I support the passage of the Excise Tariff Amendment (Tobacco) Bill 2014 and the Customs Tariff Amendment (Tobacco) Bill 2014 in the terms of the amendment moved by the member for Fraser.
These bills seek to increase the rate of excise and excise-equivalent customs duty on tobacco through a series of four staged increases of 12½ per cent commencing on 1 December 2013 and running through to 1 September 2016. They also index the rates of excise and excise-equivalent customs duty on tobacco to average weekly ordinary time earnings instead of the consumer price index. The last CPI indexation occurred on 1 August, with the first AWOTE indexation occurring on 1 March 2014. These measures implement a previous policy announced by the former Labor government in the 2013-14 budget and in the 2013 Economic Statement.
The necessity for these bills is outlined in the following facts. The first fact is that 20 per cent of the male population in Australia still smoke and 16 per cent of females in Australia still smoke, and many of these Australian smokers will die prematurely because of their addiction. The cost of treatment and the social cost to the Australian budget is in the vicinity of $31 billion per year associated with smoking in Australia. That equates to about 750,000 hospital bed days in Australian hospitals related to the treatment of smoking related diseases. Quite simply, that is a large burden on the Australian tax-paying population, and it outlines why this legislation is required.
The bills also fit well with Labor's philosophy and long-held action, whilst in government, to reduce smoking. Labor believes that smoking kills, that smoking is an unnecessary and burdensome impost on taxpayers and on our budget and healthcare system and that the Australian government and state governments must do all that they possibly can to reduce the incidence of smoking in Australia and to make it as unattractive as possible to the Australian public, particularly to younger Australians. To do that, price signals in a market are necessary, but they must also be supported by various programs and social infrastructure to help Australians quit.
Labor's record on providing that social and community support to help Australians quit speaks for itself. In 1992 a Labor government introduced a ban on tobacco advertising in Australia. It followed it up some years later by strengthening that ban in relation to internet advertising. A couple of years ago, Labor introduced the world's first plain-packaging legislation, world-leading anti-smoking legislation, and the results of that legislation speak for themselves.
The plain-packaging legislation is working. It is fulfilling its legitimate objectives. This is outlined in research that was undertaken by the Centre for Behavioural Research in Cancer and Cancer Council Victoria that supported the fact that the plain-packaging legislation was meeting its legislated objectives. The results showed that, compared with branded-pack smokers, those who were smoking from plain packs perceived their cigarettes to be of lower quality, tended to perceive their cigarettes as less satisfying than a year ago, were more likely to have thought about quitting at least once a day in the past week and rated quitting as a higher priority in their lives—proof positive that Labor's reforms on plain packaging are working. And they are now being taken up or looked at by other nations.
Labor also updated the graphic health warnings on cigarette packaging. In government, we devoted $135 million to anti-smoking social-marketing campaigns, the development of apps and other social infrastructure to help Australians quit this devastating habit. We listed nicotine replacement therapies on the Pharmaceutical Benefits Scheme. We undertook the largest investment in support for Aboriginal and Torres Strait Islander communities to reduce smoking rates. In April 2010, we undertook a 25 per cent increase in the tobacco excise to send a price signal to smokers in Australia that they needed to quit this devastating habit. Labor's commitment through health and social programs speaks for itself.
Some opponents of this increase in the excise will argue that it is unfair because it hurts lower income Australians—that a larger proportion of Australians who smoke tend to be from a lower income bracket. That is an argument of which I am conscious. It is an argument of which Labor is conscious. I do have some sympathy for low-income Australians who are addicted to nicotine. But I would say to them, particularly those in my community, that I do not seek to punish you by supporting this reform. Labor does not seek to punish you by supporting and putting up this proposal. Labor wants to help you. We want to provide every encouragement for people to quit smoking. Harsh and unfortunate as it may be, the fact is that such increases in excise and customs duty do work. They do reduce the incidence of smoking within our society. Price increases for cigarettes discourage consumption and result in a reduction in smoking rates.
After the April 2010 increase in the excise, Treasury undertook an investigation into whether or not the price increase had had the legislative effect for which it was intended. Treasury looked at consumption of cigarettes in Australia after the price increase. What they found was that tobacco consumption in Australia reduced by approximately 11 per cent, in terms of the amount of tobacco that was being imported into Australia. There is also evidence that tobacco used amongst low-income groups is more responsive to a price increase than that used by those on higher incomes. That speaks for itself. It is obvious that those who are on lower incomes and do not have as much disposable income are going to be much more susceptible and elastic to an increase in price.
The cost of cigarettes in Australia in terms of the percentage of tax that makes up the price is still relatively low by international standards. In Australia, tax as a percentage of the price is about 60 per cent. In New Zealand it is 74 per cent, in the UK it is 77 per cent and in France it is 80 per cent. This is all evidence as to why this reform is required. Although price increases tend to be a somewhat blunt instrument, as the evidence outlines, they work. They work in reducing the incidence of smoking in Australia.
I have met very few people who have not been appreciative of the fact that they have been able to quit smoking, who have not looked back and said that it was a good decision to quit smoking, not only for their health but also for their family and their friends. That is not to mention the positive effects on the Australian economy, particularly on expenditure through our health budget.
Labor is committed to providing support for those seeking to quit smoking. In government we undertook a record investment in support programs coupled with appropriate price mechanisms when required. This staged increase in the excise and customs duty is an appropriate price mechanism to help Australians quit a deadly and addictive habit. It is an approach that is supported by the World Health Organization and by many anti-cancer campaigners. I commend the bill and the amendment to the House.