Tabuteau Fletcher: Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill — First Reading Second Reading In Committee Third ReadingText is subject to correctionTabuteau Fletcher: Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill — First Reading Second Reading In Committee Third Reading[Sitting date: 26 May 2016. Volume:714;Page:11439. Text is subject to correction.]FLETCHER TABUTEAU (NZ First): I just want to take a minute to reply to some of the Associate Minister of Health the Hon Peseta Sam Lotu-Iiga’s statements because they bear mentioning again. In justifying this tax which I think everyone in the House agrees is a tax on the poor he listed a litany of underfunding in our public health system. He told us where this money would be used to plug gaps. He told us that this Government has not allocated enough in this Budget to keep up with immigration flows and that the Government has not allocated enough to keep up with inflation. So there is still this huge gap in the provision of health to New Zealanders. He got up and proudly told the House that the $425 million of extra revenue from New Zealand’s poorest will be used to plug the gaps in New Zealand’s health system. That is just completely unacceptable.He spoke of reducing harm—he spoke of reducing harm. I have to agree that the intent of the bill is to reduce harm from smoking—I could not agree more; that is what we need to achieve—but as I said in the first reading this 10 percent tax rate will not achieve that.Why will it not achieve that? It is exactly the rate that will put revenue up for the Government—$425 million—but it is exactly the rate that will see no substantive response from those addicted to smoking. So they will not react to it. How do I know that? We had people come to speak to the Finance and Expenditure Committee which I had the pleasure of sitting on a few months ago. What the anti-smoking lobbyists told the committee was that a tax of 10 percent would not actually achieve anything. It would not make substantive or effective changes to get people to actually stop due to the supposed financial pressures. What they actually told the committee was “what you need right now is 40 percent to 50 percent increases and then 20 percent increases from there on out.” In fact not only did they put forward these higher numbers but they said to the committee and to this Government that a 10 percent rate will not achieve what is hoped for in this bill and more than 10 percent was needed.If the Government believed the health professionals that a tax would lead to a decrease in smoking why did it not accept the numbers that the professionals and experts put forward? This tax will take $425 million out of the pockets of the poorest those addicted and those who are most struggling; it will take it out of the Māori community and the Pasifika community: the poor disproportionately more than any other group. And it will not make a difference to smoking rates which is the justification for this tax.Also noted was that the tax affects the poor at a far higher rate—more than any other group. Consider now that we have a system where internalising the cost of smoking—and what I mean by that is putting the tax on smokes and making those who suffer from an addiction pay for their addiction—actually covers far in excess of the cost that the health system needs to service the health problems of smokers. We have more than recouped the negative externalities to society here. That is it is suggested that smokers pay more than three times the cost of the burden they are to society.I acknowledged at the start of this debate that in the past these tobacco excise taxes made a difference to consumption. But I put it to the House yet again that they will not achieve their stated objective and that the Government has gone too far today. This tax will not stop smoking and I put it to the Government that it is just arrogance it is just apathy and it is just indifference. The Government has been told that this bill will hurt the poor more than any other group in society—but that is fine because the Minister says it will be used to plug gaps in the health system.Reducing the occurrence of smoking is vital—there is no debate; New Zealand First agrees. Let us lower the occurrence of smoking let us help people stop. But let us realise the reality of this: Treasury itself has said that tobacco taxes were very efficient for raising revenue because the addictive nature of nicotine meant that smokers were not highly sensitive to price increases. Did they hear that? The people who they presume are going to stop smoking because of price increases will not. Treasury has told them this before. They are addicted to this substance—they will not stop smoking and they are not sensitive to these increases. I put it to the House that this is actually just a cynical move that will achieve nothing except the further crushing pressure that those addicted to smoking already experience now. The poor will continue to smoke at the expense of other essentials. Families and children will miss out in order to feed an addiction.Consider further that Massey University tax expert Dr Deborah Russell said reducing smoking “was an excellent public health goal”—I could not agree more. But it could have unintended consequences. She went on to say: “Higher prices could create a black market in tobacco. This could undermine any public health benefits”. What we have to realise then—and this is quite recent—if we look at reports just from across the Ditch there we see a huge upswing in Australian organised crime in response to the same strategies used by the Australian Government in supposedly suppressing the occurrence of smoking by individuals within their own society. They see it as the same problem as we do. But what we see from our neighbours is that actually this will achieve nothing and in fact will exacerbate a problem outside smoking in and of itself—it will lead to a black market. We have seen examples from Australia around organised crime and that is without a doubt what will happen in New Zealand—without a doubt—if cigarettes go up into this price range.The other irony of this Government policy—and we saw it in some of the interviews last night and this morning—is that the implementation of this higher and higher tax rate feeds the move for individuals to grow their own tobacco; it makes sense for them. They cannot sell it but they will grow it themselves. What is the irony in this situation? The irony in this situation is that by increasing tax rates on smoking the tax take will actually decrease because you are incentivising people to grow their own and bypass the legitimate market. Where is the tax take going to come from to help the people who need our health system? It will not be from smokers because they will be growing their own and bypassing that system entirely. The incidence of criminal activity will rise.Let us help people to quit smoking but this is not and I repeat this is absolutely not the way to do it. Thank you.