Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill — First Reading Second Reading In Committee Third ReadingText is incorporated into the Bound VolumeCustoms and Excise (Tobacco Products—Budget Measures) Amendment Bill — First Reading Second Reading In Committee Third Reading[Sitting date: 26 May 2016. Volume:714;Page:11417. Text is incorporated into the Bound Volume.]Customs and Excise (Tobacco Products—Budget Measures) Amendment BillFirst ReadingHon Peseta SAM LOTU-IIGA (Associate Minister of Health): I move That the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill be now read a first time. Each day in New Zealand 12 people die prematurely from smoking-related illnesses—12 people. Each year smoking kills between 4500 and 5000 people prematurely; that is the population of a town like Foxton wiped out off the map gone prematurely every year. They die from lung cancer from heart disease and from strokes. They die from emphysema from chronic bronchitis and from cancers of the mouth pharynx and oesophagus. This relentless killer takes too many of our loved ones too soon. So the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill is about saving lives. It is as simple as that. Our family our friends and our whānau are dying from a habit that we can do something about in this House today. This bill raises the tobacco excise duty by 10 percent each year for 4 consecutive years from 1 January 2017. Raising the excise duty on tobacco is one of the most effective measures that Governments can take to reduce the harm caused by smoking. This bill will save lives and protect our future generations. It will help New Zealand become smoke-free by 2025.The bill technically amends the Customs and Excise Act and also amends or affects the Children Young Persons and Their Families Act the Education Act 1989 the Income Tax Act the New Zealand Superannuation and Retirement Income Act the Social Security Act and the Veterans’ Support Act. The amendments contained in the bill amend the Customs and Excise Act by continuing increases in excise and excise-equivalent duty on tobacco products. This Government has already raised the tax on tobacco for 6 successive years and when passed this bill will lead to a decade of 10 percent increases in tax.So what has that meant for price? Well 6 years ago a packet of 20 cigarettes was around $10. Today it is around $23 and by 2020 it will be around $32. What you may ask is the impact of that price increase? For example what has been the effect on the consumption of cigarettes? We know that in the last 5 years consumption has declined 25 percent. Critically it has meant our daily smoking rates have declined consistently over time to where it now stands at 15 percent of adults or about 550000 people. For every 1 percent decrease in smoking rates we see over 35000 smokers stop smoking. That is good for the lives of those New Zealanders it is good for their families and it is good for our communities who live with this burden. I am particularly pleased that the price increases have had a huge effect on the uptake of smoking by children. The smoking rate for the 15- to 19-year-old age group is now under 9 percent and for year 10 students that smoking rate is now well under 3 percent. The increases in price have had a dramatic effect on those young people taking up smoking. So the cost to individuals and families is huge.I spoke to a friend recently who spoke about the death of her father due to lung cancer after a lifetime of smoking. It was a slow death over 3 years and watching him turn from a rugged South Island farmer to someone who was basically having the air sucked out of him by lung cancer was disturbing for this friend of mine. And those are the sorts of social impacts that smoking has not just on the person who smokes but certainly on family members and the wider community. Over half of all long-term smokers will die of a smoking-related illness and those who die will lose on average at least 12 years of their life. Those who die in middle age will lose on average 23 years of their lives. The benefits of quitting smoking are quite clear. For example if you quit before the age of 40 the risk of dying of a smoke-related disease is reduced by 90 percent—90 percent. The personal cost to every individual smoker if you smoke a pack per day is approximately $7300 in one year.But the tangible costs of smoking to our country are also huge. The costs include lost workforce production and absenteeism. It costs our country about $2.5 billion just because of smoking alone. This is small in comparison with the intangible costs which can be up to $11 billion and include lost years of life loss of quality of life and the effect on those relationships that I spoke about.I want to remind New Zealanders that smoking remains the country’s single biggest health issue. It is the biggest cause of premature deaths in this country every year and we here as lawmakers in the House of Representatives can make a difference to the lives of New Zealanders. This bill goes a long way to addressing this chronic health issue. Price increases through tax remains the most effective tool to address the chronic social and economic costs of smoking tobacco. I urge all members of this House to do the right thing for New Zealanders today and support this bill.Dr DAVID CLARK (Labour—Dunedin North): I stand in support of the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill as will my Labour colleagues. But the first thing we want to ask the Associate Minister of Health for and what we want him to put on record is a cast-iron guarantee to New Zealanders that this is not just another tax grab. We want to know that the money from this bill—the $425 million over 4 years—will be put into public health. That is what we on this side of the House want to be assured of—that it is not just another convenient way for the National Government to achieve a constructed surplus so that it can hang tax cuts out as a carrot at the next election that it actually cares about this issue and that it wants to achieve this smoke-free target.The Associate Minister has put some words forward around achieving that target. He has talked about the progress made so far and we do want to support the Associate Minister in that. We want to support the progress that has been made and we do support this measure to further reduce smoking which kills so many New Zealanders unnecessarily. But we want a guarantee—a cast-iron guarantee today—that this money will not go into the consolidated account as just another source of revenue. We want to know where this $425 million is going. We want to see it help Kiwis face up to the challenge of smoking. We want to see it support Kiwis in public health and in the areas of smoking obesity diabetes mental health addictions and so forth—those things that would make such a difference over time to New Zealand society.This money must not go into the consolidated account; it must address public health issues and we seek that assurance from the Associate Minister. We will seek in his future speeches in the House a reassurance that that is the case. When it goes into the consolidated account we know that it disappears on pet projects. There will be some what Mr Seymour likes to call “corporate welfare” where money gets dished out to the Government’s favourite causes. It might be charter schools—one of the prime forces in the area of corporate welfare in this country—where the Government’s mates are handed out some extra money to do a job that would otherwise be done in a public system where kids would get educated if we funded them properly. But no the Government funds them at a higher rate because that is one of the pet projects of that member across there because he is in to corporate welfare like no other in this House.He would probably see the money go into the Skycity deal an over-the-top deal of money going out hand-over-fist. He does not even approve of this measure he said in his press release last night but he will be supporting it in the House. There is a member you do not quite know where he stands on most things—well he stands in several places he tells us. But corporate welfare is one thing he seems determined to support. And this is another measure that it appears he is willing to support in order to get the money out that he wants for his mates. He will have also no doubt support for the flag referendum for the Saudi sheep scandal and for various other deals the Government has done that it uses money from the consolidated account for; to fund those kinds of things that are not public health measures. But here we have some more money going into the coffers. It will probably go on similar projects—things that middle New Zealand does not like but that are this Government’s pet projects.So we will seek that assurance from the Associate Minister as this bill goes through the House—that this money really will go towards those causes: addressing smoking addressing obesity addressing diabetes addressing mental health and addictions; those public health issues that would make such a difference to New Zealand’s long-term future. We will seek assurance that it will not be dangled in front of Kiwis later on as a tax-cut bribe from a Government that is more concerned with dishing out money to a very few privileged people at the top and defending the interests of those named in the Panama Papers than the interests of most New Zealanders—most New Zealanders.So Labour will remain concerned too about the overall health picture. This is one part of it. In the Budget we heard that the Government has continued to fund Health at below the rate of inflation and cost increases—$50 million short this year. We already know that it was $1.7 billion—$1.7 billion—short in funding over the last 6 years. That means ordinary Kiwis middle New Zealanders are missing out on surgeries they need; and middle New Zealand is missing out on the health services that we all ought to enjoy regardless of whether we are super-wealthy or not. This is a Government that is seeking to undermine middle New Zealand and here we have an example where it is doing a good thing but we wonder where the money is going—we wonder where the money is going—and we hope that the Associate Minister will be able to assure us that it will actually go into achieving the targets that the Government has set itself.In primary health care in this area $14 million has been funded by the Government over the next 4 years. Here we have an example right? It is taking over $400 million away; it is putting $14 million back into the area we have been told. That is well short of the $20 million to $26 million that General Practice New Zealand said was necessary in order to address Government underfunding associated with inflation in this Budget. The Government is simply not allocating adequate resource in this area. The science is very clear that that would make a huge difference to the overall burden of health cost for our country. It would be the kind of investment that would see middle New Zealand benefit not those very privileged few at the top that this Government seems so intent on supporting these days.An excise tax is the best means of stopping smoking and that is why we will be supporting this bill. But we do need a comprehensive plan to get to a smoke-free Aotearoa by 2025 and the experts say that we are not on track to do that and that should be of concern to every member of this House—every member of this House. Seventeen percent of adults in 2014-15 smoked at least monthly and 15 percent of adults in New Zealand smoked daily in 2014-15. We are not on track to achieve that smoke-free target by 2025. That is what the experts say. Government members no doubt will say something different in their speeches but that is what the experts say and we on this side of the House we like to listen to what the people in their field—the experts—say. We do not think we know better; we actually understand that public health is a genuine issue and needs to be tackled genuinely not just with kind words.We want the assurances as I said at the outset that this money will be invested in anti-smoking programmes obesity programmes and programmes that improve New Zealanders’ overall health. Unfortunately with that cut across the sector of $1.7 billion we know that some of these services have been stopped. In my area mental health funding has been squeezed. We know that all the NGO providers in Dunedin for example have been asked to take a 5 percent cut in the last year—regardless of performance regardless of whether they are doing a good job or not. The NGO providers have all been asked to take a cut. That is what this Government is doing to the health system; it is squeezing it until there is nothing left.What we also know is that smoking rates among Māori in particular are too high at 38 percent and among Pasifika it is at 25 percent. Those are Ministry of Health statistics. Adults living in the most deprived areas in New Zealand are three times as likely to have a smoking addiction as those in the least deprived areas. This affects people across New Zealand’s spectrum. But of course this price hike will not affect those at the very top. They know this; they know that for them it can be a luxury good. But middle New Zealand is the group that will continue to suffer because this Government does not have a real plan to achieve that smoke-free target by 2025.We are still waiting for other measures from this Government—for example to ban non-plain packaging—but this Government just does not seem to have the courage to move forward the bill that it has put before the House on plain packaging. It does not seem really ready to do anything about this issue. It is all window dressing; it is a measure as far as we know to get $425 million into the coffers to construct a surplus that it can use for its corporate welfare bribes to try to get members of Parliament who do not even agree with the bill onside and to try to get them to vote for it because those members know they will get something out at the other end.David Seymour: He ran out of ideas 5 minutes ago—5 minutes ago. He ran out of time.Dr DAVID CLARK: Mr Seymour knows this is true. He will get up and speak shortly. I look forward to his tortured denial on this issue but I also look forward more to the Associate Minister giving us an assurance that this money will genuinely be used for the public health good of New Zealanders. This Government needs to front up to the fact that it is not on track to achieve that goal that it should be achieving of making New Zealand smoke-free by 2025.Of course the cuts that we have seen in this Budget will cost Kiwis’ lives. We know that in the health area. The medical practitioners tell us that. Across the medical sector we know that this Government has made cuts that will cost lives. Pharmac for example got less than the $103 million that was needed. Health needed $635 million in this Budget just to keep up with population and inflation costs. [Interruption] Those members do not like it; they do not like it when the truth is spoken in this House—they do not like it at all. They are uncomfortable with the fact that they have been cutting and squeezing across the public health sector and they cannot give an assurance that this money will actually go to public health and the public good in the long term. I look forward to hearing some kind of response from the Government on this issue.Hon GERRY BROWNLEE (Minister supporting Greater Christchurch Regeneration): The previous speaker David Clark has either no capacity himself or no research support with a capacity to read a Budget and understand what is in it. Those claims about health cuts are utter rubbish and completely wrong. This year the Budget provided an extra $1.6 billion—$1600 million extra—for district health boards.To suggest that this proposal is all about taking extra tax for all the things that the Labour Party does not like is completely disingenuous. The reality is that the member himself agreed that price is one of the best ways to deter people from smoking cigarettes. That is why this Government unlike any other before has been prepared to go out and put up the price of tobacco repeatedly year after year after year. The Māori Party is to be commended for the way in which it has held the Government to that over that period of time. It gets our full support in doing that.This proposal will see the price of cigarettes rise not to $30 as TV ONE reported last night but to almost $37 over the next couple of years. That will be a serious serious deterrent. To suggest that somehow the Labour Party is going to vote for this bill only if it gets an iron-clad guarantee that all the tax that comes off that will be used on these various programmes put together by their friends the lefty experts who think they are so important in all this stuff is utter rubbish. This Budget has over 4 years more than $2 billion additional funding going to health. Public health is a big winner in that. I would also point out that those experts will have no job when we reach the target of total cessation or near enough by 2025. So one thing I would say to the Labour Party is: be very careful about the vested interests you listen to.My final comment is that that particular group of people has one lobby group Action on Smoking and Health whose staff I have found in my time in Parliament to be the most rude people who have ever come into my office—and they never will again. But it has not changed my view that we should end smoking as a habit in this country. I support this bill.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.MARAMA FOX (Co-Leader—Māori Party): Tēnā koe e Te Mana Whakawā. Ā tēnā koutou e Te Whare. I ngā pō rā i te māuiui kaha nei tēnei nā koinei te take kua whango kaha rawa nei (katia ō koutou waha) ā hoi anō rā kai te tū ake au ki te tuku whakaaro e pā ana ki tēnei nā te excise tax.[Acknowledgments to you the House. I have been quite ill these past nights and this is the reason why I am really hoarse (shut your mouths) but despite that I rise to express an opinion on this excise tax.]I am proud to support this bill. We know we need to do things to reduce the number of people in this country who are dying from tobacco-related illnesses. I can point to at least five members of my immediate family who have lost their lives early to smoking-related illnesses. It is not something we ever want to see. We do not want to leave children without parents. We do not want to leave grandchildren without grandparents. Smoking-related illnesses are killing our people in hugely disproportionate numbers compared with non-Māori so of course we are going to support this.It is something that we have championed as the Māori Party—to reach the 2025 goal of a smoke-free Aotearoa. But does it go far enough? Many would say it absolutely does not. In fact I was lambasted last night—is that the word? I am not even sure—on Twitter because this seems like a tax on the poor. Again the people who are smoking come largely from one socio-economic area of our society and they seem to be ingrained in poverty so people are saying that this is a tax again on the poor. Well you know what? If it is going to save lives and keep families together then I do not have an issue with that as long as we put in place a number of other things to ensure that we support them.When I ask the members of my community—and wherever I go on hui Māori and I go outside and ask why are you guys still smoking?—they say one thing: “It is stress.” If I ask “why are you going back to smoking—you gave up years ago?” they say the same thing: “It is stress.” If we are not doing anything to support people while they go through giving up cigarette smoking through the cessation programmes or in a holistic way to address the underlying issues of why they smoke in the first place then we are not going to achieve our goal. We need to put in a suite of supports so that these people can have a better outlook on life—not just because they give up smoking but because they alleviate the underlying causes.What else would we do? This is just one measure. We would like to see plain packaging and we are waiting for the legislation to come. When is that going to happen? We would like to see smoke-free cars for children. Lots of people say: “Oh my goodness now you are going to fine mothers and fathers who already don’t have enough money?”. Well actually if you are locked in a car with no choice and no way to get out from somebody else’s smoking then you are sucking in somebody else’s blinking poisonous air that they are emitting into the car. Actually a child has no choice in that situation so we would like to see that initiative come into place. We would like to see support for voluntary smoke-free communities—that would be a good thing.We had a whole lot of people last night on Twitter saying: “Marama why are you giving in to these statistics rolled out by Pākehā?”. And I was thinking: “Seriously? Does it actually matter who brought the statistics up?”. Well apparently in this country it does.Here is the thing: I have a community group from Wainuiōmata coming to see me called the Hashtags—young Māori at high school—who are saying: “We do not want this in our future. We would like to support our community to become a smoke-free community. We would like to have smoke-free cars. We want every school in our little community to commit and all the parents to commit to being smoke-free. We want to get rid of those shops that are selling single cigarettes illegally. We want to get rid of the sale of tobacco in our entire community.” Those are young Māori rangatahi. How do you turn round to them and say: “No. Please smoke some more.” That is just ridiculous and so we need to support them.Who else comes to us? The Northland community who brought its petition for smoke-free cars for children does. Is that a Pākehā community that dreamt up this “white man’s magic”—these statistics? Of course it is not. That is a ridiculous statement.David Seymour: To be fair they invented Twitter.MARAMA FOX: Well actually to be fair they invented Twitter. But in Northland this Māori community got a petition together that involved just about their entire town—5000 people.The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am just going to interrupt the member. She started the debate quite well because she was referring to the bill and what is in it. There is an opportunity for making passing reference to alternatives to the bill and as much as I like her reference to the rangatahi of my community the debate cannot be based around the alternatives.MARAMA FOX: Thank you Mr Assistant Speaker. I will bring it back to the excise tax. If we cannot talk about all the alternatives we would like to see here is a start—here is a start. [Interruption] I am pretty sure that there were a few alternatives being voiced over there on the Labour benches but we will let that go.We come back to the excise tax because the No. 1 incentive for giving up cigarette smoking apparently is the cost at point of sale—and thank you very much to the lovely Mr Seymour for the water. Excise tax is a start. We would have liked to see it higher. In fact we were lobbied to take it to 40 percent because it is like the frog in the pot—when you put it up $1 a year $1 a year $1 a year everyone is going “I can do one more dollar one more dollar.” But if you automatically put up 40 percent and have to jump $10 people start to think. By 2030 the cost will go to approximately $30 for a pack of 20 cigarettes. If that is going to be what it takes to make people think again before they put a stick of poison between their lips and potentially lessen their lifetime with their own children their own family and their own grandchildren then we are happy to do it. So despite all the alternatives we would like I commend this bill to the House.KEVIN HAGUE (Green): The Green Party will be supporting this bill as we have supported the Government’s other measures it has taken towards smoke-free Aotearoa—though they are few in number. I do want to begin this contribution by particularly praising the contribution of the Māori Party because the Māori Party has consistently now for a considerable period of time provided leadership in this area of progress towards smoke-free Aotearoa. That inquiry of the Māori Affairs Committee which produced a suite of recommendations including increases in excise taxes such as this one was a very substantial step forward and its goal—the goal set out in the report of that inquiry into a smoke-free Aotearoa by 2025—has been an important and galvanising goal for this Parliament and for the community seeking that end. However we are on track to achieve a smoke-free Aotearoa goal for middle-class Pākehā New Zealanders; we are not on track to achieve that goal for Māori for Pasifika for low socio-economic status Pākehā New Zealanders and for others and it seems to me that unequal achievement of that goal would be an unacceptable outcome.What we know about what actually changes health behaviour is that giving people information is not enough. There is the model of “Homo economicus” where people are rational decision-makers and so if you just give them the information about the pros and cons of differing possible courses of action that will be sufficient. They will weigh those up they will make the rational choice and their behaviour will change. Very clearly that is not the case with smoking. Very clearly it is not the case in many other areas of life. What we know actually works is changing the public policy that creates the environment around those groups. We know that what actually works is empowering the communities who are most affected by an issue. Environment and empowerment—that is the idea of health promotion.One of the factors that can be used as a tool in changing the environment is the price of a product. This is basic microeconomic theory: if one raises the price of a product demand for it will fall. It would be great would it not if the Government understood this in other areas and not just in the area of tobacco and alcohol. So a tax on sugar-sweetened beverages for example would be something that we could consider—in another debate because it does not relate to the excise tax on tobacco.The Green Party supports this bill. We ask as Marama Fox has just asked why this tax increase is not larger. As Stuart Nash indicated earlier there is considerable research to the effect that a larger tax increase—a bigger jolt in the excise tax—would achieve a disproportionately greater effect. If that is the case and there is no evidence to contest that why would we not do it? We would support a more ambitious bill.The issue of hypothecation has also been raised and I was concerned to hear on the television news last night speculation that the revenue that the Government received from this increase in the excise tax over the next several years would form part of the war chest that it would later use for tax cuts and the lolly-scramble Budget that I am sure we all anticipate for 2017. That is not the way to proceed. The evidence is strong in fact that the effect of this excise tax increase will be felt mostly by the poorest New Zealanders. That effect is of two sorts. It is the effect of increasing the price of a product on an already strained budget and so is an impact potentially on the affordability of other products and we are all concerned about that. But there is also a disproportionate benefit achieved by those New Zealanders. They stand to gain the most. They are also the most price-sensitive consumers of tobacco products. So these excise tax increases will produce disproportionate gain as well as an impact on affordability of other products.The way to actually assuage the problem of increased cost impacting on the affordability of other costs like food or housing is indeed to ensure that the revenue from this excise tax is recycled into further programmes to assist those New Zealanders to quit—more quit programmes more health promotion activities. That means social marketing campaigns that might be driven from Māori and Pasifika communities for example. It means empowerment programmes for those communities that are most affected. That is how we should be using the $425 million. That is how we should be using it not recycling it into Government coffers. With that comment I will bring this contribution to a close. I will add some more comments in the second reading but indeed the Green Party will be supporting this bill.FLETCHER TABUTEAU (NZ First):I do not think that anyone in this House will dispute the evils of smoking and the effect that it has on the lives of people—[Interruption]—and on families around—[Interruption]The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!FLETCHER TABUTEAU: It is an insidious problem that affects all of New Zealand society and in fact societies around the world. As I said it is hard on our families and I have personally been affected by it. That is what makes the contributions from the rest of the House seem so callous and empty and disingenuous. A tax—especially this tax at this rate—will debatably prevent people from taking up smoking at a tiny tiny tiny rate. [Interruption] The decrease in smoking will be tiny—absolutely tiny—[Interruption]The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I ask the member to resume his seat. Can I ask the two members to respect the ruling that was made yesterday. It is OK to interject back and forth on the person who is speaking but to have a third- and fourth-party conversation across the House is something that is not appropriate. I think there was actually a pretty severe warning made by one of my colleagues about this yesterday. I just want to say to Mr Seymour that he is testing me.FLETCHER TABUTEAU: I actually just want to comment that I think it was the New Zealand Herald or the Newshub group that went out to New Zealanders last night and this morning and asked: “What do you think of this new tax?”. And actually more than two-thirds of New Zealanders said that it was a cynical tax grab by this Government that will have no effect on the rates of smoking by New Zealanders. I would like to spend the next few minutes of this contribution outlining why I completely agree with the majority of New Zealanders in this case.I want to empathise with the member from the Māori Party and I acknowledge the contribution from the Minister. In fact the Māori Party member could not speak much to this bill because I think in her heart of hearts she knew that it would not achieve what she hoped it would. So she actually spent the majority of her contribution saying what else we could do and what else we should be doing. And so I have huge empathy with her because I agree.But this excise tax on smokers will not work. The Minister talked about the 12 people lost to us each day and I agree that that is terribly wrong. But “What is this Government doing about it?” is the actual question. It is not spending a dollar more on cessation programmes. There is not a dollar more specifically assigned in this Budget to help people to stop. No the solution from this Government is a tax and not only that it has been acknowledged by everybody who has spoken before a tax that will affect mainly the poorest New Zealanders in our society.The only Budget strategy that this Government has is to tax the poor. It makes the Minister’s words and supposed passion and concern empty and farcical in my opinion. He puts the decrease in smoking rates down to price increases over the last few years. I call that stance misleading. I suggest that many would say it was naive. There were huge mass media campaigns cessation programmes and fully funded Quitline programmes for example. Not only are the Minister’s price increases not the most effective tool but also I put it to this House that actually the efficacy of these excise taxes have passed their use-by date and will achieve nothing. So I put it to the Government: you have increased taxes and that is all you will achieve—an increase in taxes. Those who are addicted to smoking will continue to smoke and will continue to feed their addiction at the cost of the essentials of life.Let us face reality: it is still a legal product. The Government is not willing to go that far and yet it is being more nanny State than Labour could ever dream of being. Food kills people. Sugar kills people. Obesity is the biggest killer in modern society. Let us take the logic that this Government is using in the House today and apply it to those items. That is not unreasonable. It makes perfect logical sense given the negative externalities of consumption of any and all of those goods to say: “Let’s disincentivise it let’s internalise the cost of it and put a tax on its consumption.” [Interruption] Sorry “Let’s tax it and it will stop people consuming it.” For example obesity—let us put a tax on it. Given basic theory obesity rates will decrease and we will have less obesity and fewer costs in our hospitals. That is the logic that this Government is using.We know that this measure will affect 15 percent of the New Zealand population but unfortunately the rate increase will affect 35 percent of the Māori population and 22 percent of the Pacific population and approximately 550000 New Zealanders in total. So although I think the Māori Party’s intentions are good I think this excise tax is misguided and will achieve the exact opposite that it hopes for because disproportionately poor people will pay.Here are some statistics: because of the difference in smoking prevalence people from the bottom third in household incomes spend nearly 20 times more on cigarettes as a proportion of their income than those from the top third. As many commentators noted yesterday this was one of the more contentious parts of the Budget contribution. They came out and blatantly said that this will take food from the tables of children because those who are addicted will not stop because of a tax hike; they will simply compromise what little money they have and what they can do for their families. We say that this legislation will make it harder for the poorest for Māori for Pasifika and for New Zealand children and that is unacceptable.Let us just rephrase what the Government has been saying. It is saying that a cigarette tax will get people to stop smoking and will increase public revenue. Minister Lotu-Iiga said that a tobacco tax is the most powerful tool to bring down the rates of smoking. I would actually I suggest agree with him mainly but not now. In the past we saw the statistics and we saw that yes price did have the impact that we hoped it would have. But what we are seeing now from economists around the world is that recent price hikes are not actually having the impact that we assume they will have on the consumption of cigarettes. They suggest that the majority of people who would give up smoking because of price have actually already done so. But still the Government persists in using ill-considered increases in the level of taxes generating even more revenue from the poor.So let us also put this into perspective because it will be revenue from the poor: of those who earn over $100000 it is suggested that only one in 10 are smokers and of those who earn under $35000 though the number rises incredibly to one in three. Continuing to raise taxes on poor smokers who are unwilling or unable to quit will be ineffective and unjust. This nanny State must be reminded that tobacco is still a legal product. This tax will have no effect. The desired effect that the Government is seeking to implement will not come about because of this tax rate. Thank you.SIMON O’CONNOR (National—Tāmaki): I am very pleased in this matter of urgency to discuss the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. This is an excellent bill. In fact I think listening to all the contributions that have been occurring in the House that that is ultimately the theme. There are a whole lot of distractions conspiracies and otherwise to try to take away from that but this is actually an incredibly good bill. I want to acknowledge Minister Sam Lotu-Iiga along with Marama Fox from the Māori Party for their work on this bill but particularly Sam who has shown I think very strong leadership in this space as we as a New Zealand Parliament and the New Zealand public move towards New Zealand being smoke-free by 2025.I have been disappointed by effectively the bluster and conspiracy from the other side particularly in two areas which I want to debunk. The first is this whole element of “Well smoking is legal therefore it is right.”—that is a very false point of thinking.Stuart Nash: No one said that at all.SIMON O’CONNOR: No actually we just heard that from the last speaker Fletcher Tabuteau who was saying: “Look this is legal; it is nanny Statism.” We have actually heard it and we are going to hear it I suspect from our more libertarian friend afterwards. Just because something is legal does not make it right and therefore I think it is quite appropriate for the Government to actually—Iain Lees-Galloway: Tax dodging.SIMON O’CONNOR: Tax dodging? Once again we see the absolute lack of thinking and rigour from the other side. There is never an idea that they have been able to comprehend that they could not sort of try to comprehend.David Seymour: The Labour Party is legal but it’s not right.SIMON O’CONNOR: So look—that is right. Absolutely. Actually the best example has just been given: the Labour Party is legal but it does not make it right. That is actually the second element that comes up.Tim Macindoe: Nor was the pledge card.SIMON O’CONNOR: That is right. So first and foremost just because something is legal it does not make it right. Coming out of that then was the suggestion that this is a tax that therefore the poor will pay. First I do not think there is much or direct evidence of that. Second the whole point of this excise tax is to encourage people to not smoke OK? So if people stop smoking through measures such as this they cannot ipso facto be paying the tax—sorry I was just throwing a bit of Latin in there.The next element of course—and we have been hearing it from I think Stuart Nash in particular—is about all these other harms in society. He was talking about sugar and in fact we have heard about it from others. I should not pick on just Stuart Nash but he was saying that alcohol is harmful. He did not actually quite get to coffee being harmful but we heard that sugar is harmful. I think members who go down that line—particularly in this context of us putting an excise tax on tobacco—forget that tobacco is by its very nature harmful OK? Sugar is not harmful by its nature. Coffee is not harmful by its nature. Alcohol in fact by its nature is not harmful there can be harm associated with it; but we are talking about something fundamentally different here when it comes to tobacco. [Interruption] I hear chortling from members on the other side but then again they do not understand science. It is actually very interesting.So this is actually in context an incredibly good bill: to put a tax on a compounding tax starting from January this year to encourage people to not smoke. I think what is going to be quite interesting and I am conscious that we go through all parts today is that we will be able to raise some other elements particularly what the Government is doing in the health space. I think I will address that in other readings around how this tax will be actually targeted to health and I will also be able to raise more points around what the Government is doing quite rightly beyond the excise tax to support the cessation of smoking. So I commend this bill in its first reading.DAVID SEYMOUR (Leader—ACT):I rise on behalf of the ACT Party in support of this bill although I have to say somewhat regrettably. If there was a bit more talent on the other side of the House I would probably cross the floor and join them but sadly that is not the case right now.I am voting for this bill because it is a Budget measure. But let us be very clear that it is another public policy abomination. If you want to analyse a policy here are three questions that you might ask: what is the intent of the policy—what is it supposed to do; will it be effective and what evidence do we have that it might be effective; and what might be the unintended consequences of the policy?Well the intention of the policy is to stop other people smoking. It is not a case of alleviating the harm done by one citizen to another because smoking by and large harms only the person affected—the person who does it. This policy is about trying to stop other people doing something that they would like to do because we do not like it.The objective is to reduce the number of people smoking. We might ask ourselves whether it will be effective. Well if we pick up the regulatory impact statement the evidence is supposedly that every 10 percent increase in the price of cigarettes will lead to a 2.5 percent decrease in the number of people who smoke. One might just ask oneself how effective this policy has been for the last 5 years because we have actually raised the tax on tobacco by 10 percent in every one of the last 5 years. So did we get a 2.5 percent reduction in smoking for every one of the last 5 years? No we did not. Five years ago the rate was 16.3 percent; it is now 15 percent. If we had had a 2.5 percent reduction in smoking for every 10 percent increase it would now be around about 14 percent. So it has not worked even by the standards that the regulatory impact statement sets out.So it will not be effective in achieving its goal but what about the third question? What about the side effects? The biggest side effect is that we now take an additional half a billion dollars a year in excise tax and I can understand why the Minister of Finance does not mind this policy so much. We take it overwhelmingly from the poorest people in New Zealand. You are 3.38 times more likely to be from the poorest decile than the highest decile of income amongst New Zealandersif you are a smoker. We are taking half a billion dollars or 2600 bucks from the average smoker who smokes 10.6 cigarettes a day. That is one of the unintended consequences of the tax to date.When we pass this bill when it becomes law the tax will go up another $1200. That is $3800 out of some of the poorest households in New Zealand to achieve a piddling reduction in smoking rates that is lower than the regulatory impact statement accompanying the bill predicted. What a disaster.What about some of the other unintended consequences? A brick of 10 packets of cigarettes will now be worth over $300 at the end of this policy and how much—how much—more worthwhile is it going to be for people to steal perhaps in an aggravated fashion a brick of cigarettes worth $300? Go and tell the petrol station owners; go and tell the dairy owners that every one of those bricks is worth $300. There are going to be people getting hurt because inevitably when you drive something underground you create a black market. If you doubt that go and ask the people in central Canada; go and ask the people in Australia. That is what you do when you have an excessive excise tax; you create a black market.In summary this is a public policy with no justification and with a shonky regulatory impact statement. It is a policy that has not achieved what it is supposed to achieve demonstrably over the last 5 years. This is a policy that will have unintended consequences such as impoverishing the people in New Zealand who need help the most by an additional $1200 a year by 2020.The Associate Minister of Health sits there. He knows it is a joke. He cannot justify his policy but he has had to do it for a coalition deal which is much the same reason why I am voting for it and the only one I can assure you.BARBARA KURIGER (National—Taranaki - King Country): It is a pleasure to take a short call on the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. What I really want to say today is that the previous speaker David Seymour said in talking about the intent of this bill that we are doing this because people are doing something we do not like. It is actually not about not liking it; it is a matter of doing it because smoking kills people. It is a life and death situation. It has actually been a long-time proven that it kills people.This excise tax is a powerful tool as we have seen in the past. I know that as we get harder and harder into the people who have been smoking for a long time it gets a bit harder to make an impact but this is one of the tools—and one of the effective tools—that we can use to make a difference. It is only one tool and this is why we have had a question today about where the money will be spent and whether it is a tax take. Actually this has been debated by the Health Committee because this is about the health of people. This excise tax is only one in a number of tools. We have adopted the Better Help for Smokers to Quit programme. Actually 95 percent of people who now visit a hospital have a conversation with their doctor or with their health professional about smoking. Over 470000 people of about 550000 people who smoke have received at least some minimum advice from their health professional. So this is all part of the programme.The other thing that this Government has done is it has increased the fines from $2000 maximum to $5000 maximum for those people who are selling cigarettes to minors. That was an extremely good move as well because the last thing we want is for people to start this habit young. We all know it is addictive and if they start young the potential for them to smoke for a very long time is huge so the sooner we can cut that out the better. As the Associate Minister of Health the Hon Peseta Sam Lotu-Iiga said before—and I want to give credit to the Minister and also to the Māori Party for bringing this piece of legislation forward—12 people a day are dying a premature death from smoking. This really is a health issue and if this is one tool in our tool box that we can use to help smoking cessation then we should be looking at doing that.The other thing that this National Government has done is ban smoking in prisons. There are a whole lot of moves as part of this tool box that we are actually doing. Over half of all long-term smokers will die of a smoking-related illness. It kills people. But quitting smoking by the age of 40 actually reduces the risk of dying from smoking-related diseases by about 90 percent so it is my pleasure today to support this piece of legislation and commend it to the House. Thank you.LOUISA WALL (Labour—Manurewa): Talofa lava. It is my pleasure to speak on this the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill.I actually want to start with a quote. It is from a submission from the Cancer Society Social and Behavioural Research Unit at the University of Otago to the Finance and Expenditure Committee on the Budget Policy Statement 2016. I read: “Evidence for the effectiveness of tobacco excise tax and price policies is overwhelming; increased costs of tobacco to consumers are strongly associated with declining smoking prevalence and reduced tobacco consumption. Young people tend to be more price sensitive compared with adults”. It goes on to say: “Lower socioeconomic groups and Māori have disproportionately higher smoking rates in NZ and have shown less rapid declines in smoking prevalence than other population groups. There is strong evidence that low-income groups within high-income countries show greater price sensitivity. Recent evidence suggests that smokers from Māori and Pacific Island communities are more responsive to tax increases than smokers of other ethnicities. This suggests that further tobacco excise tax increases could continue to reduce health inequalities in NZ.” The reason I read that out is that actually that is why this legislation is being proposed today.I would also like to highlight the relevance to young people and particularly to young Māori and young Māori women. I have the Māori Smoking and Tobacco Use 2011 summary from the Ministry of Health and in the 15- to 19-year-old age group there is a 14.4 percent rate of smoking for non-Māori males; for Māori males it is 29.2 percent. For non-Māori females the rate is 13.1 percent; for Māori females it is 47.1 percent. In the 20- to 24-year-old age group the rate for non-Māori males is 24.7 percent; for Māori males it is 57.3 percent. For non-Māori females it is 24.5 percent but for Māori females the smoking rate is 60.8 percent. So the relevance of this particular legislation to our Māori communities is incredible.I also want to highlight that Māori women—this is from the report that the Māori Affairs Committee prepared Inquiry into the tobacco industry in Aotearoa and the consequences of tobacco use for Māori—“suffer significantly from smoking as is evidenced by their having one of the highest mortality rates for lung cancer in the world and distressingly high levels of other diseases associated with smoking such as diabetes complications cardiovascular disease breast cancer and cervical cancer. We are even more concerned about this demographic because of the significant impact of smoking on unborn and young children. While it is not the only cause we were told that up to 46 percent of Sudden Unexplained Death in Infancy is attributable to smoking”. In New Zealand 40 babies die every year. So 46 percent of those babies are Māori babies. For our communities out there who question why this piece of legislation is going through the House that is why—the statistics the evidence speaks for itself.I would like to highlight however that there are other implications for Māori of the proposed legislation. It was really interesting to read the Minister’s press release because what he does articulate is that 15 percent of New Zealanders smoke. That is 550000 people. But for Māori and Pacific people those rates are a lot higher: 35 percent of Māori smoke and 22.4 percent of Pacific people smoke. If you break that down even more of the 550000 people who smoke that is 155000 Māori who smoke and 55000 Pacific people who smoke. I think the relevance to our communities for me is also in the amount of tax that will be collected through this proposed legislation. We are anticipating that $425 million will result from this increased tax over this 4-year period. So my proposition to the Minister and to the House is that if that is the case $119 million of that tax intake should be used explicitly on Māori programmes and $42.5 million should be used on Pacific programmes.I think it is relevant again to bring up the Māori Affairs Committee report because recommendation No. 26 of that report was really clear and I will read it: “that the Wai 844 claim lodged with the Waitangi Tribunal which asks for ‘funding for Māori health initiatives to eliminate or reduce smoking among Māori’ be progressed as soon as practicable.” I have actually written to the Waitangi Tribunal and asked it for the status of that Wai claim because in the Government’s response this Wai claim has not been referred to the Government and it cannot be referred to the Government until the Waitangi Tribunal actually goes through the process of hearing submissions. But it is my contention that if Māori are so detrimentally affected that if we are really clear about our rates of smoking and the anticipated amount of money coming out of our communities—we know that it is going to be $425 million—then I restate again: $119 million of that tax revenue should be used to fulfil the recommendation by the Māori Affairs Committee.I would also like to highlight another issue from that inquiry by the Māori Affairs Committee and it is about plain packaging. The relevance of plain packaging speaks to our commitment to reducing the smoking rates of young people because I have looked at the evidence for plain packaging and it was actually overwhelming. Cancer Council Australia provided the most succinct evidence because as we all know Australia remains the only country in the world that has plain packaging legislation and that has implemented that legislation. This is why it did that: because plain packaging provides an important role in discouraging young people from trying cigarettes in the first place.What a lot of people do not know is that 66 percent of young people in New Zealand try tobacco—and I put my hand up; I have smoked once in my life and it was through peer pressure—66 percent of young New Zealanders try tobacco. So anything that will reduce the numbers even attempting tobacco use needs to be promoted because what we do know is that 50 percent of those young people who try tobacco or smoke will smoke for 40 years. They become addicted to it almost immediately. In our Māori communities I think that more like 100 percent of us try which is why for Māori women our rates of smoking are over 50 percent. We are the perfect statistical example of that phenomenon.The other reason plain packaging needs to be brought in is that throughout the evidence young people said themselves that plain packaging creates negative perceptions and feelings about smoking. They actually want to hide those packets and they smoke less around others and it increases their ability to think about quitting; that was in 50 percent of the participants. For Māori that would be incredibly relevant because if 100 percent of us try and 50 percent of us then smoke but if plain packaging can then reduce our consumption by another 25 percent then I think that it is worth the Government looking at plain packaging as another part of this progressive piece of legislation that actually does want to meet the 2025 target which is to ensure that right across the board our different groups of New Zealanders—Pākehā Māori Pacific Asian—less than 5 percent of our population smokes. I think that is the challenge as we move into the future but this is a fantastic start.I commend the Minister I commend Action on Smoking and Health and I commend all those groups out there that are advocating for us to address this issue because it cannot be tolerated any more. Five thousand of us dying is unacceptable and it is preventable. Thank you.Dr SHANE RETI (National—Whangarei): It is a pleasure to take the last call on this bill and I want to lead with the statement that tobacco tax increases are the most effective way to reduce tobacco consumption.I think if we briefly look back through history as to how we have come to this excise tax discussion today we can see that the tobacco control programmes initiated by Government first started in 1984. The 1986 Budget was the first to raise taxes and between 1990 and 1998 the tobacco tax was adjusted for inflation. In 2003 New Zealand signed the Framework Convention on Tobacco Control (FCTC) and the World Health Organization (WHO) convention which was ratified in 2004 by New Zealand and came into force in 2005. In April 2010 the Excise and Excise-Equivalent Duties Table (Tobacco Products) Amendment Act enacted a 10 percent increase in tobacco tax annually—2010 2011 2012—very much like what we are doing here.In November 2010 the Māori Affairs Committee reported back to the House on the inquiry into the tobacco industry in Aotearoa and the consequences of tobacco use by Māori. This was a very important piece of work. It was chaired by Tau Henare and current members in the House who were there at that time include Simon Bridges Kelvin Davis Metiria Turei and Iain Lees-Galloway.The select committee heard 96 oral submissions and their recommendations unanimously included firstly a smoke-free New Zealand by 2025 and secondly tax increases: “We commend the Government on the enactment of the excise and excise Act which has increased the tax on all tobacco products by 10 percent. We recommend that the Government legislate for further incremental tax increases over and above the rate of inflation.”In 2011 the Government then adopted the 2025 smoke-free recommendation and in 2012 we got back to saying: “Well what does the increase look like from here?”. I think the regulatory impact statement for the 2012 increase is really telling because it outlines the rationale for a tobacco tax and it is underpinned by three arguments. The first is social policy objectives the second is revenue generation and the third is correcting negative financial externalities—that is the cost of smoking to Government and society should be borne by those who cause the harm especially health care costs. But I just want to reflect for a moment: we are all focusing on health care costs; let us not forget the costs of fire and let us not forget loss of productivity—labour productivity—due to smoking as well.I think it has been commented on that this is a revenue-generating mechanism—yes it is. That is one of the consequences. I turn our attention to the guiding principles of article 6 of the WHO FCTC which clearly says: “Effective tobacco taxes are an important source of revenue.” The framework that we have ratified and that we are a part of clearly says yes—that that is part of an excise tax. The three objectives for raising tobacco taxes which were included in the 2012 regulatory impact statement still hold today: social policy objectives correcting negative financial externalities and revenue generation. With that I commend this bill to the House.A party vote was called for on the question That the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill be now read a first time.Ayes 109New Zealand National 59; New Zealand Labour 32; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 12New Zealand First 12.Bill read a first time.Second ReadingHon Peseta SAM LOTU-IIGA (Associate Minister of Health): I move That the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill be now read a second time. In the first reading I spoke about why this legislation is good for all New Zealanders. I talked about the costs of smoking and I presented some evidence to suggest why this is important to New Zealanders—why it is important to the health of New Zealanders—and why a tax is part of an overall package to bring down the costs of smoking to save lives and overall to improve the well-being of New Zealanders.Some points have been mentioned from across the Chamber around applying these tax revenues to the public health spend. It is true that there will be $425 million raised over the next 4 years but as Minister Coleman said in his comments yesterday after the Budget speech that will go towards more hip and knee replacements. That will go towards disability support services for those in need. It will also go towards the bowel cancer screening programmes that will be delivered in the next 4 years. Those are the types of health programmes that are good for New Zealanders and I do not think New Zealanders out there would argue that this money would not be well spent on health services delivered to New Zealanders over the next 4 years.Members opposite said that it was just a revenue grab but you know increasing tobacco excise—we know and it is internationally recognised that it reduces harm and that it reduces the cost to society. Members opposite also referred to the impact on lower socio-economic groups but only one member opposite actually understood and looked at the evidence. I thank Ms Wall for actually doing the research and understanding the impacts of this legislation and I want to quote from the experts whom Mr Clark mentioned. In the study by Wilson Thomson Tobias and Blakely they raised two conclusions. The first is that “The estimated harm to life expectancy from tobacco taxation … is orders of magnitude smaller than the harm from smoking.” and secondly—and this is important for us as lawmakers in this debating chamber—“Policy makers should be reassured that tobacco taxation is likely to be achieving far more benefit than harm in the general population and in socioeconomically deprived populations.” That is the evidence that has been presented. Ms Wall understands that. I suggest she talk to her colleagues just to bring them up to speed with some of the latest evidence.What was also mentioned—and the Māori Party referred to it—was that this measure in and of itself is beneficial to the health of New Zealanders but in and of itself it requires support. So there is a comprehensive tobacco control programme in this country. It is world-renowned and it is delivered with serious health outcomes in mind. The effectiveness of these programmes has been measured and they do through the various smoking cessation tools and programmes face-to-face smoking cessation interventions as well as Quitline and the stop-smoking medicines—there are a number of these programmes out in the community that are being used to reduce the incidence of smoking.Some programmes are more effective than others and I reiterate our Government is committed to ensuring that the programmes that are working well should be funded and those that do not work so well should be cut. It is as simple as that. We want more effective programmes because we know that if you invest a dollar of taxpayers’ money you want to see a return on that investment where it costs—Treasury estimates that the valuation of stopping a person smoking is about $38000. The valuation of preventing someone from smoking is approximately $13000.Other members in this House have also referred to a black market supposedly being ramped up. Well there is no evidence—no evidence whatsoever—of this market being in place. The officials have looked at the size of the illicit tobacco market in New Zealand. It is estimated to be about 2.8 percent which is far lower than it is for some of our trading partners overseas. It is far lower than those whose health systems we compare ourselves with. So there is no evidence of that. But the authorities—the Customs Service and the police as well as health officials—are keeping a watching brief on this particular area.So I want to just summarise by saying that smoking is responsible for close to 10 percent of health loss from all causes and it includes 4500 to 5000 premature deaths a year. That is why we are passing this bill. It is a useful bill. It is something that I think most parties around this Chamber are supporting. It is helping us on our way to our smoke-free goal by 2025 and again in this second reading I urge members opposite members around this Chamber to support this piece of legislation.Dr DAVID CLARK (Labour—Dunedin North): I want to take a few minutes at the start to respond to a couple of the speeches that have happened so far in this debate. Mr Lotu-Iiga right now has failed to give the assurance we sought that the money from this bill would be put back into public health.Hon Peseta Sam Lotu-Iiga: More surgeries.Dr DAVID CLARK: He has talked about meeting inflation pressures. He just said “More surgeries.” as though that was public health—as though that was addressing those drivers of cost in the sector which we all know about that have such significant consequences. The member clearly does not really understand the issue and that is frightening because this is the Minister responsible for introducing this bill. He does not seem to know what he is doing on this topic. He was not able to give the assurance but he thinks he has which is the frightening frightening thing when we are in this House and he is the Minister responsible for this legislation.We have heard from Mr Brownlee various conspiracy theories including that the scientists and academics who speak out on this topic have a vested interest and that the scientists and academics who speak out on it somehow will not have a job because the Government has been so successful in this regard and therefore they are against the Government because of the Government’s success. I suspect he has probably got another theory about the man on the moon and a few other things but frankly this claim just does not stack up. I do not think anyone in this House believes there is a great conspiracy amongst the lethal left-wing academics out there to try to criticise the Government because it is so successful. The claim is ludicrous. It was an entertaining speech from Mr Brownlee but that is not really why we are here.We are here to actually put through a measure that will make a real difference and we will be supporting this measure because putting an excise tax in place does make a real difference—we know that—in terms of smoking cessation. But we also know that what the academics say is right which is that the 2025 target is a pipedream without other measures. If that money is not put into smoking cessation programmes and if it is not put into Quitline and so on the devices that help people quit the 2025 target will simply not be achieved.Another interesting thing that I have learnt in my research recently is that the behaviour of tobacco companies when they are given a lead-in time like they are being given in this legislation is to push the cost on to premium products rather than gateway products. I seek an assurance from the Minister that he will be looking to ensure that this tax is covering all tobacco products in an even way across the market. I look across the House and hope that the Minister is able to give that assurance in his next address. Otherwise what we are doing is simply putting a whole lot of excise tax on to the luxury cigars that are bought by people for whom money is no object and not on to the gateway products—those cheap cigarettes that first-time smokers use. So I would like an assurance from the Minister. He may be able to give this assurance that it will be applied evenly across all products.Why we need such a lead-in time is not clear to me. If it is so that tobacco companies can reorganise their affairs so that they will be minimally affected by this I will be disgusted and I think every other member in this House would also be disgusted to learn that. I want the Minister to consider this again—perhaps have a look at what public health actually is and see whether he can give an assurance that this money will actually go into those things that would help us to achieve the 2025 target for quitting.I did not hear Mr Seymour’s contribution. I was called away on urgent public business and was very disappointed to miss his response because I was looking forward to the tortured explanation that he was going to give about why he does not support this measure at all but is going to vote for it in the debate in support of the Government. I think from colleagues who were in the House who have briefed me the basic logic was that it was a failed measure that will not work but he will support it because it is a Budget measure. That equates to he will support it because it means he will get a quid pro quo. He will get some corporate welfare out of it. He will get to put in another charter school that is funded at five times the rate of our public schools. I think that is why that member is supporting the bill in this House. He speaks about nothing but corporate welfare that man—the man from ACT. He has this stance that the Government should spend less money but when it comes to his mates the Government should spend more money. It is unfathomable that he can stand up and say that and do it without breaking down into some kind of—I do not know—self-immolation or something. It is unfathomable that something strange does not happen in that kind of circumstance. It is a very very tortured logic but something though he seems to be perfecting.But I will look forward. No doubt he will speak further in the debate and we will hear more about the tortured logic as to why he should support the bill even though he opposes the whole idea—that is what we have got here in this House. Actually this Government has very few principles. We can see that in what it is doing. It is treating this as a revenue grab. It is a good measure and we will support it for that reason but the Government is not putting the money back into the public health-care that this country needs. The Minister is not prepared to give a cast-iron guarantee that this money will not go into flag projects—let us have another flag referendum!The Government is not able to give a cast-iron guarantee that it will not do another deal like the Skycity deal which again was another form of corporate welfare where it handed out money hand over fist because it did a bad deal behind closed doors which the Auditor-General criticised. The Government cannot give a cast-iron guarantee it is not going to do another Saudi sheep deal where it is giving money to Saudi businessmen and providing documentation and advice out of New Zealand Government agencies that will not even be released to the New Zealand public.The Government will be bailing out someone else—MediaWorks; who knows what—next. That the Government does and it will not give a guarantee that this money will not go to those kinds of deals. That is what the Government does sadly. We want to see of course that money go into public health. We are concerned of course across the Budget as we have seen this health care underfunding issue continue. There is $1.7 billion in underfunding using Treasury’s figures and analysis from Infometrics—independent analysis that shows that with rising inflation and cost pressures you need to put more money into health each year.The Government has underfunded over the last 6 years by $1.7 billion. It is no wonder that New Zealanders are missing out on the services that they require. We have seen in the latest round that there are 15 district health boards (DHBs) that will not receive enough money to meet the funding pressures. The real losers in this round are Canterbury District Health Board which will be $33 million underfunded Waitematā District Health Board at $27 million underfunded and Counties Manukau District Health Board at $18 million underfunded. But there are 15 DHBs that again are not funded for cost pressures in the Budget. Of course it is a bit more than the Government has put in in previous Budgets.The Government wants the DHBs to get closer to their targets this year because election year is coming. There are no surprises there. The Government is putting a bit of lipstick on for election year. It wants the DHBs to have smaller deficits. It wants one or two even to reach surplus. The Government is dressing it up for election year. This is the year that the Government has decided to put a little bit more into health but it will not be enough to meet all those cuts that have already been made—we know that; we know that.Mr DEPUTY SPEAKER: Back to this.Dr DAVID CLARK: Back to the issue at hand in terms of whether this measure is bringing in money for the general pot to be spent on flag referendums and so on or Skycity deals or whether it is being spent on public health as it should be. Unfortunately the Minister has been able to give us absolutely no assurances whatsoever in that regard.When tobacco companies get that lead-in time as I mentioned earlier they adjust the range of their products on the market. I do look forward to the Minister’s assurance that the excise tax will be spread across all products not just across different providers in the market but across individual products. Therefore providers cannot rearrange their ranges to maximise their profits—keep the gateway products cheaper so that they can apply the tax to the luxury products at the top of their market. We know that is their behaviour.The Government has two former tobacco lobbyists and they will certainly know the answers if the Minister does not have that answer at the top of his head. I wonder why the Government has not taken stronger measures on smoking cessation. Perhaps the answer does lie in the fact that the Government has two former tobacco lobbyists amongst its numbers. They will certainly be defending the interests of the industry as they understand it. This Government has failed to deliver on health for New Zealanders. Middle New Zealand is missing out. The Government seems much more interested in the interests of a very wealthy few at the top. When it comes to this measure it seems to be money coming in—Mr DEPUTY SPEAKER: Get back to the bill.Dr DAVID CLARK: As I said it is money coming in so that the Government can dangle tax cuts next year money coming in that it cannot assure us is going to be spent on public health measures. We will support the bill because it is one of the most effective things that can be done to help smoking cessation. But the Government is not on track to meet its 2025 target. That is what the specialists say. The Government needs to put more in play if it is really serious about achieving that goal.KEVIN HAGUE (Green): I want to pick up on one of the points made by David Clark in his recent contribution. It certainly is a pleasure to see Chris Bishop and Todd Barclay voting for the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. I want to recall Budgets of years gone by. I remember sitting next to the radio listening to finance Ministers from the past reading out the Budget. Very often there was a measure to increase an excise tax on tobacco or alcohol that would typically take effect pretty much immediately. The House would move immediately to debate a bill that would take immediate effect. For bills of that nature of course there was a reason for urgency.I am wondering what the reason is for taking urgency for this bill. This bill actually does not take effect until the beginning of next year. It seems to me that there would have been an opportunity to hear submissions from the public and submissions from the experts who could tell us whether or not this was an adequate measure. They could perhaps assess this measure against the progress that New Zealand is making towards the goal of smoke-free Aotearoa by 2025 that the Government says it has. I was reminded—this is the second reading—that in 2012 when the Government introduced its last round of excise tax increases on tobacco products in fact we did have a select committee process. The Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill did go to a select committee and we heard some fascinating submissions.I want to refer to some of those submissions because they relate directly to the issues that are the topic of this bill also. In the debate that we have had so far today we have heard one or two speakers in particular David Seymour from the ACT Party in his extraordinary contribution suggesting that there was no evidence of effectiveness. Well experts at that select committee brought forward incontrovertible evidence of the effectiveness of these kinds of measures.Just as one example—there was the evidence of increased calls to Quitline that were associated with successive excise tax increases on tobacco. We know that calls to Quitline are associated with quit attempts and the more quit attempts people make the more likely it is that they will stop smoking. It is very clear indeed that these excise tax increases will increase quit attempts and that will result in more people stopping smoking and additionally we know that excise tax increases that put up the price are a very effective way of stopping people from starting to smoke. Younger people will tend not to become smokers because of the higher price.One of the other pieces of evidence that submitters to the Finance and Expenditure Committee raised in relation to that bill which as this one does proposed successive 10 percent increases was that a jolt in the first year would actually produce a much more effective bill. I have no doubt that that would be the case in this case also. If one takes for example that effect of discouraging younger people from starting smoking then actually a 40 percent increase in the excise tax which is what the public health community and the research experts were telling the select committee we ought to do would have a disproportionately beneficial effect. That evidence seems to me to be also appropriate to this bill. None of the Government speakers have commented on why the Government is not choosing to introduce a jolt—a much bigger disproportionate increase in year one for example.The other evidence that we heard in that select committee was from very many Māori and Pasifika organisations. They came to the select committee specifically because some people had been saying “Look this bill is going to have a detrimental effect on the poorest New Zealanders—on Māori on Pasifika on low socio-economic status Pākehā—and therefore we should not do it.” Earlier in this debate Louisa Wall actually detailed some of the research that makes the very clear point that the disproportionate gains to those very New Zealanders outweigh the disproportionate cost. That is what those groups were saying to the select committee.I want to go on to comment on the other thing that those groups said as a bit of a qualifier to their support for the bill. They said: “Yes the disproportionate gains outweigh the disproportionate costs and so we definitely support it but we want to ensure that the revenue that the Government takes in from this increase in excise tax is then channelled towards ameliorating the negative effects on our community.” Ameliorating the cost supporting increased quitting services and supporting health promotion services around tobacco for our communities—unfortunately that is not what Minister Lotu-Iiga has actually said that the revenue is going to be used for. He has talked about the bowel-screening programme; he has talked about increased elective surgery.Well actually what that really means is that the revenue from this excise tax is going to be channelled into the consolidated account and will substitute revenue from that account that would otherwise be used for ordinary health services. That is not what submitters supported in relation to the 2002 Act. That is not what we support. We believe that this bill should be used entirely for the purpose of getting us towards that goal of a smoke-free Aotearoa by 2025 and achieving that goal for all groups not only middle-class Pākehā who are already on track for it but also Māori Pasifika and low socio-economic status people.So the Green Party continues to support the bill but encourages the Government to actually do the responsible thing which is to use the revenue not for the consolidated account but for enhancing the smoke-free programmes. Thank you.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.STUART NASH (Labour—Napier): I often agree with much of what Mr Tabuteau says but on this point I am going to have to disagree with him. But I will say that I do believe this is not enough. The University of Otago and a number of other studies have concluded that it needs to be at least 20 percent or a one-off shock of 40 percent. But that is no reason in my view not to vote for this bill because anything that increases the price of tobacco is a step in the right direction and let us address the other issues as we go forward.Mr Tabuteau raised an interesting point and it was that all we are doing is taking the money out of the pockets of poor people who smoke and as a consequence of that they will miss out on the necessities of life. But can I quote and it is about a 30-second quote from an academic study that dispels Mr Tabuteau’s concerns around that: “Another issue related to increasing taxation is its financial impact on existing smokers many of whom are welfare beneficiaries or on low incomes. It has been noted that increasing the price of tobacco (which due to addiction is experienced as a necessity commodity) may threaten smokers’ ability to ‘purchase the essentials of a healthy lifestyle’.” The study here is Giskes et al. 2007. “Indeed tobacco companies have cited the link between poverty and ill health as a strategy to argue against significant price increases.” That study is Clifford et al. 2014. “However this ignores the fact that tobacco is responsible for about half the mortality difference between the highest and the lowest income groups”—reference Marmot 2010—“so the health gains from making tobacco unaffordable will be much greater than the health risks posed by the (temporary) additional financial strain this will entail.”This is an important point and it was raised in the select committee because a number of us did question the impact or the burden on the poorest in our society who do smoke. It was acknowledged as a risk but the academics presented three or four papers that actually showed the benefit to society was greater than the risk posed by the financial impact on the poorest in our society and it is the reason why I am supporting this.Tax has two purposes: the first is to raise money and the second is to influence behaviour. The main purpose of this is no doubt to influence behaviour. We want people in this country to stop smoking and we need to send a very very clear signal that smoking is no longer cool. I think this message is getting across the developed world in fact. So when John Travolta lights up on television that is no longer cool; that is exceptionally uncool. We need to send that signal around the image as well.But there are a number of academic studies that show that this is the right thing to do i.e. increase excise tax. Professor Beaglehole and Professor Wilson had a very interesting paper that showed that the increases in excise tax are actually having a diminishing impact because what we are left with at the moment is that those who were going to give up smoking with the 2010 and 2012 increases actually did. We are now left with the real hard-doers—those in society whose addiction is incredibly real and is very powerful. This is why I would like to see this tax hypothecated and by that I mean the money raised from this tax the $425 million raised from this tax go directly to the health budget. Certainly what a number of the papers say is that with the money raised it is imperative that it actually goes towards smoking cessation programmes to really help those who need help.As mentioned in my first speech this is a very powerful addiction. I have read that an addiction to nicotine is actually more powerful than an addiction to heroin. So let us not kid ourselves that just because the price goes up people will go cold turkey the next day. They will not. They need help and we must provide them with that help.Another large international study on the effectiveness of tax and price policies for tobacco control was undertaken by the International Agency for Research on Cancer to evaluate the strength of available evidence across 18 countries on the effects of tax and price policies to prevent and reduce tobacco use. The actual name of the study was Effectiveness of Tax and Price Policies for Tobacco Control. The conclusion was based on extensive evidence reviewed. The recommendation was that “To improve public health by reducing tobacco use governments should adopt relatively simple tobacco excise tax structures that emphasize specific taxes and that include regular tax increases that outpace growth in general price levels and incomes.” But what it also again reiterated was that Governments should use tax revenues “to fund comprehensive tobacco control programs and other health promotion activities” given that such programmes lead to further reductions in tobacco use.So it was with slight concern that I did hear the Associate Minister of Health the Hon Peseta Sam Lotu-Iiga stand up and say that the money raised from this would go towards hip operations and knee operations. There is no doubt that we need further spending in the health sector and Ms King has highlighted this a number of times. But what I would have really liked Mr Lotu-Iiga to do and to work with Dr Coleman is to say: “Hey we’re going to raise $425 million. Let’s put aside $100 million or $50 million or let’s do some studies to really address this problem. We need to put aside a certain amount of money and go out to the public and say that we understand the pain that a number of people are going to go through. As a consequence of that I’m now putting aside $50 million that will increase the size of the Quitline programme or increase funding for a number of smoking cessation programmes by 100 percent or 200 percent or 300 percent.”There are a number of researchers in this country who understand this and understand the magnitude of the problem but who also understand what needs to be done to address this problem and help those who are suffering from a nicotine addiction. I think if the Associate Minister of Health the Hon Peseta Sam Lotu-Iiga worked very closely with the Minister of Health they could come up with a really innovative programme to drive the country towards the 2025 target of being smoke-free.A 1997 study showed that as costs increase smoking becomes less attainable and less attractive to a potential new generation. Louisa Wall actually talked about this. The number of young people who have smoked is horrendous. So not only do we need to target education programmes or help to those who are trying to quit smoking I believe we also need to undertake a new radical and hard-hitting education programme to those in schools. We have got to start with the young people and say: “Hey you know what? This is what smoking can do to you.” Let us get not just at those who are buying the packets with the ugly pictures on the back; let us go to the really young ones and say to them: “You know what? You want to be a cool rugby player? You want to be a star netballer? You want to do well at school? You want to live a good healthy life? This is what smoking does to you—it kills you.”That sounds pretty melodramatic I must admit but the evidence is absolutely overwhelming: smoking kills. We need to get that message out there not only to those who are engaging in the habit at this point in time but also to young people so they are not even tempted to start. The interesting thing is with all due respect to Louisa Wall she said she tried a cigarette due to peer pressure. We have got to change that whole model round so peer pressure is now about how it is incredibly uncool to smoke—do not start. That is the message we need to send out there. We are supporting this bill. We do think the excise tax needs to be substantially higher as indicated by a number of researchers in this country but it is a start. Thank you very much.LOUISA WALL (Labour—Manurewa): Kia ora. I am actually really pleased to follow my colleague Stuart Nash in taking a call because he and I are 100 percent on the same page in regard to this the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill and its implications particularly for young New Zealanders.I have a submission to the Budget Policy Statement that was presented by Warren Lindberg who is the chief executive officer of the Public Health Association with regard to the tobacco excise and what the tax take should be spent on. I just want to outline the initiatives he thought should be prioritised given our focus on making New Zealand smoke-free by 2025. The initiatives are: targeted health promotion and cessation services for young people; targeted health promotion and cessation services for Māori particularly young Māori women; targeted health promotion and cessation services for pregnant women and their families/whānau; funding post-birth cessation services support for up to 2 years following so that mothers and those around them can sustain cessation which would provide the maximum health gains for the parents and for all New Zealand babies; and research into effective cessation and effective tobacco policy for New Zealand including targeted surveys of tobacco use among vulnerable communities and populations.One of the references in that submission was to the Action on Smoking and Health (ASH) Year 10 Snapshot Study. The overall philosophy or principal position that this particular survey articulates in its results is this: quitting is hard and protecting children from the addiction of smoking in the first place is best. I think that makes sense to all of us but as I outlined earlier within the context of 66 percent of our young people trying smoking and of those 50 percent of them then smoking for 40 years and dying premature deaths—and we have talked about some of the consequences—I absolutely agree with Stuart Nash that we should be doing everything we can to stop our kids smoking in the first place.One of the biggest challenges we have with that and this is where it gets really interesting is that when children grow up in a family where one parent smokes they are actually 25 percent—the research is really interesting. It says if you are a young person and you grow up in a family where both of your parents smoke if one of them gives up smoking there is a 25 percent reduction in the likelihood of you smoking. If both parents give up there is a 39 percent reduction in the likelihood of you smoking. Basically if you grow up in a family where people smoke or if you see it then actually the statistics are against your ability to be resilient enough to not smoke. That is where it is kind of a chicken-and-egg problem. We want to focus on the kids but actually to focus on the kids and prevent them smoking in the first place we have to help their parents and we have to stop the parents from smoking in the first place. What we know is that on average it takes seven attempts for someone who smokes to give up. It is an incredibly hard thing to do because of the addiction.I know this because I grew up in a household in which my father smoked two packets of cigarettes every day—Winfield Reds. He chain-smoked and that has had a devastating consequence on my family. He died when he was 63. He had a heart attack. He had cardiovascular disease which is one of the outcomes of smoking for over 30 years. I think it was lucky he did not quite make—oh he was 63 and started in his 20s so he was the 40-year smoker.The other thing I find really interesting is who supplies young people. Actually the people who supply young people are their parents—40 percent of young people who smoke are supplied by their parents and their immediate family. Another 40 percent are supplied by their peer group and those who are engaged in a peer group with older people who can go into the dairies and buy those cigarettes themselves. But actually 18 percent of them get away with buying cigarettes themselves so we actually have a problem with the enforcement of the legislation that says that if you are under 18 we cannot sell to you and if someone does they will now be fined $5000. Actually that fine is good because there should now be more of an incentive for anyone who sells cigarettes to be super vigilant in making sure young people do not have access to tobacco.I did a little bit of maths—this is for Minister Lotu-Iiga because we know he will be almost successful in reaching the under 5 percent target for Māori women—based on the statistics that I have managed to find in this 2014 ASH Year 10 Snapshot Survey. What it says is that for 14- and 15-year-old Māori girls who are three times more likely to smoke daily the statistics between 2013 and 2014 saw a 30 percent reduction in the daily smoking rate and a 7.6 percent reduction in the regular smoking rate. If I apply the 4 years of this piece of legislation then at the end of 2020 I think when we will realise the fruition of this legislation the daily smoking rate for Māori girls aged between 14 and 15 will go from 8.8 percent to 5.05 percent so we will nearly get there. The regular rate for that age cohort will go from 16.76 percent to 12.22 percent.I think therein lie some of the suggestions from the researchers—that 10 percent is a good step but it is too passive. It should be 20 percent if we want to accelerate the reduction. But I think that after this legislation has been fully realised there will be an ability for the House to then renegotiate whether it should continue and at what rate because we will then be seriously getting down to the hard-to-reach communities where actually the ability for our health system to engage with those people—and I want to pick up on what my colleague Fletcher Tabuteau said. He is right: the people who are most affected are the most impoverished. They are the ones who come from communities where the access to public health services is not as it should be. So how do we get to those families? How do we help those people? How do we ensure that they can be smoke-free? I think that will be the challenge as we look at how effective this piece of legislation is in the future. It is only one part of the solution.I think that if we were genuinely wanting New Zealand to be smoke-free we would care about the people who are most affected by cigarettes and actually ensure that they have all the services they need all the tools they need and all the support they need over whatever period of time it takes them to finally realise that smoke-free aspiration—to be supported. For my father in the end it was going to a hypnotist. It worked for him. It took him a long time and it took him many attempts but eventually he found a tool that worked and he was able to be smoke-free. Unfortunately it did not erase the 25 years of his smoking beforehand and that is what I regret the most. But through pieces of legislation like this we will start to actually impact on the mortality rates and how long it is anticipated some of us will live for. I commend this bill to the House and I again just want to say congratulations to the Minister but there is so much more to be done. Thank you.A party vote was called for on the question That the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill be now read a second time.Ayes 109New Zealand National 59; New Zealand Labour 32; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 12New Zealand First 12.Bill read a second time.In CommitteeJAMI-LEE ROSS (Junior Whip—National): I seek leave for all questions in this debate to be taken as one debate and voted on separately.The CHAIRPERSON (Hon Chester Borrows): Leave is put for that purpose. Is there any objection? There appears to be none.Parts 1 and 2 and clauses 1 to 3Hon ANNETTE KING (Deputy Leader—Labour): I am very disappointed that I have been unable to participate in the first and second readings of this bill because urgent public business took me elsewhere but I have followed it as much as I could and have been impressed by the calibre of the debate on this bill from the Opposition members. This is the point where we now have the opportunity to ask—and the opportunity for the Minister to answer—some very direct questions. I am sure that the Associate Minister of Health the Hon Peseta Sam Lotu-Iiga will be very willing to answer such questions because he is getting wide support for this bill today. And because it does not go to a select committee and there is no opportunity for scrutiny by the public therefore I think this is the chance to ask those questions and for the Minister to answer.I am interested in the Minister informing the Committee how much of the revenue of the $425 million that will be gathered over 4 years will go into public health—that is public health. I am not talking about elective surgery or a bowel-screening programme; I am talking about how much will go into public health. I know the Minister is not responsible for all of the Budget but he is a powerful Minister in terms of his advocacy for his part of the health portfolio—or he ought to be—and he covers what is public health.One thing we have seen in the eight Budgets of this Government is the reduction in money going into public health and public health programmes. Of course everybody likes to say that prevention is better than waiting until somebody gets sick. It is a mantra—we ought to prevent things prevention is so important early intervention—but if you do not have an emphasis on it and you do not put the money in to help make it happen then it is just hot air and words.So I would like the Minister to tell us how much will go into anti-smoking assistance and programmes to help people stop smoking. How much is going to go into health-related issues that are often associated with smoking—mental health for example? How much will be put into the mental health budget to help those who smoke stop smoking? How much will be going into other areas—for example obesity? There is a link between smoking and obesity. These are very important public health questions. There is over $100 million a year in revenue that will be gathered and that needs to be spent. Imagine if you put that money into public health in New Zealand what a difference you could make.My fear I have to say is that it is going to be used in the consolidated account. Maybe some will go into health but we are looking at a Prime Minister who wants to have some big fat tax cuts for a few people next year and it would be wrong—morally wrong—to take money off those who smoke and put it into a tax cut for those who need it the least. This money needs to be health-related. I think any levy ought to be related to the product or the activity so that if you are taking money off alcohol in terms of excise duty or levies or if you are taking money off gambling then it ought to go alongside the public health programmes that are put in place. So Minister this is a serious question that perhaps you have not yet worked out or have not yet managed to twist the Minister of Health’s arm on but I would look for your advocacy in this area.I also want to know what has actually happened to your separate tobacco control plan. It is all very well using one lever—one lever—in the whole fight against tobacco consumption and prevalence but if it is only one lever it is not going to be enough to reach a smoke-free New Zealand by 2025. You told me in September that the Government had announced developing a separate tobacco control plan and then in February when I asked again it was still developing a tobacco control plan. Am I to expect as each month goes by that I will be told that the Government is developing a separate tobacco control plan? Where is the plan? What is in the plan? Will it include for example stopping smoking in cars when children are in them? Minister you replied to me and said that you are opposed to smoking in cars. You are also considering banning smoking in cars as part of I presume a tobacco control plan. So it was very interesting to those of us on the select committee to learn that the Ministry of Health is not proposing a ban on smoking in cars because the Government is not interested in it. So there is a disconnect between what this Associate Minister wants and what the Minister of Health is saying.If we are going to have a separate tobacco control plan Minister it needs to have a number of elements in it. One of them has already been mentioned—plain packaging—and you will know that I have asked you many questions on this and on when you are going to bring forward the bill that sits on the Order Paper. You said that the Government has got a very busy programme this year. Well I know that but how important is trying to help prevent people smoking? Is it of lower importance than some of the fiddly little bills we have had in this place that have taken up a lot of time? Is not the health and wealth of New Zealand and the well-being of New Zealanders far more important than some of the legislation—the dross—that goes through here on a daily basis?I am wondering whether you have got the punch that is needed to give what you want in this area of health. You are an Associate Minister—I understand that you have a Minister over you and obviously his interest is not as great as yours—but I am looking to this Associate Minister to be able to bring forward a separate tobacco control plan that looks out to ensure that we are smoke-free in 2025. That is what we want in this House. That is what most New Zealanders want. But without a plan—and a forward-looking plan—to do it all we are doing is tinkering around the edges.I also want to know what has happened to the public consultation on the Protocol to Eliminate Illicit Trade in Tobacco Products because you did tell me that it was going to be tabled in this Parliament in 2016. We are nearly in June—when will it be tabled? I have listened to the comments from the speaker from New Zealand First talking about what might happen with illicit trade in tobacco the growing of tobacco the black market in tobacco. One of the things that took place last year was public consultation on a protocol and it was going to be used to produce a national interest analysis to assess the pros and cons of New Zealand becoming a party to the protocol. So I want to know Minister what is happening in this. Are we going to sign up to a protocol? When will it be available? Is it 2016 or is it also—like many of the other measures—being put on the back-burner?This is one measure. We are supporting it. We do know that price is a major driver in terms of stopping people smoking. It is not about punishing New Zealanders because they smoke. You see I have always had this theory: why should we allow tobacco companies to kill poor people? Why should we allow it? That is what they do. They target their tobacco prices at those on the lowest incomes to keep them hooked. They target our kids to keep them hooked. I do not believe we should allow that. And we should take every measure we can to help New Zealanders stop smoking to give them the tools to assist them—because there are good tools out there tools that can assist. We ought to be putting our investment into that area because we know that the biggest cancer killer in New Zealand is still smoking.Minister I am urging you to take this opportunity to answer those questions because the public cannot ask them of you—there is no opportunity and there is no opportunity for select committee submissions. This is your moment Minister to stand and tell the people of New Zealand what you intend to do with the revenue that is raised—that it is not just a revenue grab but that it is going to be used to help New Zealanders give up a habit that is leading to their disease or death. That is a very serious issue.We have made good progress over many years right back to the first legislation in 1989 when Helen Clark passed the very first tobacco control legislation. I have to say that you Minister are one of the first who have actually supported it putting aside Tariana Turia. National opposed every tobacco measure until Tariana became the Minister of Health. When I was Minister she was my Associate Minister and she was pushing it then. So this is the opportunity for this Minister to stand out as a Minister interested in tobacco control.RIA BOND (NZ First): I am proud to rise on behalf of New Zealand First and take this short call in the Committee of the whole House on the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. New Zealand First recognises that smoking is harmful. We do not encourage nor do we support smoking. What we do support is for members of the public to have access to programmes that inform the public of the health risks associated with smoking. We have seen over the years on cigarette packaging the graphic details and warnings. In fact there are about 14 of those graphic warnings that have come on to the cigarette packets.There is overwhelming evidence to support the notion that what stops people from smoking is the right information the correct education and the time and support of not only their family but also members of the community. In Invercargill we have a great programme that helps smokers who choose to quit and we have a really good wraparound service throughout the agencies that in fact does help those who really do want to quit quit—not for financial reasons but for the reason that it does not look quite so good in their family and on account of the pressures that are being put on parents.This tobacco tax is the most efficient way that this Government can gather revenue and that revenue is coming from a legal activity that targets law-abiding citizens and I question along with other members in this Committee today where the $425 million would go to. New Zealand First wants assurances from the Minister of Health that the $425 million revenue grab will in fact go towards what New Zealand people need and that is smoking cessation programmes. What we do not want to see—and I think the Minister stood up earlier and directly avoided the request from this side of the Chamber for assurances about this. We wanted the assurance that the money that is gained—the $425 million—would in fact go back into these programmes and not go back into the coffers to prop up a failing population-based funding formula in this country.We here in the Committee should remember that there are many harmful things out there in our communities like vehicle exhaust emissions; food that leads to obesity diabetes and tooth decay; and alcohol which in my opinion leads to instant deaths on our roads and that is a damn tragedy. Alcohol is more dangerous than cigarettes because alcohol has far more social harm associated with it and we know this. The question is why alcohol has not been factored into the equation and taxed like cigarettes have been. We see daily on the TV that we have alcohol rehab advertising saying: “If alcohol affects your life please come to us.” I would like to see alcohol not simply being looked over as being a problem to our society. In fact it does weigh heavily within our health system.It is high time that this Government gets a grip because smoking is legal. It is a darn well legal activity. All tobacco products are legal yet time after time smokers in New Zealand continue to be heavily penalised for the freedom to choose whether they want to smoke or not. This is a ruthless tax target that targets the activity of a large number of New Zealanders who are already on minimum wages and low incomes. This is a ruthless tax on our poor.Smokers should not be classed as second-class citizens and we have seen how this has occurred. There is no smoking in pubs any more there is no smoking in public any more and in fact we have just heard that there had been a proposed ban for smoking in vehicles that you own as a New Zealander. Smokers are forced to hide behind the back of buildings like they are some kind of dirty second-class citizens. We need to remember that these are law-abiding people who choose to smoke and self-fund their addiction. That addiction is nicotine. We have also heard in the House in the first and second readings’ calls that smokers fund their health issues by three and a half times the health cost to that individual.This tobacco tax will have unintended consequences like smash-and-grabs from our dairies black market tobacco sales grow-your-own-at-home tobacco incentives and making people choose between a bottle of milk or a packet of cigarettes. The actual price of this tobacco tax will be the price on our community’s safety and our health and our well-being. When I looked at this bill I thought about how this would affect my area Invercargill and I thought about deprivation. I want to inform the Committee how this tax would affect my area in Invercargill—18.2 percent of Invercargill’s population over the age of 15 smokes compared with a national level of only 13.7 percent.POTO WILLIAMS (Labour—Christchurch East): I am keen to talk about the Pacific aspect of this bill with specific reference to new section 79AD which will be inserted into the primary legislation. It gives effect to the 10 percent increase in excise that will be collected on tobacco and in the years subsequent to that the 10 percent increase each year over a period of 4 years which will then provide to the Government we hear somewhere in the region of $425 million in revenue.There has been a bit of discussion already in the Committee about the purpose and the use of that revenue but I want to talk specifically about the collection of $42.5 million that will come directly out of the pockets of Pacific smokers—people from the Pacific who smoke. What should happen to that money?In 2004 the Quit Group which does such things as manage Quitline did a study into smoking amongst Pacific people. It is not a new study but one of the interesting facts that it found was that in the preceding decade one of the things that caused it to look at the rates of smoking amongst Pacific people was that it was becoming increasingly socially acceptable for Pacific women to smoke. Whereas smoking had been culturally unacceptable in the past it was becoming more acceptable socially for Pacific women to smoke and in particular for young Pacific women. Whether that is the influence of being a New Zealand - born Pacific person the study does not extrapolate. However what it was saying very clearly was that the rates for Pacific young women were going up.As far as I can tell from the information that it provided it would be good to have some or most of that $42.5 million that we will collect from Pacific smokers directed into the cause of ensuring that young Pacific women are educated about smoking and have some really good information so that they can make choices for their own health. Public health information works—we know it works—but it takes time and we need to start as soon as we can on that.This bill is going through the House under urgency so we will not have the opportunity at the select committee to hear submissions. This morning when I was at the Child Poverty Action Group post-Budget breakfast I took the opportunity to speak to a few people whom I met there. One woman in particular who works with children with asthma and respiratory conditions said to me when I asked her about her view on this legislation that yes if she had been given the opportunity to submit she certainly would have. She would have been in favour of the measures that the Government is taking on board.However—and it is a big “however”—she asked what is happening with our plain packaging legislation. The effectiveness of these measures is enhanced immeasurably when you take a suite of approaches and when you look at the various other tools. She knows that we have the legislation sitting on the Order Paper just awaiting the work programme of the Government to actually pass it. We know the impact that it is having in Australia. The Health Committee actually met with some members of the Australian health select committee and we have heard from them directly that it is making an impact. So I am urging this Government to get that piece of legislation pushed up the Order Paper because it will make a difference.The other thing that this young woman said to me was that she is also influenced by the work that is being done currently on smoking in cars. That will have a direct impact on children and babies in cars who are inhaling second-hand smoke. My colleague Louisa Wall made the important point about influencing adults to influence their children. I do just want to reiterate that here is one measure that we can take very quickly. It will take some time to bed in but it is an important factor and we need to ensure that we do that.This bill is a good step but it does not go far enough. I do commend Minister Lotu-Iiga on taking this measure. I wish he was bolder for Pacific people and Pacific smokers but we do commend the bill to the Committee.Hon Peseta SAM LOTU-IIGA (Associate Minister of Health): It is an honour to take a call in this the Committee stage. I want to take a quick call and answer some of the questions that have been put to me as the Minister responsible for this piece of legislation.Many across the Chamber have talked about giving a cast-iron guarantee around public health spending and yet everyone in this Committee knows that the taxation from this bill the tax that is derived from increasing tax on tobacco is going into the consolidated account. Everyone also knows that this Government is increasing health spending by $2.2 billion over the next 4 years and we know that it is going towards more elective surgeries because we have heard questions in the House almost day after day around elective surgeries. And when we put it into elective surgeries—that is $96 million worth of elective surgeries over 4 years—Hon Annette King: Over 4 years.Hon Peseta SAM LOTU-IIGA: Yes over 4 years. Yes she is on to it. It includes $169 million for disability support services which I am responsible for and I am quite proud of the fact that we are increasing that. It is going towards increased spending on Pharmac. We know that the people of New Zealand asked for that and that is what Minister Coleman and the Prime Minister have put more money into—as a Cabinet and a Government we are putting more money into Pharmac. So we know that that money is being well spent in the next few years catering for the needs the expectations and the aspirations of all New Zealanders. That is the end of the matter.I was also asked about whether this tax is going to have any impact. In fact some across this Chamber have suggested despite the evidence that has been produced by experts not just here in New Zealand but around the world that it will not have any impact. I suggest to members that they read some of the documents on the Table. The regulatory impact statement refers to the increase being expected to result in a 2.3 percent decrease in smoking rates—that is from 15 percent to 12.7 percent in the daily smoking rates over the next 4 years. That is not just the effect of the taxation. It is also the effect of all the smoking cessation programmes including the face-to-face programmes Quitline nicotine replacement therapy—all those types of interventions that make a difference in the lives of people who smoke. So we are getting a 2.3 percent decrease just from this taxation alone in the next 4 years. I have also been asked about the effect on the Consumers Price Index.Fletcher Tabuteau: Have you?Hon Peseta SAM LOTU-IIGA: Yes. I think Mr Clark asked about that about an hour and a half ago. I think those members misunderstand how this piece of legislation works because what is actually happening is that the price increases are excluded from the social assistance programmes. That is what is in the bill. I suggest to members that they read the bill. My first reading speech talked about the statutes that are being amended by this bill so I suggest that they read those provisions.I have also been asked about standardised packaging. I am getting away from the tax aspect of this bill because although we are focused on increasing tax we know that tax is not the only measure and that standardised packaging legislation is on target. It is in the House. It has been before the select committee and it is progressing in a way that—[Interruption] We know that it will go through the House this year. The Prime Minister has gone out and said it. I have said it. It is progressing through the House.I just want to say that I do thank the members opposite. We have had a rigorous debate in this Chamber. I think most parties in here will agree that this increase in taxation at 10 percent for 4 years is going to make a difference to New Zealanders’ lives.CLAYTON MITCHELL (NZ First): I rise on behalf of New Zealand First to take a call in the Committee of the whole House on this piece of legislation that we are going through under urgency. That would be my first question to the Minister: why are we sitting in the Chamber under urgency debating a bill that is coming in on 1 January? We have got 6 months in which we could actually have a select committee stage and hear from submitters and anecdotally we have heard evidence that two-thirds of the country thinks that this is nothing more than a kick in the guts. It is a “get stuffed” do-nothing “stuff it” approach whereby we are going to force people into giving up smoking.There is no evidence that suggests that that is actually going to take place by increasing the tax by 10 percent per annum. In fact it is more than 10 percent per annum—it is actually 10 percent plus the Consumers Price Index. So Minister Lotu-Iiga can you please answer the question for the people back home and those millions of people who are interested: why are we in urgency discussing this today when we have got 6 months in which we could actually run through a due process and hear submitters speak to the bill?I have a second question for you Minister. I have got some sort of clarification requirement when it comes to understanding or trying to understand the Order in Council provision that you have got. New section 79(3B)(a) in clause 4 says that it requires “every new rate of excise duty or excise-equivalent duty that the Order in Council imposes on a tobacco product is to be calculated by adding 10% of the existing rate …”. My understanding of that would be that by Order in Council you—the Minister—can make a decision to actually increase that excise at a later stage. Can you please clarify that for us? There is certainly some ambiguity in relation to that.There have been very few times in the House over the last 18 months when I could actually agree with the ideology if you like and theory of David Seymour. But I have to say that he is making sense in saying along with New Zealand First that this bill really is looking–Dr David Clark: Don’t go too far.CLAYTON MITCHELL: —I am pushing it I know; I am pushing the barrow right out here—like it is potentially going to increase the number of robberies and aggravated robberies by people who are in a very impoverished position as they try to support their habit. That is going to cause some serious concern.If the Government thinks that raising a tax on cigarettes is the answer and will stop people from smoking then like my colleague Fletcher Tabuteau has already said why is it not doing that with other things that are causing harm in society: fats in foods sugars alcohol and all these other things? This is nothing more than revenue collecting by this Government. It is trying to balance the books as we go into the 2017 general election so it can actually hand out a lolly scramble of tax cuts next year and say: “This is what we are here to achieve.”I have to say that if the ideology behind that increase in tax—that huge gouge into the working-class New Zealander and the middle-class New Zealander—is going to benefit them then surely we have to as a Government look at what it would do in reverse. If you are talking about taxing things that are bad for us what about taking tax off things that are good for us? What about taking GST—at 15 percent—off food? The actual cost of living has gone through the roof in this society because vulnerable people poor people and everyday New Zealanders are being taxed to live. If we are taxing cigarettes by 10 percent surely we should be taking GST of 15 percent off food. That would balance out the Government’s argument of why it is actually putting a tax on in the first place. How it cannot look at that is beyond us.New Zealand First has been advocating for that for some time now and every time we suggest it we hear the Government’s rhetoric: “We can’t afford to take it off. How are we going to afford it?”. I say to this Government: how can you afford not to take GST off food—15 percent—when you can sit here plain-faced in this Committee and say: “We are going tax smokers 10 percent because it is good for our health and the well-being of the future of our Government.”?Hon Maggie Barry: That’s the logic you have when your leader’s a smoker.CLAYTON MITCHELL: Maggie Barry you are not making any sense. I would just zip it right here.Hon Members: Oh!CLAYTON MITCHELL: She does not often.I have to say we will not be supporting this bill. This is nothing more than revenue collection of $425 million by this Government and it is not taking GST off food to balance out this ridiculous equation that is going to do more good than harm. Thank you.STUART NASH (Labour—Napier): It would have been good if Clayton Mitchell had actually come to the Finance and Expenditure Committee when we were debating this then he may have understood that the evidence says that this is actually a good thing in terms of stopping people smoking. In a way we did hear submissions on this in the Budget Policy Statement. We had about 20 submissions submitted. They were of a very high quality and a lot of them were academic submissions so they were very worthwhile.I just have a very quick question for Minister Lotu-Iiga and that is this: if we are taking an evidence-based approach to this did he actually look at any evidence at all that suggested the tax increase should not be 10 percent but should be 20 percent as recommended by a number of the researchers? In fact there are a whole lot of credible national and international studies that said 10 percent is just not enough; it has got to be 20 percent. A number of other studies actually said you should do a one-off hit of about 40 percent. These are not the people who are subjective; this is very objective research. So my question is whether the Minister looked at bringing in an excise duty that was higher than the 10 percent in this bill. Thank you very much.A party vote was called for on the question That Part 1 be agreed to.Ayes 109New Zealand National 59; New Zealand Labour 32; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 12New Zealand First 12.Part 1 agreed to.A party vote was called for on the question That Part 2 be agreed to.Ayes 109New Zealand National 59; New Zealand Labour 32; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 12New Zealand First 12.Part 2 agreed to.A party vote was called for on the question That clause 1 be agreed to.Ayes 109New Zealand National 59; New Zealand Labour 32; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 12New Zealand First 12.Clause 1 agreed to.A party vote was called for on the question That clause 2 be agreed to.Ayes 109New Zealand National 59; New Zealand Labour 32; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 12New Zealand First 12.Clause 2 agreed to.A party vote was called for on the question That clause 3 be agreed to.Ayes 109New Zealand National 59; New Zealand Labour 32; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 12New Zealand First 12.Clause 3 agreed to.House resumed.Bill reported without amendment.Report adopted.Third ReadingHon Peseta SAM LOTU-IIGA (Associate Minister of Health): I move That the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill be now read a third time. It has been a pleasure to be in this House leading the debate on this particular bill and I do welcome the support from across the Chamber. I think most members here agree that this bill will have a positive impact on our people—particularly I want to say our Māori people and our Pacific people whose smoking rates continue to be high. Another at-risk group of course is pregnant women. This bill is but one measure one step along the way towards the ultimate goal of a smoke-free New Zealand.I want to particularly thank the Māori Party. I want to acknowledge the previous Associate Minister of Health Tariana Turia who I think many would acknowledge has led the charge in this area and not only around the increases in taxation: 10 percent year on year on year for the last 6 years. I also want to acknowledge Marama Fox and Te Ururoa Flavell and their acknowledgment that this must continue not just here today but into the future.I also want to acknowledge members opposite and the Labour deputy leader as well as Louisa Wall whom I have had many interactions with on tobacco control. I acknowledge the passion certainly and the vigour that they have brought to this debate. I think this is one of those bills where we can agree despite some of the rhetoric that has gone on in the House this morning that it will make a difference to all New Zealanders.I want to say that it is about tax increases and there is part of me that ideologically looks at a bill that increases taxes and thinks “Well I believe in less government; lower taxes.” but I know that when it comes to smoking and tobacco control taxation makes a difference along with a whole range of other measures. We know the damage that tobacco does in this country—the 4500 to 5000 people who die prematurely in this country—and I want to reiterate what I said in my first reading speech: this is still the biggest health problem in this country.Darroch Ball: Is it?Hon Peseta SAM LOTU-IIGA: It is. It is. That is why this measure along with other measures that this Government has done I might add to promote smoking cessation in this country—we have got to be particularly grateful for them.I also want to acknowledge the officials who have assisted with this as well as with other tobacco control measures. I want to acknowledge our Government and the leadership of John Key in promoting this as I think a sensible measure. It will be one of the legacy policies that this Government will leave behind. We know that the costs of smoking are immense—the personal cost to the person who smokes but also the whānau cost the community cost of people who become sick and die and also the relationships that are affected by tobacco and the like.I just want to say that I welcome the support around this House. I believe that we are doing the right thing here today by New Zealanders. I know that this will make a difference to the health of New Zealanders and that is why I commend this bill to the House.Dr DAVID CLARK (Labour—Dunedin North): I rise to support this bill. Labour has been clear from the beginning that we will be supporting this measure because it is an effective measure to help curb smoking. It helps I think to remind all of us that smoking is still a net drain on the health system in New Zealand. Smoking is still a cost that we all bear both socially and economically and the excise that is collected by the Government does not yet offset the harm caused to our communities. It does not add up that it is something that is just taking money and not giving back but our concern remains that the money must get back to those people who are paying the excise. Those people who are struggling with an addiction to smoking must be supported in their efforts to give up. Public health generally must be supported. This is $425 million across 4 years and the Government in this debate has not committed to putting that back into public health to supporting those who would wish to give up and to supporting people with public health issues like obesity like diabetes like smoking like drug and alcohol issues and so on. It will not commit to that.The Associate Minister of Health Peseta Sam Lotu-Iiga seems to think—and he said this pretty much—that money taken from smokers and put back into hip replacements will somehow help people stop smoking. When asked what the public health benefit was from this money being taken he said it will go into hip replacements. That does not stop smoking and we need to stress that lest people cotton on to that and somehow try to understand that contorted logic. It is not worth going there. It just does not work that way. We do not think the money should go into the consolidated account to fund the Government’s pet projects be it charter schools which are funded at five times the rate of public schools or whatever its other corporate welfare priorities are at the moment: Saudi sheep or Skycity deals—whatever it is it is trying to dish money out to people for. We do not think this money should go back into that pot; we think it should be there to help smoking cessation and other public health programmes that are for the well-being of all New Zealanders.In the debate the Minister has failed to address my question about giving tobacco companies time to adjust to this. What behaviour in the past tells us is that tobacco companies put the additional costs on to their high-value products—their high-margin products like luxury cigars—and they try to keep their gateway products the cheap products as cheap as possible. The Minister has given no assurance that there will be any looking at the range of products available and making sure that this excise tax is applied in a way that actually reduces smoking in the most effective way possible. The Minister has simply not addressed that question in the Committee stage of this debate. He also talked about the progress of plain packaging legislation through Parliament and as my colleague the Hon Annette King said it has been sitting on the Order Paper since 2014 in the middle of the year. It is unbelievable that the Minister thinks that is progressing because it is written on a piece of paper that we pick up every day. It is not racing through this Parliament. So we look forward to the progress of that bill because we want to take seriously your sentiment that you believe this is a measure that is going to help New Zealanders and that it is not just a tax grab.We need to do more and we need to do more soon because people are dying while this Government fails to put money into public health. People are dying from the consequences of smoking. We will support this bill. It is one of the most effective means of stopping smoking through increasing the price of cigarettes but we need also a comprehensive plan to get us smoke-free by 2025. That is the Government’s stated goal but health experts say that we are not on track as 15 percent of adults in New Zealand smoke daily. The Government does not have us in a position with a convincing plan to make sure that we are smoke-free by 2025. It can do better it must do better and it needs to stop treating this $425 million as a revenue grab. It needs to put the money into programmes that are for the public health of New Zealanders for anti-smoking programmes obesity programmes and other programmes that will improve the health of New Zealanders overall. It continues a pattern in the health sector of underfunding generally. We are supporting this measure because it is a good step in the right direction but there is so much more to be done. We wish this Government was ambitious for New Zealand. We wish it cared for middle New Zealand and not just for the few at the top.KEVIN HAGUE (Green): It was indeed good to hear Minister Peseta Sam Lotu-Iiga in his contribution to the Committee stage indicate that the Government was committed to passing the plain packaging legislation in the second half of this year. That will be very welcome because although tax increases on tobacco products are the most effective measure of reducing death and illness from the most preventable cause of death and illness they are not enough alone; they need to be part of a comprehensive suite of measures. One of those is plain packaging and the Green Party certainly wishes that the Government was also open to the issue of smoking in cars and smoking in parks and open to the kinds of restrictions on retail supply such as a register of retailers as has been recommended. We look forward to further discussions with the Government on that.I note that the Government intends to review its progress against the Smokefree Aotearoa goal in 2018. At that point it may well be that New Zealand continues not to be on track for achieving Smokefree Aotearoa by 2025 as we are not now. We are not currently on track. We are for middle-class Pākehā New Zealanders but not for Māori not for Pasifika and not for low-income Pākehā people. If we continue not to be on trackin 2018 then I call on the Government to indicate that it is open to reviewing these taxation measures because at that point we will have demonstrated that they are inadequate. With that I close this contribution and indicate that the Green Party will continue to support this measure.FLETCHER TABUTEAU (NZ First): I just want to conclude the debate today by sympathising with and acknowledging those who have spoken in the House on just what is wrong with smoking. There is no debate from New Zealand First that smoking is a problem that kills New Zealanders—there is no debate on that. In fact whom I sympathise with even more is one of the members of the Māori Party who talked about all the programmes and initiatives we need to make cessation a success. But that is not what we are talking about here today. What we are talking about here today is a taxation measure put on—and everyone agrees—the poorest members of New Zealand’s society. They will suffer the burden of this more than anyone else will. That member over there Marama Fox shrugs her shoulders and shakes her head but it will affect Māori disproportionately and it will affect Pacific Islanders disproportionately. So let us put that into the perspective of the debate we are undertaking today.This is the measure of the sincerity of this Government: rob from the most needy. Yes they should stop but they cannot and this 10 percent rate is exactly the wrong amount remembering what the health professionals told us in the select committee. This will not achieve anything in terms of helping to reduce the uptake of cigarette smoking because people will continue to do so and in fact we will get more revenue to the sum of $425 million from those most at risk. What we see—and Mr Lotu-Iiga said it himself—is that this is a stopgap measure where we take from those who can least afford it in order to fill in gaps from the health budget which is underfunded in the first place. So we have to ask the question—and why is it that I find the cynicism of the Government so unacceptable? It is because it is saying “Let’s tax the poor.” but what has this Budget done in terms of funding quit programmes? Nothing. Not only has it done nothing but also the funding for those types of programmes has decreased. Where is the logic in that?Every member in this House has spoken of the need for support programmes and wraparound services and yet in this Budget the funding for those very programmes is going backwards. Couple that with a rate that does the exact opposite of the intent that it was purported to the House to have and not only will you achieve nothing but also you will achieve the exact opposite of the stated proposition of this piece of legislation. It will go backwards and it will do far more harm than good. So show me the money? No. Let us actually help people stop persecuting them support them and lift them out of their addiction.What does this Budget tell us about this Government’s true attitude to the people of New Zealand? “Get stuffed.” More money for cessation programmes? “Get stuffed.” More money actually directed to smoking costs in the health budget? “Get stuffed.” Cannot quit? “Get stuffed.” Not only is the Government not adding more money to the Budget to help people to stop smoking but also it is decreasing it. I say yet again to the members of this House that not only will this bill not achieve its stated intent but also it will do the exact opposite. Thank you.The ASSISTANT SPEAKER (Lindsay Tisch): The next call is a split call—Marama Fox 5 minutes.MARAMA FOX (Co-Leader—Māori Party): The Hon Dame Tariana Turia in 6 years as Associate Minister of Health made remarkable contributions to reducing smoking in New Zealand. She introduced no fewer than four pieces of legislation including the annual increases to tobacco excise rates that began in 2010 which will now run to 2020. She was also responsible for banning retail displays of tobacco products reducing duty-free allowances and introducing the plain packaging bill to Parliament. As a result adult smoking rates fell from 21 percent in 2006 to a record low of 15 percent in 2013. Her tireless and relentless focus in the face of constant criticism and challenge is testament to her leadership. There is no doubt that she achieved more in terms of reducing the smoking burden carried by Māori than any other politician ever.Some 15 percent of adult New Zealanders or 550000 people smoke daily. This is a record low but it does not tell the whole story. You see the problem is that the smoking rates are still 35 percent for Māori and 22.4 percent for Pasifika peoples. That is hundreds of our whānau dying needlessly every year so we must carry on and do more. We can all bemoan the increases to cigarette prices but the greatest price we all pay is seeing too many of our whānau go to their graves early through the harmful effects of smoking.In fact I cannot remember a time when I have been to a funeral of one of our old people or young people where the death was from natural causes. In 27 years—because that is how old I am—of going to funerals of my whānau over and over and over again not once can I remember someone dying of natural causes. The majority of them died from smoking-related illnesses and for the rest of those who smoke half of them will die—half of all people who smoke will die from smoking-related illnesses—and the rest will be sick.We must do something to halt the decline because this is about whakapapa. This is about retaining our whakapapa for our future for our tamariki our mokopuna. We are losing our people far too early. The disparity for Māori in the death rate is 8 to 10 years. They die 8 to 10 years earlier than non-Māori. My entire family of in-laws died before the age of 70 and half of them died before the age of 60. It is not good enough. For most of them it was all from smoking-related illnesses. We must look after ourselves and each other. We must do all we can to support whānau to thrive and having our urupā overflowing with whānau who have died from smoking-related illnesses is wrong.This is not about having a crack at the smokers. The Māori Party kaupapa is manaakitanga and it extends to smokers too. Tariana’s focus was as much about having compassion for smokers as it was about preventing rangatahi from starting to smoke. We have no option but to carry on the legacy. It is a legacy piece of legislation—four pieces of legislation. I look forward to the day that we put the nail into the plain packaging legislation and get that back into the House and see it through. I commend this bill to the House. It is a start but we must do more.The ASSISTANT SPEAKER (Lindsay Tisch): I call David Seymour—5 minutes.DAVID SEYMOUR (Leader—ACT): I rise on behalf of the ACT Party in favour and support of this bill even though I regard it as a regrettable piece of public policy because—as I have said in earlier stages—of the wider context of a need to support this Budget and to keep these people over here and keep those people over there except for Phil Goff who will soon be joining us in Auckland on a more permanent basis.I just have a question for the Minister and for the proponents of this bill and it is this: what do they say to the 15 percent of New Zealanders and the 35.5 percent of Māori who now pay $2800 in tobacco excise tax every single year and under this bill will soon pay $3800 of excise tax every year because they smoke? I presume what the Minister and his supporters would say is: “Well they should quit.” There is one small problem with that and it is that they have not. The regulatory impact statement for this bill vastly overestimates how many people will quit for the amount of tax taken from the poorest households in this country.I saw one such example of this not so long ago in a Countdown supermarket in Auckland. I saw a mother with a very young girl. The mother was buying a tin of milk and a packet of Winfield 25s—three-quarters of the cost of which was tax. I cannot presume to know all of their circumstances but by the look of it from the way they were dressed and from the expression on their faces the little girl was fixated on those cigarettes as if to say: “That could have been dinner.” A 7-year-old girl could work out what this policy is doing. It is having minimal effect on smoking cessation but it is literally taking food out of the mouths of some the poorest children in this country.I would say to my colleague from the Māori Party that Dame Tariana Turia is a woman deserving of the greatest of respect and the intentions are extremely noble but policies must not be measured by intentions. They must be measured by outcomes. This policy will take the tobacco tax on the average smoker from 2800 bucks per year up to 3800 bucks. That is not an enlightened policy. It is a highly regressive tax and the costs imposed in terms of poverty and deprivation on the people most in need far outweigh any possible benefits that we have been able to observe from the first 5 years of this policy.With that I support this bill because it is part of a broader Budget that I think is good. But make no mistake it is a highly regrettable policy that will do far more harm than it does good. We have to support it in spite of the fact that it is not good policy whatsoever.STUART NASH (Labour—Napier): Let me just sum up the contributions to this bill from the different parties. We have had David Seymour ignoring all the evidence that actually shows that an increase in the tobacco price stops people from smoking. So when he says that every single person who smokes is going to be hit with $2000 a year that is actually wrong. The academic peer-reviewed evidence shows that an increase in the price will stop a number of those people from spending significantly more money on tobacco than they are at the moment.The other thing about the ACT member is that he stands up here and calls this bill an abomination and a disgrace says how terrible it is and then he votes for it. Mr Seymour should actually stand for something. He should actually stand for something. I know that the Prime Minister has given him a mandate to vote against a bill that he does not agree with so Mr Seymour does have the mandate to vote against this bill. He despises this bill but he is voting for it. In Labour when we do not agree with a piece of legislation we vote against it.We have had the Associate Minister of Health Peseta Sam Lotu-Iiga ignoring our calls to get it right and turn this into a real success and a piece of legislation that will work—a piece of legislation that can be backed by academic peer-reviewed research as well as by community groups that are dealing with this issue every single day. What I would say to the Minister is that I disagree with his last speech. Do not take our Yes vote as unqualified support for this bill because we have a number of concerns about the money that is being collected the $425 million that is being collected on this—that it will just go into the consolidated account. There will not be more cessation programmes. There will be less help for people who want to quit.What we would really like to see as Louisa Wall and I have talked about numerous times is more programmes targeted at those in the early education programme so that it is absolutely uncool at any stage to smoke. We have got to turn that peer review round from “OK my peers are smoking. Hell I’d better be cool.” to “It is very uncool to smoke.” We need a decent chunk of this $425 million to go into education and smoking cessation programmes. I think the Minister could have got a lot of political capital if he had come out and said that this policy is going to be backed by good public policy in terms of cessation programmes and education programmes.We have had New Zealand First members stand up ignore the evidence and say “Get stuffed.” to any measure that will reduce the harm caused by smoking. I am a little bit surprised actually. I thought that New Zealand First members were on the right track took an evidence-based approach and really drove outcomes. To stand up and say “Get stuffed.” to—10 percent of all deaths in our health system are from smoking. Ten percent and they are saying to any measure that addresses that: “Get stuffed.” I think that is the wrong message.Then you have Labour. Labour has tried to take a balanced evidence-based approach to this. We would have liked to see a greater increase in the excise tax to 20 percent as recommended by University of Otago researchers. We would have liked to see a whole lot of this money—not all of it but a lot of it—put into programmes that help people to break that nicotine addiction which is an incredibly powerful addiction. We would have liked to see a chunk of this money stuck into education programmes that actually stop people smoking before they start.We all agree that a smoke-free New Zealand by 2025 is an admirable target. We all want to get there because it is right. It is right for this country and it is right for the people who live here. But what we do not agree on at this point in time are the measures put forward by this Budget. They could have been better. They should have been stronger. We will support this legislation but we just think it could have been a lot more powerful and sent a much stronger message. Thank you very much.LOUISA WALL (Labour—Manurewa): I know that everyone wants to go home—I do too—but I do want to say a few things just in terms of the kaupapa that we have debated now all morning. Actually I want to say to Minister Lotu-Iiga that I think there are many of us across this House who want to work with you on a strategy that makes New Zealand smoke-free by 2025. So I am asking you to allow those of us who are passionate about this kaupapa to work with you to get some of the other initiatives that need to be prioritised to complement this specific initiative that is as we have all identified today one of the most effective initiatives in reducing the numbers of smokers.For those people who may not have seen some of the earlier debate I just want to highlight that we are talking about 550000 New Zealanders who smoke. Of these 155000 of them are Māori; 55000 are Pacific people. We have 5000 deaths a year we have 350 people a year die from second-hand smoking and 70 of our babies die from sudden unexpected death in infancy so this is an incredibly important kaupapa. I know that many of us have been affected. I had a father who passed away from over 20 years of chain-smoking two packs a day. It means a lot to many people and so hopefully there is an opportunity for us to come together and work collectively. It actually could be something that everyone across the House could collaborate on so that is what I am saying to the Minister.Just before I conclude I would like to say that next week it is World Smokefree Day on 31 May. World Smokefree Day is about raising awareness and contributing to the achievement of New Zealand becoming smoke-free by 2025. So Minister you have got something to be very proud of next week and to stand up and talk about. The theme for this year is “It’s about whānau”. What we want to do is encourage more people to seek help if they want to give up smoking. What we have realised through the research is that people cannot give up by themselves; they actually need the tools to support that. They need whānau around them who support it they need the patches they need the gum—whatever tools they need to realise that aspiration of being smoke-free. All that we have tried to highlight on this side is that access to tobacco is one thing but actually if you really want to address the addiction then we have got to invest a whole lot more in the tools that are going to be effective.Finally I too would like to honour Dame Tariana Turia. This is her legacy. I would also like to acknowledge Hone Harawira because he was a then member of the Māori Affairs Committee that pushed the inquiry through and the Māori Affairs Committee itself which spent a lot of time and actually produced a really good report that gave us I think a lot of hope about Māori willingness to become smoke-free. It provided a lot of recommendations to the Government and I know that the Government has responded to that particular inquiry. Many people have been incredibly passionate about this kaupapa and will continue to be. Kia ora.A party vote was called for on the question That the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill be now read a third time.Ayes 109New Zealand National 59; New Zealand Labour 32; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 12New Zealand First 12.Bill read a third time.