Clark David: Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill; and Bills Therefrom — Third Readings 
Text is incorporated into the Bound Volume 
Clark David: Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill; and Bills Therefrom — Third Readings 
[Sitting date: 16 October 2012. Volume:684;Page:5835. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 I rise to support this legislation arising from the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. We wholeheartedly as the Labour Party support this legislation recognising that smoking remains the single biggest cause of preventable morbidity and mortality in New Zealand. The previous speaker Todd McClay referenced the importance of being positive about this change and indeed we do support it. We think that this is the way to address smoking. It is very clear that price levers are amongst the most effective tobacco control measures. They make it harder for young people to start smoking and they make it more difficult for the tobacco industry to retain its clients in this industry which currently affects about one in five adults in New Zealand. 
It is interesting of course to note that historically the National Party although it is calling for support now opposed such measures. The previous member may not recall—there seems to be a little bit of that going around the National Party at the moment that recollection loss—but the Hon Bill English said in 2000 that the reason the National Party voted against these kinds of measures was that “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.” He said that not so very long ago in opposing such an excise tax message. Those members may have forgotten that they had a different stance. In this case we celebrate that lack of memory from the National Party. In other cases we have been a little more critical where the private details of New Zealanders are concerned but in this case it is a happy thing that National members have forgotten that they opposed this kind of increase on supposedly principled grounds. 
I am a little bit suspicious that what really is going on here is a revenue grab. It is actually a naked revenue grab. 
Todd McClay 
: It’s not in your nature to be suspicious. 
Dr DAVID CLARK 
: The chair of the Finance and Expenditure Committee tells me not to be suspicious in this regard but I am afraid his body language is not convincing and it is a little too late because we know that the Government has a significant revenue hole. This is excise legislation we are debating here in Parliament. The Government has had a revenue hole since revenues dropped by 4 percent under its watch. Its own officials say that 1.5 percent of that can be attributed to the global financial crisis roughly in line with other countries around the world but that 2.5 percent of that revenue drop is directly a response to Government policy changes. 
The 2010 tax switch that this Government put through we were assured was going to grow the economy. Actually what we have seen is the economy in real terms struggling and the only reason we have had any growth figures whatsoever is due to population growth. Real wages for New Zealand workers have gone down. These 2010 tax measures which switched around the way who got which tax cuts and how much of the value of the produce that New Zealand made went where were not to the benefit of the majority of New Zealanders. Forty-four percent of the value of those tax cuts in 2010 went to the top 10 percent of earners; just 2 percent went to the bottom 20 percent of earners. That is hardly fair but what we were told at the time was that this would grow the economy and that it was broadly fiscally neutral. If you can remember back that far Mr Speaker—and I am sure you can—we were told that it was broadly fiscally neutral. The effect has been not broadly fiscally neutral in my opinion because what has happened is that those revenue drops have happened the Government is now scrabbling around and here we have a measure that looks more like something that is to do with expedience than something that is to do with principle when we look back on National’s track record. 
I am very proud to be a Labour member of Parliament because Labour has taken a stance on this issue that is consistent over time that is principled and that is actually about reducing the harm that is linked to tobacco use. So National’s stance stands out starkly in contrast to that when we see a revenue hole emerging and a different stance being taken. 
The Government has had various other measures that we have seen recently in this Parliament that are along a similar line and aim to fill this revenue hole. We have seen the car park tax recently announced. I am sure we will see legislation around that before too long. We had the paper boys and we had the cleaners and now we have a tax increase in the tobacco area. What we also know is that those who will struggle the most with this of course—the National Party had a good point originally—are those who are the poorest because they have the least room to move. It will affect people who are poor the most and Labour has some sympathy about that. That is why we have said that we would like the Government to undertake a review of the CPI and of how it is used to index Government payments and revenue. At the moment it is used in an inconsistent and sometimes a discriminatory way. For example the bills that we are looking at today ensure that CPI minus tobacco is used for benefits and superannuation yet the full CPI is used for annual excise tax increases on petrol. The full CPI continues to be used for wage negotiations aged-care subsidies inflation-indexed bonds and various long-term contracts in the public and private sector. So there is an inconsistency here that we think should be examined. We will be supporting the measure today because as I say we know that this is an effective way to curb tobacco use. 
One of the things that is deliciously ironic about all of this of course is that National not so long ago was trumpeting the entry and the jobs created by the Imperial Tobacco Group’s expansion in Lower Hutt not so far away. At the time it was thought that there were going to be 50 new jobs created—and goodness knows we could do with jobs being created in this economy. There were many many more applications lodged for those jobs than there were places available I understand. So we have some job growth here. Ironically the delicious irony here is of course that this industry will be one of the ones that will in very short order be hit by this measure. It shows how short-sighted National’s thinking is on this and other measures. 
 Of course when it comes to manufacturing the real story is that the sector is contracting outside the primary products sector. Simply transformed materials in the manufacturing sector have contracted by 15 percent since 2008 in 2008 dollars looking at the figures—a full 15 percent contraction in that manufacturing sector for simply transformed products and a 10 percent contraction in elaborately transformed areas. Perhaps tobacco products fit into the primary products process category. The statistics on overseas merchandise trade which Statistics New Zealand puts out in its data series suggest that primary products is one of the few areas in New Zealand where the manufacturing sector is surviving. 
Of course that story is about the way in which our dairying sector carries on. Those products still have to be processed regardless of the difficulties with the high dollar that that is creating for exporters. The processing in the primary sector continues but it is the other sectors of our economy that are really struggling. One has to wonder whether manufacturing across the board will go down if the Government continues to take a short-term view in the way it does on many issues where it switches from one position to another. Businesses like certainty and this issue of customs excise on tobacco is as I say an ironic change given Bill English’s vehement opposition to a similar change under the Labour Government. It is also ironic given the touting of these few extra jobs which presumably after the $45 million expansion of the plant in Lower Hutt will now be less secure than they were before. 
To conclude I want to say that Labour will support this legislation because on principle we understand and appreciate the importance of raising the price of these dangerous drugs in a way that gives people the chance over time to quit the habit. We support the measures taken to support people quitting smoking and we hope that the one in five New Zealanders who currently smoke will find their own way out of this habit in part because of the measures proposed in this bill and the previous measures taken by the Labour Government in its principled view on this matter. Thank you.