Nash Stuart: Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill — First Reading Second Reading In Committee Third ReadingText is subject to correctionNash Stuart: 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:11422. Text is subject to correction.]STUART NASH (Labour—Napier): Before I start what I would like to say is a big hello to my son Charlie Nash who is in hospital at the moment recovering. I will see you this evening my son.Mr Brownlee said that this Government is the only Government to increase tobacco tax. Sam you want bold? You want bold—in 1958 Nordmeyer increased the excise tax on tobacco by 100 percent. Now that is bold. Mind you it did not end too well for him but it was certainly bold.Let us get to the facts. First and foremost we are debating a bill under urgency to increase tax on 1 January. It has been the tradition in this House when we are going to increase the excise tax on something like tobacco to announce it at about 2 p.m. and then get it straight through the House that evening so there is no ability to go out and hoard. Here we are signalling 3 years in advance what is going to happen to the price of tobacco.The other thing that was interesting was when Mr Brownlee said how much the price of tobacco is going to increase. What that is predicated on is in fact that the tobacco companies are going to pass that price increase on. That is not necessarily the case. In one of the University of Otago’s major studies on this it said: “If you do it in this way”—if you announce excise tax increases in the way we have—“then what it does allow tobacco companies to do is plan.” What it also says it allows them to do is to absorb some of that cost because these tobacco companies make a significant amount of money. What the University of Otago said—and let us take an evidence-based approach on this—is that a 10 percent increase will not end up creating a smoke-free New Zealand by 2025. What it recommended was a 20 percent increase—or a sort of ambush 40 percent increase—so people just do not have the ability to plan to hoard or to engage in other sorts of behaviours that will negate some of these bills. But do not get me wrong; I support this. I would be a mug not to support this.But let us get the facts: 550000 Kiwis smoke and as has been alluded to smoking accounts for 10 percent of all health deaths in this country. This is wrong and we need to do something about it. I would echo Dr Clark’s comments and also again the recommendations from the University of Otago. What it has recommended is in fact that these taxes become hypothecated taxes. For those who do not know what that means what we do is we take the $425 million this will raise and we actually earmark it for research in areas that would affect smoking. So what we do is we say: “OK of this money—it is going to go into the health budget. Some will go to Quitline some will go to research that looks at lung cancer and some will go into research that looks at how to mitigate the risks or the impacts of health-related diseases.” I just think that is the best way to do things because it is an evidence-based approach; it is saying: “Hey we understand we have a major issue here. This is a major health issue so let’s deal with the money we raise from this and put it directly into something that we know will be good for this.”Let me say one thing: I am 90 percent for this—I am 90 percent for this bill. I am 10 percent concerned and that is because smoking is addictive. We know this is a fact. It is more addictive I understand than heroin. What we absolutely need to do—what we absolutely need to do—is ensure that when we increase the price of tobacco we put programmes in place that are fully funded and are proactive so people who want to break their addiction to nicotine actually have the ability and the support to do so. These programmes must be free. They must be free because breaking the addiction to nicotine is hellishly hard and so we must ensure we put programmes in place for that.The other thing also—like I said I am 10 percent concerned—90 percent is enough for me to absolutely support it. We are all in this House we are raging against the negative impacts of tobacco we are raging against the negative health impacts of tobacco and yet we in this House all enjoy alcohol. We will all go home tonight and we will probably have a glass of wine or a beer with our mates over the weekend while watching rugby. We will also drink alcohol. And what we also must take into account is that this weekend there will be a number of deaths there will be a number of domestic violence incidents and there will be a number of pub brawls as a result of alcohol. So let us not kid ourselves and say that smoking is the only legal drug that causes harm to our society because it is not. It is not. Let us recognise also the harm caused by that other legal drug in our society: alcohol.As alluded to and as all the speakers in the Labour Party will allude to we will support this bill wholeheartedly but we must recognise—and I will reiterate this because I cannot do so enough—we must recognise that we must put programmes in place. We must ramp up the programmes that allow people to come off their addiction to nicotine.I would just like to finish by outlining the four recommendations that were actually put forward by researchers from the University of Otago in its drive to see a smoke-free New Zealand by 2025. I think when we are looking at polices—certainly this sort of policy—it is very wise to take an evidence-based approach and certainly to listen to the research undertaken by those who are experts in the field.Its first recommendation was that the increase in excise tax needs to be larger than 10 percent. What it said is it actually has to be 20 percent or more because it thinks that this would mitigate the cross-subsidisation between brands that tobacco companies engage in.Its second recommendation was that there should be a one-off surprise increase of around about 40 percent. What this would do it said was ambush tobacco companies. It would mean that they could not plan and it would have the desired effect.The third recommendation—and I have already alluded to this—was the hypothecation of taxes collected because it believes this would greatly expand the cessation support currently available.The fourth one—and this is quite important—is that additional policy measures could limit tobacco companies’ ability to circumvent tax increases. We know tobacco companies make a lot of money on cigarettes. It is a fact. So by signalling this so far out what they might do is they might scale back the margin they make knowing they still will make a significant profit and not pass on the increases to the consumer—certainly if it gets to the point when they see demand falling faster than supply. So we just need to be aware of this.The one last point I will make is that I do note that in the bill this piece of legislation removes tobacco price increases from the Consumers Price Index (CPI). I think that is cherry-picking. It is like we have removed the capital increase in house prices. The Government cannot continue to remove a key product from the CPI in an effort to keep inflation down because I would argue that is artificially impacting on inflation figures. If we put house prices in there which we know are a major spend and if we put tobacco in there which we know is a significant spend then at least we get a fair and reasonable indication of what inflation is like. We cannot cherry-pick.Having said that I do support this legislation but let us make sure that we put in place the services required for people to break that nicotine addiction. Thank you very much.