Groser Tim: Customs and Excise Amendment Bill (No 3) — Second Reading In Committee Third Reading 
Text is incorporated into the Bound Volume 
Groser Tim: Customs and Excise Amendment Bill (No 3) — Second Reading In Committee Third Reading 
[Sitting date: 02 September 2008. Volume:649;Page:18506. Text is incorporated into the Bound Volume.] 
TIM GROSER (National) 
: 
 A former member of the House who actually rose to the top of the greasy pole and became Prime Minister albeit very briefly once told me that one of the interesting things about coming into this House is that it is like entering into a giant postgraduate training institution because whether or not a member likes it one is forced to address a whole range of issues that one would never in any other occupation ever have to deal with. Although there is always a concern for any member of Parliament about being once-over-lightly the reality is that one gains over a period of years considerable knowledge. One offshoot of that is that one drills down into any technical bill and I would argue that a bill with a title the Customs and Excise Amendment Bill (No 3)—eye-glazing-over material it cannot get more technical than this—is a beautiful example of the point that was made to me a few years ago. Behind this bill there are some really important things but one has to drill right into it. I will start by making that point in respect of the whole treatment of what is actually called “chop chop” which is home-grown tobacco. To understand what the actual issue is here is I think an interesting illustration of this former member’s point.  
This issue is actually about organised crime. We start off with a health policy objective and so we have extremely high excise taxes on tobacco as you know Madam Assistant Speaker. There was a landmark World Bank study that we came across in the course of our examination of this legislation written in 1999 which from memory stated something like: “All the evidence around the world tells you that the most effective measure you can take against smoking is to raise the price.” If one raises the price by 10 percent the literature suggests there is a 4 percent reduction in usage. This country and many other countries have extraordinarily high excise taxes on cigarettes for I would argue health policy reasons. I personally do not believe that revenue is the leitmotif of this policy; I think it is a genuine effort by Governments around the world including various New Zealand Governments to deal with the shocking health implications of smoking. However as soon as one has done that one increases a massive incentive to arbitrage the difference between the low cost of manufacturing a cigarette—or producing a cigarette—and the retail price. This is one of the chief sources of finance for organised crime around the world. 
So behind this so-called incredibly technical and one might say almost boring bill are issues like organised crime. Tobacco smuggling is a huge issue. According to British authorities it is a larger source of finance for organised crime in the UK than narcotics. In Quebec 60 percent of cigarettes sold are estimated to have been smuggled. In New York there are huge State taxes on top of federal taxes and we were shown an estimate whereby one trailer truckload of contraband cigarettes taken into New York and sold through legal for the most part outlets is worth about a million dollars. It is also related to terrorism. When the federal authorities broke into the apartment of the first bombers of the World Trade Center they found a whole stack of counterfeit cigarette stamps showing that the excise had been paid. By the nature of our job as members of this House we are forced to get into issues that we would frankly never want to get into and what we find behind them are issues like this.  
Our concern was primarily gangs in New Zealand and since the question has been raised as to the personal exemption on home-grown tobacco I will just explain what I took to be the committee’s view. The difference between the overall view of the committee and the minority view is not a large issue in terms of the underlying problem. It simply is that one set of people in the select committee working to exactly the same script wanted to leave it to regulations. We in the National Party as a matter of principle do not like so much discretion being left to officials. We prefer the House to state its view. So the reason why we came up with a firm figure is an issue of principle about how law is made. We just do not like ambiguity in things that affect the lives of our citizens and we do not like changes to be made that people are not happy with and consultation with officials instead of the bill coming back to the House. That is the reason but that point of principle is not really an issue of any substantive policy difference among the members of the select committee.  
I have to say that the limit on home-grown tobacco—“chop chop” is apparently what it is called; I had never heard the term before—provoked a lot of discussion. First of all there was an enormous amount of confusion. I do not think we were terribly convinced by one of the submitters because of the conflict of interest between that submitter’s interests and our view about what matters in the community but I will not go into that. There was a huge amount of confusion over whether the measurement should be of dry or green matter and how many cigarettes one person could smoke in a day. But fundamentally we have come up with quite a high personal exemption use. It is the same as Canada’s so it is not extraordinary in any sense. The logic behind it is this. We felt strongly that we want our customs and police authorities to concentrate on real criminals. If we have a very low level of exemption the law has to be administered to some halfwit out there who has just gone a gram or two over. We did not want the good men and women who carry out such tough services on behalf of us all to be frankly wasting their time with trivial matters of this nature. So we have gone for a relatively high personal exemption precisely to allow the authorities conducting our business on our behalf to concentrate on the real problem which is organised crime.  
There is potentially an enormous amount of money to be made out of organised crime. We find as we go through the bill that there are some very tight definitions around the manufacturing and growing process. I do not have the precise clause in front of me but it is a concept that it must be grown on a property one lives in; people cannot start up some little semi-garden plot and start to farm it. It has to be manufactured in one’s own home and it has to be absolutely for one’s own personal use. There are a few issues around that. We understand that we will never have a watertight situation. In the case of somebody who rolls his or her own tobacco and gives it to a mate we could probably argue about whether that was within the law but the whole philosophy of the members of the committee was that actually this is a huge and serious problem. It is not out of control in New Zealand as it is in many other countries where it is linked literally into terrorism and massive and vicious organised crimes. There has been testimony on homicides murders and witness intimidation that we can find right throughout the literature on this subject but in New Zealand the issue is gangs and we want to be sure that we are not wasting the time of the authorities but are focusing on the real target.  
That is a first introduction to the bill. I think it is good legislation. Like the select committee chairman I think the members worked very very well together and I think we have something that is worth putting into law.