Hague Kevin: Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill — Second Reading 
Text is incorporated into the Bound Volume 
Hague Kevin: Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill — Second Reading 
[Sitting date: 25 September 2012. Volume:684;Page:5592. Text is incorporated into the Bound Volume.] 
KEVIN HAGUE (Green) 
: 
 I want to begin by expressing my thanks to all of those who made submissions on this bill the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill to the officials who serviced the Finance and Expenditure Committee and to the committee members themselves including the chairperson of the committee Todd McClay who has just recently spoken in this debate. Congratulations to Todd McClay on his successful attempts at quitting smoking. On average it takes someone seven attempts to quit and on average the odds of quitting are doubled in any particular attempt by using nicotine replacement therapy or some other method as Todd McClay has discussed. 
None the less I want to express some frustration that despite a request from the Health Committee this bill was considered by the Finance and Expenditure Committee. The reality is that this is or ought to have been as Maryan Street has just mentioned a bill primarily about health. Indeed virtually all of the submissions that were received by the Finance and Expenditure Committee were about health. I believe that the Health Committee may have been better positioned to provide an expert scrutiny of the submissions that were received. Had that occurred it may be that the committee would have come back to this House with a bolder recommendation about this bill. 
In the  
New Zealand Medical Journal 
 just a few days ago on 21 September Nick Wilson and George Thomson from the University of Otago Faculty of Medicine published a letter entitled “What is tobacco tax for—revenue or health?”. I think some of Maryan Street’s comments go to that point. I want to particularly draw out one passage from their letter in which they say this: “We suggest that Parliament makes it explicit in the tobacco tax legislation that: The primary purpose of the current Bill is to reduce smoking so as to prevent harm to health and to prevent premature death rather than to increase Government revenue. The Bill is a key part of the Government plans for achieving a smokefree nation in 2025.” Chester Borrows has referred to that goal in his contribution to this debate today. The reason that that is important is that the option considered first by the agencies of Treasury the Ministry of Health and the Customs Service which has been selected for this bill and has been recommended by the select committee is in fact the option that has the least effect on improving New Zealanders’ health so it is in fact least congruent with a purpose that is about health rather than revenue gathering. 
We know that these 10 percent increases recommended in the bill will not be enough to get us to that smoke-free goal in 2025. We know also that the tobacco industry has ways of manipulating its margins to enable it to cope with and accommodate such small increases to excise tax. Chester Borrows referred to that smoke-free goal as a stretch goal target and indeed as other speakers have mentioned it will be a difficult target for the nation to reach. Given the comments that I made in the first reading debate which others have picked up on in this debate today that smoking is the largest preventable cause of death in New Zealand and increasing the price of tobacco and tobacco products is the single most effective measure of actually reducing the consumption of tobacco and tobacco products it seems to me that it is woefully inadequate to choose the least effective measure. In doing so the Government is planning to fail to meet that target that it has set. 
 By way of contrast virtually all of the submitters—who as I say were from the health sector by and large—recommended instead that we in the first year increase excise tax by 40 percent because they said that is the way of achieving the kind of shock change of behaviour rather than that gradual acclimatisation that smokers will tend to have to these progressive smaller increases. They also suggested that that 40 percent increase should be followed up by subsequent annual 20 percent increases. That is the option recommended by the experts from the health sector and that is the option that the Green Party supported. So why was a more aggressive option rejected? That one was not even considered by the agencies but they did consider a one-off 30 percent increase and subsequent smaller increases. 
The implication of the letter from Messrs Thomson and Wilson in the  
New Zealand Medical Journal 
 is that it may have been rejected because it would adversely affect the revenue because if we reduce the consumption of tobacco and tobacco products actually the revenue stream will in fact decrease. I guess there is some evidence for that in that when the agencies considered the options to recommend to us—and those options are included in the regulatory impact statement—the option that is included in the bill and recommended by the select committee was the one favoured by Treasury. The much more aggressive one considered by the bill is the one that was favoured by the Ministry of Health. So in our questioning of officials in the Finance and Expenditure Committee’s deliberations I asked why that more aggressive approach was rejected. What the Treasury officials came back to me with was the suggestion which Chester Borrows has alluded to in his comments here today that it was rejected because Treasury was concerned about the impact on those low-income New Zealanders who did not quit or reduce their consumption of tobacco or tobacco products. There was absolutely no modelling done of that at all despite the fact that it is actually a relatively easy scenario to model. That causes me to question that scenario just a little. 
So I put that suggestion to all of the submitters from the health sector who deal with those low-income communities. What those submitters said without exception was that they did accept that there would be a disproportionate impost on those communities and they expected that the Government would respond to that by using some of the revenue that came in through these more aggressive taxes to fund better services to support people who wished to quit or to reduce their consumption. But they also said that they still favoured the most aggressive tax increases possible and they did so for one reason and one reason only: in addition to disproportionate costs falling on that community there would also be disproportionate benefits in the savings from reduced tobacco consumption but most important disproportionate benefits to the health status and the years of quality life gained by those communities. 
So overall it is a shame that the Government has chosen to go with the modest 10 percent increases. The bill also refers to the duty-free concessions. Those duty-free concessions are at best an anachronism and the sooner they go altogether the better. I support the select committee’s recommendations about that. I want to again endorse the thanks and the congratulations that this House has previously accorded to the Hon Tariana Turia who ought to take a considerable degree of credit for this measure and for the ongoing efforts of this House to deal with the scourge of tobacco-related harm. Thank you.