House of Representatives

Second Reading Speech

Ms Roxon (Minister for Health and Ageing)

I move: That this bill be now read a second time.

This bill seeks to establish in legislation the increase in the excise applying to tobacco products.

Tobacco is perhaps the most deadly legal product available in Australia. It is the leading preventable cause of disease and premature death in Australia.

In 2003 it was estimated that smoking results in approximately 15,000 Australian deaths a year. This is more deaths than murder, illegal drugs, motor vehicle accidents and alcohol combined.

Tobacco related diseases are also responsible for approximately 750,000 bed days in hospitals every year.

The total cost to Australian society to tobacco is estimated at $31.5 billion each year.

Cigarettes are toxic and poisonous-containing 4,000 chemicals. Cigarettes are estimated to cause one in five of all cancer deaths. Smoking is a major cause of cancers of the lung, larynx, throat, oral cavities, oesophagus, bladder, kidney, pancreas, stomach, cervix and the blood. It also causes heart disease, stroke, blindness, emphysema and increases the risk of miscarriage, stillbirth and complications during birth.

That is why successive Commonwealth and state governments have taken action to reduce Australia's smoking rates. This has included action at the Commonwealth level by increasing taxation, conducting hard-hitting social marketing campaigns, banning tobacco advertising and introducing graphic warning labels. States and territories have also acted by banning smoking inside licensed venues, running Quitline services and hiding cigarettes from view at point of sale.

This action has had a dramatic effect. The number of daily smokers aged 14 and over in Australia has been reduced from approximately 30.5 per cent of Australians in 1988 to 16.6 per cent in 2007.

This is important progress-but we can and must do better.

That is why the government has announced a comprehensive package targeted at smoking.

Prevention is better than cure, and tackling smoking is one of the best investments we can make in keeping people healthy.

In 2008 the government initiated two major reviews which looked at the issue of taxation for tobacco.

The National Preventative Health Taskforce was asked to recommend action to reduce the health burden of tobacco, alcohol and obesity. In its report the first tobacco recommendation it made was to significantly increase the price of tobacco. It said:

Increasing prices is one of the most effective measures that government can take to reduce tobacco consumption and prevalence.

It recommended a staged increase in prices, up until the price of 30 cigarettes reached $20.

The Australia's Future Tax System Review also looked at the issue of tobacco taxation and concluded:

There is a strong case for a substantial one-off increase in tobacco excise. Australian retail prices for cigarettes are moderate by international standards and taxes constitute a relatively small share of the retail price.

It recommended a substantial increase in taxation depending upon evidence on the costs of harm from tobacco smoking, the indexing of tobacco excise to wages rather than CPI and the removal of duty-free allowance for tobacco.

These reports build on the evidence from Australia, Canada, the United Kingdom, South Africa and other countries demonstrating that higher taxation makes a significant contribution to cutting smoking rates. This has shown to be particularly effective for young people. Taxation has also been recommended by the World Bank and the World Health Organisation as one of the most effective ways to cut smoking levels.

Acting on this advice, on 29 April the Prime Minister and I announced that the government was taking action to increase the price of tobacco.

The government, as of 30 April 2010, increased the excise and excise-equivalent customs duty rate applying to tobacco products by 25 per cent. This is the first increase above inflation in the taxation on tobacco in more than a decade.

This has seen the excise on cigarettes rising from 26.22c per stick to 32.775c per stick, and the excise on other tobacco, such as loose leaf tobacco, from $327.77 per kilogram of tobacco content to $409.71 per kilogram of tobacco content. The excise-equivalent customs duty on comparable imported tobacco products has been increased by the same amount.

This has increased the tax on a pack of 30 cigarettes by $2.16 and the tax on a pack of 25 cigarettes by $1.80. These are averages; the prices are different for different brands. This means that the price of a regular pack of 30 cigarettes is now over $15 and a pack of 25 cigarettes is now over $14.

This is expected to reduce the number of smokers in Australia by two to three per cent, or approximately 87,000 people. It is also expected to reduce the total consumption of tobacco by around six per cent.

This move has been endorsed by the Australian Medical Association, the National Heart Foundation, the Cancer Council of Australia, the Australian Nursing Federation, the Public Health Association of Australia and Action on Smoking and Health, among other public health groups.

This measure is part of a comprehensive package against smoking, including, in a world first, the fact that the government will introduce legislation to ensure that cigarettes in Australia are sold in plain packaging by 1 July 2012.

This will remove one of the last frontiers for cigarette advertising and it was also a recommendation from the Preventative Health Taskforce. Logos, brand imagery, colours and promotional text will be restricted or prohibited. Mandated graphic health warnings will be updated and expanded.

Research has shown that industry branding and packaging design reduce the effectiveness of graphic health warnings on tobacco products.

The government is also investing over $85 million in hard-hitting antismoking advertising campaigns and it will be introducing legislation to bring restrictions on tobacco internet advertising in Australia into line with other media.

And on this side of the House we have also taken the principled stand to refuse to accept political donations from the tobacco industry. The same cannot be said for those on the other side of the House.

This comprehensive antismoking package follows the landmark COAG agreement that delivered fundamental reform to Australia's health and hospital system.

The expected $5 billion of extra revenue from this measure, along with existing revenues from tobacco, will be directly invested in better health and hospitals through the National Health and Hospitals Network Fund.

This will help deliver better health and better hospitals for all Australians.

Under the government's National Health and Hospitals Network, the government is investing $7.3 billion in additional funding over five years.

This funding will deliver new beds, more doctors and better hospitals. This bill will be crucial to funding those improvements.

It builds upon other actions the government has taken to improve preventative health:

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A record $872 million investment in preventative health including programs in schools, workplaces and community settings;

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$103.5 million under the National Binge Drinking Strategy;

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The decision to establish the Australian National Preventative Health Agency, which has been stalled by the opposition in the Senate for over six months; and

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$449 million to improve the quality of care for Australians living with diabetes.

Yesterday the government released its response to the National Preventative Health Taskforce, detailing where the government is taking action and what steps are still under active consideration.

The government will continue to make further investments in preventative health, particularly once we have established our national agency to provide expert advice to the Commonwealth, the states and the territories.

This bill represents the next bold step on preventative health.

It will have a strong impact on combating the prevalence of smoking and reducing the number of preventable diseases and premature deaths in this country. The revenue raised by the excise increase will be directly invested in better health and hospitals for all Australians.

I commend it to the House.

Debate (on motion by Mr Andrews) adjourned.