Customs and Excise (Tobacco Products) Amendment Bill

I am pleased to come to the third reading of the Customs and Excise (Tobacco Products)—

💬 DEPUTY SPEAKER: The Minister needs to move the motion.

Sorry, Mr Speaker; my bad. I move, That the Customs and Excise (Tobacco Products) Amendment Bill be now read a third time.

As I said, I am pleased to come to the third reading of the Customs and Excise (Tobacco Products) Amendment Bill. As I’ve said before, this short bill will both protect Crown revenue and help protect New Zealanders’ health. I am therefore both happy and relieved to see it come to its final reading. The bill is a straightforward and pragmatic response to suspected non-compliance and a technical change in an international tool of trade. Both affect tobacco, and this bill, therefore, helps protect the nation’s health and the Crown revenue needed to fund Government services.

As a final re-cap, the bill achieves these objectives in the following ways. It sets a new rate for water-pipe tobacco based on the total weight of the tobacco. This will overcome the current problem where some importers are thought to be under-declaring the tobacco content of their water-pipe tobacco in order to pay less duty. I can’t tell you the extent of this practice, as it is not technically feasible for Customs to verify the tobacco content of water-pipe tobacco. That has enforcement implications. This bill will fix the situation by charging excise on water-pipe tobacco at $234.77 per kilogram of total weight. For good measure, the bill will also prohibit the importation of water-pipe tobacco without a permit. This will help Customs monitor imports and discourage any other forms of non-compliance. This regime already applies to most other tobacco.

The international Harmonized Commodity Description and Coding System, which provides numerical descriptors for all types of goods is periodically reviewed. In the last review, a new tariff and excise heading was created for some tobacco products. This has changed some of the descriptors cited in the Customs and Excise Act 2018. This bill updates those so that all tobacco excise will continue to be adjusted annually to reflect inflation.

Throughout the passage of this bill, I have talked about possible non-compliance. Some importers are under-declaring the tobacco content of water-pipe tobacco so as to pay less duty than they should. When some practices are identified, it is appropriate for me to take action to protect the fairness and integrity of the tax system by taking legislation such as this through the House. But non-compliance is the exception. I want to take this opportunity to publicly recognise that the overwhelming majority of traders are law abiding. I am proud that by closing off avenues for non-compliance, tax evasion, I and this bill are giving honest traders a level playing field. I therefore commend this bill, at its final reading, to the House.

The question is that the motion be agreed to.

Tēnā koe, Mr Speaker. Look, thank you, National will be supporting this bill through its progress here at the third reading, and while this is a customs and excise bill, I just want to focus for a moment that the end outcome we’re looking for is, actually, a human outcome to have a deterrence to reduce smoking. That’s the end outcome we want to reach. And while this all about the excise and the customs part to that, I want to bear that in mind.

To take that a step further, looking at the regulatory impact statement, they make notes that when they’ve been out to stakeholders, they’re unable to determine the material implications for Māori, children, seniors, disabled people, women, gender diverse, Pacific peoples, veterans, and rural communities, but they don’t believe it’s significant. I was looking at some data from Australia, and certainly, the use of tobacco water pipes is quite small and infrequent—well less than 1 percent, as I recall.

There is also commentary, as I mentioned in my first reading speech, that I saw mostly through the Middle East, and that some of the Middle Eastern communities here in New Zealand may be affected by this. The reflection from officials is that this is a niche product and one which is unlikely to have a large impact on that community. So I’m reassured by that.

I just want to briefly come to and conclude on the health impact, because for a while, there was some thinking that tobacco water-pipe smoking might be safer because, as the tobacco comes through the water, it’s almost been purified or reduced in some way. That’s actually not correct. It turns out that a number of studies have shown that for people who use water-pipe tobacco frequently, they have levels of nicotine in their urine, generally equivalent to smoking 10 cigarettes a day, and that every one session of using water-pipe tobacco is equivalent to, actually, smoking two cigarettes.

So I just wanted to bring the discussion back to the purpose: we’re actually doing this so we can offer some protection for people who might be bound by tobacco and offer some hope and a sense that we can help them change this behaviour. We commend this bill to the House.

E te Māngai, tēnā koe. Tēnā koutou e te Whare. If I may take the opportunity at this third reading to do, as the good Dr Shane Reti just did, in kind of contextualising this Customs and Excise (Tobacco Products) Amendment Bill and the broader framework of how it is that we approach substances that can cause harm. Just referencing those contributions, and I want to thank the Minister for the back and forth in the committee of the whole House just before, and her officials as well, especially for coming back to me overnight with a number of responses to some questions on what this would look like in practice.

Fundamentally, this bill is, for the Greens, and the reason that we support it, just about ensuring that we have a system that is applied simplistically across all tobacco products, hopefully to address those concerns as raised by the ACT Party and also by the National Party around why this is happening now. Otherwise, it seems pretty straightforward to me as to why this is necessary.

But that, of course, is not to detract from the core point that I was making during the committee of the whole House. That is, of course, that, again, if we are to recognise that substances like alcohol or tobacco or cannabis or whatever else can cause harm, the question then becomes, how do we create a regulatory and tax environment in order to reduce that harm? And what does the evidence say about how we go about doing that, without necessarily imposing our ethics or our morals or our ideology beyond the points of those purported intentions becoming effective?

That was the point that I was making in the first reading as well, around the notion of syntax, which is that we sometimes risk, in levying things like these excises, going beyond the point of efficacy and drifting far too much into a space that is in practice like prohibition, that drives the likes of the black market, where you have no regulation because there is nobody who is checking ID. There is no quality control and there is, in the case of substances like cannabis, next to no education for consumers or ability to intervene in problematic usage.

So when we were talking about the kind of range of different approaches that we can take in that regulatory and that tax environment, such as is outlined in this bill, you have, on the one side of things, a kind of complete prohibition where you have a clamping down and, obviously, criminal penalties associated to the sale and supply of the substance. That doesn’t get rid of the substance in most instances. As I alluded to before, it can end up meaning that we have far more harmful substances and versions of them that are cooked up in people’s kitchens or in their garages or otherwise.

On the other side of the spectrum, you have a complete free market, which is, effectively, without regulation. And, obviously, 20 or 30 - odd years ago we were far closer to that, when it comes to tobacco, with the likes of the ability to advertise at sports games and otherwise. At both ends of that spectrum, at the end of prohibition or criminal prohibition and at the end of a complete free market, with that lack of regulation around how those who are seeking to sell the substance can access consumers, you have what the Greens would argue, and, actually, what the international evidence and the Global Commission on Drug Policy says, which is that you have the maximisation of harm. That is, you have entities, whether they be organised crime or whether they be those who are large commercial entities, who are seeking to make a quick buck by exploiting vulnerable communities to sell as much of this product as possible.

Now, again, to boil it down to what this bill actually does in practice, it is about simplifying the excise that is levied on water-pipe tobacco. That is about making sure that this is applied universally across all different types of tobacco that are coming through Customs. And I acknowledge that the Minister’s role is solely within that realm of Customs. But, none the less, I ask all of those in the Chamber who are contributing today, particularly my colleagues in the ACT Party, who were not particularly keen to come out throughout the cannabis referendum campaign in 2020 and to stake their colours to the mast, to say that there is an opportunity for ideological consistency here. There is an opportunity for us to acknowledge that all substances can cause harm and that we can regulate them and that we can tax them in such a way that reduces that harm.

To the point around excise on tobacco products, again, I think it is really important, as we get towards Smokefree Aotearoa 2025, that we continue to pay attention to what is effective. At what point is this syntax potentially pushing more of the supply into the unregulated black market and potentially creating more problems that we’re going to have to mop up further down the track? And I just see the first little red flag of that with that $10 million allocated to policing the black market for underground tobacco.

However, the Greens support this bill today, again, because it is about simplifying that excise system, but we’d just like members across the Chamber to reflect on that broader point. Kia ora.

Bill read a third time.