Clark David: Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill — Second Reading 
Text is incorporated into the Bound Volume 
Clark David: Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill — Second Reading 
[Sitting date: 25 September 2012. Volume:684;Page:5596. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 I rise to take a call in support of this bill the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill and I hope I can certainly meet and possibly exceed the high standard of debate just forwarded by Mr Hayes in his— 
Hon Member 
: Short. 
Dr DAVID CLARK 
: —short succinct and worthy contribution. I enjoyed the irony in his comments on politicising. You know usually those who like to throw stones in that glass house know how they are thrown. Indeed Todd McClay in his earlier contribution rued that politics had entered the debate after the Finance and Expenditure Committee had worked so well and collaboratively. I certainly always admire Mr McClay’s ability to insist on the absence of politics in debate when the politics does not suit him. He is nothing if not consistent. 
The debate of course in the select committee was a good one. We heard many submissions from many organisations that had important things to say that had experiences to share and that indeed had much research behind their submissions. We discussed topics such as the unintended consequences of this rise in the excise—the 10 percent increases year by year from 1 January 2013 and then 2014 2015 and 2016—and we wondered what might happen. Overseas evidence was considered and a view was presented that home-grown tobacco would be more popular as a consequence. I am assured by those who know more about this than I that flavour will not be leading that move. The quality of home-grown tobacco apparently is not perhaps up to what can be purchased in the shops but indeed some people will endeavour to produce their own as they struggle to meet the costs of rising tobacco prices. We also discussed the introduction of amendments to the duty-free treatment of tobacco and it is regrettable that the Government has not done something to tackle that. It appears that it could be open to accusations of having one rule for those who cannot afford international travel and a different rule for those who can. 
We can see the Government’s priorities indeed in getting this through. It is not entirely comfortable with the legislation one suspects although it will raise an additional $528 million over the next 4 years. One suspects that it is perhaps along the lines of the other tax grabs we saw in the Budget—a bit of a cynical measure aimed at those whom it has done the least to support during its time in this Government. The increases will be made in combination with the CPI indexation of the duties that occur annually on 1 January. We know that this will have a significant effect on the final cost. Treasury in its analysis in the regulatory impact statement that it has presented to the House has said that tobacco consumption imposes a significant cost on Government. We know that to be the case. But it also makes the point that these costs—these negative externalities—are largely met by the existing excise so further increases in tobacco excise cannot be justified on the grounds of meeting all the health costs that arise from the smoking of tobacco. In Treasury’s words: “smokers are probably already ‘paying their way’ in narrowly fiscal terms.” But that is where Treasury’s analysis stops. It is disappointing because then Treasury goes on to say that it may also reduce labour productivity and it may have other impacts that are internalised—it speculates “through effective wage rates in the functioning of the labour market.”—but it has not taken the time or it does not have the time it says to research those impacts fully. 
 This is a pattern we are seeing out of the Public Service at the moment as various parts of it are squashed and where morale is low because of a Government that is choosing to bring in consultants rather than to value the contributions of Public Service policy analysts. We saw a similar pattern with my bill to Mondayise Anzac Day and Waitangi Day the Holidays (Full Recognition of Waitangi Day and ANZAC Day) Amendment Bill. The effect on productivity of policy changes is not being assessed because it is hard work. Those policy analysts who have it on their agenda simply cannot afford the time or are not encouraged to do it by the current Government. That must be disappointing as we seek to have the best possible advice when making these decisions that affect a significant portion of our population. We are told that one in five New Zealanders is a smoker today so 20 percent of our adult population is affected by this legislation entirely and directly. 
Smoking remains the single biggest cause of preventable morbidity and mortality in New Zealand so there is no doubt we need to tackle this. That is why Labour will support it. Labour indeed took measures under extraordinary urgency to increase the excise on tobacco back in the early 2000s. We see here a move by this Government to increase it in a series of steps but all put through in one swift move. I guess it is probably a little distasteful to the Government if we turn our minds back to the comments of Bill English in 2000. He had this to say. He said that “The reason we voted against this measure”—as the Government then did—“was that the Government did not ever say that it would do it and that is the measure it set—not us. The Government did not say before the election that it would do it—that is the Government’s standards not ours. It is a tax increase. It is a tax on the poorest people in New Zealand it is an increase that is far too large and that is why we voted against it.” Well how times have changed. We have a Government that is suffering from a low tax take. We have seen a 4 percent drop since the global financial crisis in revenues. The tax department says that 1.5 percent of that can be attributed to the global financial crisis roughly in line with what other countries have expected and experienced but that 2.5 percent of that drop in revenue can be attributed directly to Government policy changes. 
Here we are talking about measures that the Government described as “broadly fiscally neutral”. We are going back to those 2010 tax cuts where we know that 44 percent of the value of those tax cuts went to the top 10 percent of earners and just 2 percent of the value of those 2010 tax cuts went to the bottom 20 percent of earners. Those are the people I suggest who are disproportionately affected again by this excise tax. It is a Government that says one thing and then does another. It votes against this kind of legislation in one term under one Government and then brings it through in its own Government when really by expediency it is faced with a revenue hole that needs to be filled. So this Government has put up this tax and done it in a way that has not really been signalled. It has done it to paper over the big hole in the books that is created by that tax so-called switch. We know that the majority of the benefits for the lower-income earners—in fact all of them—were swallowed up very quickly in GST and then beyond that with rising living costs we know that the median wage recently dropped by 3 percent. 
This is a Government that is overseeing the worst economic record of any Government in 50 years. I am sure Mr Bennett will rise soon to dispute these facts or to defend the approach it is taking or to tell us that it is a long-term strategy that is broadly fiscally neutral—if you interpret “broadly” in the sense of “over the next 100 years”—or some other excuse. What we are seeing here is a Government that has lost the revenue that it was expecting and is grabbing for some more revenue. 
Ultimately we do support—we do support—measures that will stop people smoking over time and that discourage smoking. They are the same kinds of measures that it would be interesting to see employed in the alcohol space. We know that alcohol-related harm could be reduced by pulling the big levers of marketing and price. These are the recommendations of the Law Commission. Again the Government has said that it will not go near them this time. I guess we wait another 10 years to see whether it will back out of that view as well and come around and come to terms with the fact that there are ways to change behaviour. This measure is a measure that the Government is taking. We will support it because we believe that it is important to address this single biggest cause of morbidity and mortality in New Zealand. Thank you.