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BATA and the Australian Regulatory Landscape: Response to the Preventative Health Taskforce Technical Report 2,

“Tobacco Control in Australia: Making Smoking History” January 2009

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CONTENTS

EXECUTIVE SUMMARY 3

RESPONSE TO THE DISCUSSION PAPER 14

Pricing and related issues 14

Track and trace 16

Illicit trade 17

Place of sale 18

Licensing 22

Duty free sales 24

Retailer to Consumer Internet Sales 25

Packaging 25

Product information 30

Consumer product information 32

Corporate activities and donations 33

Claims around ‘Promotion’ 36

Smoking and media 36

Place of use 36

Smoking in cars carrying children 39

Lease requirements 41

Cessation 41

REPORT INACCURACIES 42

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EXECUTIVE SUMMARY

Introduction

BATA welcomes the opportunity to respond to the issues raised by the Preventative Health Taskforce Technical Report no. 2, Tobacco Control in Australia: Making Smoking History (the Discussion Paper).

We acknowledge and support the intention of the Preventative Health Taskforce and the Department of Health and Ageing in addressing the public health impact of smoking – especially amongst people who are underage.

BATA believes that the hallmark of effective regulation lies with its workability and enforceability, as well as its ability to demonstrate clear and measurable public policy objectives. Any proposal should meet this benchmark before being enshrined in regulation.

The following document outlines BATA’s view on some of the issues raised by the Preventative Health Taskforce (the Taskforce) and proposes some initiatives for dealing with tobacco control in a sensible and evidence-based manner.

The Discussion Paper itself, whilst not encompassing the views of all stakeholders in the tobacco control debate, is no doubt ambitious. Indeed there are some 77 recommendations, ideas, policy intentions and suggestions made. From this we would hope that a simple and clear focus can be established moving forward.

Where the Discussion Paper raises concepts for consideration we offer preliminary comments. If any of these concepts were later to be developed into specific regulatory proposals, we would expect to be consulted so that we could respond more specifically.

We would also hope that any proposed measures resulting from the Taskforce’s recommendations would be subject to both Regulatory and Economic Impact assessments.

BATA background

British American Tobacco Australia (BATA) is Australia’s leading tobacco company, accounting for 45.5 percent of the cigarette market

1 . The company manufactures and

distributes cigarettes and roll-your-own tobaccos and distributes pipe tobaccos and cigars. Our brands include Winfield, Benson & Hedges, Dunhill, Pall Mall and Holiday.

We have operations in every Australian state and territory, and directly employ over 1,100 people and our federal excise contribution alone is approximately $3 billion.

1 ACNielsen, Moving Annual Total Industry Exchange of Sales as at Nov 2008.

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Working towards sensible regulation

While the only way to avoid the risks of smoking is not to smoke, a real world view suggests that a large number of people will continue to choose to smoke even though they are aware of the risks.

Building on our reputation as a responsible tobacco manufacturer, BATA has participated in the development of some key regulation in the Australian context, such as our support of bans on overtly fruit-flavoured cigarettes and our active involvement in the drafting of a standard for the measurement of cigarette extinction propensity.

The Office of Best Practice Regulation (OBPR) advocates thorough consultation in the development of regulatory proposals and the review of existing regulations to ensure that both those affected by the regulation and the regulator have a good understanding of the problem.

This ensures there is a clear understanding of all options to solve the problem, possible administrative and compliance mechanisms, associated benefits, costs and risks.

2 For

this reason, good regulatory practice dictates that tobacco manufacturers should be included in the development of effective regulation.

Responding to a question from Godfrey Bloom (IND/DEM) on Article 5.3 of the FCTC, the European Parliament Commission responded by saying that “The tobacco industry is a stakeholder and as such will be approached by Commission services”.

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Such regulation should also respect the rights of legitimate tobacco companies, who produce a legal product and should be allowed to conduct their legitimate business in a responsible manner.

We believe that whilst it is important to respect the rights of non-smokers, there is also an obligation on the part of regulators to respect the rights of informed adult consumers who choose to use legal tobacco products.

Tobacco regulation to date

Despite claims made in the Discussion Paper that “over the past six years we have taken our foot off the accelerator pedal in several areas of tobacco control”

4 page 11 of this

submission shows that during this period there have been some 50 new regulations imposed (at a combined State and Federal level) on tobacco products.

2 Office of Best Practice Regulation Website. “Effective Consultation and Effective Regulation” [Online]. Available at: http://www.obpr.gov.au/consultation.html [Accessed: 17/11/08] 3 (2008) Written Question from Godfrey Bloom (IND/DEM) to the European Parliament Commission, Article 5.3 on the WHO Framework Convention for Tobacco Control, 1 September 2008 [Online]. Available at: http://www.europarl.europa.eu/sides/getDoc.do?language=PL&reference=P-2008- 4694&type=WQ&secondRef=0 [Accessed: 17/11/08]. 4 Preventative Health Taskforce Discussion Paper, October 2008, p. v

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The danger is that another wave of tobacco regulation, as proposed in the Discussion Paper, could actually have a diminishing return and there is evidence that over- regulation of tobacco products can lead to regulatory fatigue. Research from Canada shows that “in effect, tobacco control policy aimed at forcing abstinence is running into some of the same constraints as past and present prohibitionist approaches to alcohol…”

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It is estimated that 30% of the Canadian tobacco market is now supplied through the illicit tobacco channel. The consequences of this is that those illicit tobacco products are unregulated, thereby undermining the regulatory framework for tobacco control asserted by Health Canada.

Such research also shows that a “further limitation on regulatory strategies is that, in some cases, existing regulatory measures, such as blanket advertising bans, graphic package warnings or industry denormalisation have come to be seen as an end in themselves rather than as a means of achieving improved public health” 6

BATA believes there is already a significant amount of regulation on tobacco products and there may now be the risk of too much, with unintended consequences of progressing further.

However if the Taskforce is intent on recommending even further regulations, the focus should be on minimizing the unintended consequences and in targeting specific areas which are proven to have an impact.

In order to assist in this process, and based on our knowledge of the development and sale of our product and our experience in the regulatory process, BATA has outlined some areas of focus going forward.

Impact on business and jobs

It is important to remember that tobacco regulation can have significant unintended consequences for the broader community. In particular, regulations on tobacco can have an adverse impact on business, particularly small business, which are often never considered, yet alone consulted, in the drafting of such laws.

The impact on business, particularly small business, often tends to be an after-thought by which time it is often too late as they are already lumbered with the extra administrative costs and decreased revenue.

The current economic climate, which forecasters and political figures tell us will continue to be very challenging for the coming year, means that business will be even more sensitive to further regulations at a time that they can least afford it.

The consequences of this will be loss of revenue and loss of jobs.

5 Sweanor, D. (2008) “A Canadian’s Perspective: Limits of Tobacco Regulation in the William Mitchell Law

Review, Vol. 34, No. 4, p. 1600 6 Sweanor, D. (2008) “A Canadian’s Perspective: Limits of Tobacco Regulation in the William Mitchell Law Review, Vol. 34, No. 4, p. 1601

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What business needs is regulatory consistency and certainty to plan for the future and avoid unnecessary costs, especially in the current tough economic climate.

Core areas of focus for effective tobacco regulation

To ensure that resources are effectively used, BATA believes that any recommendations from the Taskforce should focus on five core areas.

Our recommendations for effective regulation are based on research conducted both in Australia and internationally, our expertise as a tobacco manufacturer and distributor and our experience working with governments on the development of tobacco policy and regulation.

The core areas are as follows:

1. More, highly targeted, education programmes especially aimed at young people.

2. Nationally consistent tobacco retail laws to assist with business certainty and, to mitigate the negative impacts and unintended consequences of differing and inconsistent laws.

3. Closer engagement with and co-operation among retailers, tobacco manufacturers, key regulatory decision-makers and public health advocates through the establishment of the Federal Tobacco Consultative Forum.

4. Nationally consistent, integrated approach to pricing of products such as tobacco and alcohol as recommended by the Report of the current Henry Review into the taxation system.

5. Greater focus on potentially risk reduced products.

Summary of core elements of our recommendations for sensible tobacco regulation

1. More, highly targeted, education programmes especially aimed at young people

We acknowledge there are real and serious risks associated with smoking. There is no doubt that education is the most effective way to continue to reinforce the already universal awareness of the real and serious risks associated with smoking and to reduce, in particular, the rate of youth smoking.

We support, in principle, a policy intention aimed at making education services available to all smokers and which sustains the existing universal awareness of the risks of tobacco use. We believe that Government and relevant community health partners should ensure that there is adequate provision for such services. That is why we support measures raised in the Discussion Paper such as more funding for Quit agencies and intervention programs at a state level.

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We are keen to develop a constructive role in this process with relevant health authorities, to further build on the work that we are doing around youth smoking. In order for such education programmes to be fully effective, BATA believes that regulators could achieve further public health gains through highly targeted education campaigns aimed specifically at young people, through mediums with which they engage and in a manner that appeals to them.

2. Nationally consistent retail laws to assist with business certainty and to mitigate against the negative impacts and unintended consequences.

There is no conclusive evidence that retail display bans work. Rather than resulting in public health benefits, such measures add financial burden and administrative cost to business (especially small business). They can also lead to an increase in the illegal tobacco trade and increased youth smoking.

Despite the lack of evidence that retail display bans are effective some State Governments, such as Tasmania, NSW, Victoria and the ACT have pursued such bans.

BATA is opposed to bans on tobacco display. Indeed, if governments are committed to introducing regulation to restrict tobacco displays, this must allow for effective price and brand communication with adult smokers; permit effective brand competition at the point of sale; mitigate the potential financial and other impacts to retailers; and avoid unintended adverse consequences such as the potential for increased tobacco consumption and illicit trade.

While our stance on the ineffectiveness of retail display bans is clear, BATA would prefer a nationally consistent approach to retail display restrictions than the current piecemeal approach.

Further, as stated previously, given the continuing economic difficulties and the need to protect jobs in the retail sector, business, particularly small business, need regulatory certainty and consistency so that they can plan.

Such legislation would need to ensure that all States have consistent, regulation, that commencement dates are aligned, that there are realistic compliance periods for all retailers and that sensible measures such as retail price lists are permitted to ensure retailers and adult smokers know what products are available and can efficiently serve their customers in a restricted environment.

Retailers, retail associations, the tobacco industry, and other affected stakeholders need to be consulted throughout the regulatory process, so as to ensure that the measures proposed are workable and practical and that public health objectives are achieved with minimal impact on Australian small businesses.

There is support for calls for nationally consistent retail display restrictions of tobacco products. The Productivity Commission found in August 2008 that “a nationally consistent approach to the regulation of tobacco sale, promotion and supply would

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clearly reduce the compliance on burden for national retailers in relation to tobacco sales” 7 .

The Productivity Commission has also outlined a way that nationally consistent retail display restrictions could be implemented. In its August 2008 Report it recommended that “as the regulation of tobacco sales is a State and Territory responsibility, the introduction of a nationally consistent approach in this area is a matter for the State and Territories and could be addressed through their memberships of the Ministerial Council on Drug Strategy”

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BATA believes that this is the implementation model that should be further explored.

When it comes to retailer licensing, BATA urges the Taskforce to recommend a national licensing scheme so long as it satisfies a number of key requirements (explained further in this document) and is developed in close consultation with tobacco manufacturers, wholesalers and retailers. Such a scheme should bring no additional administrative burdens to business and instead should seek toe reduce this burden on them.

Legislation relating to licensing differs across each State and Territory in Australia and there are also different requirements for wholesalers, retailers and vending machine licensees per jurisdiction.

3. Closer engagement and co-operation between retailers, tobacco manufacturers, key decision makers and public health advocates through the establishment of the Federal Tobacco Consultative Forum

It would be disappointing, and indeed the debate surrounding public health would be paid a significant disservice, if all legitimate stakeholders were not given the chance to engage in the development of tobacco policy and to offer their opinions, evidence and research.

As tobacco manufacturers we have developed considerable knowledge about our products.

Retailers and the hospitality industry also have a contribution to make as they are at the coal face when it comes to the sale and consumption of tobacco products and should also form part of the Federal Tobacco Consultative Forum. As previously stated, too often their concerns and the economic impacts on their livelihood are ignored or, at worst, dismissed.

Therefore to ensure that all views and stakeholder impacts are taken into account, BATA urges the Federal Government to establish the Federal Tobacco Consultative Forum which would be chaired by the Parliamentary Secretary to Health, responsible for tobacco. The Forum should consist of all relevant stakeholders, including tobacco manufacturers, and would be chosen by the Parliamentary Secretary to the Minister for Health in co- operation with the Department of Health.

7 Productivity Commission Research Report, August 2008, p. 176 8 ibid

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Meetings would be held three times a year which would discuss the issues surrounding tobacco control, monitoring new developments and research, and identifying ways to achieve sensible, actionable policy solutions to achieve the Government’s goals. Issues raised in the Taskforce’s Discussion Paper could be dealt with by the Forum rather than the current piecemeal approach.

Such a forum is not unprecedented within the Health portfolio. Indeed the recently established Illicit Trade Forum brings together the departments of Treasury, Health and Customs and tobacco manufacturers and is making a real difference in the fight against illicit trade of tobacco in Australia.

Further, such forums are common amongst other Federal Government portfolios and include the

o Australian Taxation Office: Corporate Consultative Committee o Australian Customs Service: National Passenger Facilitation Committee (formerly

Passenger Facilitation Taskforce Industry Consultation Group) o Department of Infrastructure: Aviation Security Advisory Forum (ASAF)

4. Nationally consistent, integrated approach to pricing of products such as tobacco and alcohol addressed current Henry Review into the taxation system.

All issues to do with the complex area of tobacco price and taxation should be considered as part of the process currently being undertaken by the Henry Review into the taxation system. At present there would appear to be two federal processes underway when it comes to tobacco excise and it would seem logical that the Henry Review is the appropriate forum to deal with this complex issue.

This would be consistent with the recommendation regarding alcohol excise which states that “the current Treasury review of Australia’s taxation system provides an opportunity to review and reform flaws in the current alcohol taxation system …The review should consider alternative models of alcohol taxation for Australia…” 9 .

It is worth noting that the Henry Review into the taxation system has found in their initial discussion paper that, "compared with many other consumer goods, tobacco consumption is relatively unresponsive to price. Most estimates suggest that a 1 percent increase in the price of cigarettes will reduce total consumption by 0.4 percent. ... This also implies that the scope to control consumption with tax is limited” 10

The Report also reinforced that the unintended consequences of price increases could be an increase in use of illegal tobacco, stating that, "both the health sector and the industry acknowledge higher taxes on tobacco would increase incentives for illicit trade in untaxed tobacco, by way of smuggled cigarettes and tobacco leaf, or ‘counterfeit’ cigarettes purporting to be legally produced and taxed. The health sector believes tighter regulation and enforcement would be necessary to control the illicit trade. The

9 Preventative Health Taskforce Technical Report no. 2, p. 38

10 2008 Henry Review Panel Consultation Paper, p. 227 [Online]. Available at:

http://taxreview.treasury.gov.au/content/downloads/consultation_paper/Consultation_Paper.pdf [Accessed: 15/12/08]

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industry believes the risk of more illicit trade is an argument against increasing tobacco taxes.” 11

5. Greater availability of potentially risk reduced products.

We accept that public health authorities seeking to reduce the health impact of consuming tobacco products should focus primarily on advising people of the risks.

However, BATA also believe that many informed adults will still choose to be tobacco consumers. Indeed, the early data presented supports this.

Therefore we consider the development of potentially risk reduced products as a priority and seek to engage with regulators, health authorities and appropriate scientists to discuss which product changes would be supported by public health groups and might gain consumer acceptability, how new products may be tested, and how their attributes might be communicated to consumers.

Some tobacco products, such as Swedish style snus, are associated with much lower risks than cigarette smoking.

To ensure that the most effective way forward can be developed on tobacco harm reduction, we will continue to engage in dialogue with regulators and public health groups and others to find ways to characterise the relative risks of new types of tobacco products.

Conclusion

BATA hopes that these areas of core focus will provide a way forward through the myriad of recommendations, ideas, policy intentions and suggestions made by the Taskforce’s report.

We nevertheless provide our initial comment and views on other key areas covered in the Technical Report No 2 of the Preventative Health Taskforce.

11 ibid, p. 226

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Tobacco reform in Australia

Despite assertions made in the Preventative Health Taskforce, there is no doubt that the foot has truly been on the accelerator pedal with regards to tobacco control over the last six years. And this pace is continuing.

By way of example, in the last year alone BATA has made 11 submissions to governments on inquiries they are conducting in relation to tobacco control.

As is evident from the list below, initiatives in tobacco control have accelerated over the past 6 years, to the extent where it is now difficult for some health experts to pin point exactly what is and what is not effective when it comes to tobacco control.

Below is an outline of just some of the tobacco regulations that have been introduced during this period.

2002 – smoking restrictions applied to Victorian licensed premises with gaming rooms and machines 12

2002 – point of sale advertising restricted in Victoria, except for product display and price 13

2003 – smoking banned in Northern Territory enclosed workplaces, restaurants, cafes, shopping centres and the dining areas of licensed venues, licensed premises required to provide smoking and non-smoking areas of equal amenity

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2003 – Northern Territory introduces licence requirements for tobacco retailers, advertising prohibited and product display and point of sale restrictions

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2004 – 59 councils banned smoking near children’s playgrounds (since this date) 2004 – smoking banned in South Australian enclosed public places, workplaces, and shared areas 16

2005 – smoking banned in Queensland workplaces, enclosed public places and other public areas

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2005 – court enforceable undertaking agreed between ACCC and industry to remove 'light', 'mild' and similar descriptors from tobacco products

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2005 – SA places restrictions on the number of points of sale of tobacco products and requirement for separate retail tobacco licences

19

2005 – tobacco advertising in South Australia at point of sale banned 20

2005 – SA limits cigarette vending machines to one per venue and restrictions applied to placement or operation 21

2005 – SA place ban on all forms of tobacco advertising in retail outlets 22

12 www.health.vic.gov.au/tobaccoreforms/downloads/smoking_laws_booklet_sept02.pdf 13 tobacco.health.usyd.edu.au/site/supersite/resources/pdfs/TL2001.pdf 14

www.smokefree.org.au/sfv_browse.asp?ContainerID=1572) 15

tobacco.health.usyd.edu.au/site/supersite/resources/pdfs/TL2001.pdf 16 www.dassa.sa.gov.au/site/page.cfm?u=120 17 www.smokefree.org.au/sfv_browse.asp?ContainerID=1572 18 www.accc.gov.au/content/index.phtml/itemId/683533 19

www.dassa.sa.gov.au/site/page.cfm?u=120 20

www.dassa.sa.gov.au/site/page.cfm?u=120 21 www.ahasa.asn.au/index.php?a=154 and http://www.tobaccolaws.sa.gov.au/Default.aspx?tabid=96 22 www.tobaccolaws.sa.gov.au/Default.aspx?tabid=89

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2005 – WA introduces restrictions on indirect forms of the sale of tobacco products by mail order or the internet 23

2006 – Federal: pictorial Graphic Health Warnings implemented on cigarette packaging 2006 – Federal: all tobacco sponsorship for international sporting events held in Australia phased out

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2006 – Queensland reduces retail display of tobacco to 1sqm 2006 – SA bans sale of overt fruit flavoured cigarettes 2006 – ACT bans sale of overt fruit flavoured cigarettes 2006 – prohibition in the ACT of tobacco vending machines distributing smoking products 25

2006 – ACT vending machines require a lock out mechanism 2006 – SA bans split packs 2006 – Tasmania bans split packs 26

2006 – smoking banned in Tasmania pubs and clubs enclosed areas and all enclosed public places and workplaces 27

2006 – smoking banned in Queensland pubs and clubs enclosed areas 2006 – smoking banned in WA pubs and clubs enclosed areas and all enclosed public places

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2006 – smoking banned in ACT pubs and clubs enclosed areas and all enclosed public places and workplaces

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2006 – smoking banned in Victorian enclosed workplaces and public areas 30

2006 – smoking banned in NSW enclosed workplaces and public areas 31

2006 – WA restricts advertising of price discounting and display of tobacco advertisements at point of sale

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2006 – WA restricts vending machines to licensed premises and amenity areas of mine sites 33

2007 – SA ban retailer rewards, vending requires lock out system 2007 – SA ban retail sales via the internet 2007 – NSW ban mobile sales and fruit flavours 2007 – WA reduces retail display of tobacco to 1 sqm 2007 – WA introduces retailer licensing for the sale of tobacco products 2007 – Tasmania bans display of retail display of tobacco products 2007 – Tasmania bans sale of fruit or confectionary flavoured cigarettes

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23 www.austlii.edu.au/au/legis/wa/bill_em/tpcb2005281/tpcb2005281.html 24 http://www.health.gov.au/internet/main/publishing.nsf/Content/phd-tobacco-progress-cwealth-07 25

www.health.gov.au/internet/main/publishing.nsf/Content/9BBD4C52D0C65A1DCA2574C8000DA5D9/$Fil e/att-a-act-07.pdf 26 www.health.gov.au/internet/main/publishing.nsf/Content/phd-tobacco-progress-tas-07 27 www.seton.net.au/smokingban/legislation.cfm 28 www.smokefree.org.au/sfv_browse.asp?ContainerID=1572 29

www.smokefree.org.au/sfv_browse.asp?ContainerID=1572 30

www.smokefree.org.au/sfv_browse.asp?ContainerID=1572 31 www.smokefree.org.au/sfv_browse.asp?ContainerID=1572 32

www.health.gov.au/internet/main/publishing.nsf/Content/623CE2B1CA23D9C3CA2574C8000F52F2/$File/ att-a-wa-07.pdf 33

www.health.gov.au/internet/main/publishing.nsf/Content/623CE2B1CA23D9C3CA2574C8000F52F2/$File/ att-a-wa-07.pdf

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2007 – SA reduces retail display of tobacco to 1 sqm 2007 – smoking banned in Victorian pubs and clubs enclosed areas 2007 – smoking banned in NSW pubs and clubs enclosed areas 2007 – smoking banned in South Australian pubs and clubs enclosed areas 2007 – smoking banned in cars with children in South Australia 2008 – Federal: national move to ban sale of overt fruit flavours across Australia 2008 – smoking banned in cars with children in Tasmania 2008 – smoking banned in cars with children in NSW 2008 – smoking banned in cars with children in Queensland 35

2008 – regulations for Reduced Fire Risk cigarettes in Australia are passed 2008 – NSW passes laws for the total retail display ban of tobacco products 2008 – ACT passes laws for the total retail display ban of tobacco products 2008 – SA vending machines to have appropriate staff intervention mechanism to operate 36

2008 – Victoria announces retail display bans and banning smoking in cars carrying children

34 www.dhhs.tas.gov.au/__data/assets/pdf_file/0005/34367/Selling_Tobacco_Products_in_Tasmania.pdf

35 www.cabinet.qld.gov.au/mms/StatementDisplaySingle.aspx?id=61368 36 www.tobaccolaws.sa.gov.au/Default.aspx?tabid=172

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RESPONSE TO THE DISCUSSION PAPER

Pricing and related issues

BATA Position Summary

BATA recommends that all issues to do with price and taxation should be considered as part of the process currently being undertaken by the Henry Review into the taxation system.

This would be consistent with the recommendation regarding alcohol excise which states that “the current Treasury review of Australia’s taxation system provides an opportunity to review and reform flaws in the current alcohol taxation system …The review should consider alternative models of alcohol taxation for Australia…” 37 .

If taxes are to be reviewed, it should be done holistically by financial experts rather than in a piecemeal way by a variety of departments and organisations.

Background

Since December 1999 there has been a 30% increase in tobacco excise rates. 38

The 30% tobacco excise growth reflects six monthly CPI increases which, when coupled with higher cost recovery from manufacturers and increased GST, has caused cigarette prices to increase by about 68% since 1999.

Put another way, in 1999 a packet of Winfield 25s cost around $7.00. Today it cost around $12.00.

The incidence of taxation on tobacco products in Australia is already one of the highest in the world – currently, tobacco excise/taxes represent approximately 70% of the price of a pack of cigarettes on average (including GST).

The practice of the six monthly CPI excise increases is optimal as it minimises the impact on the overall inflation rate, especially on lower socio economic groups, whilst balancing an increase in government excise revenue with a fall in consumption (around 2% per annum) 39 .

Unintended consequences of increased prices is increased use of illegal tobacco

Unfortunately one of the adverse impacts of the high levels of tobacco excise is the increased trade in illicit tobacco. When cigarette prices rise in the legal market, sales fall partly because smokers substitute illegitimate cigarettes for legal tobacco products.

37 Preventative Health Taskforce Technical Report no. 2, October 2008, p. 38

38 ABS data, Customs tariffs, Industry Exchange of Sales 39 ABS data, Customs tariffs, Industry Exchange of Sales, Retail Tobacconist

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It is estimated that the illicit tobacco market was around 1.8bn cigarettes in 2007, which equates to about A$450million in lost revenue. 40

Moreover the regressive nature of indirect taxes means any sudden increases in such taxes have a greater impact on those in lower socioeconomic groups , which in the case of tobacco only further fuels the growth in illicit tobacco consumption among these groups.

The current excise regime is meeting Government revenue targets whilst increasing cigarette prices above inflation and other comparable excisable products. In the future BATA is keen to ensure the Government’s tobacco strategy continues to support health objectives, with a particular emphasis on, youth smoking prevention without increasing the illicit tobacco trade.

Australia’s experience with an ad hoc excise increase for pre-mixed drinks holds lessons for government considering similar excise changes for tobacco or other excisable products. As far as tobacco is concerned, an adhoc increase is likely to result in an increase in consumption of illicit tobacco.

We believe that it is important that the co-dependency between government, health and revenue objectives remains intact going forward. In this regard we strongly believe that the Henry Review and the Preventative Health Task Force deliberations and recommendations regarding tobacco should be coordinated, with the Henry Review taking the lead in this process.

Henry Review – Initial report

It is worth noting that the Henry Review into the taxation system has found in their initial report that, "Compared with many other consumer goods, tobacco consumption is relatively unresponsive to price. Most estimates suggest that a 1 percent increase in the price of cigarettes will reduce total consumption by 0.4 percent. ... This also implies that the scope to control consumption with tax is limited”

41

The Report also reinforced that the unintended consequences of price increases could be an increase in use of illegal tobacco, stating that, "both the health sector and the industry acknowledge higher taxes on tobacco would increase incentives for illicit trade in untaxed tobacco, by way of smuggled cigarettes and tobacco leaf, or ‘counterfeit’ cigarettes purporting to be legally produced and taxed.

The health sector believes tighter regulation and enforcement would be necessary to control the illicit trade. The industry believes the risk of more illicit trade is an argument against increasing tobacco taxes.” 42

40 PricewaterhouseCoopers report 2007, Illegal tobacco trade: costing Australia millions

41 2008 Henry Review Panel Consultation Paper, p. 227 [Online]. Available at:

http://taxreview.treasury.gov.au/content/downloads/consultation_paper/Consultation_Paper.pdf [Accessed: 15/12/08] 42 ibid, p. 226

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Track and trace

BATA Position Summary

BATA supports international efforts that are currently underway as part of the FCTC process and provide tobacco companies with the flexibility, as appropriate, to develop internal processes in line with international standards.

Background

A secure supply chain is a fundamental requirement in efforts to reduce illicit trade. The legitimate channel must be protected to both stop infiltration by contraband and counterfeit tobacco products and also to prevent diversion of legitimate product into the illegal channel.

To provide such security, we believe that all stakeholders, both in Australia and other markets, should agree to an effective framework to track the forward movement of tobacco products through the supply chain as well as to trace backwards to the point of departure from the legitimate supply chain should illicit products be found.

International movements

BATA welcomes the inclusion in the draft Chairperson’s text at the second FCTC Conference of the Parties meeting that provides for Parties to ensure that all manufacturers must conform to an international standard for tracking and tracing without prescribing a specific technology.

This is vital to ensure flexibility for each signatory to determine what requirements are appropriate for them as well as ensure that all manufacturers, large and small, are able to meet the international standards set by the Protocol.

BATA’s current efforts

In order to meet the intended FCTC Protocol requirements and to meet the needs of those early adopter governments, British American Tobacco is currently proactively working to enhance its existing “tracking and tracing” capability. We have established a global Track and Trace Project Team which is seeking to put in place operational and technical requirements to address the evolving track and trace standards required by the Protocol.

Our solution will use open data standards and will enable relevant authorities to access specified data via a common industry entry point that will enable the tracking of tobacco products from British American Tobacco distribution warehouses to the point where it is sold to the first external customer, and to similarly trace back to any point of departure from this legitimate supply chain.

Our enhanced track and trace methodology is targeted for trial by mid 2009, and we are happy to discuss details of the project should it be of interest.

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Illicit trade

BATA Position Summary

BATA supports measures that seek to reduce illicit trade and that are internationally consistent and enforceable. This would assist in cracking down on 6.4 percent of total cigarette consumption in Australia and potentially recouping at least $450 million of revenue losses.

Problem of illicit trade

BATA is supportive of any measures that will effectively address the illicit tobacco market. Latest intelligence shows that the illegal tobacco market remains a serious problem in Australia, with an estimated 1.8 million kilograms of illegal tobacco in circulation in 2007. 43

This is equivalent to 6.4 percent of total cigarette consumption in Australia and represents taxation losses of at least $450 million. The availability of illegal tobacco undermines government policy to keep tobacco costs high and limit the accessibility of tobacco products to minors. 44

The Australian experience

Over the last five years, Australia’s biggest source of illegal tobacco supply was domestically grown ‘chop chop’ or loose leaf tobacco. Chop chop was diverted from licensed farms and directed to the black market avoiding the payment of Government tax and excise.

Following the Government sponsored buyout of the domestic tobacco growing industry and the attendant demise in down trading of chop chop, in 2007 Australian Customs recorded significant increases in the number of sea cargo detections of illicit tobacco and cigarettes.

45

While this could be indicative of how illegal tobacco supply sources have adapted to change, or of the increase in Customs controls post the closure of the domestic market, it does signal that illegal tobacco remains “in demand” and demonstrates the true international nature of illegal tobacco.

According to our estimates, the illicit trade in tobacco products represents approximately 6 percent of total world tobacco consumption, and this is expected to grow as future excise increases encourage more consumers to seek cheaper illegal products.

43 PricewaterhouseCoopers Research Report, “Illegal tobacco trade: Costing Australia millions.” August 2007

p 3. 44 ibid 45 Australian Customs Service, “Illicit Cigarette and Tobacco Detection Summary.” January 2008.

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Illicit trade adversely affects our business and that of our commercial partners. It denies governments worldwide approximately US $20 billion in annual revenue, whilst at the same time exposes consumers to products which often fail to comply with national regulatory standards.

Partnering with governments to find a solution

BATA looks forward to partnering with governments in the development, negotiation and implementation of an effective Illicit Trade Protocol that will target criminal perpetrators and enhance controls and oversight, while providing flexibility for governments to tailor anti-illicit trade policies to their own circumstances.

BATA has continued to work with Australian Customs, the Australian Tax Office and the Australian Federal Police in reducing the illegal tobacco market. We believe that, based on our experience in working with these groups to develop effective solutions, we can positively contribute to any international efforts to reduce illicit trade.

As explored further in this paper, there are significant impacts on illicit trade by a number of proposals made in the Discussion Paper.

Place of sale

BATA Position Summary

Overseas evidence demonstrates that retail display bans do not work and cause serious unintended consequences with no evidence of intended public health benefits.

Rather retail display bans result in a financial burden and administrative cost to business (especially small business), they can lead to an increase in illegal tobacco, and can result in an increase in youth smoking.

Introducing such bans into Australia is a regulatory experiment which will significantly change the retail landscape and no one knows the full extent of the negative impact that these bans will have.

Given the current economic climate, which we are being told will continue to ‘get worse’, now is not the time to be experimenting with business (particularly small business) and the priority should instead be on saving jobs in the retail sector rather than losing them. BATA believes that business deserves consistency in regulation to provide certainty in their planning.

For these reasons BATA is opposed to such bans and have made our case to various State and Territory governments.

Although we continue our stance on its ineffectiveness, BATA would rather see a nationally consistent approach to retail display restrictions than the current piecemeal approach.

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Why retail display bans do not work

There is no concrete evidence that retail display bans, as evidenced from international experience, bring with them public health benefits and instead bring with them a significant economic cost to business (particularly small business) an increase in illicit trade and an increase in smoking prevalence.

Retail display bans cost retailers, especially small retailers

Small retailers would also be more likely to lose sales to larger stores, as the display of products helps to counteract the incorrect assumption that larger stores have a bigger range of products available.

Therefore, rather than reduce smoking, more regulation imposes an administrative burden on retailers, particularly smaller retailers and adds to their compliance costs. This inhibits their ability to effectively compete with a larger retailer.

If display bans were implemented, there is concern that small retailers would be less likely to be able to bear the costs of compliance involved in refitting their stores.

In fact, research conducted in NSW found that 81% of small businesses surveyed believe that banning cigarettes display will see smokers shift their purchases to large supermarkets

46 .

Smaller retailers also believe the absence of stock visibility will have some competitive implications for them with larger retailers able to offer one-stop-shopping at better prices. The sale of tobacco products contributes as much as 40 percent of revenue for small to medium sized business (who do not “specialise” in the sale of tobacco where the contribution is between 60-80 percent of sales revenue). 47

An increase in illegal tobacco

Evidence also shows that more regulations, such as putting legitimate tobacco products out of sight will result in an increase in the trade of cheaper illegal tobacco and cigarettes.

In 2007 it was reported the rate of illicit tobacco trade was higher in Saskatchewan than almost every other Canadian province.

48 In fact, the Canadian Cancer Society believes

that tackling illicit trade along with youth smoking prevalence will be the major focus areas for Saskatchewan in the years to come. 49.

46 AUSPOLL Retailer and Community Attitude Survey June 2008.

47 PricewaterhouseCoopers “Sales of cigarettes and tobacco product by type of retail business” An analysis of the significance of sales of cigarettes and tobacco products to tobacco retailers in Australia. May 2005. p. 22 48 Boggs, T. (2007), Convenience Central Magazine Volume 6, Issue 10, October 2007 49

Benjoe, K. (2008), “Agency wants increased anti-smoking measures in Sask.” [Online: Published in Leader- Post, 01/04/08]. Available at: http://www.canada.com/reginaleaderpost/news/story.html?k=42720&id=831ed26f-d7e0-4b24-a3eb- 2e954a1c1c66 [Accessed: 28/04/08].

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Further, in 2007, 6.4 percent of tobacco consumption in Australia was consumption of cheap, illegal tobacco. 50 The availability of low cost illegal tobacco undermines government policy to keep tobacco costs high to reduce affordability and levels of consumption.

51

In 2005, it was found that 1 in 17 cigarettes smoked in Australia was illegal tobacco, which would indicate that interventions to manage both legal and illegal consumption of tobacco should be a part of the government’s health agenda.

52

Potential increase in smoking prevalence or youth smoking

International evidence demonstrates that banning or restricting tobacco products at point of sale display does not reduce smoking incidence nor does it reduce youth smoking.

Saskatchewan was the first Canadian province to prohibit the retail display of tobacco products. However the percentage of smokers in Saskatchewan actually increased from 21 percent in 2002 to 24 percent in the 19 months when the ban was first introduced.

Also during this period, the national rate of youth smoking decreased from 22.5 percent to 22 percent over the same period whilst in Saskatchewan youth smoking prevalence actually increased from 27 percent to 29 percent. 53

Furthermore, in 2005, three years after the display ban, it was identified that Saskatchewan had the highest rates of smoking in the 15-19 year old age group compared to every other Canadian province 54 .

The display ban has also been ineffective in reducing smoking prevalence. Statistics from Health Canada have shown there has been no medium-term reduction in smoking rates and from 2003 to 2005, smoking rates did not change, compared to other provinces that saw significant reductions without the use of a retail display ban 55 .

BATA approach to national consistency

If governments are committed to introducing regulation to restrict tobacco displays, this must allow for effective price and brand communication with adult smokers; permit effective brand competition at the point of sale; mitigate the potential financial and other impacts to retailers; and avoid unintended adverse consequences such as the potential for increased tobacco consumption and illicit trade.

50 PricewaterhouseCoopers Research “Illegal Tobacco costing Australia millions” August 2007. p 3. 51

ibid. 52

PricewaterhouseCoopersResearch “The Illegal Tobacco Market in Australia.” March 2005. p 4 53 Tobacco Control Programme, Health Canada, Canadian Tobacco Use Monitoring Survey (CTUMS) Annual 2002-2003. 54 Canadian Council on Tobacco Control (2007) Ontario Tobacco Strategy: Youth and Tobacco Factsheet [Online]. Available at: www.cctc.ca/cctc/EN/mediaroom/factsheets/factsheetyouth [Accessed: 24/04/08]. 55

Statistics Canada (2006), An Update from the 2005 Canadian Community Health Survey, Chart 5 [Online]. Available at: http://www.statcan.ca/english/research/82-621-XIE/2006002/smoking.htm [Accessed: 24/04/08].

21 

BAT believes that if a national approach was to be regulated, regardless of a balanced impact assessment; all State and Territory Governments should be required to legislate for such display restrictions to be effective.

Such legislation would need to ensure that all States are nationally consistent, that there is a similar starting period, that a realistic compliance period for all retailers is introduced and that sensible measures are put in place to assist retailers and minimise the negative impacts on them.

Retailers, retail associations, the tobacco industry, and other affected stakeholders need to be involved in the regulatory process, so as to ensure that there is minimal impact on Australian small businesses.

Support for national consistency

There is support for calls for nationally consistent regulation on the retail display of tobacco products.

The Productivity Report found in August 2008 that “a nationally consistent approach to the regulation of tobacco sale, promotion and supply would clearly reduce the compliance on burden for national retailers in relation to tobacco sales”

56 .

Support is also forthcoming from various retailers with the Productivity Commission also finding that the “Coles Group proposed that nationally consistent approach to the regulation of tobacco sales be developed through the Ministerial Council on Drug Strategy” 57 .

Policy Implementation

The Productivity Commission has outlined a way that nationally consistent retail display restrictions could be implemented. In its August 2008 Report it recommended that “as the regulation of tobacco sales is a state and territory responsibility, the introduction of a nationally consistent approach in this area is a matter for the State and Territories and could be addressed through their memberships of the Ministerial Council on Drug Strategy” 58 .

BATA believes that this is the implementation model that could be further explored.

56 Productivity Commission Research Report, August 2008, pg 176

57 Productivity Commission Research Report, August 2008, pg 176 58 ibid

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Licensing

BATA Position Summary

BATA would support a sensible licensing scheme for national consistency and developed in close consultation with tobacco manufacturers, wholesalers and retailers. Such a scheme should also include importers of tobacco products.

Background

Legislation relating to licensing differs across each State and Territory in Australia and there are also different requirements for wholesalers, retailers and vending machine licenses per jurisdiction. A number of States require retailers to hold a valid retailers license, whereas in the ACT and WA currently the manufacturer is also required to hold a licence themselves and ensure that they are only selling product to a retailer with a valid license.

BATA position on licensing

Our position regarding licensing has been stated publicly in submissions to government, predominantly at a State level.

As previously stated, BATA supports a licensing scheme so long as it satisfies the following key requirements and is developed in close consultation with tobacco wholesalers and retailers:

1) Purpose and administration of licensing scheme is clearly identified Tobacco licensing schemes should be implemented as part of a broader compliance scheme for the purpose of preventing sales to minors and the illicit trade in tobacco products.

Ideally we would prefer a national licensing scheme, imposed at Federal level to ensure a level playing field for retailers across all Australian jurisdictions. The scheme would encompass tobacco retailers, wholesalers, and owners of liquor licensed premises in which tobacco vending machines are housed.

2) Who would be required to hold a license would be clearly articulated To ensure a level playing field for smaller businesses against larger ones, individual businesses falling within a large franchise or banner would each have to hold a licence. i.e. a license will be required per retail premise In regards to vending machines, a licence should be required for each vending supplier (not per machine) operating in a particular liquor licensed premise (BAT has approx 8,000 vending machines). Given that many licensed premises contain multiple retail environments each containing a vending machine, a requirement to licence each machine in a premise would be unduly restrictive. For example, a liquor-licensed venue containing three vending machines owned by a single operator would attract one licence.

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3) License fees set at a fair level

Any licensing fee would be imposed and maintained at the minimum required to cover the administration costs of the scheme. Licensing fees would not be used to raise government revenue.

It should be noted to date that the license fees are relatively nominal and the intention of the fees as specified by the State Health Departments is to cover the costs of administering the licensing schemes, rather than to raise revenue.

Tobacco retailers already face high costs in relation to security, insurance against theft and compliance with successive and ever-changing tobacco control regulations. The application of additional substantial fees relating to the sale of tobacco products would place a heavy burden on retailers, especially small businesses and would also be inconsistent with the purpose of the scheme. Retail outlets may choose to cease selling tobacco when the cost of the license is greater than the value of tobacco for the retailer.

4) Revocation and granting of licenses

The licensor (i.e. Health Department) would be granted powers to revoke the licence based on conviction of a licensee for any serious and intentionally reckless breach of the licence. For example, a tobacco retailer who was charged and found guilty of an offence of sales to minors or engagement in the illegal tobacco trade would have their licence revoked for a period to be determined by an appropriate authority.

Granting of a licence would be conditional upon participation in a government- sponsored training programme in responsible retailing, including preventing youth access and illegal sales. Such programmes would be run through existing retail industry associations or educational organisations.

Licensors would be responsible for ongoing training of licensees in legal compliance.

The licensor would be responsible for training of inspectors to monitor and enforce the conditions of the licence.

Licensees would be required to display their licence clearly at the point of sale such that inspectors and customers could ascertain their status as a legal purveyor of tobacco products.

5) Full consultation in the development of the scheme

The licence scheme would be developed in close consultation with tobacco retailers and other affected stakeholders including tobacco manufacturers and hospitality owners, and be the subject of a separate and formal review process, coordinated by revenue stakeholders, prior to any articulation in regulation.

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Duty free sales

BATA Position Summary

No public health benefit would be served through the abolition of duty free sales of tobacco products. Such a move would have significant unintended consequences (such as the loss of jobs and sales for business) and would set a dangerous precedent with banning the sale of a legal product.

BATA opposes the banning of duty free sales of tobacco products as the products are already highly regulated, and equate to approximately 1% of Australia’s total industry volume. Considering this, and when compared to other channels, there is no overall benefit in removing sales from either a health or illicit trade perspective, other than the inconvenience to the international travelling public and negative impacts to Australian businesses and jobs.

Duty free sales already occur in a highly controlled environment with no opportunity for immediate consumption of the product in public places.

Such restrictions are likely to have unintended consequences on business commerce, revenue and employment given that consumers will simply purchase tobacco products in another jurisdiction rather than Australia, which would result in an impact on Australian business rather than an impact on smoking rates.

Permission to sell duty-free tobacco is also subject to strict controls and licences in every state and territory. The movement and storage of the product is highly regulated as is the method of sale to the end user.

In broad terms there is;

§ Limited access for the Australian population to access tobacco in a duty free environment;

§ Purchase qualification is required; § Purchase quantity is strictly limited; § A retail license is required to sell tobacco products in a Duty Free environment; § There is highly restricted storage and movement of tobacco products; and § Strict records of transactions are maintained.

A dangerous precedent would also be set by banning the sale of a legal product in a legitimate channel, putting the future sale of other such products (such as alcohol) in doubt.

Given the above, there is very little reason to assume that the abolition of Duty Free sales will either address illicit trade or reduce cigarette consumption.

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Retailer to Consumer Internet Sales

BATA Position Summary

BATA believes that sensible regulation around internet sales to consumers is necessary. BATA would not support further restrictions on business-to- business internet sales.

In addition, given the small proportion of cigarettes sold over the internet, and the increasing size of the illicit tobacco market, BATA believes that Government should first focus its attention on addressing the illicit tobacco trade.

Many retailers use the internet to purchase cigarettes from wholesalers. These sales are regulated , include relevant tobacco excise and are an example of ensuring legitimate small businesses can continue operating efficiently by using technology to their advantage.

BATA hopes that regulation around business to retailer internet sales will make it more difficult for consumers to buy cigarettes from tobacco manufacturers or importers looking to circumvent tobacco excise by producing and selling unregulated tobacco.

Not unlike “illegal tobacco”, many of these sites sell cigarettes unrestricted, avoid the payment of Australian taxes and often do not carry the required health warnings. In addition to these issues, illegal internet sales of cigarettes impact upon the legitimate sales of retailers and wholesalers alike.

A reduction in this form of illicit trade via the internet could be achieved through improved and appropriate government controls to develop increased and consistent enforcement.

Packaging

BATA Position Summary

BATA is opposed to the introduction of plain packaging as it is not supported by any research or evidence and, there are significant legal barriers to its implementation.

Even proponents of ‘plain packaging’ acknowledge that in the absence of any examples of jurisdictions in which plain packaging has been introduced, the research evidence to which it refers is “speculative”. The dangers of reliance upon uncorroborated expressed views as to how consumers would behave in a hypothetical situation are well known.

Existing studies are wholly inadequate as a basis for a measure that, not only may have unintended counter-productive consequences, but raise fundamental issues with implications far beyond the tobacco industry.

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Such a policy would have the unintended consequences of job losses and a potential increase in illicit trade with no public health benefit.

Background

Plain packaging is essentially a legal, as opposed to a health, issue as it deals with the use of trademarks and a company’s right to use their brands. Attempts to introduce plain packaging into Australia would see BATA take every action necessary to protect its brands and its right to compete as a legitimate commercial business selling a legal product.

Plain packaging is not a new idea and has been considered and rejected by numerous countries on numerous occasions. It was considered by the New Zealand Government in 1989 and rejected due to concerns of possible breaches of international law. It was considered in Canada in 1994 and rejected due to the lack of evidence and potential international trade law complications. It was considered in Australia in 1997 and rejected, in part, due to similar concerns.

Further, In Australia in 1997 the then Federal Government’s response to a Senate Committee inquiry into tobacco (where plain packaging was a focus) found that “…further regulation needs to be considered in the context of Australia's international obligations regarding free trade under the General Agreement on Tariff and Trade (GATT), and our obligations under international covenants such as the Paris Convention for the Protection of Industrial Property, and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)

59 .

Legal issues regarding plain packaging

The legislative ability of the Federal Government to introduce a mandatory plain packaging regime is constrained by the limits of power imposed by the Constitution and the international agreements to which Australia is a party. Prohibiting the use of trade marks on product packaging could:

o amount to an acquisition of property without just terms, in breach of the Constitutional guarantee set out in section 51(xxxi);

o impose restrictions on the registration and use of trade marks based on the nature of the goods or services for which such marks are registered, and otherwise unjustly encumber those marks by way of special requirements, contrary to the international system of trade mark protection (in particular under Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS);

o constitute a barrier to trade, contrary to international obligations under the Technical Barriers to Trade Agreement (TBT) and the General Agreement on Tariffs and Trade 1994 (GATT); and

o undermine the basis upon which IP rights are created and protected internationally.

59 Government Response to the Report of the Senate Community Affairs Reference Committee, 1997, p. 30

[Online]. Available at: http://www.health.gov.au/internet/main/publishing.nsf/Content/3B85A3D460C59239CA256F190004A8D5 /$File/senate.pdf [Accessed: 10/12/08]

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There are also Australian Constitutional issues to the implementation of plain packaging. If such packaging was introduced, the trade mark owners will lose the use of their trade marks and common law rights in their branding and the corresponding acquisition by the Commonwealth will include the appropriation to themselves of the space on the packaging for their public health messages at no cost, as well as retaining fees paid in connection with registration and maintenance of trade marks.

A law that breaches the constitutional guarantee provided for by section 51 (xxxi) is invalid and liable to challenge in the High Court of Australia.

Further, Australia is a signatory to TRIPS which protects intellectual property. The introduction of a plain packaging regime would be inconsistent with Australia’s obligations under TRIPS to ensure that:

o "the nature of the goods or services to which a trademark is applied shall in no case form an obstacle to registration of the trademark" (Article 15(4)); (emphasis supplied) and

o "the use of a trademark ... shall not be unjustifiably encumbered by special requirements, such as ... use in a manner detrimental to its capability to distinguish goods and services," (Article 20). Article 8 of TRIPS does provide that some measures in the interests of public health may be taken, but only if they are consistent with TRIPS.

Australia is also a signatory to the GATT and the TBT. In particular, under the TBT Australia must ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. Technical regulations include regulations about symbols, packaging, marking or labelling requirements of a product.

The introduction of plain packaging requirements would also be inconsistent with Australia’s obligations under the TBT in that:

o Article 2.2 requires that technical regulations not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create. The evidence available does not establish that a legitimate objective would be fulfilled by the proposals.

o Article 2.8 requires that where technical regulations are appropriate, they should be based on product requirements in terms of performance rather than design or descriptive characteristics.

GATT has similar provisions.

Breaches of international agreements are subject to international dispute procedures and also may have adverse consequences for Australia’s international reputation.

The international obligations referred to above are fundamental to the effective international protection of all trade marks (and related IP rights) and their commercial value. Accordingly, a breach of those principles will call into doubt the commitment of Australia to an effective IP regime which promotes innovation and value creation.

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Legislation implementing the proposals for plain packaging, involving an elimination of intellectual property rights, would be seriously at odds with Australia’s insistence, for example in its current negotiations with China over the Australia China Free Trade Agreement, that other countries improve their protection of intellectual property rights.

It is also BATA’s understanding that at the recent FCTC Conference of the Parties 3 (COP3) meeting in Durban, South Africa (from 17-22 November 2008), Australia was the Key Facilitator of the Working Group which drafted the Guidelines in this area.

At these meetings Australia emphasized that no Party was obligated to implement plain packaging and that all Parties had to consider obstacles to plain packaging under national and international law and the fact that there is still a need for further research and for an evidence base.

We are happy to elaborate on these and other issue with appropriate personnel at a face to face meeting.

A dangerous precedent for other product categories

Plain packaging would also lead to great uncertainty amongst business about their right to use their brands and would set a dangerous precedent should future governments wish to impose similar regulations on say the alcohol, snack or fast food industries.

This view is shared internationally. In response to the United Kingdom’s Department of Health Discussion Paper’s section on plain packaging, the European Communities Trade Mark Association (ECTA) found that “the adoption of plain packaging legislation outlined in the Consultation Document may have effects and ramifications well beyond the intentions of the Department of Health”.

Plain packaging will cost government

Contrary to certain opinion on this issue, there will be a cost to government should plain packaging be introduced.

There will be a flow on of job losses, not just confined to the tobacco industry but in the printing and retail sectors more broadly. Further, the uncertainty created by the encroachment of government on their brands could impact on business confidence and their willingness to invest in new products and innovations to the detriment of consumers.

Additionally, tobacco companies would be entitled to very substantial compensation from the Commonwealth should plain packaging be introduced.

No public health benefit

Not only is plain packaging a legal difficulty, potentially bringing with it significant job losses and cost to Government, there is actually no evidence that plain packaging will lead to public health benefits.

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The United Kingdom’s Department of Health discussion paper on plain packaging states that “the research evidence into this initiative is speculative, relying on asking people what they might do in a certain situation” 60 .

The UK Government has recently gone further and stated that they do not intend to pursue the issue of plain packaging at this time as “the evidence base needs to be developed” 61 . On 16 December, in response to a parliamentary question regarding plain packaging, the UK Secretary of State for Health, Alan Johnson stated ‘there is no evidence base that it actually reduces the number of young children smoking.’

BBC reported that “The government had also considered banning all promotional material from tobacco packaging. But ministers say until there is enough evidence such a move would actually stop young people taking up smoking it will not introduce a ban.'” 62

Here in Australia, Simon Chapman also states there is “relatively small public health research literature about the likely impact of plain packaging” and that the research available is “experimental”

63 .

It is curious that given there is no evidence that such a measure would have a public health benefit, relative to other measures, that it could be given serious consideration as part of a government report.

Significant unintended consequences

In addition to there being no evidence that plain packaging would bring public health benefits, we know from experience (such as excise increases and Graphic Health Warnings) that people will buy cheaper cigarettes and more of them.

The consequent commoditisation caused by plain packaging is that it would likely lead to price becoming the sole identifiable product feature, which in turn encourages vigorous price competition leading to consumers switching to cheaper products, of which they can afford more.

Such a scenario would also lead to an increase in the use of illegal tobacco as plain packaging would facilitate counterfeiting and smuggling, and thus the distribution of products through unregulated, untaxed criminal networks more readily open to under age and vulnerable smokers, while at the same time making policing of illicit trade significantly more difficult.

60 UK Department of Health Consultation Paper (2008), "Consultation on the Future of Tobacco Control", p. 41 [Online]. Available at: http://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_08511 4 [Accessed: 10/12/08]. 61 UK Department of Health News Release, "Johnson stubs out recruitment of young smokers", 9 Dec 2008 10:07 AM [Online]. Available at: http://www.wired-gov.net/wg/wg-news- 1.nsf/vAllPrint/F37443D58B2281988025751A00379A81?OpenDocument [Accessed: 10/12/08] 62

BBC News Online, "Ban on tobacco displays announced", 08:44, 9 December 2008 [Online]. Available at: http://news.bbc.co.uk/1/hi/health/7771210.stm [Accessed: 10/12/08] 63 Ibid, p. 10.

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90% - 100% Health warnings on Pack

BATA also opposes any move to 90%-100% health warnings on packs as the risks of smoking are already well known and for the same reasons that BATA is opposed to plain packaging

Australia is already leading the world in terms of the pack space already appropriated for graphic health warnings, covering 30% of the front of the pack and 90% of the back.

BATA understands that the Department of Health are undertaking an internal review as to the effectiveness of such warnings, with the result yet to be publicly available.

Product information

BATA’s Position Summary

BATA believes that decisions with regard to product information should be dealt with through current international processes.

BATA understands that at the recent COP3 meeting in South Africa, it was agreed that draft Guidelines which dealt with the contents of tobacco products and regulation of tobacco product disclosures would be submitted for adoption at COP4 (which is to take place in Uruguay in the last quarter of 2010). Australia is a partner to the Working Group elaborating on these Guidelines.

Given the importance of this issue, the scientific uncertainties on this issue and Australia’s involvement in shaping international policy in this area, BATA recommends that an international approach is best.,

Domestic developments

BATA voluntarily ceased using terms such as ‘light’ and ‘mild’ in 2005.

Recent International Developments

This issue of cigarette contents and emissions was discussed at COP3 in November 2008.

At that meeting BATA understands that it was agreed that the Working Group continue to develop a first set of draft guidelines for COP4 around the contents of tobacco products and the regulation of tobacco products and disclosures.

It was further requested that the Tobacco Free Initiative (TFI) would carry out the following work in three areas:

1. Submit a report for consideration by the COP at COP4 which:

31

• Identifies best practices in reporting to regulators regarding contents, emissions, and product characteristics, including via electronic means and systems

• Identifies best practices in informing the public of product information • Collects information on legal cases and analyses of the legal issues related to

tobacco product disclosures.

2. Validate, within five years, the analytical chemical methods for testing and measuring the cigarette contents and emissions identified as priorities in the progress report of the working group, using two smoking regimes, ISO and Canadian intense and to inform the COP on a regular basis of progress made.

3. Monitor scientific progress and, where appropriate, design and validate methods for testing and measuring the product characteristics for aerosol particle size and filter fibre residues and inform the COP on a regular basis of progress made.

Given the amount of international work that is being considered, and Australia’s involvement in this work, BATA believes that it would be sensible to continue work through such international forums and consider their results.

Dispelling ingredients myths

In our view, based on the currently available scientific evidence, the ingredients that BATA uses, at the levels used, do not add to the harm of tobacco consumption, do not induce people to start smoking and do not affect people's ability to quit. There is currently no evidence that smoking cigarettes without added ingredients reduces the health risks. There is no such thing as a safe cigarette.

BATA does not add ingredients to make cigarettes appealing to children. The ingredients in some cigarettes do include sugars, cocoa and fruit extracts, but they blend with tobacco, making a characteristic taste when burnt, distinct from the effect these ingredients have on foods.

Tobacco products are not “spiked” with nicotine, and ingredients are not added to increase the amount of nicotine in cigarette smoke, or to increase the amount or speed of nicotine absorbed into the smoker’s body.

Any proposal to restrict the level of ingredients used in tobacco products should be based on sound scientific evidence.

Cigarette emissions

Similarly, any restrictions on the levels of certain smoke constituents should be based on sound scientific evidence and with the objective of reducing the risks of consumers.

As recognised at the COP3, further work is necessary to develop standardised analytical methods for the testing and measurement of cigarette contents and emissions.

32 

International examples

Article 11.2 of Canada’s Tobacco Product Information Regulations (2000) around the display of product emissions on packs was reconsidered as the information was considered confusing based on the difference between smoker behaviour and product testing

64 .

The FCTC have highlighted in response to this development that such information on packages “are not only ineffective, but harmful regulatory practices” 65 . The FCTC have also identified that the current packaging information on Australian packs is appropriate in informing consumers of the risks associated with smoking 66 .

BATA believes that, if the FCTC have acknowledged the strengths of current labelling in Australia regarding health risks, then changing such a structure may be a “harmful regulatory practice”.

BATA is willing to work with governments and other relevant stakeholders on any proposal to disclose information on cigarette toxicity in a way that is clear and accurate and relevant to consumers.

Need for further stakeholder engagement

As is evident, tobacco product regulation is complex and will have significant implications for tobacco users. What is concerning, therefore, is that the lack of full consultation by the Taskforce in drafting their submission means that when it comes to this important area, there is a stated lack of confidence as to whether such measures could even be implemented.

This example further highlights the importance for tobacco manufacturers such as BATA to be involved in the regulatory processes, so that any regulations that have a direct effect on the tobacco industry or other relevant stakeholders are workable, evidence based and effectively address public policy.

Consumer product information

BATA Summary Position

BATA supports informing consumers about the risks of smoking with clear and accurate information at the point of sale. However, for this to be effective, consultation with retailers and retail associations is essential to not only understand the retail universe, but also to understand how such information can be effectively produced and distributed without negatively impacting Australian small businesses.

64 FCTC Article 11 Factsheet – “Emission and Constituent Labelling” [Online]. Available at:

http://www.fctc.org/dmdocuments/COP-3_Article_11_Fact_Sheet_Emissions_%20Constituents.pdf 65 ibid 66 ibid

33 

BATA believes, however, that such an initiative can only be effective if the information provided to consumers is clear and accurate. Previous international examples demonstrate the problems associated with providing smokers with information that does not benefit consumer understanding of the risks associated with tobacco use.

Overseas experience

Article 11.2 of Canada’s Tobacco Product Information Regulations (2000) around the display of product emissions on packs was reconsidered as the information was considered confusing based on the difference between smoker behaviour and product testing

67 . The FCTC have highlighted in response to this development that such

information on packages “are not only ineffective, but harmful regulatory practices” 68 .

BATA believes that, of the proposals suggested by the Preventative Health Taskforce, point of sale information is likely to be the most effective media for communications as it provides another warning to smokers prior to purchase.

Corporate activities and donations

BATA Position Summary

To ban a legitimate company from playing a role in the community is nonsensical and sets a dangerous precedent for other companies, at the same time as increasing the financial burden on Australia’s charity sector.

Surely doing good in the community by corporate citizens should be encouraged.

Background

BATA is committed to being a responsible corporate citizen and we have come a long way in embedding Corporate Social Responsibility (CSR) within our business through our governance structure and through our supply chain. BATA is actively involved with many charitable organisations and believe that we have a responsibility to give back to our community.

It is easy to think of examples where CSR activities do not have the aim or effect of promoting tobacco. It would seem rather extreme to prohibit CSR activities on matters that do not aim or have the effect of promoting tobacco product or tobacco use.

It follows that an absolute ban on CSR raises significant legal issues, namely:

o property rights - it is a fundamental principle of property rights that a legal entity can spend it’s money in any way it sees fit, subject to reasonable regulation. It is

67 FCTC Article 11 Factsheet – “Emission and Constituent Labelling” [Online]. Available at:

http://www.fctc.org/dmdocuments/COP-3_Article_11_Fact_Sheet_Emissions_%20Constituents.pdf 68 ibid

34 

difficult, therefore, to see how or why a legal enterprise could be prohibited from spending money on legal socially responsible causes (unless they were specifically for the purpose of promoting tobacco); and

o certainty – it is a basic common law principle that ambiguous prohibitions contravene the principle of certainty.

Such a ban would also be incompatible with international CSR initiatives which not only encourage companies to undertake such activities but also make CSR information available to all stakeholders, including to consumers, investors and the wider public, "to enhance the transparency, visibility and credibility of CSR practices".

CSR activities, particularly of multinational enterprises (which of course include BAT and most other tobacco companies) are regarded to be of major importance to the world economy, and to sustainable development generally.

Perhaps of most significance in this context are the OECD Guidelines for Multinational Enterprises 2000 (the OECD Guidelines). The aim of the OECD Guidelines is to encourage the positive contributions that multinational enterprises can make to economic, environmental and social progress, and to minimise the difficulties to which their various operations may give rise.

Although the OECD Guidelines are voluntary, and therefore not legally enforceable, governments adhering to them must promote and encourage their use. In summary, the OECD Guidelines provide that, in the countries in which they operate, enterprises should, inter alia:

o contribute to economic, social and environmental progress with a view to achieving sustainable development;

o respect the human rights of those affected by their activities;

o create employment and training opportunities;

o uphold and apply good corporate government principles and practices;

o develop and apply effective self-regulatory practices;

o encourage business partners, including suppliers and sub-contractors, to apply principles of good corporate conduct; and

o abstain from improper involvement in local political activities.

In relation to disclosure, the OECD Guidelines also encourage transparency and accountability, calling for the publication of timely and reliable information on companies' activities, structures, financial situations and performance (with due regard to business confidentiality and other competitive concerns).

The OECD Guidelines also call for high standards for non-financial information, including environmental and social reporting. Enterprises are also encouraged to communicate

35 

matters such as their governance structures and policies, as well as information on social, ethical and environmental policies and other codes of conduct and performance in relation to these. Once again, therefore, any proposal to ban a legal industry from undertaking CSR initiatives would conflict with the principles and objectives behind the OECD Guidelines.

BATA also engages in stakeholder dialogue on a regular basis with many people in the broader community, with invitations extended to government officials, retailers, small businesses, public health professionals, NGOs and environmental groups with the aim of assessing the expectations of our stakeholders when addressing our own business practices. These sessions are conducted by a third party and are always verified by independent, qualified professionals. Results of these sessions are used as a basis for any other external engagement, as we intend to meet such stakeholder expectations wherever possible.

A practical result of BAT stakeholder dialogue

Stakeholder dialogue has led to the foundation of the independent Butt Littering Trust, who has successfully worked with many Australian Governments in educating smokers on appropriate butt disposal, advised councils on butt litter mitigation initiatives and encouraged the issuing of fines. Since 2003, 71 education projects have been conducted with: § 24.9% overall average reduction in butt litter in project areas; § 221,480 smokers educated face-to-face on the impact of butt littering; § 45,630 pledges by smokers to ‘Please Butt It, Then Bin It’ obtained through 25

Butt Free City projects; § 504,000 personal ashtrays distributed; § 3,798 permanent butt bins installed and maintained in key locations Australia

wide; and § ‘Butt Free’ project management, advertising, publicity and promotional support

provided free of charge to all partners 69 .

In July 2007, the Trust contributed towards Sustainability Victoria 70 , community groups, hotel associations and 66% of Victoria’s local councils on the ‘Don’t be a Tosser – Bin Your Butts’ campaign. This campaign was developed in response to indoor smoking bans, which it was believed would generate approximately 80% more butt litter if there was no intervention. In July 2008, the results of the campaign showed that:

§ Butt littering fell by almost 50%; § 66% of smokers binned their butts – up from 42% prior to the campaign; § 73% of venues actively supported the campaign – exceeding the goal of 20%;

and § 68% of venue managers reported increased awareness and concern about butt

litter as a result of the campaign.

69 Butt Littering Trust 2008 Executive Report 70 ‘Don’t be a Tosser’ campaign results available on the Victoria Litter Action Alliance website

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We believe that these activities are extremely important in addressing our corporate social responsibility and minimising the impact of the operations and activities that the business has on the community where possible. To prevent a business from making such an attempt is not only irresponsible but also harmful to the broader community.

Claims around ‘Promotion’

BATA Position Summary

The Discussion Paper makes a number of assertions regarding what they deem ‘promotion’. Tobacco companies are already banned by law from participating in promotional activity and therefore such proposals are redundant.

Background

Under existing tobacco control regulation, tobacco companies are already banned from promoting their products or from conducting promotional activities.

Regulations

There are currently over 700 regulations on how tobacco products can be made, distributed and sold in Australia and there is no need for further regulations in this area.

Smoking and media

BATA Position Summary

BATA does not oppose proposals raised in the Discussion Paper regarding smoking in the media.

Background

BATA provides no funding, donations or any form of support in return for positive depictions of smoking in the mainstream media.

BATA also opposes underage smoking and we strongly support education campaigns based on evidence in addressing these important issues.

Place of use

BATA Position Summary

BATA encourages, in principle, measures that seek to reduce people smoking around young children We support regulation that accommodates the interests of both non-smokers and smokers and limits non-smokers’ involuntary exposure to ETS.

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However, like many health experts, BATA questions the viability, enforceability and rationale for outdoor smoking bans.

Background

BATA supports some outdoor smoking bans that are endorsed by the wider community and are easily implemented and enforceable (such as bans on smoking in children’s playgrounds). Beyond this, there is evidence that outdoor smoking bans would undermine acceptance of indoor bans 71 , and may lead to more smoking in the home (around children)

72 , and concern over civil liberties abuse

73 .

However BATA does not support further restrictions on smoking in public places that do not meet the needs of all relevant stakeholders, that are not supported by the wider community and that are not effective, workable or do not adequately address public policy.

BATA experience

Our experience is that environmental tobacco smoke is an issue of public importance and we believe that smokers should be mindful of others' comfort and should not smoke around young children. We favour restrictions on smoking in enclosed public places and we accept that their needs to be regulation. We support practical initiatives such as the creation of smoke free areas, combined with adequate provision for smokers. We are willing to work with the hospitality industry in developing effective solutions that address this public policy.

Business cost of smoking bans

The Discussion Paper quotes the International Agency for Research Against Cancer as stating that there were “no adverse affects on overall sales in the hospitality industry” relating to indoor smoking bans 74 ,. However this does not appear to be the case in Australia. In NSW alone, $385 million was lost by small businesses in the first year since the indoor smoking bans 75 , with other states (such as Tasmania) recording a 20-30% downturn

76 . This economic loss incorporates the cost of renovations needed to cater for

smokers in permitted outdoor settings and increased expenditure on security (with more people entering and exiting venues to smoke).

The hospitality industry has been able to mitigate issues such as footpath congestion; noise pollution and butt litter through increased spend. However, any changes to

71 Chapman, S “Banning smoking outdoors is seldom ethically justifiable”: Tobacco Control 2000:9; 95-97

(see http://www.aha.org.au/Documents/SMOKING/Chapman%20Ethics.pdf ) 72 Adda, J Ph.D., and Cornaglia, F, Ph.D: quoted in “Public Smoking Bans May Increase Smoking at Home” April 5, 2006. See: http://www.jointogether.org/news/research/summaries/2006/public-smoking-bans- increase.html 73

Australian Hotels Association (AHA) National Office website: www.aha.org.au/resources.html 74

Preventative Health Taskforce Technical Report No.2, October 2008, p. 16 75 AAP Newswire, National, 01/08/08 76 Hobart Mercury, 06/08/08, p. 9

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legislation on smoking in outdoor public places, such as hospitality venues, would have a further impact on already struggling hospitality venues.

These measures are in response to legislation developed by all States and Territories (with the current exception of NT), whereby smoking is allowed in pubs and clubs with a clear definition as to what is an ‘outdoor space’. To further change these laws and cause Australian pubs and clubs to commit to further renovations, in the current economic climate, will surely see serious adverse affects to the Australian hospitality industry.

Further these measures have also necessitated significant compliance costs for pubs and clubs.

Attitudes on outdoor legislation

The weight of opinion on outdoor smoking bans appears to question their value. For example, Chief Executive of Action on Smoking and Health (ASH), Anne Jones, has called for pubs to “maintain a safe workplace – that means sending smoking outside, where it can't harm others”

77 .

In a recent publication on outdoor smoking bans 78 , Professor Simon Chapman reminds

the tobacco control community that “The 2006 US Surgeon General’s report on involuntary exposure to tobacco smoke made no recommendations and reviewed no evidence in its 709 pages on the dangers of outdoor exposure or the public health importance of controlling it.”

The 2006 US Surgeon General’s report was the result of extensive research on environmental tobacco smoke and is the foundation for recent international activity on indoor smoking bans. It gives, however, no medical justification for outdoor smoking bans.

Further, in the same article, Simon Chapman reinforces his belief that "to me "going too far" in SHS (Second Hand Smoke) policy means efforts premised on reducing harm to others, which ban smoking in outdoor settings such as ships decks, parks, golf courses, beaches, outdoor parking lots, hospital gardens and streets". 79

Community attitudes

Of course the best test of community support for an outdoor smoking ban is whether market forces have influenced businesses to self-regulate in this regard. If there was majority support for banning smoking outdoors, this would be reflected in a large number of businesses banning smoking around their businesses.

77 Jones, A: Action on Smoking and Health (ASH), press release 21 Nov 2005: “Barworker's passive cancer case win highlights smokefree urgency”. 78

Chapman, S: “Going too Far? Exploring the Limits of Smoking Regulations”. Research paper written under National Health and Medical Research Council (Australia) grant The Future of Tobacco Control #401558 (2006-09) 79 ibid

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BATA’s own community attitude research has found that there is broad support for banning smoking indoors. Beyond that, the Australian community only supports bans in children’s playgrounds (not footpaths, malls etc). A national survey 80 in 2007 made these findings:

§ Unprompted, in terms of health issues, Australians are more concerned with public hospitals, obesity, drugs and alcohol, mental health, dental care, the hospital system, aged care and Medicare, than they are with smoking bans;

§ Also unprompted, 0% cited smoking as the top priority for councils to focus on. § Concern about smoking relates to youth smoking (not adults) § 74% of voters think that councils should focus on enforcing existing cigarette

butt litter fines, education about responsible disposal of cigarette butts and provision of bins and ashtrays for butts rather than banning smoking in open public places; and

§ 88% support banning smoking in children’s playgrounds.

Nationally, while the tobacco control lobby is trying to characterise outdoor smoking bans as the "norm", we can see that this is also not the case. In fact since the first council outdoor smoking ban in 2004, of Australia’s approximately 675 councils

81 :

§ 58 Councils have banned smoking in and around children's playgrounds (9%) § 51 have banned smoking at sports fields (8%) § 32 at swimming pools (5%) § 32 in public parks (5%) § 12 at council run events (2%) § 12 at entrances to public buildings (2%) § 11 at beaches (2%) § 6 at alfresco dining areas/footpaths (1%) § 4 at council owned car parks (1%) § 3 at public transport stops (0.4%)

Smoking in cars carrying children

BATA Position Summary

BATA supports the sensible regulation of tobacco products, while ensuring that adult smokers can make informed choices about the use of such products. We accept that environmental tobacco smoke is an issue of public importance and believe that smokers should be mindful of others' comfort and should not smoke around young children.

We do not support attempts to ban or regulate against smoking in private dwellings or private vehicles that are not containing children. We believe that people should not smoke around young children.

80 Public Place Smoking research conducted by Crosby|Textor (June 2007)

81 Audit of Australia’s local governments conducted by British American Tobacco Australia, March to April 2008.

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However, we think this is more effectively achieved through education and encouraging greater personality responsibility amongst smokers. Governments at all levels need to be very careful in balancing the civil rights of the smokers with those of non smokers.

Need for sensible regulation

While the only way to avoid the risks of smoking is not to smoke, a real world view suggests that a large number of people will continue to choose to smoke despite knowledge of the risks. To this end we are committed to working with government and relevant stakeholders to discuss the steps that existing smokers might take to potentially reduce the risks of smoking.

Instead, BATA believes that education is an extremely important and effective measure in addressing such issues, without unfairly restricting the rights of adults to smoke.

Community attitudes

It is worth noting that community attitude research shows that Australians see a ban on smoking in their vehicles as overly intrusive. Research shows that community support for indoor public place bans is only just starting to materialise – real community support for bans on smoking outdoors or in a person’s own (without children present) car are a long way off.

Current smoking restrictions adequately recognise the preferences of smokers and non- smokers. 64 percent of people interviewed (including 56 percent of non-smokers), agree that smokers are demonised enough in modern society, they have rights too. 82

Further restrictions on people smoking outdoors would be viewed by the community as regulation “going too far”. Polling shows that “both smokers and non-smokers considered that restrictions (such as banning all smoking in outdoor areas) could be becoming excessive”

83

This view is shared by the Australian Council for Civil Liberties (ACCL). When the Queensland government debated outdoor bans, it was roundly criticized by the ACCL Chairman who said; “I think for this package to say that smoking should be banned inside all pubs and clubs is justified, but I think it starts to get a bit extreme when it says you can't smoke in outdoor forums such as patrolled beaches" 84 .

82 UMR Research, BATA Quantitative Research Report, February/ March 2004

83 Crosby Textor, BATA Qualitative Research, 17 September, 2004

84 O’Gorman, Terry (quoted in) “Qld smoking ban fires up debate”:

http://www.abc.net.au/news/newsitems/200409/s1193524.htm

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Lease requirements

For reasons stated previously, BATA does not support the proposed action of including a prohibition on smoking as a term of private leases. BATA believes that smokers should be able to consume a legal product in their own home. We do not believe people should smoke around children. This again establishes a dangerous precedent.

Cessation

Given the risks of tobacco use, we support, a policy intention aimed at making cessation services available to all smokers and which sustains the existing universal awareness of the real and serious risks of tobacco use.

We believe that Government and relevant community health partners should ensure that there is adequate provision of such services.

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REPORT INACCURACIES

Having dealt with some of the substantive issues raised in the Report, there are a number of inaccurate statements made that need to be addressed to ensure an informed and impartial debate can occur in this important area of public health.

Presented below is BATA’s response to just some of the inaccurate statements made by the Taskforce.

Taskforce statement

“Vested interests such as tobacco companies will do everything in their power to discredit or dilute prevention programs” (p. xi Discussion Paper)

Fact

BATA has a proud history of working with governments at a federal, state and local level to ensure that tobacco regulation is sensible, workable, enforceable and evidence based. As stated earlier in this document there are real and serious risks to health associated with tobacco use which is why we believe that the manufacture, distribution and sale of tobacco products should be regulated.

BATA has played a supportive role in many preventative programs. For example in just the past few years, we have played an active role having the sale of overt fruit flavoured cigarettes banned and were a key player in facilitating the introduction of reduced fire risk (RFR) cigarettes into Australia.

We have a strong working relationship with the health departments in each State and Territory and are quick to respond to their issues and concerns.

We support tobacco regulation if it can be demonstrated that the proposed regulation is workable, enforceable and evidence demonstrates that it will work.

Therefore, given our history of being a relevant and supportive player in the regulatory process, this statement must be considered at best a matter of opinion.

Taskforce statement

“… over the past six years we have taken our foot off the accelerator pedal in several areas of tobacco control” (p. v Technical Report No. 2)

Fact

Contrary to the opinion expressed by the Taskforce, the past six years (i.e. 2002- 2008) has seen significant progress made in the area of tobacco control, with many initiatives being unprecedented in the Australian context and some subsequently adopted by other countries.

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As previously mentioned, in the last year alone BATA has made 11 submissions to governments on inquiries they are conducting in relation to tobacco control.

Further, in just the last six years alone we have had the following tobacco control initiatives undertaken;

2002 – smoking restrictions applied to Victorian licensed premises with gaming rooms and machines

85

2002 – point of sale advertising restricted in Victoria, except for product display and price

86

2003 – smoking banned in Northern Territory enclosed workplaces, restaurants, cafes, shopping centres and the dining areas of licensed venues, licensed premises required to provide smoking and non-smoking areas of equal amenity 87

2003 – Northern Territory introduces licence requirements for tobacco retailers, advertising prohibited and product display and point of sale restrictions 88

2004 – 59 councils banned smoking near children’s playgrounds (since this date) 2004 – smoking banned in South Australian enclosed public places, workplaces, and shared areas 89

2005 – smoking banned in Queensland workplaces, enclosed public places and other public areas 90

2005 – court enforceable undertaking agreed between ACCC and industry to remove 'light', 'mild' and similar descriptors from tobacco products 91

2005 – SA places restrictions on the number of points of sale of tobacco products and requirement for separate retail tobacco licences 92

2005 – tobacco advertising in South Australia at point of sale banned 93

2005 – SA limits cigarette vending machines to one per venue and restrictions applied to placement or operation 94

2005 – SA place ban on all forms of tobacco advertising in retail outlets 95

2005 – WA introduces restrictions on indirect forms of the sale of tobacco products by mail order or the internet

96

2006 – Federal: pictorial Graphic Health Warnings implemented on cigarette packaging 2006 – Federal: all tobacco sponsorship for international sporting events held in Australia phased out

97

2006 – Queensland reduces retail display of tobacco to 1sqm 2006 – SA bans sale of overt fruit flavoured cigarettes 2006 – ACT bans sale of overt fruit flavoured cigarettes

85 www.health.vic.gov.au/tobaccoreforms/downloads/smoking_laws_booklet_sept02.pdf

86 tobacco.health.usyd.edu.au/site/supersite/resources/pdfs/TL2001.pdf 87 www.smokefree.org.au/sfv_browse.asp?ContainerID=1572) 88 tobacco.health.usyd.edu.au/site/supersite/resources/pdfs/TL2001.pdf 89

www.dassa.sa.gov.au/site/page.cfm?u=120 90

www.smokefree.org.au/sfv_browse.asp?ContainerID=1572 91 www.accc.gov.au/content/index.phtml/itemId/683533 92 www.dassa.sa.gov.au/site/page.cfm?u=120 93 www.dassa.sa.gov.au/site/page.cfm?u=120 94

www.ahasa.asn.au/index.php?a=154 and http://www.tobaccolaws.sa.gov.au/Default.aspx?tabid=96 95

www.tobaccolaws.sa.gov.au/Default.aspx?tabid=89 96 www.austlii.edu.au/au/legis/wa/bill_em/tpcb2005281/tpcb2005281.html 97 http://www.health.gov.au/internet/main/publishing.nsf/Content/phd-tobacco-progress-cwealth-07

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2006 – prohibition in the ACT of tobacco vending machines distributing smoking products 98

2006 – ACT vending machines require a lock out mechanism 2006 – SA bans split packs 2006 – Tasmania bans split packs 99

2006 – smoking banned in Tasmania pubs and clubs enclosed areas and all enclosed public places and workplaces 100

2006 – smoking banned in Queensland pubs and clubs enclosed areas 2006 – smoking banned in WA pubs and clubs enclosed areas and all enclosed public places

101

2006 – smoking banned in ACT pubs and clubs enclosed areas and all enclosed public places and workplaces

102

2006 – smoking banned in Victorian enclosed workplaces and public areas 103

2006 – smoking banned in NSW enclosed workplaces and public areas 104

2006 – WA restricts advertising of price discounting and display of tobacco advertisements at point of sale 105

2006 – WA restricts vending machines to licensed premises and amenity areas of mine sites 106

2007 – SA ban retailer rewards, vending requires lock out system 2007 – SA ban retail sales via the internet 2007 – NSW ban mobile sales and fruit flavours 2007 – WA reduces retail display of tobacco to 1 sqm 2007 – WA introduces retailer licensing for the sale of tobacco products 2007 – Tasmania bans display of retail display of tobacco products 2007 – Tasmania bans sale of fruit or confectionary flavoured cigarettes

107

2007 – SA reduces retail display of tobacco to 1 sqm 2007 – smoking banned in Victorian pubs and clubs enclosed areas 2007 – smoking banned in NSW pubs and clubs enclosed areas 2007 – smoking banned in South Australian pubs and clubs enclosed areas 2007 – smoking banned in cars with children in South Australia 2008 – Federal: national move to ban sale of overt fruit flavours across Australia 2008 – smoking banned in cars with children in Tasmania 2008 – smoking banned in cars with children in NSW 2008 – smoking banned in cars with children in Queensland

108

98

www.health.gov.au/internet/main/publishing.nsf/Content/9BBD4C52D0C65A1DCA2574C8000DA5D9/$Fil e/att-a-act-07.pdf 99

www.health.gov.au/internet/main/publishing.nsf/Content/phd-tobacco-progress-tas-07 100

www.seton.net.au/smokingban/legislation.cfm 101 www.smokefree.org.au/sfv_browse.asp?ContainerID=1572 102 www.smokefree.org.au/sfv_browse.asp?ContainerID=1572 103 www.smokefree.org.au/sfv_browse.asp?ContainerID=1572 104

www.smokefree.org.au/sfv_browse.asp?ContainerID=1572 105

www.health.gov.au/internet/main/publishing.nsf/Content/623CE2B1CA23D9C3CA2574C8000F52F2/$File/ att-a-wa-07.pdf 106

www.health.gov.au/internet/main/publishing.nsf/Content/623CE2B1CA23D9C3CA2574C8000F52F2/$File/ att-a-wa-07.pdf 107 www.dhhs.tas.gov.au/__data/assets/pdf_file/0005/34367/Selling_Tobacco_Products_in_Tasmania.pdf 108 www.cabinet.qld.gov.au/mms/StatementDisplaySingle.aspx?id=61368

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2008 – regulations for RFR cigarettes in Australia are passed 2008 – NSW passes laws for the total retail display ban of tobacco products 2008 – ACT passes laws for the total retail display ban of tobacco products 2008 – SA vending machines to have appropriate staff intervention mechanism to operate 109

2008 – Victoria announces retail display bans and banning smoking in cars carrying children

As is evident, initiatives in tobacco control have accelerated over the past 6 years, to the extent where it is now difficult for some health experts to pin point exactly what is and what is not effective when it comes to tobacco control.

Taskforce statement

“The UK Government has announced its intention to mandate plain packaging of tobacco products” (p. 3 Technical Report No.2)

Fact

The UK Government has announced no such intention.

On the contrary, the United Kingdom’s Department of Health has explicitly stated in their discussion paper on tobacco control that when it comes to plain packaging “specific proposals are not being considered at present” 110 . Indeed the Department of Health went further and stated that “the research evidence into this initiative is speculative, relying on asking people what they might do in a certain situation” 111

Recently the UK Government have stated that they do not intend to pursue the issue of plain packaging at this time as “the evidence base needs to be developed”

112 .

In short, this statement from the Taskforce with regards the UK’s position on plain packaging is an error.

Taskforce statement

“Excise duty on tobacco products has not increased even once in Australia over the past six years” (p. Technical Report No.2) 

109 www.tobaccolaws.sa.gov.au/Default.aspx?tabid=172 110

UK Department of Health Consultation Paper (2008), "Consultation on the Future of Tobacco Control", p. 39 – Emphasis Added [Online]. Available at: http://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_08511 4 [Accessed: 10/12/08]. 111

Ibid, p. 41 112

UK Department of Health News Release, "Johnson stubs out recruitment of young smokers", 9 Dec 2008 10:07 AM [Online]. Available at: http://www.wired-gov.net/wg/wg-news- 1.nsf/vAllPrint/F37443D58B2281988025751A00379A81?OpenDocument [Accessed: 10/12/08]

46 

Fact

Excise duty on tobacco products has increased every six months over the past six years – a total of 12 times since 2002.

Indeed since December 1999 there has been a 30% increase in tobacco excise rates.

Thus the comment that excise duty has not increased is an erroneous one.

Taskforce statement

There were “no adverse affects on overall sales in the hospitality industry” relating to indoor smoking bans (p. 16 Technical Report No.2).

Fact

This is not the case.

In NSW alone, $385 million was lost by small businesses in the first year since the indoor smoking bans

113 , with other states (such as Tasmania) recording a 20-30%

downturn 114 .

This economic loss incorporates the cost of renovations needed to cater for smokers in permitted outdoor settings and increased expenditure on security (with more people entering and exiting venues to smoke).

Recent media reports state that the introduction of the indoor smoking ban in NSW cost clubs and pubs almost $1.7million a day in poker machine revenue. Further there was a loss of 2,100 jobs at clubs in the 12 months of the ban.

Clubs donations to organisations such as charities and professional sporting teams also fell by $8.9 million 115 .

********************************************************************************************

113 AAP Newswire, National, 01/08/08 114

Hobart Mercury, 06/08/08, p 9 115

Sydney Morning Herald, 10/12/08, “Smoke bans cost clubs $1.7m a day” [Online]. Available at: http://www.smh.com.au/news/national/smoke-ban-costs-clubs-17m-a- day/2008/12/09/1228584839206.html