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

I am very disappointed that I have been unable to participate in the first and second readings of this bill because urgent public business took me elsewhere, but I have followed it as much as I could and have been impressed by the calibre of the debate on this bill from the Opposition members. This is the point where we now have the opportunity to ask—and the opportunity for the Minister to answer—some very direct questions. I am sure that the Associate Minister of Health the Hon Peseta Sam Lotu-Iiga will be very willing to answer such questions because he is getting wide support for this bill today. And because it does not go to a select committee and there is no opportunity for scrutiny by the public, therefore, I think, this is the chance to ask those questions and for the Minister to answer.

I am interested in the Minister informing the Committee how much of the revenue of the $425 million that will be gathered over 4 years will go into public health—that is public health. I am not talking about elective surgery or a bowel-screening programme; I am talking about how much will go into public health. I know the Minister is not responsible for all of the Budget, but he is a powerful Minister in terms of his advocacy for his part of the health portfolio—or, he ought to be—and he covers what is public health.

One thing we have seen in the eight Budgets of this Government is the reduction in money going into public health and public health programmes. Of course, everybody likes to say that prevention is better than waiting until somebody gets sick. It is a mantra—we ought to prevent things, prevention is so important, early intervention—but if you do not have an emphasis on it and you do not put the money in to help make it happen, then it is just hot air and words.

So I would like the Minister to tell us how much will go into anti-smoking assistance and programmes to help people stop smoking. How much is going to go into health-related issues that are often associated with smoking—mental health, for example? How much will be put into the mental health budget to help those who smoke stop smoking? How much will be going into other areas—for example, obesity? There is a link between smoking and obesity. These are very important public health questions. There is over $100 million a year in revenue that will be gathered and that needs to be spent. Imagine, if you put that money into public health in New Zealand, what a difference you could make.

My fear, I have to say, is that it is going to be used in the consolidated account. Maybe some will go into health, but we are looking at a Prime Minister who wants to have some big fat tax cuts for a few people next year, and it would be wrong—morally wrong—to take money off those who smoke and put it into a tax cut for those who need it the least. This money needs to be health-related. I think any levy ought to be related to the product or the activity, so that if you are taking money off alcohol in terms of excise duty or levies, or if you are taking money off gambling, then it ought to go alongside the public health programmes that are put in place. So, Minister, this is a serious question that, perhaps, you have not yet worked out, or have not yet managed to twist the Minister of Health’s arm on, but I would look for your advocacy in this area.

I also want to know what has actually happened to your separate tobacco control plan. It is all very well using one lever—one lever—in the whole fight against tobacco consumption and prevalence, but if it is only one lever, it is not going to be enough to reach a smoke-free New Zealand by 2025. You told me in September that the Government had announced developing a separate tobacco control plan, and then in February, when I asked again, it was still developing a tobacco control plan. Am I to expect, as each month goes by, that I will be told that the Government is developing a separate tobacco control plan? Where is the plan? What is in the plan? Will it include, for example, stopping smoking in cars when children are in them? Minister, you replied to me and said that you are opposed to smoking in cars. You are also considering banning smoking in cars as part of, I presume, a tobacco control plan. So it was very interesting to those of us on the select committee to learn that the Ministry of Health is not proposing a ban on smoking in cars because the Government is not interested in it. So there is a disconnect between what this Associate Minister wants and what the Minister of Health is saying.

If we are going to have a separate tobacco control plan, Minister, it needs to have a number of elements in it. One of them has already been mentioned—plain packaging—and you will know that I have asked you many questions on this and on when you are going to bring forward the bill that sits on the Order Paper. You said that the Government has got a very busy programme this year. Well, I know that, but how important is trying to help prevent people smoking? Is it of lower importance than some of the fiddly little bills we have had in this place that have taken up a lot of time? Is not the health and wealth of New Zealand and the well-being of New Zealanders far more important than some of the legislation—the dross—that goes through here on a daily basis?

I am wondering whether you have got the punch that is needed to give what you want in this area of health. You are an Associate Minister—I understand that you have a Minister over you and obviously his interest is not as great as yours—but I am looking to this Associate Minister to be able to bring forward a separate tobacco control plan that looks out to ensure that we are smoke-free in 2025. That is what we want in this House. That is what most New Zealanders want. But without a plan—and a forward-looking plan—to do it all we are doing is tinkering around the edges.

I also want to know what has happened to the public consultation on the Protocol to Eliminate Illicit Trade in Tobacco Products because you did tell me that it was going to be tabled in this Parliament in 2016. We are nearly in June—when will it be tabled? I have listened to the comments from the speaker from New Zealand First talking about what might happen with illicit trade in tobacco, the growing of tobacco, the black market in tobacco. One of the things that took place last year was public consultation on a protocol and it was going to be used to produce a national interest analysis to assess the pros and cons of New Zealand becoming a party to the protocol. So I want to know, Minister, what is happening in this. Are we going to sign up to a protocol? When will it be available? Is it 2016 or is it also—like many of the other measures—being put on the back-burner?

This is one measure. We are supporting it. We do know that price is a major driver, in terms of stopping people smoking. It is not about punishing New Zealanders because they smoke. You see, I have always had this theory: why should we allow tobacco companies to kill poor people? Why should we allow it? That is what they do. They target their tobacco prices at those on the lowest incomes to keep them hooked. They target our kids to keep them hooked. I do not believe we should allow that. And we should take every measure we can to help New Zealanders stop smoking, to give them the tools to assist them—because there are good tools out there, tools that can assist. We ought to be putting our investment into that area because we know that the biggest cancer killer in New Zealand is still smoking.

Minister, I am urging you to take this opportunity to answer those questions because the public cannot ask them of you—there is no opportunity, and there is no opportunity for select committee submissions. This is your moment, Minister, to stand and tell the people of New Zealand what you intend to do with the revenue that is raised—that it is not just a revenue grab but that it is going to be used to help New Zealanders give up a habit that is leading to their disease or death. That is a very serious issue.

We have made good progress over many years, right back to the first legislation in 1989, when Helen Clark passed the very first tobacco control legislation. I have to say, that you, Minister, are one of the first who have actually supported it, putting aside Tariana Turia. National opposed every tobacco measure until Tariana became the Minister of Health. When I was Minister, she was my Associate Minister, and she was pushing it then. So this is the opportunity for this Minister to stand out as a Minister interested in tobacco control.

I am proud to rise on behalf of New Zealand First and take this short call in the Committee of the whole House on the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. New Zealand First recognises that smoking is harmful. We do not encourage, nor do we support, smoking. What we do support is for members of the public to have access to programmes that inform the public of the health risks associated with smoking. We have seen, over the years, on cigarette packaging the graphic details and warnings. In fact, there are about 14 of those graphic warnings that have come on to the cigarette packets.

There is overwhelming evidence to support the notion that what stops people from smoking is the right information, the correct education, and the time and support of not only their family but also members of the community. In Invercargill we have a great programme that helps smokers who choose to quit, and we have a really good wraparound service throughout the agencies that, in fact, does help those who really do want to quit, quit—not for financial reasons, but for the reason that it does not look quite so good in their family and on account of the pressures that are being put on parents.

This tobacco tax is the most efficient way that this Government can gather revenue, and that revenue is coming from a legal activity that targets law-abiding citizens, and I question, along with other members in this Committee today, where the $425 million would go to. New Zealand First wants assurances from the Minister of Health that the $425 million revenue grab will, in fact, go towards what New Zealand people need, and that is smoking cessation programmes. What we do not want to see—and I think the Minister stood up earlier and directly avoided the request from this side of the Chamber for assurances about this. We wanted the assurance that the money that is gained—the $425 million—would, in fact, go back into these programmes, and not go back into the coffers to prop up a failing population-based funding formula in this country.

We here in the Committee should remember that there are many harmful things out there in our communities, like vehicle exhaust emissions; food that leads to obesity, diabetes, and tooth decay; and alcohol, which in my opinion leads to instant deaths on our roads, and that is a damn tragedy. Alcohol is more dangerous than cigarettes because alcohol has far more social harm associated with it, and we know this. The question is why alcohol has not been factored into the equation and taxed like cigarettes have been. We see daily on the TV that we have alcohol rehab advertising saying: “If alcohol affects your life, please come to us.” I would like to see alcohol not simply being looked over as being a problem to our society. In fact, it does weigh heavily within our health system.

It is high time that this Government gets a grip, because smoking is legal. It is a darn well legal activity. All tobacco products are legal, yet, time after time, smokers in New Zealand continue to be heavily penalised for the freedom to choose whether they want to smoke or not. This is a ruthless tax target that targets the activity of a large number of New Zealanders who are already on minimum wages and low incomes. This is a ruthless tax on our poor.

Smokers should not be classed as second-class citizens, and we have seen how this has occurred. There is no smoking in pubs any more, there is no smoking in public any more, and, in fact, we have just heard that there had been a proposed ban for smoking in vehicles that you own as a New Zealander. Smokers are forced to hide behind the back of buildings, like they are some kind of dirty, second-class citizens. We need to remember that these are law-abiding people who choose to smoke and self-fund their addiction. That addiction is nicotine. We have also heard in the House in the first and second readings’ calls that smokers fund their health issues by three and a half times the health cost to that individual.

This tobacco tax will have unintended consequences like smash-and-grabs from our dairies, black market tobacco sales, grow-your-own-at-home tobacco incentives, and making people choose between a bottle of milk or a packet of cigarettes. The actual price of this tobacco tax will be the price on our community’s safety and our health and our well-being. When I looked at this bill I thought about how this would affect my area, Invercargill, and I thought about deprivation. I want to inform the Committee how this tax would affect my area in Invercargill—18.2 percent of Invercargill’s population over the age of 15 smokes, compared with a national level of only 13.7 percent.

I am keen to talk about the Pacific aspect of this bill, with specific reference to new section 79AD, which will be inserted into the primary legislation. It gives effect to the 10 percent increase in excise that will be collected on tobacco and, in the years subsequent to that, the 10 percent increase each year over a period of 4 years, which will then provide to the Government, we hear, somewhere in the region of $425 million in revenue.

There has been a bit of discussion already in the Committee about the purpose and the use of that revenue, but I want to talk specifically about the collection of $42.5 million that will come directly out of the pockets of Pacific smokers—people from the Pacific who smoke. What should happen to that money?

In 2004 the Quit Group, which does such things as manage Quitline, did a study into smoking amongst Pacific people. It is not a new study, but one of the interesting facts that it found was that in the preceding decade one of the things that caused it to look at the rates of smoking amongst Pacific people was that it was becoming increasingly socially acceptable for Pacific women to smoke. Whereas smoking had been culturally unacceptable in the past, it was becoming more acceptable socially for Pacific women to smoke, and, in particular, for young Pacific women. Whether that is the influence of being a New Zealand - born Pacific person, the study does not extrapolate. However, what it was saying very clearly was that the rates for Pacific young women were going up.

As far as I can tell from the information that it provided, it would be good to have some or most of that $42.5 million that we will collect from Pacific smokers directed into the cause of ensuring that young Pacific women are educated about smoking and have some really good information so that they can make choices for their own health. Public health information works—we know it works—but it takes time and we need to start as soon as we can on that.

This bill is going through the House under urgency, so we will not have the opportunity at the select committee to hear submissions. This morning when I was at the Child Poverty Action Group post-Budget breakfast, I took the opportunity to speak to a few people whom I met there. One woman in particular, who works with children with asthma and respiratory conditions, said to me when I asked her about her view on this legislation that, yes, if she had been given the opportunity to submit, she certainly would have. She would have been in favour of the measures that the Government is taking on board.

However—and it is a big “however”—she asked what is happening with our plain packaging legislation. The effectiveness of these measures is enhanced immeasurably when you take a suite of approaches and when you look at the various other tools. She knows that we have the legislation sitting on the Order Paper just awaiting the work programme of the Government to actually pass it. We know the impact that it is having in Australia. The Health Committee actually met with some members of the Australian health select committee, and we have heard from them directly that it is making an impact. So I am urging this Government to get that piece of legislation pushed up the Order Paper, because it will make a difference.

The other thing that this young woman said to me was that she is also influenced by the work that is being done currently on smoking in cars. That will have a direct impact on children and babies in cars who are inhaling second-hand smoke. My colleague Louisa Wall made the important point about influencing adults to influence their children. I do just want to reiterate that here is one measure that we can take very quickly. It will take some time to bed in, but it is an important factor and we need to ensure that we do that.

This bill is a good step, but it does not go far enough. I do commend Minister Lotu-Iiga on taking this measure. I wish he was bolder for Pacific people and Pacific smokers, but we do commend the bill to the Committee.

It is an honour to take a call in this, the Committee stage. I want to take a quick call and answer some of the questions that have been put to me as the Minister responsible for this piece of legislation.

Many across the Chamber have talked about giving a cast-iron guarantee around public health spending, and yet everyone in this Committee knows that the taxation from this bill, the tax that is derived from increasing tax on tobacco, is going into the consolidated account. Everyone also knows that this Government is increasing health spending by $2.2 billion over the next 4 years, and we know that it is going towards more elective surgeries because we have heard questions in the House almost day after day around elective surgeries. And when we put it into elective surgeries—that is $96 million worth of elective surgeries over 4 years—

💬 Hon Annette King: Over 4 years.

Yes, over 4 years. Yes, she is on to it. It includes $169 million for disability support services, which I am responsible for, and I am quite proud of the fact that we are increasing that. It is going towards increased spending on Pharmac. We know that the people of New Zealand asked for that, and that is what Minister Coleman and the Prime Minister have put more money into—as a Cabinet and a Government we are putting more money into Pharmac. So we know that that money is being well spent in the next few years, catering for the needs, the expectations, and the aspirations of all New Zealanders. That is the end of the matter.

I was also asked about whether this tax is going to have any impact. In fact, some across this Chamber have suggested, despite the evidence that has been produced by experts not just here in New Zealand but around the world, that it will not have any impact. I suggest to members that they read some of the documents on the Table. The regulatory impact statement refers to the increase being expected to result in a 2.3 percent decrease in smoking rates—that is, from 15 percent to 12.7 percent in the daily smoking rates over the next 4 years. That is not just the effect of the taxation. It is also the effect of all the smoking cessation programmes, including the face-to-face programmes, Quitline, nicotine replacement therapy—all those types of interventions that make a difference in the lives of people who smoke. So we are getting a 2.3 percent decrease just from this taxation alone in the next 4 years. I have also been asked about the effect on the Consumers Price Index.

💬 Fletcher Tabuteau: Have you?

Yes. I think Mr Clark asked about that about an hour and a half ago. I think those members misunderstand how this piece of legislation works, because what is actually happening is that the price increases are excluded from the social assistance programmes. That is what is in the bill. I suggest to members that they read the bill. My first reading speech talked about the statutes that are being amended by this bill, so I suggest that they read those provisions.

I have also been asked about standardised packaging. I am getting away from the tax aspect of this bill, because although we are focused on increasing tax, we know that tax is not the only measure and that standardised packaging legislation is on target. It is in the House. It has been before the select committee, and it is progressing in a way that—[Interruption] We know that it will go through the House this year. The Prime Minister has gone out and said it. I have said it. It is progressing through the House.

I just want to say that I do thank the members opposite. We have had a rigorous debate in this Chamber. I think most parties in here will agree that this increase in taxation, at 10 percent for 4 years, is going to make a difference to New Zealanders’ lives.

I rise on behalf of New Zealand First to take a call in the Committee of the whole House on this piece of legislation that we are going through under urgency. That would be my first question to the Minister: why are we sitting in the Chamber under urgency debating a bill that is coming in on 1 January? We have got 6 months in which we could actually have a select committee stage and hear from submitters, and, anecdotally, we have heard evidence that two-thirds of the country thinks that this is nothing more than a kick in the guts. It is a “get stuffed”, do-nothing, “stuff it” approach whereby we are going to force people into giving up smoking.

There is no evidence that suggests that that is actually going to take place by increasing the tax by 10 percent per annum. In fact, it is more than 10 percent per annum—it is actually 10 percent plus the Consumers Price Index. So, Minister Lotu-Iiga, can you please answer the question for the people back home and those millions of people who are interested: why are we in urgency discussing this today when we have got 6 months in which we could actually run through a due process and hear submitters speak to the bill?

I have a second question for you, Minister. I have got some sort of clarification requirement when it comes to understanding, or trying to understand, the Order in Council provision that you have got. New section 79(3B)(a), in clause 4, says that it requires “every new rate of excise duty or excise-equivalent duty that the Order in Council imposes on a tobacco product is to be calculated by adding 10% of the existing rate …”. My understanding of that would be that by Order in Council, you—the Minister—can make a decision to actually increase that excise at a later stage. Can you please clarify that for us? There is certainly some ambiguity in relation to that.

There have been very few times in the House over the last 18 months when I could actually agree with the ideology, if you like, and theory of David Seymour. But I have to say that he is making sense in saying, along with New Zealand First, that this bill really is looking–

💬 Dr David Clark: Don’t go too far.

—I am pushing it, I know; I am pushing the barrow right out here—like it is potentially going to increase the number of robberies and aggravated robberies by people who are in a very impoverished position as they try to support their habit. That is going to cause some serious concern.

If the Government thinks that raising a tax on cigarettes is the answer and will stop people from smoking, then, like my colleague Fletcher Tabuteau has already said, why is it not doing that with other things that are causing harm in society: fats in foods, sugars, alcohol, and all these other things? This is nothing more than revenue collecting by this Government. It is trying to balance the books as we go into the 2017 general election so it can actually hand out a lolly scramble of tax cuts next year and say: “This is what we are here to achieve.”

I have to say that if the ideology behind that increase in tax—that huge gouge into the working-class New Zealander and the middle-class New Zealander—is going to benefit them, then surely we have to, as a Government, look at what it would do in reverse. If you are talking about taxing things that are bad for us, what about taking tax off things that are good for us? What about taking GST—at 15 percent—off food? The actual cost of living has gone through the roof in this society because vulnerable people, poor people, and everyday New Zealanders are being taxed to live. If we are taxing cigarettes by 10 percent, surely we should be taking GST of 15 percent off food. That would balance out the Government’s argument of why it is actually putting a tax on in the first place. How it cannot look at that is beyond us.

New Zealand First has been advocating for that for some time now, and every time we suggest it we hear the Government’s rhetoric: “We can’t afford to take it off. How are we going to afford it?”. I say to this Government: how can you afford not to take GST off food—15 percent—when you can sit here plain-faced in this Committee and say: “We are going tax smokers 10 percent, because it is good for our health and the well-being of the future of our Government.”?

💬 Hon Maggie Barry: That’s the logic you have when your leader’s a smoker.

Maggie Barry, you are not making any sense. I would just zip it right here.

💬 Hon Members: Oh!

She does not, often.

I have to say we will not be supporting this bill. This is nothing more than revenue collection of $425 million by this Government, and it is not taking GST off food to balance out this ridiculous equation that is going to do more good than harm. Thank you.

It would have been good if Clayton Mitchell had actually come to the Finance and Expenditure Committee when we were debating this, then he may have understood that the evidence says that this is actually a good thing in terms of stopping people smoking. In a way, we did hear submissions on this in the Budget Policy Statement. We had about 20 submissions submitted. They were of a very high quality, and a lot of them were academic submissions, so they were very worthwhile.

I just have a very quick question for Minister Lotu-Iiga, and that is this: if we are taking an evidence-based approach to this, did he actually look at any evidence at all that suggested the tax increase should not be 10 percent but should be 20 percent, as recommended by a number of the researchers? In fact, there are a whole lot of credible national and international studies that said 10 percent is just not enough; it has got to be 20 percent. A number of other studies actually said you should do a one-off hit of about 40 percent. These are not the people who are subjective; this is very objective research. So my question is whether the Minister looked at bringing in an excise duty that was higher than the 10 percent in this bill. Thank you very much.