Swarbrick Chlöe; Whaitiri MekaParts 1 and 2 Schedule and clauses 1 and 2CHLÖE SWARBRICK (Green—Auckland Central): Just referring to the regulatory impact statement—it might be interesting for members given the content of the debate that we've had so far. It refers to in 2020 and 2021 combined and I'm quoting here from the regulatory impact statement: We collected $5 million in total duty in goods and services tax on flavoured tobacco. We estimate the loss to Crown from evasion could be up to $31.5 million over the two years."It does then however go on to say: "In addition importers are exploiting the regulatory environment in New Zealand and using it to smuggle flavoured tobacco to Australia. Large shipments can be declared at low [per kilo tobacco content] in New Zealand and smuggled to Australia to avoid the much higher excise rates Australia applies to flavoured tobacco. For example we're aware of cases where flavoured tobacco has been smuggled from New Zealand to Australia by sending it as smaller parcels that were falsely declared as body scrub."I have just two questions to the Minister in relation to both that but also other parts within this regulatory impact statement and the other contributions that I made in the debate so far particularly around the black market.The first is just in relation to that point about smuggling into Australia and where this puts us in line with the rest of the world. Do these changes now mean that our flavoured tobacco excise rates are at the same level that they are in Australia—i.e. meaning that this issue as outlined in the regulatory impact statement will be removed; if not what is the disparity there?Secondly it's a question about consideration of the black market. Just in relation to the contribution that I made in the first reading about the fact that the Government's investing millions of dollars in tackling black market tobacco and the potential for the black market to grow were there to be a regulatory or a tax environment which erred far more towards kind of in-practice prohibition. Is the Minister concerned or has the Minister seen reports about what kind of impact this may have on the potential for the growth of the black market in this water-pipe tobacco?So those two questions: around the comparison to Australia and around the impact on the potential black market.Hon MEKA WHAITIRI (Minister of Customs): While I'm getting some answers I just want a comment about the Australian import that—apparently no the Australian rate is higher.Actually I want to share with the member that in some jurisdictions—which is obviously Australia—water-pipe tobacco is taxed as if it was 100 percent tobacco. The rate that New Zealand will apply which I've given in my speeches is calculated on the assumption that tobacco content is 15 percent which is I guess the best current estimate of the typical tobacco content of this product. So the answer to "Is the Australian rate higher?": no. Like I said it's 100 percent. But in terms of your black market question the black market definitely is an issue and Customs see it probably more so than any other agency. I guess that's why the Government has allocated $10.4 million in this Budget for enforcement to try and stem the black market that you've alluded to.CHLÖE SWARBRICK (Green—Auckland Central): I thank the Minister and the officials for offering those questions at such a rapid-fire rate.Just to that first question around the comparison to Australia in particular and that disparity in the 15 percent and 100 percent rate and obviously that story that I alluded to before around smaller parcels being funnelled through Aotearoa New Zealand to Australia sometimes being falsely declared as body scrub. Given that disparity which seems to currently exist even were we to make these changes as we are today—is there not still some concern that we might end up seeing Aotearoa being potentially that back-door to the Australian black market?As a result—kind of as a secondary question to that—what kind of collaboration are we seeing with Australian Customs in particular to try and either clamp down on or work together or collaborate or try and see some kind of alignment in what our policies might look like?Hon MEKA WHAITIRI (Minister of Customs): To that member we work quite closely with our Australian border agencies and have a post in Australia. We work on a range of Customs-related issues and this will be but one of many that we work in tandem with our Tasman neighbours.Again going to the black market issue this is why we've made decisions in this year's Budget to actually address whether it's in scrubs whether it's hidden anywhere so not only the bill that we're passing today but the extra resourcing—the $10.4 million we got in Budget 2022—would absolutely put a spotlight to actually disincentivise people smuggling any illegal substances either into this country or to other countries because New Zealand is thought as a soft spot.That's not what the intention is here and with Customs' constant watching we want to monitor it and manage that in I think a very professional way."