Customs and Excise (Tobacco) Amendment Bill

I move, That the Customs and Excise (Tobacco) Amendment Bill be now read a third time.

I’m pleased to come to the third reading of the Customs and Excise (Tobacco) Amendment Bill. This bill directly responds to a rapidly growing threat facing New Zealand. The smuggling and unlicensed manufacture of tobacco products is putting at risk approximately $2 billion a year of Crown revenue and the health of many New Zealanders. The excise tax on cigarettes and other tobacco products has been a key tool in reducing the number of New Zealanders who smoke and to save lives by reducing smoking rates has been a goal of all Governments over the last 10 years.

As we all know, smoking has a direct link to lung cancer, which is a hideous disease that destroys too many of our loved ones. Smoking is also a serious risk factor in a number of chronic diseases. We, as a country, can neither afford the pain it afflicts nor the economic cost.

Smuggled and illicitly manufactured tobacco evades excise tax. Not only does this reduce Crown revenue but it also affects the way that Government provides services. Further, smuggled and illicit manufactured tobacco may not meet the Government’s plain packaging requirements or carry health warnings. And all of this encourages more smoking directly, undermining our goal for Smokefree 2025.

As I set out in my first reading speech, tobacco smuggling is currently low risk and highly profitable, thus feeding and strengthening the organised criminal groups involved. I am resolved to minimise the involvement of organised crime in the New Zealand economy and society generally. This is another reason why I’m determined to see this bill passed as quickly as possible.

This bill will impose import controls and give customs streamlined processes designed to address the very particular nature of tobacco smuggling, especially through the mail. The provisions in this bill will still enable legitimate imports of tobacco in all of its forms, but it will require importers to get a permit and ban importation through the postal mail system. A permit system will allow customs to undertake due diligence on tobacco importers. Preventing import in the mail is vital to combating tobacco smuggling. Criminal groups are well aware that the mail system aids anonymity and that customs does not receive information on mail parcels prior to import as it does for other imports.

Now, I’m not expecting that smugglers will stop sending hidden and mis-described tobacco through the mail just because we introduce a permit system. That is why the bill also provides for a bespoke seizure and destruction process to apply to tobacco that will inevitably still be sent through the mail. That process will only apply to tobacco and tobacco leaf, which will reduce storage, time, and costs. This will also free up customs staffing resources to focus on protecting New Zealand from other dangerous or illegal imports like meth and other illicit drugs and offensive weapons.

But preventing smuggling and the illegal manufacture of excise tobacco is only part of the story. We need to do this while also protecting the right to trade and manufacture without incurring undue costs or barriers. This bill achieves both objectives without needing to make any free trade-offs. People will still be able to legitimately import tobacco through fast freight courier systems as bulk sea cargo. Permits will be free and the process for getting one will be simple. Existing legitimate importers will be issued their first permit automatically for the period of a year or until their manufacturing licence needs to be renewed. No one buying legitimate product will notice any change as the permit system will have no impact on the availability or the price of legitimate tobacco product. International travellers, when such travel once again becomes possible, will experience no change either. The current duty-free tobacco allowance will continue as it is.

I hope that as I’ve shepherded this bill through the House, I’ve been able to convey the absolute urgent need for new tobacco specific input controls and a new tobacco seizure and destruction process. As I mentioned in my first reading speech, with this bill having highlighted how tobacco imports are undermining the system, it is very important to take urgent and swift action so that there is limited opportunity for it to get worse, especially in relation to tobacco leaf, because even during alert levels 4 and 3, tobacco smuggling has continued.

The combination of excise and revenue evasion involved with organised crime, money-laundering, and circumventing the smoke-free controls makes urgent action necessary. Without this change, I fear that the gains New Zealand has made in battling tobacco addiction and chronic disease will be lost and organised crime will gain a profitable economic base from which they can expand their activities. I am sure that you share my determination to see that this is addressed.

I commend this bill and its final reading to the House. Thank you, Madam Speaker.

Oh, that’s jolly decent of you. This will be a very short contribution—really, it’s just to continue to put National’s, if you will, protest around process. We find it incomprehensible that we have to be rushing this through Parliament under Budget urgency. I want to stress again for the record that this bill, according to the regulatory impact statement, has, effectively, been ready since November last year, and why it needs to be rushed through now is beyond me.

I think, also, while we support the intention of the bill and we support what the Minister of Customs is saying, the big players already have effective import licences. No illegal importer is going to seek said licence, even if it’s free, and while we are also, rightly, changing the way that someone, if you will, can appeal the seizure of their illegal goods, I would put good money—see how we’re switching from smoking to gambling here—on the fact that no illegal importer is going to challenge customs for having seized their tobacco.

So, again, we support this bill, but it’s just nonsensical that the Government, in front of the greatest crisis in a hundred years, has decided a tweak to the Customs and Excise Act is necessary.

Thank you. I’m just going to take a quick call on behalf of New Zealand First. New Zealand First supports the bill. We support the bill because we actually want to support those businesses who legally sell cigarettes right now, who are being undermined, whose business is being undermined by people bringing the product into the country illegally and selling it on the black market. So this is about New Zealand First supporting legal businesses and their products and their ability to make a profit legally in this country.

I want to pick up on something that the Hon Tim Macindoe said about the fact that he took exception to Minister Salesa saying that the problem of smuggling had been increasing for a long period of time. He said that in the last year of the previous Government it had been increasing and it had continued to increase during this term of Government. I take him at his word; I’m not disputing that at all. What New Zealand First would say is that that clearly points out that the piece of legislation that the National Party introduced that required the Government to increase excise tax every year, knowing that it did not reduce the number of smokers, knowing that it hit the pockets of the poorest members of our community—knowing that it did those things, the National Government passed a piece of legislation in their term that would have required a new Government to come back and overturn those price increases.

New Zealand First feels so strongly about the fact that the increases in excise that were placed upon some of the poorest New Zealanders—that does not do what we asked it to do. That does not take the $2 billion that the Crown gets and puts it into prevention—

💬 DEPUTY SPEAKER: Yeah. Well, we’ll just come to the bill, because everyone else has—so we’ll just come to the bill.

—and we used—absolutely—our agree-to-disagree powers inside of Cabinet around those changes.

So we support this because we’re supporting legal businesses; legal businesses who have the right to sell tobacco even at the incredibly high price that the previous Government made sure that New Zealanders would have to pay.

I wasn’t going to take another call, and this one will be a very quick one, but I have to answer a couple of comments that the—

💬 DEPUTY SPEAKER: I hope it’s about the bill.

It is absolutely about the bill. She has suggested that—well, first of all she said that I mentioned the last year of our time in Government. I talked about the last few years, but there had quite clearly been a significant—I do hope the cameras are not on me at the moment, Madam Speaker!

💬 DEPUTY SPEAKER: Or me!

This is unbelievable. Good Lord, no. The member for Hutt South has just entered into the House with hair extensions and I have been completely thrown off. Is this the member for Hutt South?

I didn’t say “year”, Ms Martin; I said “years”. But it is absolutely right that the importation of illegal tobacco has increased sharply in recent years, and, yes, it can be linked to the excise increases of recent years, which almost all parties in the House have supported, except for New Zealand First. Her suggestion that that particular policy hasn’t helped drive down smoking rates in New Zealand is absolutely confronted by the evidence. Of course it has. We’re all—or, I think, almost all of us are—firmly committed to the Smokefree Aotearoa policy. We know that’s in the best interests of the health of our citizens, and increased prices through excise taxes have helped to achieve that. Yes, there have been some unfortunate consequences, including a tax on dairies and all the rest of it, and that is to be regretted, but for her to suggest that it hasn’t had that health impact is absolute nonsense, and she knows it.

Bill read a third time.