Hague Kevin: Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill; and Bills Therefrom — Third Readings 
Text is incorporated into the Bound Volume 
Hague Kevin: Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill; and Bills Therefrom — Third Readings 
[Sitting date: 16 October 2012. Volume:684;Page:5837. Text is incorporated into the Bound Volume.] 
KEVIN HAGUE (Green) 
: 
 This is now at the third reading no longer one bill but seven. Part 2 of the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill which we have been debating over some months is now divided into six bills around indexation of benefits pensions and allowances. The Green Party is going to continue to support the first bill which really all of the debate has been about until this stage today. But we will oppose the six indexation bills and I will come to that shortly. We join others in thanking and praising the contribution of Minister Turia in bringing this to the House and steadfastly campaigning on these issues. Tobacco is as others have said the greatest preventable cause of harm in New Zealand. Price measures—measures that increase the price—are the most effective strategy for reducing consumption and therefore reducing harm. So the first bill here is an absolutely sensible measure. It is interesting—I make the comment in passing—that the same argument in fact applies to reducing alcohol-related harm yet we saw the Prime Minister in response to the Law Commission’s report immediately ruling out using price as a mechanism to reduce that harm. 
There have been concerns raised in previous stages of the bill and indeed in the public debate about these measures and about what the Government’s intent was. Minister Turia alluded to those in her contribution today because academics from the University of Otago raised the suggestion that the Government could dispel speculation that its primary motivation was about revenue raising by adding into the bill a purpose that made it clear that this bill was in fact about improving the health of New Zealanders. The Government has declined to take up that suggestion and I think that is unfortunate because that will ensure that there will continue to be a question mark not over Minister Turia’s motivation but over the motivation of the Government as a whole on this issue. That speculation has been fuelled by the fact that the particular option that was chosen by the Government from those that were offered by officials for how excise tax could be increased over time to reduce tobacco-related harm was the one that had the least positive impact on health. So it is natural for the community and in particular the health community to wonder about what the Government’s primary motivation is. 
I also draw attention to the fact that this legislation will not keep tax increases to a rate that will reduce tobacco consumption to meet the Government’s goal of a smoke-free Aotearoa by 2025. So what that means is that the Government is planning to fail to meet its objective in 2025. It is good to see the comments from the Finance and Expenditure Committee. I think the select committee is concerned about those matters. It is good to see the comments about possible other steps that the Government might take to help achieve that goal but the easiest step would have been to take the suggested excise tax increases that would have put this country on a path to achieving that goal and it is unfortunate that the Government did not do that. 
Treasury officials in their comments to the select committee said that the reason for choosing the excise tax increase regime of 10 percent by 10 percent by 10 percent instead of that proposed by health community groups and academics from around the country universally—of an immediate increase of 40 percent in the excise tax followed by smaller increases in future years—was that it was concerned about the impact that would have on low-income New Zealanders. I think we would all share a concern about a disproportionate impact on low-income New Zealanders. But when we asked Treasury officials about what modelling they had undertaken to support their conclusion on that in fact there had not been any at all. This was just a supposition on their part. And when we asked the health groups who worked with those low-income New Zealanders or represented those low-income New Zealanders what they thought about the assumption Treasury had made they all supported the more aggressive tax increases of an immediate 40 percent increase followed by the others. The reason they did that they said when we asked them about it was that yes it was true that there is disproportionate cost on low-income New Zealanders but also there is a massively disproportionate benefit both in health and in the economic gains that came from that improved health. That is why they rejected the option that was chosen by the Government. 
I want to come to the six indexing bills. It is certainly the case that making tobacco products more expensive reduces consumption but the logic that the Minister has outlined in her contribution today around the justification for these six bills fails a basic mathematical test. She said it makes no sense to make tobacco products more expensive on the one hand by increasing the tax and then giving that money back by including tobacco in the indexation for those benefits and allowances and so on. Unfortunately that is not how the trade-off works. That is not the linkage between those two things. These six bills which remove the increase in tobacco excise from the CPI for the purposes of indexation effectively erode the incomes of all New Zealanders who receive those benefits or allowances or pensions—of all of those people regardless of whether those people are smokers or non-smokers. So it applies to all of those people in a completely non-targeted way and it erodes their income. It is not specific to tobacco at all. What it does instead is to relatively increase the price of everything that they spend their money on. That is what it does. It is not a trade-off in the way that Minister Turia seems to imagine that it is. Therefore these six bills are not measures that in anyway provide an incentive to reduce tobacco consumption. What they instead do is punish the poor and that is not an objective that the Green Party can support. So we support the first bill and we reject the other six.