voted against it.” So the finance Minister, not so long ago, was voting against this kind of measure. There is a certain irony in his supporting it now.

We see it for what it is: it is a cynical tax grab—$528 million over the next 4 years, Treasury says, will go into the Treasury coffers. We know that is why the Government is doing it. We know it is concerned about the revenue hole left by the 4 percent revenue drop during its term in office, which is largely due to economic conditions being poor. This Government has the worst economic record of any Government in 50 years. It had hoped for better. It described its 2010 package as broadly fiscally neutral, and it has proven to be anything but, unless one uses the term “broad” in the broadest sense.

We know that smoking remains the single biggest cause of preventable morbidity and mortality in New Zealand. Around one in five adults currently smoke. The Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill directly affects a significant portion of our population. It is an issue that needs to be tackled. Labour will be supporting the bill because this is a measure in the right direction. We have had a principled stance on this right the way through. It is not about a tax grab as far as we are concerned; it is actually about addressing the health issue that lies behind it.

💬 Maggie Barry: Holier than thou.

Labour continues to support this, we continue to be consistent in this regard, and Maggie Barry will acknowledge that this is the right thing to do. I do not think she would say it is the wrong thing to do. Her Government is now supporting this measure.

What we see is that, equally, in the papers that we have had before us in the Finance and Expenditure Committee, the regulatory impact statement from Treasury explains the effect of this legislation on smokers. In 2010 Cabinet favoured the sequence of three 10 percent steps rather than a one-off 30 percent increase, because it considered that it would offer a repeated set of messages to smokers. That is what is contained in the regulatory impact statement. It goes on to say that “The Treasury does not have any evidence available to support one approach over the other as being more likely to be effective in prompting sustained reductions in smoking.” I think that what sits behind this particular choice is that this Government does not want to deal with it on multiple occasions. It wants to get this dirty Act over with. It wants to get the revenue banked in the coffers. It does not want to address the health issue too many times, so that is why it has chosen the 30 percent over the 10 percent when it has had direct advice from Treasury that it makes no difference whatsoever.

The effect on smokers, of course, is significant. An average smoker smokes 12 cigarettes a day, we are told. Assuming a current price of $16 for a packet of 20, that amounts to $3,500 per year. Continuing to smoke those 12 cigarettes per day, we are told, will cost the average smoker an additional $1,130 more per year. This is a significant measure. It will affect behaviour. It will make a difference because we know that price and marketing is the most effective way of dealing with addictions. We know that from the alcohol sphere. We see the Government avoiding those measures in the alcohol sphere currently, but to its credit it is taking on the price issue here, albeit for perhaps the wrong reasons.

Certainly the University of Otago presenters who came to our select committee identified that. They portrayed this bill, although in more polite and academic terms, as a naked revenue grab. They advocated for some changes in the bill. The first was to clearly establish that the purpose of the bill is to save lives rather than to increase Government revenue—to make the purpose absolutely clear. Secondly, they advocated for clearly establishing the bill as part of the Government’s plans for a smoke-free nation in 2025. That is an interesting point that I will come back to, because if it were adopted as part of the Government’s plan for a smoke-free nation in 2025, we might see some additional measures, because Treasury also tells us that this measure alone is unlikely to achieve that goal. They also advocate for increasing the tax rises to 40 percent in the first instance, and at least 20 percent in subsequent rises.

The researchers from the University of Otago—whose specialist topic this is, who have done the research, who understand what would make a change, and who are people based and educated largely in New Zealand’s finest city—would recommend that we also reduce duty-free allowances for tobacco products to one pack of 20 cigarettes or the equivalent. They would also urgently investigate establishing a minimum price for tobacco. These are measures that the select committee did not decide to adopt. They would further suggest that we ensure tax increases are implemented with co-interventions, and they outline a series of ways in which that could be done, effectively hypothecating the additional tax take. Perhaps it is a dirty word to Treasury—the “h” bomb, hypothecation—but it is actually a way of having the changes accepted by the public. We know that the public will accept positive changes, and particularly smokers in the general public, when they know that they will be provided with assistance to help break the habit as a part of that package. These researchers note that the overwhelming evidence is that tax increases are one of the most effective means to reduce smoking prevalence. They cite the modelling work carried out by the New Zealand Institute of Economic Research for the Ministry of Health that demonstrated that substantial tax increases would be an important component of achieving the 2025 smoke-free goal. Treasury advises that the increases proposed will not be sufficient to achieve that goal on their own.

We note that there is a paucity of other policy being brought forward by the Government, and all of that, of course, highlights the fact that as far as the Government is concerned this is an attempt to fill its revenue hole, the 4 percent loss of revenue in the Government books—1.5 percent of which is attributed by the Inland Revenue Department to the global financial crisis, but 2.5 percent of which is attributed directly to Government policy changes. This is an attempt to begin to fill that revenue hole because the economy has not grown. The policies the Government has adopted, the tax policies we are discussing here, and other policies the Government has adopted have not grown the economy sufficiently that the revenue is there to afford the public services that we all value. We see this bill as a tax grab. Unfortunately, it is not achieving the 2025 goal that we would hope it would.

We also note that Treasury’s advice is that the social policy objectives will not be met, because excise increases should be considered as part of a broader package. They also note that the stock of current smokers will still be the majority of smokers in 2025. Even aggressive increases in tobacco excise rates alone are unlikely to be sufficient to achieve the smoke-free goal in this time frame. I put it to you that this is clearly a measure that is a tax grab. It is going to achieve positive results, so we will support it. We do wish the Government would go further, and I look forward to hearing from the next member who will speak, and I hope it is Maggie Barry. I hope she will enlighten us as to the wider Government policy on this issue, and not just tell us about the naked tax grab, which this current bill represents. Thank you.

I move, That the question be now put.

Tēnā koe, Mr Chair. I rise knowing that that botanical expert could visit upon me a form of mother-in-law’s tongue, a well-known weed that grows up in and around the gardens of Auckland. But I want to talk about a far more serious subject.

💬 Maggie Barry: Don’t be so prickly, Shane.

I was relying only on the modest botanical knowledge I inherited from the Anglican Church while I was at St Stephen’s College. Then I went to the various Anglican churches around Auckland—and I must say the padre did smoke, so it is actually relevant—and I recalled that line. I am not entirely sure whether that member actually spoke about that botanical pest otherwise known as the mother-in-law’s tongue, but from time to time she evinces those qualities. That is reflective of how much botanical knowledge she had, inversely related to some of her political contributions. Kei te pai.

I would like to start with a small story—very instructive. I come from the very far north, Ninety Mile Beach, and the name of our tribe is Te Aupōuri. It means the dense smoke. How it arose was that we were surrounded by some of Hone Harawira’s relations, and we were a far more modest, humble sort. In order for us to escape the ravages of their foul designs, we lit a big fire. We waited for the smoke. It was early in the morning and it settled just above the current of the water. We managed, with a level of sleekness, and a sort of waka that was not a “Tupperwaka”, to sneak away.

Unfortunately, in more recent times, that story—a grand story about pre-colonial times—is visited upon us as more and more of my own matuas have died with a cigarette, Park Drive, in the māngai, one in the damn hands, and one in the ear. Those images—unfortunately, they were Māori Battalion returnees, so it is probably not the most sensible contribution in terms of the rather romantic image we have about our matuas who went to the Māori Battalion—were a feature.

When we went to hui, because I grew up right next to the marae—my dad was a dairy farmer, which may cause some of the members on the other side of the Chamber to ponder as to how I ended up where I am. Well, it was truth in justice, it was truth in justice—truth in justice. However, part of what we contributed on the marae with our old grandmother, who whāngai-ed me, brought me up with my parents, etc.—she was born in 1892—was that we used to go and get bales of hay and spread this hay out because there were very few mattresses, etc. We would spread this hay out and put out a thing called a kuta mat, made out of this golden reed growing in the lakes; our whaeas used to make these mats out of it. So that was the mattress. Well, I have vivid memories of these Māori Battalion returnees sitting there, with their Park Drive, with a small flask of whisky, arguing about land.

Unfortunately, not much has changed, but at least there has been an improvement. The tone has changed and the norms have changed. There is no more smoking in that particular marae. We actually have mattresses. I think they come from “The Ware-whare”, otherwise known as The Warehouse. Unfortunately, fewer of us actually know how to make those mats. They are one or three long-suffering individuals who, from time to time, have been misguided enough to support the Māori Party in the mistaken belief that its politics are going to revive our culture, but that is another matter.

So this is just another step on a long-term journey. Yes, the tax is regressive and, yes, I have been out once or thrice with my mātāmua, the matua of Aotearoa Tuatahi, and, yes, I have seen him with my partner enjoying a cigarette now and again. It is free will, it is everyone’s choice, etc., and may they enjoy the opportunities that smoking and drinking afford them. I enjoy drinking and something else but not smoking, but it is a free life and it is free will. It is free will.

It is regressive, and a lot of our Māori voters, they are hōhā. They are hōhā that we are supporting this, but we have to say to them: “It is in your best interests, and please reward us appropriately when voting comes around.” So we know that there are occasional difficulties. I think it is inevitable that the flinty, rather mean-spirited side of the Chamber—that side of the Chamber—will remind us that this is about tax and revenue, but it is how it is applied. I would actually like to see a hypothecation model—a rather sensible word brought to the fore by Annette King as she reformed our transport policy, which is currently being squandered by that side of the Chamber. So this revenue is dedicated to working with young parents. In our world, in Te Ao Māori, unfortunately, a young parent of 16, 17, 18, or 19 in “Strugglers’ Gully” is often very stressed, so the challenge that Treasury—

I raise a point of order, Mr Chairperson. This relates to an incident that occurred early in Mr Jones’ speech. I did not want to interrupt his speech, so I ask you just to reflect on it. There are a number of Speakers’ rulings relating to interjections, but I could not find one that actually relates to the matter of a member standing whilst another member has the call in order to interject in the way that Maggie Barry did during the previous member’s call. The nearest one I can get to is Speakers’ ruling 61/5, which says: “A member may not make interjections while standing or leaving the member’s seat.”, although I assume that means getting up and walking around and making interjections. I just wonder whether we could get a ruling from you on the practice of standing in order to make an interjection on a member who has the call.

I shall reflect on the matter. I think that, in general, interjections are to be discouraged, and anything that gives the interjector, or interjectee—the person doing it—any kind of advantage is to be seriously discouraged.

I move, That the question be now put.