tobacco oia 2011

Reference: 20100381

THE TREASURY 26 January 2010 Kaitohutohu Kaupapa Rawa

Eric Crampton University of Canterbury Private Bag 4800 Christchurch 8140

Dear Eric Crampton

Thank you for your Official Information Act request, received on 15 December 2010. You requested the following:

1. All advice that Treasury has received from the Ministry of Health concerning the effect on retailer profits of a ban on the retail display of tobacco products. In particular, but without limiting the request, I wish to know whether the Ministry of Health advanced the view that retailer projects could be increased by such a ban.

2. All correspondence between the Ministry of Health and Treasury, and all internal documents produced by Treasury, regarding the Ministry of Health's estimate of a $1.9 billion Vote Health cost of smoking. Has Treasury conducted any independent assessment of the soundness of that figure? Has Treasury any plans of reviewing the figure?

Information 8eingReleased

Please find enclosed the following documents:

Item Date Document Description

1. 19 July and 27 July Email from the Ministry of Health 2010 (MoH) to the Treasury and reply

2. 19 July 2010 Preliminary Impact and Risk Assessment

3. 1 September 2010 Draft Cabinet paper

4. 6 September 2010 Retail displays ball park figures - draft for discussion

5. 6 September 2010 Draft regulatory impact statement

6. 9 September and 10 Email from MoH to various and reply September 201 0 from the Treasury

7. 9 September 2010 Draft Cabinet paper

8. 28 September 2010 Email from MoH to various, follow up email, and reply from the Treasury

9. 29 September 201 0 Draft Cabinet paper

10. 29 September 2010 Draft Regulatory Impact Statement

Decision

Release, with the exception of the names of junior staff and all contact details under section 9(2)(a) and s9(2)(g)(i).

As above

As above

As above

As above

As above

As above

As above

As above

As above 1 The Terrace PO Box 3724 Wellington 6140 New Zealand

tel. 64-4-472 2733 fax. 64-4-473 0982 www.treasury.govLnz

I have decided to release the relevant parts of the documents listed above, subject to information being withheld under one or more of the following sections of the Official Information Act, as applicable:

• personal contact details of officials, under section 9(2)(a) - to protect the privacy of natural persons, including deceased people; and

• names and contact details of junior officials and certain sensitive advice, under section 9(2)(g)(i) - to maintain the effective conduct of public affairs through the free and frank expressions of opinion.

Regarding the second part of your request, the Treasury holds no correspondence or internal documents on the Ministry of Health's recent estimate of the cost of smoking to the health system. We have not, and do not currently intend to conduct, any formal review of this estimate. Accordingly, I have refused this part of your request for information under section 18(e) - that the information requested does not exist or cannot be found.

I note, however, that Treasury officials have discussed the estimate with health officials while working on recent Cabinet papers. We noted that the $1.9 billion figure cited is significantly higher than previous estimates we are aware of, and noted we would be interested in better understanding the data and methodology.

We have also discussed with the Ministry of Health that an updated and robust analysis of the overall fiscal and social costs of smoking (extending beyond direct health sector costs) would be desirable. This would include broader fiscal impacts (e.g.: offsetting savings in superannuation costs due to reduced life expectancy, and the distribution of this), broader health impacts (e.g.: passive smoking impacts) and social impacts (e.g.: the impacts of smokers' illnesses on their families and communities). The last detailed work in this area commissioned by Treasury was undertaken by Des O'Dea in 2001, and it appears from your blog posts that you have already read this work.

Information Publicly Available

The following information is also covered by your request and is publicly available on the Ministry of Health's website:

Item Date Document Description Website Address

1. 26 October 2010 Better Controls on Tobacco htt[!:/Iwww.moh.govt.nzlmoh.nsfl Retailing Cabinet Paper and indexmh/better-controls-Regulatory Impact Statement tobacco-retailing

Accordingly, I have refused your request for the documents listed in the above table under section 18(d) of the Official Information Act - the information requested is or will soon be publicly available.

This fully covers the information you requested.

You have the right to ask the Ombudsman to investigate and review my decision.

Yours sincerely

/) // //

/J~;.~ __ -------'~~~-'-(~unny \

Manager, Healt for Secretary to the Treasury

From: Sent: To: Cc:

[Withheld under s9(2)(g)(i)]

Tuesday, 27 July 2010 11 :54 a.m. [Withheld under s9(2)(a)]

John MacCormick; And~ Jackson; Camilla Lundbak; [Withheld unders9(2)(a)] «/) "-

Subject: RE: PIRA - tobacco displays & Hi 11"(2)!iJJ(1)} ~ © Thank you for sending this through. The PIRA sets out the problem definition 0 Kl~'~ummar~ lIterature. WetI,~ ~is~e ' However, in order to determine whether the policy is significant or no£'ith YO~t e aper is not exempt from the regime) I need to have a better sense of the sca~~~;;;;;. You ~ t t e costs will vary according to the options available. Are you able to quantify a) ho 1 siness~,JH<e1¥ 0 be affected by this policy and b) the size of the impact (I.e. the estimated comp~, c c s. I unde n u will have this information to hand as a result of the consultation process? As you me I n, t size of t . act . I be different depending

on'which option is chosen. So can you either def, ine t~e e, 0 therw~' 'ust qL ,'fY the most costly of the feasible options. V Also, just one other minor point. In the 'additi4~~~p Ions f~ equirements' section, you have put 'not sure' next to the minor impact exemption~asiS that . p t of the different options will vary. For the purposes of determining exemptions (a . nificance), th~a ys the feasible option that has the largest impact (i.e. all of the feasible options ~ e minor for 1e(120' to be exempt). Regardless, in this particular instance, I believe even the lowe~st'o.n~/ will n~ nough to qualify for this exemption. Hence, I agree

with your assessment that this ~ ex~;., ~

Happy to discuss. ~ ~

:::,::::::: '1 ~ ~ ~/~h"d~ I)} ~ ~

,~, rial to the Tre,isury, intended only for the ~ddr(~,see(s), and (my also be legally privileged, If you are not an intended

Hi [Withheld under s9(2)(g)(i)]

Attached, as discussed, is a draft PIRA on tobacco displays. The document contains some background on how things currently stand.

We would appreciate your comments / thoughts before finalising the PIRA but would also like to meet to discuss the next steps and how we might approach the issue.

1

Cheers

[s9(2)(g)(i)J

[Withheld under s9(2)(g)(i)J ~

Policy Analyst ~ Sector Capability and Implementation Directorate © Ministry of Health ~ [Withheld under s9(2)(a)J

http://www.moh.govt.nz ~ '" ~ ,[Withheld under s9(2)(a)J V ~ '\) .

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2

Preliminary impact and risk assessment /(

A preliminary impact and risk assessment (PIRA) is Intended to: ~ ~ ~ Help agencies determine whether Cabinet's Regulatory Imp~~) ~

requirements apply to a policy initiative for which they are resp:~~ .... ~..... V -• HeIP .. ·.agen.Gies ide.nt.i.fy the potential r.ange .. Ofim ... pact~.·~~.· .8 that lll.i9ht ~.Pf. ...e ed

~~;~P~i.~:~~.~~~~.:.:;.~.~. ~:t .. ~:~e ... i.~~::::r: ~~~.e.aVc.i~ ...... ' .. ~~.~.iS .. ~:~~~~:. S.n~~.t) .. ~.~ •

• Wi~e~~~. :::s~;~~~~cl:!~a.:. :~.:~e ... o .. r ... ~~~e .. i.S .. t.~ .. ~"\t 01 ~.p.O.' ~~... I~. : •• ent .•. t .. h. ey

Help Treasury confirm whetherthe_I1~~ze of . ~~impacts and risks

warrant RIAT .in.volvement in provi ih~~dent ass. u ~ ... a·the quality of the regulatory impact state.ment (RIS 11 ~ mto/ms t~ ~o osals,

It should be started as ear~~sslble In the~· @~:9 should be provided to your

Treasury policy team a. s s. as. t .... e ag. e~c ... t.h. '.1 . s '(fial e. nough .information to helP. T.rea. sury make a call about th!7J5~ eU of th frrttiat. I ' til e. his may not require definitive answers

to all questions, ~ 0; U . .

~~mer~bl~ency'· . .. .

~ Ti~QY olicy w~wo~mme or proposal:

!?/) ~posal t~~sPIays of tobacco products from public view in retail outlets

~ ~ It ~~\?(S) of the main ,<Ict and/or Regulations that could be amended or created:

~ V' ~~e Environments Act 1990 .

t? ~ Agency contact name and phone number:

~ [Withheld under s9(2)(g)(i)]

© Date completed:

19 July 2010 (draft)

, . _' .. ' 'C",' ~ ,. .' _ _. -.

Do theRIAreCJlJir~rn$bt$appIY?· .

Is this policy initiative expected to lead to a Cabinet paper? Yes ~

Will this policy initiative consider oPtiO. ns th. at involve creating, ame .. nding Y~ ~ "" or repealing either primary legislation, or delegated legislation that is a ~ (\ ~ regulation for the purposes of the Regulations (Disallowance) Act 1989?~ ~ 0

If you can answer Uno" to either of these two questions, the RIA re I e~ ~t apply. ~ T ... here is no need to complete a PIRA (though tha questions might still pr I a us~~ \)' prompffi). ~~ ~---i

• TeChnical. u.revision. s" or consolid ... at.iO s. M S .... b .... an. tial.IY. ~.. . ..... t t .. he.. No current law in order to improve le~a. c a ItY~r n igabi)i~. .

(including .the fixing of errors, ~. ~CCII~i. if ira .. o .... no.f.t.... . •... g.. •.. 9is.·lative intent, and the reconciliation of ~$te~nies .

• Suitable for inCJUSion~utes Amend eOt>. 'f not already No

coveredbythe~o.;~ ~' No

No

• Would repeal 0 0 edu~nl~ provisions.

legis e~6ns. • Pr~vid~s ~ t e~ cm e cent of existing legislation or

ed ~ e authori~~ ppropriation Bill, an Imprest Supply Bill, No Su rdinate Legis~ onfirmation and Validation Bill.

~I. ements ~~s ?0. settlemen. tfor Treaty of W .. aitangi claims, other

~. . an thO~h~~ amend or affectexisting regulatory

arrange .~. . .'. . .

~ • ~~. i··') (.. minimumnec.es.s. ary.) in orde .• r to comply W./th existing ~ 'J ·nte~';'~al obligations that ara binding on New Zealand.

~~ ~ 0 or only minor impacts on businesses, individuals or not-for') ~ofit entities (such as might be the case for certain changes to the

~ internal administrative or governance arrangements of the New Zealand government, like the transfer of responsibilities, staff or

No

No

Not sure - the impact of different options will

vary.

rcy. assets between government agencies). .

o If all the legislative options associated with this policy initiative qualify for one of these exemptions, then the RIA requirements do not apply.

If claiming a full exemption, please confirm this assessment with your Treasury policy team.

You do not need to submit a PIRA for this purpose, but you will need to provide information in support of this claim.

If some aspects of the legislative options for this initiative can stand independently from the

rest, and qualify for one of these exemptions, then the RIA requirements do not apply to those aspects. Since a PIRA will still need to be completed and submitted to your Treasury policy

te:;~':~I::;I:.:::. any .important aspects 01 the Initiative for which an. exempti~ed .•..... ~ ........M What is the intended scope of the policy initiative? ~.~ ~ © Brief description: \f. -The policy initiative relates to the removal of tobacco products from disR ~n retail ou ets. Two ~tQ'es of tobacco

policy, preventing smoking initiation and promoting smoking cess at' ~La dressed throug I isliiti0P, information

campaigns, price and, of course, smoking cessation programmes. he ro os to legisl t(l~ 0 e obacco products

from public view in retail outlets is consistent with both Objectiv~p r RS re importa t1~0 helps to 'denormalise'

the product and make it more difficult for young people to 91al.Q.' !f6j ct which i~~Ut ong-term users is not a

normal product, yet it often has pride of place in retail 0 ~9t'<!'11 a mstorted . sSi~ts significance to society and

its desirability. ~~

::e~t:;:::;ti::.~n underlying po:y ~~)Bm~s to Whi~IiCY initiative is responding?

Tobacco use accounts for about 5000 ~~fJ premat e ~au: p r year in New Zealand. Smoking prevalence is

falling, not fast enough. Althou ~cco advertising i n J.arg banned, the prominent display of tobacco products

available for sale in retail out s ubv rt this ban. Rese rc in ie tes that prominent tobacco displays normalise tobacco,

which prematurely kil~f fig term ~a nsumer product, encourages youth smoking uptake, and

undermines attempts tim g. ~,'0

What is kno~ t magnit hese policy issues/problems?

Brief d sw';;;;;i!) ~ rm t~ d 0 indiVidU~~y by tobacco is well documented. The removal of tobacco products from view

II u Ie will, the literaturis~ests, contribute to a decline in smoking uptake and also assist smokers to quit or stay

qu agnitud~e of its impact is difficult to measure. The policy has been adopted by several jurisdictions but most

~ e~ es have been e ~ either they are still to be implemented or have not been in place for a detailed evaluation.

~) ~e" evidenc f~ os ·tfrisdictions where a ban has been in place for some time is disputed by vested interests. It

seems Ii Iy tli ~Nfu posal will have a positive impact over time as fewer young people take up smoking and more quit

~ "th" 'd "ddeo drop i",mokiog p""'eo,, ""","mpli,, .. (( ~t i~C:iP::Dr nature of the evidence supporting the problem definition?

((/) ~ Principally academic and other research. For example, recent research has concluded that:

rcy ~ · :~o::;: b~':~::':' :: b:I:::::d ~o~:,:o"::::kI~:~:~::g:::ltlh' more "','y Ih,y ~, 10 h'" lri,d '0 that tobacco displays act as cues to smoke, even among those not intending to buy cigarettes, or who are

actively trying to avoid smoking ... tobacco displays increase the likelihood that children and young people will start to smoke, and trigger 'impulse buys' in those individuals who are attempting to quit or have quit.

unplanned cigarette purchases were made by 22 percent of the smokers interviewed leaving tobacco retail

outlets. Forty-nine percent supported a ban on point-of-sale tobacco displays versus 12 percent who were

opposed. Twenty-eight percent agreed that a ban would make it easier to quit.

Two-fifths of quit attempters surveyed as part of the New Zealand Tobacco Use Survey 2008 agreed that

.. TI1~PO(icYiS$Ue

If the range of policy options to be considered is already constrained by existing legislation or

prevIous Cabinet decisions, what are those constraints?

Brief description:

There are no such constraints. However, it should be noted that following a Cabinet meeting in early March 2009 to consider

the Government's response to two submissions seeking the removal of tobacco products from public view in retail outlets the

Government publicly advised of its decision not to proceed with further regulation of tobacco displays at this time. It noted its

intention to monitor international research in the area and did not rule out future regulation, if necessary.

Brief description: ~ .'" ~ Any change is likely to involve delegated legislation. Before this can happen thYs'lh~ree Enviro ments A~O ~ill need amending to provide regulation-making powers to implement this ~roR I.

Which groups are likely to be noticeably affected (either t u efits 0(O]S :bit options being considered? ~ r\ Individuals, families and/or households? Consumers? Em I«Y~. uSiness~'bt::\or-f of it organisations

(including charities, voluntary organisations and in~~ ld'so ietieS)?~ ~~I~~ live in particular regions? Users of resources eg, recreational fishers, ro~s'E ,,~e bers of p~tibuJ'a' roups of the population (eg,

ethnicities, genders, age groups etc) centr~~~ agencie.~ al gov nment? Other?

Brief description: ~ ~ - ~ Groups likely to benefit from the proposa r ou g people wh d tobacco use and those who successfully quit

because they are not enticed by tobacco disp 0 make i p Is es and return to smoking. This will contribute to a

reduction, over time, in smoki~ce and in pre t~ea s suiting from tobacco use.

The costs are likely to~~~ indust@ reduced ability to advertise its products and on tobacco retailers

or those who mr~?~~n:;OVing p~~~~c view and replacing them with compliant alternatives. The costs

will vary accord~r plions ava' ab removing products from public view and possibly by type of retailer if groups

such as s ~t~1 nists or dut st e have their own particular provisions.

\) ~ ',h' b, m'd'~' y di",,' imp''''' '" m"II,m, I"~ porn "mpll,"" ",,, ,"d 'odim,' 'ff"" '''h''

~~¥,~~~~b o"~ ' ......... '.' .

~ @n~ options that may be considered, potentially:

~ ~ War impair existing private property rights?

©~ No, except for any

physical shopfitting changes to retail

premises needed to

comply.

• Affect the structure or openness of a particular market or industry?

For example, assist or hinder businesses to provide a good or service;

establish or remove a licence, permit or authorisation process; create or

remove barriers for businesses to enter or exit an industry?

No sure - some

impact on competitive marketing?

• Impact on the environment, such as regulations that affect the use and No. management of natural resources?

, -'"

'Ye~/N(jlNQtl)u r.~·

• Have any significant distributional or equity effects? Not sure. It should ~

~qUalities ~ "\:,

~p~!.FbhD .~=:~n::~~

For example, where significant costs are imposed or significant benefits

conferred on different sectors of the population?

<) . .. Ju ~Aa rovided

!?;; ') .~~rY comment

• Have an. yother sign .. ificant costs or b.en.ef.it~. ~ .•....••.. ~ .. jn .. ·.es, i~ .. ~ ... wief~~alNo. Compliance costs or not-f.or.-p.rofit organisations? . ·~.w .. (~are mentioned above.

For example impose additional complia~ . in oduce or I~

government cost recovery arrang~m. s;' Jliiacr n New ala. d~ international capital flows or trad .. '. Clu . i ,ih.·.·~· j flOW ..• ·. S. g~.~ 5 .. ,.·.·.se .... ~.·ces, investment and ideas to and from land; imp t ~l centives to

work or the mObl.lity 07~. tI~' or to invest I.n e~.CJfl.9 . or 'Is; impact on re,ource .lIoe.tlon, '0 V e'tment? ~ 'V

FO. r the m .•. aior typrf.o'Sts Y4:(.;: V~d, please .proyide brief informa. tionabout the

:~:~I~b~~~ ~Wwhatever dimensions seem most usetul .nd

Not sure (points for debate).

Not sure (points for

«~ n ertain? debate)

~~ Is the success of any of the options likely to be dependent on other policy No, though other

initiatives or legislative changes? policy options might

© enhance the

effectiveness of the proposed policy

Are any of the legislative options likely to have flow-on implications for the No

future form or effectiveness of related legislation?

Are any of the legislative options likely to be novel, or unprecederited? Not internationally.

··p;OlicY;de~ign;andiri1pleinentafionriSl<S.· Yes/No/Not sure

, Are any of the legislative options likely to be inconsistent with No ~

fundamental common law principles? ~

Are any of the legislative options likely to be inconsistent with aafusUCh cs:!) New Zealand's international obligations, or New Zealand's commitment~s e~(require

c nsideration. ~ toward a single economic market with Australia? .~ detaile~

Austr~ ~:at nd

~ Teesj;ve

~)~v ~~POI~Y Are any of the legislative options likely to include a n 0 to crea~ ~ delegated

delegated legislation, or grant a. broad discre~.i~ to a py~ .. '" ~legiSlation will be

body? ~~ v.~ required.

Are any .. of the le.gislative options Iik.e .. I.Y .. ~.i~ ... d~ ... r,o. vi.sions~. .. ... PJ .ft No.

from ex. isting legisla. tive norms fO. ~.i.~ . . ~~. orr. s.itua.ti .. "V ... , . -. Are there other issues with the cI~vigabilit 0 s of· No, not with the

particular issue, but

the same time? ~SJ . g' ~~ft:ir~~tetl:~tMaOri ., . () Committee is currently

~.. . " . .~... . . considering tobacco

issues and may

~. .. .~~.....' .... ~~~~~c~~~~::~ns for V- . ~ change in tobacco policy.

Agency's .prelil11inaryassessrnel1t

Do the RIA requirements apply to this policy process or proposal?

Yes.

Yes?

Most jurisdictions have allowed time for the changes to be implemented.

No.

Trea§ufycoOfirrriaUo n.

Ag~ncY' s . '1·' . . ' . •.. ..... pr~tlTIinwyas~es,~fl1ent' .. ' .. .

Would an ,'" + requi y resulting regulator ' ' " .< '" . re RIAT involvement? y proposal be likely to h .... .. ·Tr~a~lIrYCorifirma··t·i No ave a slgn'f' ." .JOIl , IIcant 1m " , pact or risk and th ' , ~ erelore ~

~~ ~© ~ ~\f

, ~~~~© ~~ ~

M ~~ ~~ ~~ ~~©

©~

Early DRAFT/OUTLINE 1 September 2010

In Confidence

OFFICE OF THE ASSOCIATE MINISTER 0 F HEALTH (Ho&~n: Turia) ~ Cabinet s~~mlttee ©

BETTER CONTROLS ON RETAIL SUPPLY OF TOBACCO ~ ~ Proposal ()

with a focus on removing tobacco products fro r . di y and e lorin ossible future alignment with Australian proposals for' ging of~~ G-- ducts.

Executive Summary N.. "'0 levels of smoking in New Zealand. rates are I to concerted Government policies and progra e, t are stil~; and not falling fast enough.

3. Recent measures have inclu ig i icantly rm~~ 0 prices through increases in tobacco excise passed into law I il. ir 'Qi tt r help for smokers to quit is one of the Governm.ent's!J~' ity targets fo tftEl) ~~II sector. This health target is driving clinicians to system a . til.!IY~SeSS and a [l1{sS1l:ie smoking status of hospital patients. The approach i~barh tendeGh rimary care sector, and is supported by government-fu tf R' g cess a ins r ices such as Quitline and subsidised nicotine re~~~B! rapy~t e rmaceuticals.

4. Social atti~ ve largel s· against smoking and continue to harden. Surveys Show~tn 'ority of s er e now aware of the damage it is causing their healt erally re t ey became addicted and express support for stronger

i-s . g measu~ '\

n is backgroun~e current controls on the commercial marketing and retail of tOb~CO look increasingly inadequate and are undermining the effectiveness of

Initiatives h tobacco excise increases and the health target.

~ overn~ media campaigns, such as the Health Sponsorship Council's smo~g r Future campaign targeted at preventing young people from taking up

~ ~K' 'Ie effective, are pitching against decades of concerted commercial

() e i ctivity by tobacco companies. The impact and cost-effectiveness of anti-s ok n programmes can be enhanced by taking other measures to counter the

~~~ ing efforts of the tobacco industry.

'1 ~ce Government considers smoking to be dangerous and undesirable it follows that

~ cigarettes and tobacco are not "normal" consumer products. Therefore they should not continue to enjoy normal access to active consumer marketing tools, including retail

© displays. It would be helpful to clarify this underlying principle for tobacco control policy.

8. This paper proposes a number of regulatory amendments that build on existing controls on tobacco advertising and retail supply. These measures are needed to bring greater consistency and certainty to the treatment of the marketing and retail supply of tobacco products under the law, in order to improve the overall impact of the Government's wider tobacco control policies.

9. more to come?

... '

..


Background ~ 10. Smoking is the leading cause of preventable death and imposes a hUge~f~n on

health, particularly for Maori whose smoking prevalence is double the re QJJJ. © population. . ~

11. Over the last 25 years successive Governments have taken a nu asures ~ bring down smoking rates. While these have been effective in i tly reducing ~ smoking prevalence, about 20% of adult New Zealanders - e 50, 0 people - s ~IV/ smoke on a daily basis. Amongst Maori the rate is . These nu rs a~e ignific improvement on the peak of the smoking epidemic1

, b~~ still too high.

12. Further detail to support paras 1-6 of the Executive ~~~rr:f?~mOk~.n -k!j' . Ioo-a co is dangerous, highly addictive etc, but legal and w~ta I ea. Not ef.JUfa.!i. commensurately with its harm or risk. Govern rp Ii i are e~e tI~t more is needed. Need to continue to build a cohere n 6c reh~n' r. , etc.

13. NZ is party to the FCTC which defines re i dis I ys as at tol) co advertising.

14. Current legislation (Smoke-free Enviro n t) ban~baccco vertising, and while retail displays potentially come with t e eral defini . ~~vertising in the Act, specific provisions allow for reta~I' t at~e n er of restrictions. The current requirements were int(b( uc b amen ~~ Act in 2003 resulting in greater restrictions on the numb~ size of . ~ ys.

15. These include the fOI~O estrictions: ~ • At each pOint~f ;~I e acco d~' p~. I it d to a maximum of 100 cigarette

packets and 4 ~on !\

block di • Each to§bO 's I ay in~ 'maxl urn of two packets of the same variant (no

• Tob cco '9.cI s may n 's layed within one metre of 'children's products' such as co I '0 er.-and ice~ ft drinks and products that are marketed primarily lor

. of sale or not.

~ y) tobacco ~,;t~re displ~yed with~n two m~tres of a point of sale, a sign .stating

~) V 'SMO a~~ust be dlsplayEid In clear view of the customer at the pOint of sale

(th~i I plies free signage).

~. 16'ie etas been considering options for tightening the restrictions on retail

·~s some time. Proposals to remove the right of retailers to openly display

~ ac were consulted on in 2007, with submissions closing early in 2008. Retail

~. s were also the subject of two petitions to Parliament's Health Committee in

08.

~ 17.ln October 2008 Cabinet agreed two preferred options for more detailed work to report

back in February 2009. In February 2009 the new Government dealt with the matter and issued its response to the Health Committee report. At the time the Government

© did not consider there was sufficient evidence that a ban on visible tobacco displays in retail outlets would be the most effective strategy to reduce smoking rates and tobacco consumption. The proposals were put on hold, pending monitoring of international experience with display bans and emerging evidence on their effectiveness.

1 World Health Organisation terminology

2


18. Late in 2009 I (Mrs Turia) raised the matter again in consultation with other Ministers, ~ and in March 2010 Cabinet agreed a further round of consultation Seeking~re detailed views on options for regulating the display of tobacco products in retail o~

19. This paper responds to Cabinets invitation for a "report back to SOC ttl me of the consultation process and with proposals on whether or not to R c WI Va ban on (? !\ the display of tobacco products in retail outlets." [CAB Min (10) r Ie ~ 0

Comment '\.) ~

Tobacco products, primarily cigarettes, are usually di in large, wa e , 20. There are approximately 10,000 retail outlets selling ~o co products in ~Iand.

shelving units. ~ ~

cigarettes and 40 cartons, per point of sale '. i chec t =, particularly 21. Although the Act limits the size of these displa ~. um of 1 pac ts of

superettes and larger service stations, Of~h Ing uni I~side to create a visually larger display, sometimes r~fer etas 'power .

22. Point of sale advertising, such as r . . a of tOb~" a p omotional tool used to generate awareness of products 0 . te info ma 'lOp? . ulate trial and encourage repurchase.

23. Tobacco companies maintain t e purpose plays is not to recruit new

maintain that the rem etail disPla~ e negative economic consequences th~ d c ng sale a c n en' nce stores and other outlets. These arguments are~r di or and a '~( b elf serving. What evidence there is on brand-switch in ~ r sugg t ~ okers are extraordinarily brand loyal.

24. Currently, ~=' of tObip s at the point of sale means that they are highly visible to chl:(ui erS~i . vulnerable consumers such as children, young peop -s rs an. s ring to quit.

25. u ~ nternafo a' 's' tions have implemented or are considering ~~ bans o~~ 0 displays in retail outlets and there is emerging evidence S R ring the effect;~e~s of such bans.

~6. gorical e~nc~f the impact of retail display bans on smoking initiation and

~ evalen ~~ake some years to emerge, and is complicated by interactions with

other pol ~ ures. But the rationale for moving now to remove tobacco products fro~ib tall display does not depend solely on categorical evidence that removing

~ ~ajJ ~ significantly lowers smoking prevalence.

27. inc t e widespread removal of tobacco advertising and sponsorship, increasing

~I e has emerged about the role that retail tobacco displays continue to play in

~ ormalising' tobacco. Research indicates the presence of retail displays increases the elihood that children and young people will start smoking, and prompts impulse

~ purchases among ex-smokers and smokers trying to quit.

28. Recent surveys show strong public support in New Zealand for a ban on tobacco

© displays, the most recent survey finding 67% of people supporting a complete ban, including 59% of smokers. The level of support was similar for different age, gender,

. income and occupational groups, and for both Maori and non-Maori.

29. The current statutory restrictions on retail displays are only partly effective. They are complex to understand. The accompanying compliance guidelines make up a 30 page document. Most retailers rely on shop furniture supplied by the main tobacco companies and support from tobacco industry sales representatives to comply. Enforcement and compliance are difficult.

3

Early DRAFT/OUTLINE 1-September 2010

30. Amending the SFEA to better deal with retail displays also provides an opportunity to ~ improve a number of other enforcement and compliance difficulties With~ te xisting legislation.

Report back on consultation (? (\ 31.ln response to a consultation letter Proposal to ban retail tOb~CC . Z Y I New ~0

Zealand 1 002 responses were received. Many submissions r co I erd but aro ~ 850 were duplicates of various template letters promoted by e groups on both sides of the debate. ~

32. The responses to this second round of consultation ~~ ely similar to h consultation process undertaken in 2007/08. T~er ¥so new ~. al information on the perceived strengths and wea es the more ~ proposals set out this time, and some further insights into 0 and be~lt ~'olsPJ cific elements and options. ~ if:

33. Views were polarised with the healt~s~ s, some . s an public submitters ~trongly in favour of removing retail dis s the to~~o in ry and most retailer Interests opposed. V

34. Opponents of removing tOba~C]O u from dis I fo ssed on:

• compliance costs with estim t to $12, iler were provided (The Ministry of Healt ommis' ed an . e assessment which indicates that in practice average c ~ Id be much Ie, i r nge from $330-$3,300.)

• business viabili th ~ e ass~r' n h bacco makes up a surprisingly high proportion of I c enien. c r~ n ver - especially convenience stores &

petrol s~ati ns ~ V • claims f 1ar~c e closur ~~tailers, robberies and security problems resulting from th~eop se~ange~g a ~t substantiated with supporting evidence).

• inc ~ y with ~ al overnment approach on business regulatory policy

o ssertions th' ts on smoking and health benefits from removing displays 10)11 e negligible (in ding challenges to studies and the evidence used by

6.t:{porters~

~~ ~ if the~ r'l di roposal is progressed, a strong preference for flexible requirements

, "> V allowi ~" displays to be modified rather than prescriptively forcing retailers to put al~a'c06' der the counter" and

~ ~p f alternative measures such as tighter enforcement of existing retail instructions

an 'n articular the ban on sales to people under 18,

~ &: ters of removing retail displays focussed on:

«~~ New research adding to the evidence that tobacco displays encourage youth smoking

~~ uptake and undermine quit attempts

• The need to set the costs to retailers, which are likely to be exaggerated, against the cost

© to the country of tobacco harm

() • The strong public support for the proposal, including among smokers who have recently quit or intend quitting

• The need to send a consistent message that tobacco is not a normal product, but dangerous and different from other consumer goods

• International precedents and successes which support removal of retail displays and

4


• The experience of retailers who have removed displays and say it did not cost much or ~

display for higher margin products. harm sales and had other business benefits, for example, improved seCU~ity: nd space to

36. Officials conclude that removing tobacco displays will help reduce pe i ~ tobacco as a 'normal' consumer good and contribute to reducing t h r c ed by smoking. No sudden or dramatic drop in smoking prevalence is' ,u' would, ~ conjunction with other policies, contribute to reducing tobacco ake r time, V particularly among young people, and also support smokers I. There will be cos s particularly for retailers. These will vary according to the options de a~ai~for removing displays from sight. ~

37. A more detailed report on the outcomes of the~o ~~ rs/cl.ttach~ dix.

Key elements of a more effective regulatory re . a~etail tO~~IY Retail Displays ~v ~' ~ 38. In light of new research and moves bY~~'K.~ ictions to e tobacco displays

from public view, it is proposed to =~e oke-fr~iron ents Act to provide

during the process of supplyin a t r.

39. Flexible transitional arrangem propose, I rly for small retailers (criteria

that tobacco products must n~t b v i he pub ic a only be exposed briefly

to be determined by max'mum fl area~ only one point of sale) to provide that low-cost modific ~~~ existing ca I~ obacco display units would be acceptable, ie, ija. r ~~ tions co IJ VOl ed for a period of 2-3 years.

40. All larger super ,01 statio ~~ ience stores and larger private individually owned small s e s as wml ~) or substantially remodelled or redecorated retail pre e req'r 'thl say 6 months to install tobacco storage units, cabinetry e eCh~n' hich prevent any member of the public from viewing toba roduct while R c product is being selected for supply to another custo ~

S I' t acconists ~ 41. ~&;rist tob cco retail outlets could be permitted to display individual cigars and one

~ Kat'of eac an ariant of tobacco product stocked by that retail outlet. The

~ finitio ~ sP' liSt tObacc. onist would need to be tightened to avoid businesses

establish~~ within shops" or running significant sidelines.

~ :;© in ames to avoid tobacco advertisin

val of 'normal' trade discounts

43. Section 28 of the Smoke-free Environments Act 1990 prohibits free distribution and rewards, and places restrictions upon the offer of rebates by manufacturers, retailers and others with regard to tobacco products. In summary, the Act states that:

• no manufacturer, distributor, importer, or retailer of tobacco products may distribute or supply any tobacco product free of charge or at a reduced charge

• a reduced charge includes providing tobacco with another product that is free or reduced. A reduced charge excludes a normal trade discount or normal trade rebate

• no person may offer a cash rebate to a retailer, including as an inducement in relation to purchasing, selling, advertising or locating tobacco within the retailer's business.

5


44. It is apparent that rebate schemes operated by tobacco companies for retailers are ~ commonplace. The rebates are linked to the volume of tobacco sales. The inistry of Health has investigated these schemes and has questioned the legality 0

practices. © 45. The Ministry has written to each of the three main tobacco compal),iE s e'n t where

the companies' rebate practices might be in breach and aSke~t 'b a i s to en~ their rebate schemes comply with the law. Responses from I rial acco and QWW ~orris indicated that they consider their rebate arrangement 0 awful, normal tra e

discounts. ~~ 46. Further progress has been constrained by the Minist~~ 'lity to requir 0 co

companies to disclose details of the schemes. ~h in lifstry d ret~a~ a' he terms of their agreements are subject to confid .. p isions, a tha isclosure would put them in breach of contract.

47. Clarifying the law to prohibit any trade dis~n i~pec ~ retail would avoid the current regulatory impass~o r ~~ nstitutes 0 ai' trade discounts. This would also be consistent with tel princi~f 'de malising' tobacco retail. V

48. ~

49.

50. The Minis alth iS~ t~rr~y responsible for the administration and enforcement

for th ~ tment 0 e f nt officers to enforce its provisions through of thi~k6Q[6 Envi~ ,s';4.,0t 1990. The Smoke-free Environments Act provides

. esti a on of com~~ d the collection of evidence. These officers are employed II Health Unit~~ are part of the DHBs.

~51. 0 efree e rcement officers not only respond to complaints of alleged breaches of

legislation, I 0 undertake proactive work such as controlled purchase d/) ~ peratio ~ r young volunteer under the age of 18 attempts to purchase tobacco.

~ ~2. Cu," tly',,)6, ecutions under the SFEA are cumbersome and ineffective '-% "V 53~ notices, instant fines etc.

~~ amendments

~ 54. ego removing the ability for tobacco sponsored yachts to enter NZ ports as of right

(rather than requiring Ministerial approval as required for other tobacco-sponsored competitors in international events)

O 55. firming up the restrictions on misleading terms such as 'light' or 'mild', in line with o Commerce Commission rulings

Implementation issues

56.

6


Alignment with Australian moves on 'plain packaging'

57. Retail displays are regulated in Australia at state level, and retail display b~a~ch as ~ proposed for New Zealand are already in place. In May 2010, the federal ~t~~A. Government announced its intention to legislate to force tobacco to be sg,lc;l y<!.9/ptain © packaging" from 2012. In addition to option it is also proposed to conside1) luctnvegulating the packaging of tobacco products in conjunction with Australia, with ~E'tQ)armoni~' trans-Tasman requirements for plain packaging. Officials propo~~ . or progress I V Australia on the 'plain packaging' proposal, explore the potentia(f<> gula ryalignment, and report back to Cabinet in2011. £ ~

Consultallon ,,~ 'V ~--J

;~nanClal implications ~ 1i; ~ ~©

Legislative implications

61. A Smoke-free Environ -6- s Act mend ill the 2010 legislative programme with priority level 5, i ~ti{ instructio I ued in 2010. This Bill is the appropriate leg~is~.)/ -x.'e.QJi1 for~ p' Sl roposals outlined in this paper. It is now proposed to co Ie draftin ir12tN' s that the Bill can be introduced to the House and hav I i eadi~ I~ liament rises for the Christmas recess.

Regulatory i~naIYSiS~ 62. A re~~ct st~ t a een prepared, and is attached to this paper. The

<iUI t . act an~ . s on the central plank of the measures proposed in this

r, mely the re 0 a tobacco products from retail display. The regulatory a . plications of a ove to harmonise with Australian plain packaging

~ ~. ~ment~ul~hese proceed will need to be addressed in future Cabinet

') W orting. ~ V

~ ~.. perspective

©~ P:'bIiCity

66. It is proposed that this policy be announced once finally agreed by Cabinet, including proactive release of the Cabinet paper and publication of the Regulatory Impact Statement.

67. The announcement should make appropriate reference to the Parliament's Maori Affairs Select Committee Inquiry into the tobacco industry in Aotearoa and the consequences of tobacco use for Maori. The Committee is on the point of reporting. The

7


overwhelming weight of submissions has been in favour of reducing smoking rates effectively to zero by removing commercial tobacco supply altogether. o~nce the A . Committee reports the Government has 90 days to respond. :; ~

Recommendations ~A)):: ~(? (\ 6B.lt is recommended that the Committee: ~ V . V '0

1. Note 2. Agree

~ ~~

~~©~

~~~ ~1i; (j:}~ ~~

©~

8


Appendix: Report on Consultation ~ 1. On 22 March 2010 Cabinet approved the release of the consultation letter pr~$to ban _

tobacco retail displays in New Zealand and sought a report back on the 0 t{~<;y; e © consultation process and proposals on whether or not to proceed with th ~~f tobacco displays in retail outlets.

2. Public consultation took place between 31 March and 21 May 2~OV 000 ~ submissions were received. Many were substantial although a 0 w re form or template letters promoted by interested parties. ~

3. About 85 percent of submitters supported the proposal ~1¥r'ii ivvvii<i,duals, 753 ~n-tette s). Supporters included all the health sector SUbmiSS~'on 'r' i s fro~m op e, the majority of submissions from the general public an ig . I ~nt propo ipilO\ e etailers who submitted as individuals - about a quarter of r i ers. V

4. Opponents comprised 28 individual sUbmi~s~'i form I ~~ e tobacco industry submissions opposed the propos ng ith the m' 't '~~ia~issions from retailers and retail organizations, a smal~oj Q.rri from the gene ublic and one submission from an overseas (UK) p~.vat~e~ea ch instit~.

5. The consultation primarily sought e t rom aft dis on options for removing displays and their costs. New' or 'on n the e f i ce was welcome, but this evidence had been considered' e i us cons t ~. bmitters were told previous

repeat as well as UPdSf3 e 'ous informa' 0 6. Views were pOla~iS ~ ng vie~w r doth for and against the proposal.

Ultimately, the i m own to'u n over what weight should be given to the health issues ve 'kely~e Rlpt in les by and costs to tobacco retailers. Retailer

overwhel i ~lle suppor roe proposal argue the benefits are potentially and indu~sr,,groYP r ue the ~b fi s are minimal or non-existent and the costs

consi rable ~e costs I'm r irrelevant.

7. The ~ f sUbm~' e eVIC@generalcommentseitherinsupportoforinoppositionto

~o ai, rather t ring the specific questions set out in the Ministry's letter.

. conflicting vie resented, conclusions are not easily drawn from the analysis of missio~but they 0 help to identify the areas of difference. These issues, include:

~ he role t CCQ 'splays play in advertising tobacco products,

~ the' nc I e literature for the effect of retail tobacco displays and for beha ~r nange resulting from the removal of retail displays,

~ • ~ldence around the impact the removal of displays would have had on smoking

() ~ e ce, smoking behaviour and on retailers in other jurisdictions, for example, I a 0, Saskatchewan, Ontario, and Ireland,

~ costs to retailers of placing tobacco out of sight,

public acceptance of removing tobacco retail displays. ~• e special circumstances of specialist (cigar) tobacconists and duty-free stores,

if ~ obacco displays and their impact - the research evidence

©~ 8. Supporters of removing tobacco displays from public view contend that tobacco displays

() function as a highly effective advertising and marketing tool in the absence of other means of advertising. New Zealand research shows a link between tobacco displays and the likelihood that a young person does or will smoke. Australian research also demonstrates a relationship between displays and the urge to smoke experienced by former smokers and those attempting to quit.

9


9. Opponents argue that other factors are responsible for youth uptake, for example, peer pressure, or 'forbidden fruit'. One submitter (the UK policy think tank the Democracy ~ Institute) extensively disputed the validity and conclusions of the academic~e rch, in particular the reliance of many studies on self-reporting of smoking intentio r an © measured behaviour.

Comment ~ 10. The existence of a link between tobacco displays and youth smo . r from the V

research, although the strength of the relationship varies. T of r ail displays i undermining smokers' quit attempts by prompting a relapse is les 'dely st~~d, but research to date is consistent with current knowledge at influences S$G~ I quit attempts. (Unlike the Democracy Institute submissi ,~i appears to be n a similar submission to UK consultation on the tO~iC u f t e disPGe r h has been peer-reviewed and published in reputable 'fic' rature - n ludl by a leading New Zealand author who refutes~an e mocrac~~ claims).

The impact of removing retail tobacco dl ~ smokln4v~\. 11. Opponents of the proposal argued th t ttl v, of tob~ ~~ overseas, for

example, in Iceland and Saskatchew, II Ie or no ef~~~n oking prevalence.

displays had reduced smoking ev ce, espec' II oung people. Supporters of the proposal, ge~er CI . the sam urce's'/concluded that removing

Comment 12. Further work to try a~~some of th~' e possible, but it is unlikely that they

can be conclusively r< S5iVed. It seems c Mti moving tobacco displays as part of an ongoing pac~of{W~ 0 con§ s will contribute to a reduction in smoking preval r' e by ma ing bacco's presence at retail outlets less prominent~it' . Iy thaiY' bacco products from sight will have an immediate ~·s impact okl g prevalence.

13. It is dif 'cult Q e the im~ '6 0 er influences such as price changes, education initiat v . campamn ~~'rh,p the effect of removing tobacco displays. The c ul tl act of ~~Jhactt5PlayS is likely to be greatest on young people as tobacco

alised'. This' e e will feed into prevalence figures over time, by contributing e oing decline in king uptake by young people.

0h~ anomie i~cuSJ on retailers of removing tobacco displays

~) ~everal r~-i 3r~'ltheir representatives pointed to overseas evidence, principally from can~~of 'stQ closures and a loss of profits. New Zealand retailer organisations

r taile 'business is from tobacco. ~ ~x '65 a cern about the financial effect the policy will have on their members. They

V ~.a substantiated estimates that 36 to 60 percent of convenience store and other

~~ rsely, several New Zealand retailers, mainly small retailers, who sell tobacco but store o ~ut of sight, indicated that the change had had little impact on tobacco sales. Current

~ smokers "knew what they wanted".

6. One major retailer organisation stated that the additional costs of the proposed policy cannot

© be estimated at this stage, for example a predicted loss in sales for smaller retailers through

() customers purchasing elsewhere and potential stock shrinkage.

Comment 17. The claims in relation to Canada's experience are generally unconvincing. Other factors

such as the global recession and illicit trade, the latter particularly in Ontario and Quebec provinces, appear to have been influential.

10


18. The financial impact indicated by retailer organisations seems to suggest implicitly that the ~ policy would be effective in reducing tobacco sales. There is a problem with the internal consistency of some of the industry and retailer arguments about the effecti~~~ of removing retail displays and potential impacts on their financial viability. If t e 6Jic~ould © be ineffective at reducing tobacco consumption then it would not impact a €ZMJAcl vice versa. V

19. The policy proposed is likely to have some impact on revenue fro sa es for so~ retailers and may impact on the financial viability of some retail owe r, other facto s seem likely to more influential both on revenue and financial viability removi~obacc displays per se. Retailers have adequately adapted tO~'5'ficant re uction)nJr:l~l umber of cigarettes sold between 1970 to now and with the en n e market of c'\..~rue e stores as an adjunct to service stations without a ~i9 'fi f bUS~V

Options for removing products from display ~Q stored under the counter within a set time- e a on other . s fo utting tobacco

20. The consultation document invited comme~~ q' men~tb products to be

products out of sight. The tobacco ind~r r . sand t eir org I ations strongly opposed placing tobacco products u~ 0 nter, so ettiJ:t supporters of the proposal

generally argued for. ~~~ "'0 . \ V Comment 21. Compliance costs would be sig ., Iy reduc iler opposition ameliorated to

comply with a requir. n t tobacco ~ust not be displayed.

~:'~~Ch of th~J'''9~1,,;),ocum~~erned with the costs to retailers of refitting their premises t ~~15a~~0 fr . ~y and large the information provided in ~~~~~iSSiO d. cost~"'\ enting the proposed option is less detailed than had

23. T e ~ of refitl$'!'l l P~B~ varied considerably. Figures of around $3,000 to , 0 ere estimate (pJ$cing tobacco products under the counter, though one retailer e uses a $10 curta' . .

~4. T inistry ~ng ed an interior design company to provide independent advice on the

W ts of a e.[ing' 0 retail premises to comply with any legislation placing tobacco

roducts ~r-s' "Eleven retailers, including four dairies, a convenience store, three petr~at o)q~ tl three supermarkets were visited. In the draft report the costs of

~ ~o i e estimated to be between $300 and $3,300. The sample was small but it '% 'V r:;;~ n objective indication of where the compliance costs for most retailers might lie. ~ ~~~. new counters, not an easy option at some of the stores visited, would be more

~'1~ar and duty-free sellers who submitted argued they would face very high costs to comply

6. The other major costs mentioned were the possibility of increased time required for training ~ with the proposed removal on retail tobacco displays.

© staff, managing stock and retrieving tobacco products for customers from drawers or closed

() cabinets. Some retailers submit this could impact on the viability of the business trading in other goods and services. Transaction efficiency and speed of service are seen as key to successful convenience retailing.

Comment 27. This situation may not arise or even diminish if retailers who have removed displays

from public view find they can meet current purchasers' needs with a reduced product range.

11


Effective date for any changes

28. Opinions varied considerably. Tobacco companies and retailers consideredd ~o 24 ~ months to be reasonable for modifications to existing cabinetry and oppose . introduction of under the counter displays. Those supporting the pro~ps fa e ~ 'immediately to 12 months for modifications and 9 months to 3 years for' cco ~_ () products under the counter. ~ -Y

Comment ~ \) 29. Being flexible with the time required to get to an ultimate en 0 t 0 visibilit~ seems

reasonable approach.

Specialist tobacconists ()

tobacconist retailer' or whether they should be su' 0 'fferent r$tl . igar retailers felt that they were different from O~h r i the~a their clientele, who are generally not young, a wider rang ~ a d pipe. ons rs visit these stores with the express purpose of p~rc i ~ 'tQj;ts co, and a e "ely to be influenced by product displays. ~

31. Health submitters generally felt s ia' 0 cconis shoM ubject to the same provisions as other tobacco re 'Ier

Comment

number if different p ~ applied. S !?~ . Ions to prevent this and possibly an age restriction ~n t 't:.('flQ) ch pre i ~ l5e considered.

33. There was a mi e~cJlo to the s g~ that smoke-free officers should have their powers ex~tEl ~I:fle the~ ±e;f~ e whether a retailer is specialist or not.

Duty free sto ~ ""

3<i4. ?U~~r:re c~ur~~e t to the same tobacco display restrictions as other

3 .' r dkl~y-free retailer a 0 argued for special consideration on the basis of the . . nce o~~~~~to t eir viability and the convenience of visitors. They noted that

~~ ~res~ve~rse ~ ~ors had made an exception or different provisions for duty-free

> );Im~e~\)

~ 36. This' e I require further consideration, principally to find out more about how other

() ~~'o ave applied their removal of retail displays in duty-free stores.

~~ducts

~ ere was little enthusiasm from any quarter for the idea that retailers should have a list of

roducts for sale which would be available to customers who asked to see it. Health

~ submitters suggested it would be a form of advertising and retailers were concerned about the time involved maintaining it.

rcy Comment o 38. It could be an option with provisions to prevent it becoming a form of advertising.

Surveys

39. Supporters of the proposal noted the high levels of public and smoker support for the proposed changes. Wellington Medical School reported that the proportion of smokers supporting a complete removal of the display of cigarettes in shops (those replying

12


"somewhat" or "a lot", increased from 62 to 68 percent between 2006/07 to 2008/09. Recent ~ UMR surveys conducted in April and July 2010 have shown 76% support fo~th complete removal of tobacco displays, an increase from 68% in May 2008.

40. A survey for a retailer's organisation found some agreement that removin to a m ~-!) display would have health benefits. The survey for the New Zealand Ass c'~ic ~_ Convenience Store survey found that 27 percent of 1 000 res~pn Im~ht a tOb~ display ban would stop teenage smoking while 70 percent tho it d not. Thir eight percent thought a ban would reduce teenage smoking, cent did not.

Other issues raised.

41 . Opponents of removing tobacco displays promoted alt a ch as i ~ the minimum age of purchase and government w r i r closel~i h he ail industry.

42. Several retailers and many health sUbmitt~es . sPla~s. u . h e licensing of retailers to educate retailers about the legi a on, d 0 stren en ement.

43. Retailers raised concerns about rob~brie rity pr9~ms a~n increase in illicit trade following any removal of tobac ~ . The eVid~'bG=6ithis is not strong. Some retailers who have put tobacco pr c t sight e do'r{e s to increase security. Any link between removing tobacco isp a~ illiC~lt ra~ ~t ous. Illicit trade may be an issue in Canada, which is usua 'te s an ex ~~hile it merits monitoring in New Zealand, it is not currently a signifl proble.

44. Retailers were concg~mut stock b a ile being dispensed or during restocking. Th~e. SStJ9 s m ma~g I:i any legislation provides some flexibility, for example, pe .~. r ers to t ~. ea onable steps to minimise the exposure of tobacco produc 0 enf(~ ~ be difficult. Overseas precedents can be

examined ~ e II. ~

~~ ~~ d/)~ ~~ ~v ©~\f.

~~ ©~

13

Retail displays ball park figures - annual Draft for discussion

Tobacco excise + GST: $1.3 billion

This is 70% of total tobacco turnover: $1.9 billion /(

Divided by say 10,000 outlets: $190,000 average turnover !?/> A ~ ~ (dominated by approx 350 supermarkets and say 500 petrol stations~~ (( !\

Average retail margin@8-9%:$16,000peroullet /(" ~ 0 (Median might be more like $10,000 or less) v~ ~ .

Impact on sales from retail display ban? ()

5% of $1.9 billion is $95 million (market wld~A /(~ 5% of $190,000 is $9,500 less turnov';lJ'~W ~ ~ 5% of $16,000 lost margin is $8~ ~ ~--J ,,~ -

Remember the main target is pr~d new t oung people and avoiding

removal of displays, at I in e short ter

So a more rea)9l!> ~ ~ of m~~ible impacts on tobacco sales would probably be a~~r~ude less than this:

0.5% $~n is $~~Ymarket wide)

;~~~~ is $950 tu~over per outlet

~ 16,000~in is $80 peroullet

Q ~ this re~~nt in economy-wide terms?

~ tt\ ~ing to note the industry submissions are somewhat inconsistent in arguing:

~') ~ removing retail displays would be ineffective at reducing consumption (because

they say the only purpose of the displays is to compete for brand market share)

!?; 2) removing retail displays would seriously impact on retailers' turnover and © ~ businesses through reduced sales

Outline Regulatory Impact Statement: Better Retail Controls On Tobacco

® This document was developed following a meeting between Health and Tsy/RIAT officials (Everett [s9(2)(g)(i)] Pickens 6 September) /(

It outlines possible contents of the RIS picking up points from that dISqJS~.;;?Ait~ a view ~A~ • establishing the significance of the proposal (in RIAT terms) and ~~ 0 • progressing the RIS (which is under time pressure, and is c%!~ 0 e reso~s;;

needed to produce a quality Cab paper and proposal for Mi.~~ \? ~

Section 1:

This section needs to do two jobs

It needs to set the wider context of smoking anec ing=~t policy issue addressed by a number of initiatives of whic t ~ sal is ju t~ part - this is important for the benefit side of the rationale, I fj sts on~e con ution that the proposal can make to support the general directio a cliveness ~~ co control policies

It also needs to set out the specific~'t rrow is t heart of the proposal, ie moving from the current regime wh es r ts retai . tobacco to certain limits, to a regime where retail displays are bein oved~ logether. It is suggested this narrow scope and the rela~ilb al/ size of t~ (6Q It ce costs involved means this is not a "significant" regulatory pro lilA T terms, e:v~ ugh tobacco control in general and addressing the harm tffh~' is a s;pfifi~N$ ue

Section 1A: Wif;~~Of S~'~bacco control policy

Point 1 : Smokin~lm es alar $ Obn) health, social and economic burden on New

Zealand. ~ The d~'1)'9' u ~ I able an:$r Iy negative consequences on human health and mortality from h((9~~ acco are we t blished. Half of all long-term smokers die of a smoking relate ~m losin=n avera e of 15 years of life. Tobacco smoking is the leading

~entab cause e in New Zealand. An estimated 5000 New Zealanders die each

~e to dir:el or exposure to second-hand smoke, and around 1500 of these e t s occ~in ~ age (35-69 years).

~ okin~ 90 per cent of lung cancers, which are the leading cause of cancer death in

V New Z an is linked to many other types of cancer. It is a major cause of heart attacks, str~, 0 e ardiovascular diseases, blindness, infertility, and respiratory diseases such as

ie, bronchitis, and asthma.

r116kin is also a major contributor to health inequalities in New Zealand. Maori women are

~t ",/be as likE?ly to be current smokers as women in the total population. Maori men and Pacific me are 50 per cent more likely to be current smokers than men in the total population.

~ Point 2: Tobacco is not regulated commensurately with the costs and harm it imposes.

~ Nicotine is a highly addictive substance, but unlike most similarly addictive dangerous drugs, smoking is a legal and socially entrenched behaviour. This is in large part due to decades of concerted commercial marketing by tobacco companies. '

Current tobacco regulation and control measures are modest when compared with the control of other harmful products in New Zealand, and when considered alongside the very high level of harm and the high and disproportionate burden suffered by certain groups, particularly Maori.

If it were not already in widespread use it would be captured by hazardous substances and misuse of drugs regimes

Early DRAFT 6 September 2010

Point 3: Existing policy settings have increasingly taken a comprehensive approach to tackling tobacco smoking, particularly under the Smoke-free Environments Act (1990).

....

Raising the price of tobacco through excise tax has been an important policy tool. Most ~ recently in April this year the e, xcise was increased by 10% on manufactu~igarettes and 25.4% on loose 'roll your own' tobacco. The excise will increase by at Ie er 1 OO~1c (depending on any additional inflation indexing) on all tobacco product I ' Y 2011 C 15% on 1 October 2010) comprising about 70% of the retail pric~ c et es, thes 'sf9 and again in January 2012. With excise tax and GST (which is als ., 0 12.~O to

increases have a significant impact on price. Each 10% rise in<f~).«"co rice is unde s 00 to lead to a 5% decline in demand, including prompting 2% of currer,Vsmoker quit.

Providing better help for smokers to quit is one of the G~nt's six pn i r ts for the health sector. This health target is driving clini;;,i s atE'c ~s and address the smoking status of hospital patients. T ~o h is no ein xtended into the primary care sector, and is supported by gover Q1~ - nded ~ ssation services such as Quitline and subsidised nicg0la me~ra nd other pharmaceuticalsCabinet approved SignifiCa~~ ing for t co trol initiatives in the 2007 and 2008 budgets. Much of this fun~'n sorting i ease cess to cessation support for smokers to increase quittin. ~ V Government also funds media cam ai Stith as th I Sponsorship Council's Smoking Not Our Future campaig t d at pr v . oung people from taking up

of concerted commercial ~Ke:(i g activity 0 companies.

Point 4: These POlic~tin~ e beg' ,but only partly so.

Progress is being ma . r Cin~g.ti9~a smoking rates are now the lowest since smoking prevale~.r repo i h 6 census. Twenty percent of the adult population are n nt smo ~' r und 650,000 people. Youth smoking rates are also declining ea ~y ar.

Recent w d surv s ~ at most smokers want to quit and 44% of smokers have

quit a e okers.

~ ese pOI~ett~gs cumulatively attempt to 'denormalise' tobacco and smoking

~~o't~e pro~~~e are not seen as a legitimate part of life in New Zealand

'al acc~~~.~ISO declining.

~ oint 6: fu~~ displays run counter to this by presenting tobacco products as 'normal' ~ 'V co~nr g ds and undermining the statutory ban on other forms of tobacco advertising.

in and relapse among those who are trying to quit. ~ al triggers, particularly product exposure, can prompt initiation, continuation of

~ . lays are seen to contradict the otherwise clear message that children and young people

receive about the dangers of smoking and act as a prompt for impulse purchases by recent

O quitters and smokers attempting to quit.

'\:::::j) Sequential surveys over the last few years have shown majority public support for removing displays, although it is opposed by tobacco manufacturers and groups representing some tobacco retailers who cite a lack of compelling evidence for effectiveness and the potential for unintended consequences.

Section 1 B: Specific issues with tobacco advertising & retail displays

The Smoke-free Environments Act 1990 ('the Act') introduced a number of provisions that banned the promotion and advertising of tobacco products. From 1990, tobacco products

2


were prohibited from being advertised in all media. Retailers were also banned from advertising the sale of tobacco products (though this ban did not come into force until 1995). Tobacco products were able to be displayed in retail stores but only if they were not ~ visible from outside the retail premises. /)

The Act was amended in 2003. It now contains a number of provisions ~~9:,to furth~ limit the promotion and advertising of tobacco products. Part Two o~t ~~ains restrictions on how tobacco products may be displayed in retail pre' , c as d 'ries, supermarkets and service stations. /( '" V Sections 23A and 238 of the Act outline a number of restrictions ~ow to~a co pro ts can be displayed. These include the following restrictions'

• At each point of sale, the tobacco display is limited to~um Of~i ackets and 40 cartons. !?/)~.'V' (\

• ~i~~~a~~~~cco display may include a maXim~u~~e~ts of ~'me! ariant (no block

• Tobacco products may not be disPla~~ metre of chi n's products' such as confectionery and ice cream, soft dri~ __ J dUcts t~ar eted primarily for

• ~:~:::~ products may not be " ~:~ CQt1llte~VSimilar suriace, whether at a point of sale or not. (]j~ ~ v

• If tobacco products aregp d within t~of a point of sale, a sign stating 'SMOKING KILLS~' t d' layed~'~~~Jiof the customer at the point of sale (the Ministry supplies f n .

As a sUPPleme5h criPti~ . nts in the Act, the Ministry published the 'Tobacco Displ . Ii es', W I ~re updated and re-released in December 2006. The purpose of ~o 0 Disgla UI ines' is to help large retail organisations and toba?c? ma ~ ers a~ e understand the details of the tobacco display restnc J s.

The a ms with existin bacco displays are :

~hi~ and YO~(>~le are still regularly exposed (in around 10,000 retail outlets) to a

~ ~uct tha ~~t\~rdinary commodity' but a highly addictive and harmful SUbstance

~• iSPlaY~d~'ri): me an environment consistent with all other efforts to support smokers who

Q arr~'~YA~ or who have successfully quit .!' ys u dermine health warnings about smoking, which since February 2008 have

~. raphic pictorial warnings showing the health consequences of smoking

ob co displays are an exception to what is otherwise a comprehensive ban on tobacco

~ dvertising in New Zealand. As the main residual form of advertising open to them, tobacco

companies invest considerable resources into designing and furnishing the displays

© There is increasing evidence about the role that retail tobacco displays play in 'normalising' tobacco, increasing the likelihood that children and young people will start smoking, and prompting impulse purchases among ex-smokers and smokers trying to quit. There is also increasing public concern about retail tobacco displays, which are now an anomaly in New Zealand's otherwise strong tobacco control programme.

A number of international jurisdictions have implemented or are considering implementing bans on tobacco displays in retail outlets and there is emerging evidence supporting the effectiveness of such bans. . .

3


Section 2: Objectives

The objective is to counter the impact of retail displays of tobacco which:

• Increase the susceptibility of young people to start smoking ~ A • Trigger relapses among smokers attempting to quit ©~ ~ • Provide a means for tobacco companies to effectively advertise t~i~ ,despite

international agreements and New Zealand law to ban tOba~~1Ilg ~

Regulatory Impact Analysis

A. The proposed option is to extend the currewt G tr he~d e~'rTg , promotion of tobacco products by prohibiting visual disp ~ I . . ~

The other feasible options considered we~e: ""V B. Do nothing ~ C. No regulatory change, but ratheNn~~ itional fi ~\(ur~es into countering

commercial marketing of tObac~vernm t anti-smoking advertising.

D. A combination of minor ;=ry change ~ I g additional fiscal resources to improve compliance an>~ing the cur~_y controls

Analysis of COfE!!:.~and~r& © seeTableo~~~~e <-~~ Need~r er ~ on COST~~rofitability, enforcement) v BENEFITS (uptake level changes -ie nu ~. n't take up ;m6~, quitters not relapsing)

~kfv ~t -nu~ ovp~ople needing to quit (and not relapse) v Value of a life / QAL Y (swine flu

~ sis me~.o ~~Pth). Discussed by O'Dea Tobacco Taxation. ... Appendix Cpp21-36.

o . Ion cost - y lives saved?

~ iden~~ ban in NZ and overseas.

;!~~on of COSTS (turnover, profitability,) only option A could be expected to have a o ~~~ impact. If this reached as much as a 0.5% reduction in sales compared to BAU these costs

~ Idbe:

O. Yo of $1.9 billion is $9.5 million (market wide)

rCY 0.5% of $190,000 is $950 turrnover per outlet . o 0.5% of $16,000 lost margin is $80 per outlet

At least some of this would be compensated by turnover in other convenience retail products purchased from the disposable income saved through not buying cigarettes. (For example critics of the tobacco excise rises were concerned that low income families would substitute from bread and milk to tobacco - presumably this works in reverse)

4

Analysis of costs, benefits and risks

Option

A. Prohibit retail tobacco displays

B. Do nothing

C.

D. Improved enforcement and compliance

Costs

One-off costs for retailers to modify shopfitting <$50million over 3-5 years - say $12m per annum

Reduced costeffectiveness of exi policies such as tob excise increases and

Governmen~d anti-S~.O in e i camp ,s s Smok 0 ur Fut

~

>$5 million per annum to assess, support & if needed to fully enforce compliance at 10,000 outlets

Benefits

This is the only option that comprehensively addresses the problems caused by retail tobacco displays, because it removes them.

Minimal

This would not avoid the impact of the retail displays but would provide a countervailing anti-smoking message.

(Retails displays maximise their impact by being eye height and at point of sale - this positioning is not available to other advertisers)

Minimal, as breaches to current display restrictions tend to be minor infringements

Risks

reaction venience Likely tO~be adverse

re~tile I ps (who . e Ing links

i comp n~

V

Continued lobbying by health groups etc. who advocate removing retail displays

Reputational risk to NZ in light of FCTC expectations & removal of displays by comparable countries such as Australia, United Kingdom and Canada

Public exposure to widespread Government advertising might generate criticism

Increased bureaucracy

Based on pricing rates per m2 for static billboards in shopping centres http://www.oab.co.nz/i ndex .php?page=shopping-centres-b


~~ ©~

§:})~~~© ~~ ~

~ ~~ ~~ ~~ ~~©

©~

6 i

From: [Withheld under s9(2)(g)(i)J

Sent: Friday, 10 September 20105:33 p.m. To: [Withheld under s9'2)(a)J z'

Chris Bunny ~ Cc: Subject: RE: Tobacco Retail Displays Cabinet Paper Draft for consultati!?/> A ~ ~

Hi Matthew, ,,~V © Apologies in advance if any of my points are unclear, as I have prepared this fe~~~in order~he deadline. My feedback is as follows: V ~ '\.) .

fill In 2008, the current Government decided that, at that stage, t~not SUffiCiel~ to support a

ban on retail displays - if we accept that this decision wa~w II' , then@~nt for this paper is the research/evidence that has emerged since t . u tion thr stu' in your paper all of which post date 2008, however they seem to be primaril e surveY$ I opinion rather than likely effectiveness. Has there been any research or 0 eted si 2 n the effectiveness of tobacco display bans on tobacco consumpti~O/U ra e /quittin ? Wi out providing such research I think the statement in paragraph 10 t to a 0 diSPI!tre" better understood to be a powerful tool that encourages and pro~o e n 1/ may be h ~ fend. What evidence is this

statement based on? ~ III> Also, what is the balance of evidence es he pape a r tly mentions a few studies which all

appear to support a ban. Given the Gove t's 20 d I' n I assume there is also literature/studies suggesting there is no or min~' . act - are yo t in de reference to these studies to give a sense of the evidence on bala~nce? i cur ently hard to t se e of whether these three studies are reflective of the literature as a wh . @

III> The paper mentions a n r retai~er v~ d to remove displays themselves - how many retailers?

Is it a large propor~ III> The paper mentio t e he~lt os f smoking are estimated $1.9 billion. Is this figure gross or net? I

ask because ~ 1ere is t uggest smoking is cost positive to the health system due to avoided sts crease~' e. Obviously this doesn't mean we shouldn't be attempting to reduc s in tes, but it d s that the 'reducing smoking will save the health sector/Crown mone' (U nt doesn't hold.

III> ragrap - you e tion at early signs suggest tobacco sales have fallen as a result of the excise

~'n hat i~ma.o I this based on? I query because I understand some statistics have shown a r du 'on in the ~ cigarettes available for sale, but that this is just a result of a rush to push product

r ugh cus~ ~ oid the excise.

~ para~~ ~ mention that as restrictions of tobacco advertising have tightened, this has resulted in an iner sed liance on tobacco displays. Have you done any work on what the tobacco companies may fo~f>Nl absence of tobacco displays - i.e. is there a risk that we will see an increase in tobacco

~~~g via you tube advertising or product placements in movies?

~ e the compliance cost estimates taken into account the fact that tobacco companies are likely to stop

a I ting retailers with their displays/shop fits outs? You note that tobacco companies have absorbed the cost in the past, but I assume their incentive to do so will cease when they no longer benefit from

© advertising in retail outlets. III> In paragraph 48 you mention that the evidence from Iceland suggests it has been effective - however this is

in direct conflict with a statement in the 2008 paper that said "evidence from Iceland is unable to link decreased smoking rates with the ban on tobacco displays, and recent bans in Thailand and Canada have not yet shown positive results in smoking rates". The paper also notes that bans in other jurisdictions are too recent to see an effect, but I assume that you would hope to see an impact within 10 years, which is the period of time since Ice.land implemented their ban ..

<11/ As I've raised previously, I think the argument made in paragraph 69 that retailers may be able to replace displays with more profitable items is inconsistent with the actions of retailers currently (Le. if it was profitable to do so, why haven't they already removed displays in Significant numbers?)

1

* You refer to a proposal to increase the powers of search and discovery in paragraph 88 - what powers are you suggesting?

o The paper emphasises the importance of how the proposal is implemented- yet the paper asks Ministers to make a decision on displays without any information on this. Perhaps a better alternative would be to ask for an in-principle decision, to be confirmed by Ministers informed by an implementation plan.

o I see the section on tobacco sponsorship is incomplete (para 95), however, if you are going down the rout~ of completely banning tobacco-sponsored competitions in international events then may have some concerns or at least want to know the likely impact on the viability of sporting eve s ©-

o The financial implications section is currently blank - however this is Where~ yu u s ibe the economic cost to retailers and industry of this proposal. The financial implic' ti is intende encompass more than just the fiscal implications for the Crown. /( '" ~

In terms of "major issues" - my primary concerns at this point are: V ~ ~~ \f -1& The lack of information in the paper regarding the cost of the ~W)lf al. Currently t . I a reference

to the compliance cost per retailer. However there is no discu fQf{ antifi~a . e . ely compliance cost overall or the revenue implications. ~ (\ .

1& The lack of evidence to suggest the gain in terms of sma 'I s (I.e. eVi~'of~f ctiveness) will

outweigh the compliance costs. ~ = o The timing of this paper given the Maori affairs se ~ ittee is :t repo back, and the analysis on

plain packaging yet to be done. Ideally these is SttiMfft all be onsider 'n conjunction.

obviously this will depend on how the final ve s· n s a e up an n e the recommendations.

As always, I'm happy to talk my feed~Ugh. <6~

Kind regards, ((/> ~ (CY~ 'V

[WIthheld under s9(2)(g)(iJ] ~ 0

1h€~ information in addressee: il. pit","" in m 'diately C '?t. ;.e this "mail a 'J . tify Treasury by rEturn email ()r telephone (64 4 472 273:3);

b, """, dL '" "w, O"OPY~hi' ", """'"'''''''''''' ",,' m" h' "",,w''',

4~)(i)]~rs~:~und'~J~~9~;t.;J a,m, Alison Handley; WARD, Shannon (LGL/TLU); Alison Cossar;

~ SiakimQfu.; , i Moke; Susan Wauchop; MARSHALL Kirsty Cc: 7?~'u~~ s ~(a)] Subj :.:,~aCcii Retail Displays Cabinet Paper Draft for Consultation

~~omiog'll Qe as promised here is the the draft Cabinet paper for departmental consultation.

It is just a draft, and still has one or two gaps and some obvious failings like being too long.

However we are still under instruction to get this to SOC on 22 September (possibly as a late paper, or to CBC on 27 September)

So it looks like it will go through OSOC in some form next Tues 14th

So could we please have some comment by close of play on Friday - ie. as much feedback as possible by the weekend, including

2

any and all major issues.

There will be another version early next week for fine tuning.

Many thanks in advance for your input, and your forbearance with the compressed timetable

Please don't hesitate to call at any time to discuss any issues at all

cheers Matthew

Matthew Everett Principal Policy Analyst Sector Capability and Implementation Directorate Ministry of Health [Withheld under 89(2)(a)J

~ ~~ attachments may contain infonnation that i - NFIDE u ject to legal privilege. ~ If you are not the intended recipie~t read, use, ~ . a e, distribute or copy this message ~~nts. ~

~~S~dJ;h':~~*~;~i.;:~. < .*e***:~.*::**::*:::::**************** ****<* ~~t:~~:'~ ~~~~YeS~d C~~te~tandcie~;d byili~Mlnl;t~of~He~lth'S- .•

((/)~ \~ ~V ©~\f' ~~

©~

3

DRAFT 9 September 2010

In Confidence

OFFICE OF THE ASSOCIATE MINISTER OF HEALTH (Hon Tariana Turia)

BETTER CONTROLS ON TOBACCO RETAILING ~ '" ~ Proposal v ~ \f . 1. This paper seeks a decision to remove tobacco pro om retail di I n

packaging of tobacco products in 2012. ()

Executive Summary ~ ~~ 2. Further measures are needed to ad~r ~ ificant H r used by continued high

levels of smoking in New Zealand. I es ar~fI.iQg d to concerted Government policies and progra~~t:Jt re stil too ~d not falling fast enough.

3. Smoking kills around 5000 N~~ea( ~rs a a S>the leading cause of premature death, killing more peQ~ han all a entable causes of death combined. The annu~1 dd' ional health~ from smoking related disease is estimated at $1.9 billi . A essing sm . . ritical to reduce the future burden on

the health care S~y. £~ 4. Recent measures e' IUd~d . ~ Iy raising tobacco prices through increases in

tobacco exci~~ 'nto la' th-- roviding better help for smokers to quit is one of the Gover 'six priQtit.y' a ets for the health sector. This health target is driving clinicia ~s atiCalJ,y-~~ nd address the smoking status of hospital patients. T~e pp ~ now =fh ded into the primary care sector, and is supported by go '57 -funded sm' ssation services such as Quitline and subsidised n 011 e lacement ther and other pharmaceuticals.

~PUb . pinion ~ar~ly shifted against smoking and social attitudes continue to

~ n. S ~ ~ that a solid majority of smokers are now aware of the damage it

i causing t ~ Ith, regret that they became addicted and express support for

~ strong~t~s oking measures.

() 6. A9~rt th~ackground, the current controls on the commercial marketing and retail ~~ obacco look increasingly inadequate and are undermining the effectiveness of

~~~ . . tives such as tobacco excise increases and the health target.

. overnment-funded media campaigns, such as the Health Sponsorship Council's

~ moking Not Our Future campaign targeted at preventing young people from taking up

smoking, while effective, are pitching against decades of concerted commercial

© marketing activity by tobacco companies. The impact and cost-effectiveness of antismoking programmes can be enhanced by taking other measures to counter the marketing efforts of the tobacco industry.

8. New Zealand has ratified the World Health Organisation's Framework Convention on Tobacco Control. This requires participating countries to prohibit all forms of tobacco advertising, including retail displays. Comparable countries such as Australia, the United Kingdom, Canada, Ireland, Iceland and Norway have all taken steps to remove retail tobacco displays. Youth smoking rates have declined in Canada and Iceland.

DRAFT 9 September 201'0'

9. Current regulation of tobacco retailing under the Smoke-free Environments Act 1990 restricts retail displays to some extent, but still enables tobacco companies to display their product prominently in some 10,000 dairies, supermarkets and petrol stations.

10. The current law recognises tobacco companies' assertion of a right tO~i . lay tobacco A products in order to compete with each other like suppliers of other co I' OOdS'©~~ However, this everyday presence of tobacco products in the live~o ~~ nders, particularly young people who are susceptible to experiment wit ~~ nd addict smokers who are trying to quit, is now better understood to~p rf tool th~~ encourages and promote smoking. Allowing retail tobacco ys dermines t JV, Government's policies and significant expenditure aimed at red g expo re an addiction to what is clearly a highly dangerous and! u~'rable product

11. This paper proposes amending the smOke-fre~ev Act§F to acco products being displayed in everyday retail envi e and tak th p ortunity to tighten and improve related controls on tobacc e' ing an~:;t~ ply. Tobacco products will still be able to be legally SOld~ ged~e'a~r 0 del'.

12. Consultation on the proposal to remov~~ lays ha ~ undertaken. As was evident from previous consultation i5! ,Parli tary 'etition in 2008, and submissions to the current MaOri~' @I ct~o mi t uiry into the tobacco industry in Aotearoa and the cOQ.seQ,tls s of to for Maori, there is strong public and health group suppo?~fG(!!J propos I upermarkets and a number of retailers have moved to reduce or-r ov~' I mselves, and some of these retailers submitted in S~f the prop ~. h tobacco industry and most retail interests, partiCUI~alY is ions r~r~E r g airies and small convenience stores, are in general oPR a oncern ~t e osts the changes would impose on these businesses. ~ V

13. Minimising t,"~11 ce co been an important consideration in developing the proposal in' fhi2r er. It i~ d to legislate for the removal of retail displays, and then pro i~e: a ge of f~~ tlons and timeframes for compliance through more d~e' d r ~@ a Ions, s~o ,~eQ y education and guidance. This would allow officials to w r h ail business' 9rests on the detail of how the changes should be im ~ ed, a~equeste In their submissions. Costs are very sensitive to this detail.

~hi~aper also n at Australia has announced its intention to introduce plain

~0 ~J{aging ~\tQj: , products in 2012, and proposes exploring the possibility that New

ealan~·g JMJ duce similar measures in due course in alignment with Australia.

~ Th~ I remove displays addresses the impact of Cigarette and tobacco

V pa In I ass form in the retail environment. Plain packaging would address the ~~ obacco branding and marketing in other everyday settings.

c::k~nd costs and harm of smokin

15. The direct, unavoidable and seriously negative consequences on human health and mortality from smoking tobacco are well established. Half of all long-term smokers die of a smoking related illness losing an average of 15 years of life. Tobacco smoking is the leading preventable cause of death in New Zealand. An estimated 5000 New Zealanders die each year due to direct smoking or exposure to second-hand smoke, and around 1500 of these deaths occur in middle-age (35-69 years).

16. Smoking causes about 85% per cent of lung cancers, which are the leading cause of cancer death in New Zealand, and is linked to many other types of cancer. It is a major cause of heart attacks, stroke, other cardiovascular diseases, blindness, infertility, and respiratory diseases such as emphysema, bronchitis, and asthma.

2


17. Smoking is also a major contributor to health inequalities in New Zealand. Maori women are twice as likely to be current smokers as women in the total population. Maori men and Pacific men are 50 per cent more likely to be current smokers than men in the total ~ population.

18. Smoking causes an estimated 62,800 life years lost to tObacco-relate~ure . ©J deaths, and 19,000 quality adjusted life-years lost to tobacco-relat'II . e ann I cost of smoking to the health system is difficult to calculate prec' I, I currently estimated by the Ministry of Health to be at least $1.9 billio~nt e t al Heal~. Budget of around $12 billion. \ V

Current tobacco control initiatives ~ 19. New Zealand has a comprehensive tobacco control~me that in e e core

range of measures recommended by the worl~~t~ganizati~~ • broad tobacco control and smoke-free env s legiSI~~~ • increasing the price of tobacco throu~o -«. ~ • health promotion and education~~e quit 'n ~~~courage uptake, and

• smoking cessation service~t ~o~e ntl ~ it

20. The Smoke-free Environment ct \9~O and I n 2007 aim to reduce the disease and death caused by to fjJi. Some elements of these pieces of legislation include: ~ $ • protecting WO~k s ~ cOnd~~k'E(eXPOSure • prohibiting th SU~PI ~ co to people under 18

• Prohibiti~~ advert'· , r otion and sponsorship, and:

• requ' 'ng~c he~ath r' s to be displayed on tobacco products.

21. The ov t has ~'o . ~cl" roviding better help for smokers to quit" as one of the si I it ealth targe (11)e health sector. The Ministry of Health and District Health B Bs) are coordl ting activities to ensure that the target is met. DHBs are

~equ. to rep~g~t the tobacco health target and all have a regional tobacco

~o I plan ~V

April 201~cise on tobacco products was substantially increased to lift the tax

~ on roll ~~~03.acco to an equivalent level to cigarettes, and then raise the excise

Q on~b~ products by 10%. Two further 10% rises will come into effect in January 20 an anuary 2012. The early signs are that tobacco sales have fallen in line with ~)X . ns and demand for quit services and nicotine replacement have definitely ~~sharply following these excise increases.

~ rnational obli ations

23. The WHO's Framework Convention on Tobacco Control (FCTC) was the first

© international public health treaty. It was adopted by the World Health Assembly in May 2003 and entered into force in February 2005. Over 160 countries plus the European Union are Parties to the Treaty. New Zealand has ratified.

24. The FCTC's objective is to establish a global agenda for tobacco regulation, with the purpose of reducing initiation of tobacco use and encouraging cessation. Tobacco advertising and the packaging and labeling of tobacco products are key concerns.

25. Article 13 of the FCTC requires Parties to comprehensively ban all forms of tobacco advertising, promotion and sponsorship. Retail displays are covered by the definition of advertising and the implementation guidelines recently elaborated by the parties state

3


clearly that a ban on tobacco displays should form part of parties' comprehensive bans. While the FCTC does not impose binding treaty obligations, there are strong expectations that parties will abide by the articles and guidelines they have negotiated. ~ The Ministry of Health is required to report regularly to the World Heal~h rganization on New Zealand's compliance with the Treaty, its obligations and its guid ~

Regulation of tobacco retail displays ~ (? ('\ 26. Current legislation (Smoke-free Environments Act) bans tOb~C ¢f'1 'ng, an~i~

retail displays potentially come within the general definition ve )sing in the P\v specific provisions allow for retail displays that meet anum E0Q'kestrictions. Th current requirements were introduced by amendments to the Actin 200~lting I greater restrictions on the number and size of retail ~

27. These include the following restrictions: ~)~ 'J ~' • At each point of sale, the tobacco display is li'f maXim~ ~igarette

• Each tobacco display may include a XI ~ two pa the same variant (no packets and 40 cartons. ~~. \)

block displays). ~

• Tobacco products may not b~d' la e i hin 0 me~ children's products' such as confectionery and ice cream ft r' k and pr t t are marketed primarily for children.

• Tobacco products m~~ e diSPlayed~~U r top or similar surface, whether at a point of sale or not. ~

• If tobacco prod~' layed ~~~ etres of a point of sale, a sign stating 'SMOKING KILL:: bel d's ~~ar view of the customer at the point of sale (the Minist~p II ree si ..

cigarett ~9 carton . of sale (Le. per till or checkout, retailers with more 28. Although he t Its th~S' 0 se displays to a maximum of 100 packets of

tha ne OO,H t of sale ~~ t shelving units side by side to create a visually larger d' s etimes ref~r~t as a 'power wall'. These prominent tobacco displays are a r r eatur~f larger convenience stores and petrol stations, where they sit alon . e displ of ack foods, confectionary and other impulse purchase items.

s cons ,,'Q f ro osal to remove tobacco retail dis la s

~ . Govern t s been considering options for tightening the restrictions on retail « diS~ e time. Proposals to prevent retailers from openly displaying tobacco we co ul ed on in 2007, with submissions closing early in 2008. Retail displays were ~"'ti ubject of two petitions to Parliament's Health Committee in 2008.

~1n ~ober 2008 Cabinet agreed two preferred options for more detailed work to report

~ back in February 2009. In February 2009 the new Government dealt with the matter

nd issued its response to the Health Committee report. At the time the Government

© did not consider there was sufficient evidence that a ban on visible tobacco displays in retail outlets would be the most effective strategy to reduce smoking rates and tobacco consumption. The proposals were put on hold, pending monitoring of international experience with display bans and emerging evidence on their effectiveness.

31. In September 2009 the Maori Affairs Select Committee launched an inquiry into the tobacco industry in Aotearoa and the consequences of tobacco use for Maori, with public submissions closing in late January 2010. Calls for removal of retail displays is a feature of many submissions: . .

4


32. Late in 2009 I (Mrs Turia) raised the matter again in consultation with other Ministers, and in March 2010 Cabinet agreed a further round of consultation seeking more detailed views on options for regulating the display of tobacco products in retail outlets

33. This paper responds to Cabinets invitation for a "report back to SOC ~n outcome of ~ the consultation process and with proposals on whether or not to pro 't a ban ~/\ ~ the display of tobacco products in retail outlets." [CAB Min (1 0) 1~~ ~

Comment /'( ~ V ~ Support for further Government action to address smoking v ~ \f . 34. Over the last 25 years successive Governme. nts have en a number a~f ~c:ures to

bring down smoking rates. While these have been f@i in significa ~ing

smoke on a daily basis. Amongst Maori the ra' . hese nu er re a significant smoking prevalence, about 20% of adult New z~n e - ome s.~oPle - still

improvement on the peak of the smoking eRi' a~e ~M' . 35. Tobacco is not regulated commensuratel £iti1't e costs larriNt imposes. Current

tobacco regulation and control mea~sr fe~ stringent wh ompared with the control of other harmful products in 9vh I d, an~onsidered alongside the very high level of harm and the~i a I ropo' na Clen suffered by certain groups, particularly Maori.

36. Nicotine is a highly addictive sub e, bu . sf similarly addictive and

part due to decades of c r ed an~s~o "c d commercial marketing by tobacco companies.

37. Survey eVide~01/) ~a co~ Q est attitudes towards smoking continue to harden, inclu' =mo we as the general public. Surveys conducted by the Wellingto . e i al SCh~a rt of the International Tobacco Control Survey has shown s~ ort for~~ 0 tobacco control measures among the public ~~~Y:J q",ong ~~ is includes support for removing point of sale

38. Th~ry of ealth's comprehensive survey data shows that:

~ ~ee ou f fiv r. nt smokers had tried to quit smoking in the past five years, a third ') ~~moke t for at least 24 hours in the past 12 months and a fifth had

succ fu UI for a week before starting to smoke again.

am.

~~~ ximately one-third of current and previous smokers had quit for more than 24 hours ; hlhe past 12 months. There were no significant differences by gender or

~ neighbourhood deprivation.

• Three-quarters of smokers who had tried to quit in the past 12 months said one of the rcy reasons was for their own health, while a third had tried to quit because of the cost of o smoking. There were no significant differences by gender or ethnic group.

The case for tighter controls on retail of tobacco products

39. There are in the order of 10,000 retail outlets selling tobacco products in New Zealand. These include supermarkets, petrol stations, dairies and other convenience stores, and also bars and restaurants. The number of tobacco outlets has continued to grow,

1 World Health Organisation terminology

5


particularly with the entry of petrol stations into the market, even as smoking rates have fallen and total cigarette consumption has dropped.

40. Point of sale advertising, such as retail displays of tobacco, is a promotional tool used to ~ generate awareness of products, communicate information, stimulate~r' and encourage repurchase. Tobacco products, primarily cigarettes, are u u 'Vdi Played~.,pr large, wall-mounted, shelving units. ~</,

41. Although the Smoke-free Environments Act limits the size of t . s to a maximum of 100 packets of cigarettes and 40 cartons, per i t of (Le. per .il\9t: units side by side to create a visually larger display, so etimes r erred to a 'po er wall'. ()

42. After the Smoke-free Environments Act Prohib~'t 0 e eral f~t cco advertising and sponsorship in 1990, the abilit t . a tOba~o od ts that are for sale inside a retailer's premises and the dmig (ti ig~re ae 0 pack itself became the main vehicles for promoting ~ .pt duct e t cco industry's response was to pay greater attenti~n 'n~"t'OM displays Ii'~n became more elaborate and prominent and displayed a wid 0 obacc~ct$' The level of investment in these displays h~S e . Icant, ug . the industry finds them an effective advertising method.

43. Tobacco companies maintain th purpo e . aisplays is not to recruit new

maintain that the rem 0 tail display ave negative economic consequences t~ho r . g sal~ nience stores and other outlets. These arguments are c 'c and p ar t be self serving. What evidence there is on brand-switchi 19j>e '. r sug t okers are highly brand loyal and know exactly whic ~i<:'(c tt s or t I:j c product they intend to purchase.

Vi~ib to omer~ i vulnerable consumers such as children, young pe ,e mokers an rs trying to quit.

45. Th t stat~ory restri tions on retail displays are only partly effective. They are

~o to und ~I)d) The accompanying compliance guidelines make up a 30 page

~ ment. ~r ,tWrers rely on shop furniture supplied by the main tobacco

mpa~.es u port from tobacco industry sales representatives to comply.

~ Enforce t d compliance are difficult.

() 46. Ae' SFEA to better deal with retail displays also provides an opportunity to <l~~ number of other enforcement and compliance difficulties with the existing

~~·n.

4 . celand was the first country to ban retail displays of tobacco products, banning all ~ rnauonalex erience

© displays of tobacco in 2001. Thailand has prohibited the display of tobacco products

O since September 2005. Norway introduced a ban on visible display of tobacco products at points of sale in Norway with effect from 1 January 2010.

48. Following the lead of Saskatchewan in 2002 prohibiting any advertising, promotion or display of tobacco products in places where people under 18 years of age might see them, all provinces and territories in Canada have now enacted their own legislation requiring tobacco products to be out of public view.

49. The Australian Capital Territory, New South Wales, Tasmania, Victoria and Western Australia have now all passed legislation requiring tobacco products to be out of sight at

6


general retail outlets. They have varying requirements for specialist tobacconists. The policies are either already in effect, (ACT, NSW, Tasmania, Western Australia) or soon to come into effe~t. Northern Territory, Queensland and South Australia h.ave all ~

commencement dates before January 2012. announced their intention of banning point of sale advertising with pro~o d

50. In Britain, both Houses of Parliament have passed legislation WhiC~O .. obacc« (\ displays at the point of sale in England, Wales and Northern Irel~' -"0 implementation scheduled to commence from October 2011. nation on regulations setting out the details has been undertaken in ~~~. e Position\~ new Government on advancing this is yet to be clarified. T~tiSh pa5e~t\)e. passed legislation in 2010, which makes it an offen~e isplay tObac~ ts or smoking related products. Consultation on propos 'ons cau 0 July

2010. ~ . 51. In order to sell tobacco in Ireland a person mus gistere ~ seller, an

approach adopted in several other jUriSdi~~~ L .slati~~s that registered tobacco sellers must keep tobacco ~ro u ~r d out of' 'n a closed container or dispenser that is not visible or acces ib persa~her t n the retailer'. The legislation came into force from 1 9 V

Evidence of effectiveness and u 'c ~ 52. Since the widespread removal 0 cco a e I·n. d sponsorship, increasing

evidence has emerged~the role tha j;etj3. to cco displays continue to play in 'normalising'tobacco, se ch indicate.th.e sence of retail displays increases the likelihood that Ch~'1 a ng p~ tart smoking, and prompts impulse

53. For example' 2009 n' Paynter, ASH, NZ, and Richard Edwards,

purchases amon - rSi!n ok r trying to quit.

University o/~~wellin~; lished an article in the international journal Nicotine & TOba~R.~h. A~~' ' g the evidence from 12 frequently referenced peerrevie eSWfHes, the ~rs::-corlcluded that, given the addictiveness of tobacco, the se lOt e health h dsvposed by smoking, the evidence that tobacco promotion e s children to st smoking, and the consistency of the evidence that point of

~ale r otion ~e';f?s children's smoking, ample justification exists for banning point

4- asse s t ~~~nce of pOint of sale cigarette displays on unplanned purchases, ~ adve~~displays of smoked tobacco products.

~ Au ~~~rs as they left retail outlets after purchasing tobacco. Unplanned Owen r al. (BMJ Journal of Tobacco Control 24 March 2009) interviewed 206

~ 'V ig ette urchases were made by 22 percent of participants. Forty-nine percent a ban on point of sale tobacco displays versus 12 percent who opposed. «j ty-eight percent agreed that such a ban would make it easier to quit.

~~hese results align with Ministry of Health Tobacco Use Surveys which found two-fifths

of recent quit attempters agreed that cigarette and tobacco displays in dairies, petrol

© stations, supermarkets and convenience stores make it more difficult for smokers to quit

() smoking or stay quit.

56. Surveys conducted by UMR for the Cancer Society have shown strong and steadily increasing public support found for the complete removal of tobacco displays, rising from 68% in 2008 to 76% in 2010. The level of support is almost as high among smokers and also growing. A survey undertaken by the Wellington Medical School found smokers' support for complete bans on displays of cigarettes inside shops had increased from 62% to 68%between 2006/07 to 2008/09. The smokers most likely to support a ban were suffering financial stress, were planning to quit in the next month or had quit recently.

7


57. The New Zealand Association of Convenience Stores has reported a survey it conducted found 38% thought a tobacco display ban would reduce teenage smoking while 57% thought it would not. ~

58. It is too early to comprehensively assess the removal of retail displays iJ;(d~Qer countries, and the impact on quit rates and youth smoking uptake can'A~~wnfiden?p (\ separated from other supporting measures to address smoking a~~~ontrol. 0

59. However, there is emerging evidence from Iceland and Can a 0 e I act to~ display bans have had on smoking prevalence among you opl . A Western Australian Parliamentary Committee accepted that in Saska ch n the d line in prevalence rates in 15 to 19-year-olds has accelerate, lIing by almos 0 uarter since the ban was implemented in 2002. In additio , . d that the i f oint of sale b. ans also appears to be positive in Icelan~, e e eClin~ valence rate among 15-year-olds has increased since enacte~1.

Report back on consultation . ~ /<~ 60. In response to a consultation letter P/I lL~ an retail Yob~ displays in New

Zealand 1 002 responses were rece' . n submi I were thoughtful and

groups on both sides of the d teo .

61. The responses to this second ro c~os QE . e largely similar to the

information on the per e trengths an a esses of the more detailed proposals conSUltation process u~~ en in 20071 .)it e was some new and additional

set out this time, ~~ her i~g i the costs and benefits of specific elements and 0p(lQl

62. Views were ~ Ith the~ se or, NGOs, some retailers and public submitters ~trongly in fa f remo~i e displays and the tobacco industry and most retailer Interest~~ .

63. O~~);~~ removin~~ 0 products from display focussed on:

· ¥.~. nce costs with~imates up to $12,000 per retailer were provided

~e inistry~e~ commissioned an independent assessment which indicates that in

~ ctice a~~s would be much lower, in a range from $330-$3,300.)

• bUSi~~(there were assertions that tobacco makes up a surprisingly high ~ ~pr~op ~I ~~eneral convenience retail turnover - especially convenience stores &

~ 'V ~~. f large scale closures of retailers, robberies and security problems resulting from

~') 'SS oposed change (generally not substantiated with supporting evidence).

inconsistency with the general Government approach on business regulatory policy

«~ strong assertions that impacts on smoking and health benefits from removing displays

©~ would be negligible (including challenges to studies and the evidence used by

() supporters)

• if the retail display proposal is progressed, a strong preference for flexible requirements allowing existing displays to be modified rather than prescriptively forcing retailers to put all tobacco "under the counter" and

• support for alternative measures such as tighter enforcement of existing retail instructions and in particular the ban on sales to people under 18.

64. Supporters of removing retail displays focussed on:

8


• New research adding to the evidence that tobacco displays encourage youth smoking uptake and undermine quit attempts

• The need to set the costs to retailers, which are likely to be exaggerated, against the cost /( to the country of tobacco harm ~ ~ ~

• The strong public support for the proposal, including among smo~er recenvP 1\ quit or intend quitting 0

• The need to send a consistent message that tobacco is not~ r tluct, bU? dangerous and different from other consumer goods

• International precedents and successes which support emoval 0 retai~di san

• The experience of retailers who have removed dis a@, say it did n ~ uch or harm sales and had other business benefits, f~r a ;:lie, i prov~j)Y).nd space to display for higher margin products. V V

65. A more detailed report on the outcomes ~~ atio~~ as Appendix.

Key conclusions _ ~ V v~ 66. In 2009 the Government's decide ~~\ceed witH~' isplay proposals pending

new evidence from the internatio ~~ienCi!t hi ould be the most effective strategy to reduce smoking ra an obacco t n. Categorical evidence of the impact of retail display bans, O~k'~~ i . nd prevalence rates will take some years to emerge~~ . complicat ~ e ctions with other policy measures. But what eVidenc~t e NE s portS§h c 0 e removal of retail displays.

67. But the ration. ale vi ow to e(nlOy to acco products from visible retail display does not de§p~q S1 eV~'d e -t'hatA moving retail displays significantly lowers smoking pre ~. rs T i Irmly of the view that removing tobacco displays will help redu r eptii1n t cco as a 'normal' consumer good and will contribute to redu~~ rm ca oking. No sudden or dramatic drop in smoking prey en~M '!il<ely so~ a e of this measure. But it will, in conjunction with other p I I ,c tribute to re i tobacco uptake over time, particularly among young pe d also support s okers to quit.

~h~ain down~'t~e proposal is that there will be costs for retailers as they adjust

~'> • shop ~~~~~'PIY - particularly for small retailers, such as the typical corner

airy. ~s lSt-swill vary according to the options and timeframes made available for

~ re50'n 's I ys from sight, and may well be absorbed by the tobacco companies as

V th v he past.

69.~ ilers have already made their own commercial decision to remove tobacco

~ ys, and with retail margins on tobacco beginning to decline as our excise

~ 'ncr ases start to bite, there is potential for retailers to replace tobacco displays with helf space for more profitable items. I note The Royal Australasian College of

Physicians and Cardiac Society of Australia and New Zealand have recommended to

© the Maori Affairs Select Committee that subsidised nicotine replacement products be sold everywhere that tobacco is sold. This would enable people to choose between an expensive product that harms them, and an inexpensive product that helps them quit, and could provide convenience stores with a new line of business to replace tobacco.

70.ln order to deal responsibly with the compliance cost issue and the impacts on small business I propose to move in two steps: firstly to introduce amended legislation to clearly establish the new policies on removing retail displays and related matters, and then secondly to develop detailed regulations and guidelines in consultation with retail interests. These regulations and guidelines would lead to flexible solutions to comply with the law and reasonable transition criteria and timeframes to minimise the downside

9


impact on business, particularly vulnerable small businesses. The process would also provide an opportunity to further educate retailers and explore business opportunities from being 'part of the solution', ego selling nicotine replacement products to help ~

smokrs quit. «/) ." Key elements of a more effective regulatory regime for retail tOb~C ~ rF () Retail Displavs ~/ 71. In light of new research and moves by other jurisdictions to ove acco diSP!f.

from· public view, it is proposed to amend the Smoke-free VI ents Act to pro i e that tobacco products must not be displayed in a wa~yt is rea' visi~le~tie p lic.

72. Subsequent regulations would be developed to Pro~1 . Ie transitio<h~) arrangements, particularly for small retailers (C~it' e etermig,~ximum floor area and/or having only one point of sale) to pr I t a ow-c~t odi' ations to existing cabinetry and tobacco display un~'ts QU b cc~Pt ,., or modifications could be avoided for anum 0 a S.

73. The regulations would likely have S~hr i [mes ~nQ less xibility for larger businesses such as supermarkets a d c 'sed petro r,..~convenience stores, as well as any new or substantially r 0 or r~er t d retail premises. These would be required to install to co r ge un~' y or other mechanism(s) which prevent any member of tli ic from . ~ bacco products while the tobacco product is bein~ted for SUP~4~ er customer.

74. The regulations w~u I Wit~h~ matters such as requirements for "smokin~ kills" or " Ie under 1rSS\s' ge and also the provision of price lists for prospective custo. V

S ecialist tobac '51

pack to /::l:brand V~I - acco product stocked by that retail outlet. The de' . i n f a specialis onist would need to be tightened to avoid businesses e .. "shops within ops" or running significant sidelines.

~ve s jUriS~~~ave generally defined a "specialist tobacconist" as a business

~ erive~~ 8<.(Percent of its income from the sale of tobacco, or derives more than

Yo of its i ~ from tobacco products other than standard cigarettes or roll your

~ own to~~o\, process would be required to "approve" applications to become a

Q sPrrus~ co retailer.

77. h~ytions could also introduce new requirements for duty free stores.

t' radin names to avoid tobacco advertisin

ading names that essentially advertise the availability of tobacco products to the ~ Retailers a re currently permitted to the word "tobacconist" or use other terms in their

© general public. Some trade under the name of "discount tobacconist" thereby also

() giving the impression that they sell tobacco at sale prices.

79. The Act could be amended to enable certain terms in trading names to be prohibited by regulation, with reasonable timeframes.

Removal of 'normal' trade discounts

80. Section 28 of the Smoke-free Environments Act 1990 prohibits free distribution and rewards, and places restrictions upon the offer of rebates by manufacturers, retailers and others with regard to tobacco products. In summary, the Act states that:

10


• no manufacturer, distributor, importer, or retailer of tobacco products may distribute or supply any tobacco product free of charge or at a reduced charge

• a reduced charge includes providing tobacco with another product that is free or reduced. /Z A reduced charge excludes a normal trade discount or normal trade re~ ~ ~

• no person may offer a cash rebate to a retailer, including as an indu~r e i lation ~ (\ purchasing, selling, advertising or locating tobacco within the ret ~" u' ss. "0

81. It is apparent that rebate schemes operated by tobacco com~ie r r tailers ~? commonplace. The rebates are linked to the volume of tob ale . The Minis~rY) Health has investigated these schemes and written to each of t hree~. toba companies setting out where the companies' rebate~.ces appear t . reach of the law. Responses from Imperial Tobacco and Ph' . asse~t a . bate arrangements are lawful, normal trade discoun~s (\

82. Further progress has been constrained by the : [ inabili~reql1l e tobacco companies to disclose details of the SChe~1i dus~r I ers claim the terms of their agreements are SUbje~t t id iality pr .. s, d that disclosure

tobacco companies to disclose he la' f their r e hemes so that a decision

would put them in breach of contract. ~

83. There are two options to deal w~'t h . The w e amended to require

could be made whether these e I in the u ms of "normal" trade discounts.

normal trade discount fQiloB ceo retail Tal: ents. This would be consistent with 84. A stronger measure wo d-b to clarify th~c rovisions of the law to prohibit

the regulatory princ' o't'\te'v ormali lOCO retail.

85.???

wers of Smoke-free officers

I-)f~ ealth $, e cy responsible for the administration and enforcement {s'e-free Envir e ts Act 1990. The Smoke-free Environments Act provides

for ointment of enfo cement officers to enforce its provisions through ~~~. ation of~t'(lpl~ts and the collection of evidence. These officers are employed

~) ~bliC H~~ ~which are part of the DHBs.

7. mOkef~ i6rc~ment officers not only respond to complaints of alleged breaches of

Q op r 0 , here a young volunteer under the age of 18 attempts to purchase tobacco. ~ the~~.s. hey also undertake proactive work such as controlled purchase

88.~~ rosecutions under the SFEA are cumbersome and ineffective, and could be ~~ved by stronger powers of search and discovery.

~ 'n ement offence scheme for offences relatin to sale of tobacco roducts to under-18s

89. Anyone who supplies tobacco or herbal smoking products to a person under the age of

rCY 18 years commits an offence under the Act punishable by a fine up to $2,000. The "0 offence is one of strict liability.

90. Smoke-free Enforcement Officers appointed by the Ministry enforce the prohibition by conducting controlled purchase operations for tobacco products with the help of a volunteer under the age of 18. Prosecutions of this offence are cumbersome and costly, with $67,000 spent in the 2009-2010 financial year on Crown Solicitor fees alone. The average penalty imposed by the Court is $300. As well, in a number of cases involving young defendants or first-time offenders Courts have discharged the defendant without conviction.

11


91. I propose changes to the Act to enable Smoke-free Enforcement Officers to issue infringement notices to first-time offenders. An infringement notice is a proportionate response to first time offending. It would administratively be a more efficient and cost- ~ effective method of encouraging compliance with the Act by impOSing~finanCial penalty, while holding the defendant accountable for their action, and I the ~ formality of court proceedings. ~

92. It is proposed that an amendment to the Act establish the infrin 0 ence s~m a set penalty, and the power to make regulations to enable d lie ~ovlsions s ~ fees and forms. Formal operational guidelines would need eve{oped to ensuYe that enforcement officers act in a consistent manner when issuin nfringe~t not es and con.sidering whether an alternative action SUCh~ al or written w~~more appropriate. V ~ ~

93. Provisions of the Summary Proceedings Act 1~ used fo~tnct Court to review or enforce an infringement notice. ~u s e r~ec ~~d to prosecution involving the full range of pen ~~ v . ble u ~ t~ct.

Registration N 94. Several elements of this package' retail co ~I ould be easier and more

contact details of their busines d me bas' . 'on about their tobacco retailing activity.

Other minor amendments C\ ~~ 95. ego removing the a .. (}r~ acco ~y~hts to enter NZ ports as of right

competitors i~"tn:tern . al eve - _. it that too? Could breach a mandatory provision of t ~~c. Polif I was the face-saving provision when the Act was not repealed~1 ~ may s· e e sensitivity?

96. firmi u ~ stricti~ t ading terms such as 'light' or 'mild', in line with . C c ommissio i I think we would need regulation making powers. The

C e Commission h by and large achieved our goals - but not all companies ~av~ I ed uP~ % understanding

~~i_nt wit :rst~n moves on 'plain packaging'

~ etai! dl y re regulated in Australia at state level, and retail display bans such as

Q pr05 r w Zealand are already in place. However, packaging and labelling requ em ts such as health warnings come under federal jurisdiction.

~~~ 10, the Australian Government announced its intention to legislate to force ~~o to be sold only in "plain packaging" from 2012. In addition to option it is also

ith Australia, with a view to harmonising trans-Tasman requirements for plain packaging. ~ roposed to consider further regulating the packaging of tobacco products in conjunction

© 99. Now the outcome of the Australian general election is clear it appears this proposal will be

progressed. Officials propose to monitor progress in Australia on the 'plain packaging' proposal, explore the potential for regulatory alignment, and report back to Cabinet in 2011.

Consultation

100. There has been extensive public consultation on the proposal to remove retail displays of tobacco products, as described in paras above and in the Appendix. This paper was prepared by the Ministry of Health in consultation with the Ministries of Economic Development, Consumer Affairs, Justice, Pacific Island Affairs, Youth Development, Foreign Affairs and Trade, and Social Development, and the Treasury,

12


the NZ Customs Service, Te Puni Kokiri and the Department of the Prime Minister and Cabinet.

Financial implications

101. None

Bill of Rights Act 1990 ("Bill of Rights Act"), and the Human ~GAct 199 . Th~ protections of freedom of expression in s14 of the Bill Ri~ti~ includ o~~Vrcial expression and advertising. While prohibiting retail of a produc i m facie a limit on freedom of expression, this type of expre i I at th~e' of the right, any limits placed on it are more readily ju Ie. e publi ea grounds behind the proposal should be sufficient to justl I itatio~ advertising already has limits placed on its freedomg o' in t~r required health warnings and photos of harmful effectsii f he prod . he roposals in this paper seek to alter the limitation by req . . ducts~e hi n from view. While it may be argued that this is a differe~o limitation ~ an an extension of the current limitations in place, thi~~~m Of~i . io I no less justifiable than the previous limitations put in Plac~ same r .

Legislative impliCatiOnS~ ~~ 103. A Smoke-free Ei' ~ s Act~~ en Bill is on the 2010 legislative

programme with It" . I 5, ie d qffih9'n uctions to be issued in 2010. This Bill is the appropriate leg' i vehm'cl 0 ~~r ssing proposals outlined in this paper. It is now propose~~ te leg ti'n 2010 so that the Bill can be introduced to the Hou~e and.h~i . ir~t rea~~g fore Parliament rises for the Christmas recess, which

reqUlreS~R I 'Ionty~~ 4.

104 .• re a ready !$~ e regulation-making powers under the Smoke-free Ere s Act, but tli ay need amendment to ensure they enable the reg I . s req~mp ement these proposals.

d);~:~y i~pac;:~atement has been prepared, and [will be] attached to this

~~ae.e. ~~;~:ory impact analysiS focuses on the central plank of the measures V. pr se i is paper, namely the removal of tobacco products from retail display. The

~ to '/; impact implications of any move to harmonise with Australian plain packaging

~ I.' ents should these proceed will need to be addressed in future Cabinet

p mg.

t? ~G der implications

0~106. None

o Disability perspective

107. N/A

Publicity

108. It is proposed that this policy be announced once agreed by Cabinet, including proactive release of the Cabinet paper and publication of the Regulatory Impact Statement.

13

DRAFT 9 Septem ber 201 0

109. The announcement should make appropriate reference to the Parliament's Maori Affairs Select Committee Inquiry into the tobacco industry in Aotearoa and the consequences of tobacco use for Maori. The Committee is on the point of reporting. ~ The overwhelming weight of submissions has been in favour of reduciwoking rates effectively to zero by removing commercial tobacco supply altogether. the © Committee reports the Government has 90 days to respond. ~ -

Recommendations [Outline] ~ " \~

110. It is recommended that the Committee: v ~ \J . 1. Agree to remove retail displays ~ 2. Agree to other improvements ~ 3. Agree to the use of regulation-making &~~ ~Ple~" etail of the

proposals and to allow for flexibility of com . t tions a~, ~es in order to reduce the compliance costs and imp~ I re~Sl ses

4. Agree to amend the smOke-fre~el ts Amen<-ctm~Bi I to give effect to the decisions in sub paras 1-3 abov ~

5. Note the Smoke-free Envir~ men n . I is in the 2010 legislation programme with priority ~e: y (in tr the Parliamentary Counsel Office to be provided in the y~a

6. 201 0 legiSlati~n r e to ~ 4 0 be referred to a select committee in the year)

7. Agree th~' . stru~cs Smoke-free Environments Amendment Bill 2010 be or the . entary Counsel Office by the Ministry of Health [no

later~n .; ~~ ac on their bu . s

8'<ie ~ rk W~i' etc on options to minimise compliance costs and

9. . he Associate MI ister of Health (Mrs Turia) to direct the Ministry of Health to

~~~ b~ b~aCk~saIS for further regulations under the Smoke-free Environments

O. Invi~h M ciate Minister of Health (Mrs Turia) to direct the Ministry of Health to

~~ §. 0 gress by Australia on its proposal to legislate for plain packaging of

a products and explore the possibility of New Zealand harmonising or ~~he ise aligning with Australia, with a view to reporting back to Cabinet as ~ '-$ ~ priate when developments warrant it.

©~

14


Appendix: Report on Consultation 1. On 22 March 2010 Cabinet approved the release of the consultation letter Proposal to ban

tobacco retail displays in New Zealand and sought a report back on the outcome of the ~ consultation process and proposals on whether or not to proceed with the~oval of tobacco displays in retail outlets. ~

2. Public consultation took place between 31 March and 21 May 2010~O 1 submissions were received. Many were substantial although a~o t form ~ template letters promoted by interested parties. V

3. About 85 percent of submitters supported the proposal (112 indivi s, 7~5f miette s~. Supporters included all the health sector submissions, s ~issions from y ople, the majority of submissions from the general public and a I~ie t proportio r taHers who submitted as individuals - about a quarter Of~h e t ile. ~

4. Opponents comprised 28 individual submissions f rm let~~ tobacco industry submissions opposed the proposa~l. 't e m~j . 0 s Issions from retailers and retail organizations, a small pr ~' fr m the er.a blic and one submission from an overseas (UK) priva~~~ institute.

5. The consultation primarily sought co~ affecte~on options for removing displays and their costs. New info~~~n_ he~e e i nce was welcome, but this evidence had been considered itl'Prev« us consu t mitters were told previous submissions would be taken into 'a2'eoo t, but m . ters still took the opportunity to repeat as well as update 'ous in ormat~' n

6. Views were polarised ~~n views ex asse oth for and against the proposal. Ultimately, the iSSU~~ ~ n to J d ever what weight should be given to the health issues vers r y rieti in les by and costs to tobacco retailers. Retailer and industry ~s the he' s are minimal or non-existent and the costs overwhelmin~upporte s proposal argue the benefits are potentially consider e an~ costs m' a irrelevant.

7. Th~ajO ~ bmitt= id general comments either in support of or in opposition to th 0 0 rather than sing the specific questions set out in the Ministry's letter. G [)hfr): nflicting views sented, conclusions are not easily drawn from the analysis of

~the ¥m(SSion~the do help to identify the areas of difference. These issues, include: • e role~ba I lays play in advertising tobacco products,

~ the evi . e literature for the effect of retail tobacco displays and for be~'o r c ange resulting from the removal of retail displays,

~ • ~e . e around the impact the removal of displays would have had on smoking

rev e e, smoking behaviour and on retailers in other jurisdictions, for example,

N tI, Saskatchewan, Ontario, and Ireland,

~ he costs to retailers of placing tobacco out of sight,

• public acceptance of removing tobacco retail displays. ~ • e special circumstances of specialist (cigar) tobacconists and duty-free stores,

© Tobacco displays and their impact - the research evidence

() 8. Supporters of removing tobacco displays from public view contend that tobacco displays function as a highly effective advertising and marketing tool in the absence of other means of advertising. New Zealand research shows a link between tobacco displays and the likelihood that a young person does or will smoke. Australian research also demonstrates a relationship between displays and the urge to smoke experienced by former smokers and those attempting to quit.

15


9. Opponents argue that other factors are responsible for youth uptake, for example, peer pressure, or 'forbidden fruit'. One submitter (the UK policy think tank the Democracy Institute) extensively disputed the validity and conclusions of the academic research, in particular the reliance of many studies on self-reporting of smoking intent~.on rather than /( measured behaviour. ~ ~

fg~~ee~~istence of a link between tobacco displays and youth smoki~.S r· m the © research, although the strength of the relationship varies. ~h r il diSPI~ undermining smokers' quit attempts by prompting a relaps' ss· ely studie research to date is consistent. with current knowledge of what in nces s cessf uit attempts. (Unlike the Democracy Institute submission ich appears t sed on a similar submission to UK consultation on the topic, c the dispute a h has been peer-reviewed and published inreputable~n . i lit raturea by a leading New Zealand author who refutes many ocracy ~'s claims).

The impact of removing retail tobacco dis~n mOki~~nce 11. Opponents of the proposal argued that t em~ of tObac~ ~ys overseas, for

example, in Iceland and Saskatchew, . t or no ~f~ smoking prevalence. Supporters of the proposal, gen~r c· . h sam ou :M, oncluded that removing displays had reduced smoking v c espec'al 0 young people.

Comment

can be conclusively re ve It seems c removing tobacco displays as part of an ongoing pack~f t 0 cone es will contribute to a reduction in smoking prevale e I e~y ing bacco's presence at retail outlets less prominent, b~'S . y tha . bacco products from sight will have an immediate 0 7~1 e Im~ac oking prevalence.

13. It is diffi ~~6iate the i-a er influences such as price changes, education initiat'ves\ ~ camp~· n n the effect of removing tobacco displays. The cu iv i pact of re 'n isplays is likely to be greatest on young people as tobacco is ' r Ised'. This infl ce will feed into prevalence figures over time, particularly by

~on~ . g to t~ng~g decline in smoking uptake by young people.

~h~J nOmi~f)a~~On retailers of removing tobacco displays

~ 1 everal~il r and their representatives pointed to overseas evidence, principally from

() ca~ 0 closures and a loss of profits. New Zealand retailer organisations ex r ss c ncern about the financial effect the policy will have on their members. They ~~ nsubstantiated estimates that 36 to 60 percent of convenience store and other

~~~rs business is from tobacco.

~. Conversely, several New Zealand retailers, mainly small retailers, who sell tobacco but store

out of sight, indicated that the change had had little impact on tobacco sales. Current smokers "knew what they wanted".

res 16. One major retailer organisation stated that the additional costs of the proposed policy cannot ~ be estimated at this stage, for example a predicted loss in sales for smaller retailers through

customers purchasing elsewhere and potential stock shrinkage.

Comment 17. The claims in relation to Canada's experience are generally unconvincing. Other factors

such as the global recession and illicit trade, the latter particularly in Ontario and Quebec provinces, appear to have been influentiaL

16


18. The financial impact indicated by retailer organisations seems to suggest implicitly that the policy would be effective in reducing tobacco sales. There is a problem with the internal consistency of some of the industry and retailer arguments about the effectiveness of removing retail displays and potential impacts on their financial viability. I~th policy would ~ be ineffective at reducing tobacco consumption then it would not impact 0 I s, and vice versa. (? 1\

retailers and may impact on the financial viability of some reta~'ler .}Qtl~, other ~s seem likely to more influential both on revenue and financial vi i /i~:oving to

19. The policy proposed is likely to have some impact on revenue from b s s for son:~

displays per se. Retailers have adequately adapted to a signi a duction i the n er of cigarettes sold between 1970 to now and with the en~r . to the m rket of c enien e stores as an adjunct to service stations without a signif ~ ss of busine .

Options for removing products from display ~ h 20. The consultation document invited comment 0 - . ent f ~~Oducts to be

stored under the counter within a set time-f~ge d other i~r putting tobacco products out of sight. The tobacco ind~s , ~~ sand th . nisations strongly opposed placing tobacco products un r c er, sO~'ng s porters of the proposal generally argued for. V

Comment ~ ~ 21. Compliance costs would be sig . I Y reduc ailer opposition ameliorated to

comply with a require eN tobacco ~~_~ust not be displayed. some extent if retailer~wJ?r at Ie ini~ ecide themselves how best to

Costs ~ ((~ 22. Much of the c~~lta . ocum~~derned with the costs to retailers of refitting their

premises to r cco fro . lay. By and large the information provided in SUbmiSS~i s 0 osts~ oi ting the proposed option is less detailed than had been ho ~

23. Th 'm t s of refittin . s varied considerably. Figures of around $3,000 to $~zf~~ e estimated~Cing tobacco products under the counter, though one retailer c~~es a~o curtain.

~~h~inistrY 4§ en d an interior design company to provide independent advice on the ;'M~f alte i mOb co retail premises to comply with any legislation placing tobacco

~ rOduct~t ~g 1.. Eleven retailers, including four dairies, a convenience store, three

Q pe~t' d three supermarkets were visited. In the draft report the costs of co yin e estimated to be between $300 and $3,300. The sample was small but it

!f·v n objective indication of where the compliance costs for most retailers might lie.

p ive. ~ it i new counters, not an easy option at some of the stores visited, would be more

~ igar and duty-free sellers who submitted argued they would face very high costs to comply

with the proposed removal on retail tobacco displays.

rcy 26. The other major costs mentioned were the possibility of increased time required for training o staff, managing stock and retrieving tobacco products for customers from drawers or closed cabinets. Some retailers submit this could impact on the viability of the business trading in other goods and services. Transaction efficiency and speed of service are seen as key to successful convenience retailing.

Comment 27. This situation may not arise or even diminish if retailers who have removed displays

from public view find they can meet current purchasers' needs with a reduced product range.

17


Effective date for any changes

28. Opinions varied considerably. Tobacco companies and retailers considered 18 to 24 months to be reasonable for modifications to existing cabinetry and opposed any ~ introduction of under the counter displays. Those supporting the propos~af oured 'immediately to 12 months for modifications and 9 months to 3 years for I tobacco ~ products under the counter. ~

Comment 29. Being flexible with the time required to get to an ultimate en~irlt visibility s~

reasonable approach. v~ \f ' Specialist tobacconists ~ ~ 30. Supporters and opponents of the proposal had n$~a ge n how fl· 'specialist

tobacconist retailer' or whether they should be s 0 i erent re LiIat1otl. igar retailers felt that they were different from other re s they n=~/:l6J their clientele, who are generally not young, a wider rang~r a PiP~' C umers visit these stores with the express purpose of purcha' to cco, and nlik to be influenced by product displays. , ~ ~

31. Health submitters generally felt spa i~~~conists s~ subject to the same provisions as other tobacco retaile " V ,,\f ~

Comment

number if different pro '0 pplied. S isions to prevent this and possibly an age restriction on~r s h pre~. d e considered.

33. There was a mixe ti 0 t~e u esti that smoke-free officers should have their powers exten~~ e the e . e whether a retailer is specialist or not.

Duty free s re0 ~ 34. Duty-fre ~r are cu~ . ct to the same tobacco display restrictions as other

tOj>¥~~~~ Ilers.

35. Airr¥'~-free retailers al argued for special consideration on the basis of the

~'mportance of t~«-co)G, their viability and the convenience of visitors. They noted that

~ oYrG overs~~~6i-s had made an exception or different provisions for duty-free tdres. V

~ mment~ \ .

() 6. Th~~"'~W require further consideration, principally to find out more about how other ~~s have applied their removal of retail displays in duty-free stores.

~~~roducts

~ . There was little enthusiasm from any quarter for the idea that retailers should have a list of

roducts for sale which would be available to customers who asked to see it. Health

© submitters suggested it would be a form of advertising and retailers were concerned about

() the time involved maintaining it.

~ Comment

38. It could be an option with provisions to prevent it becoming a form of advertising.

Surveys

39. Supporters of the proposal noted the high levels of public and smoker support for the proposed changes. Wellington Medical School reported that the proportion of smokers supporting a complete removal of the display of cigarettes in shops (those replying

18


"somewhat" or "a lot", increased from 62 to 68 percent between 2006/07 to 2008/09. Recent UMR surveys conducted in April and July 2010 have shown 76% support for the complete removal of tobacco displays, an increase from 68% in May 2008.

40. A survey for a retailer's organisation found some agreement that removineacco from /( display would have health benefits. The survey for the New Zealand As I n of ~ ~ Convenience Store survey found that 27 percent of 1 000 respon~e 0 a tobap(c? (\ display ban would stop teenage smoking while 70 percent thoug it I ot. Thirt~ eight percent thought a ban would reduce teenage SmOking~'ai 0 n id not. \~

Other issues raised. v~ \f ~ 41. Opponents of removing tobacco displays promoted alt~es such as i~

enforcement of the existing law and greater education(~N;e;aQo/.s anads r, aising the minimum age of purchase and government wo . ~ ~e closely . 11 ail industry.

42. Several retailers and many health submitters link~ ':'i plays i~~' e licensing of retailers to educate retailers about the legisa~re~el~orcement.

43. Retailers raised concerns about rObb~ei rity prob m d an increase in illicit trade following any removal of tobacc' . he ev.~fl e fo is is not strong. Some retailers who have put tobacco pro c sight hav 0 to increase security. Any link between removing tobacco is illiC~'t tr 's e uous. Illicit trade may be an issue in Canada, which is usual ~ cite s an ex "hile it merits monitoring in New Zealand, it is not currently a signiflCan r~Ole

44. Retailers were concer a ut stock b M~ while being dispensed or during restocking. The~si ~u ma~~ ~y legislation provides some flexibility, for example, per .. ~= to tea e sonable steps to minimise the exposure of tobac?o pr.od~~ . enfo~ be difficult. Overseas precedents can be examined In ~e. ~

~~~ d/)V ~V ~V ©~\f ~~

©~

19

® From: [Withheld under 89(2)(g)(i)]

Sent: Thursday, 30 September 201 04:53 p.m. To: [Withheld under 89(2)(a)J

Cc: Chris Bunny /'Z Subject: Tobacco Retail Displays Cabinet Paper Oral! lor Consultation ('(/) A rr::" ~ Hi Matthew, ~~W 0 Thank you for sending through a revised version of the cabinet paper and RIS. ~~~~king to i ~ a Treasury comment as the arguments for banning tobacco displays appear to bot e whole, valid. Ho e er, as outlined below, we still think the paper could do more to fully inform Ministers of the elev~at matio . I understand that RIAT is intending on doing a QAjindependent assessm~ in Decem er - . . particular

paper ends up being included then the following points may get~ic ~~ 'V (R\ .. Evidence of effectiveness: ~Q

o The paper and RIS are lacking information~r: g othe~. 0 argument Le. no pieces of literature are discussed which suggest ~n' to ceo displ . I no e effective at reducing smoking prevalenCejtake-UPjqUittin~' t a he gov ment cluded that there was insufficient evidence to justify a ban' ,nd no liter t~· arding effectiveness has emerged since that time other than self-re e veys, SOila, in the paper may be over stated (such as "increasing evidence has e e e ""researc~l. " I growing research evidence", "the evidence for these issues is well Ished"

o The paper notes that~1 the governm Qf9 . I d that there wasn't sufficient evidence that banning displays "wo I be e most effec .~", tr egy" - however, the original paper actually

stated that the~n. icient ~' 'ustifya ban. So the wording used in the paper may

be slightly stro . ~ \J . o paragraPh~ti t ther e e ' evidence from Iceland that the ban has had an impact on

smoking r t s' . conf~ict 't statement made in the 2008 paper that "evidence from Iceland is un~ ecreas s in ates with the ban on tobacco displays". Has evidence emerged

4'> Impa~cSinc--~ ~,SO,ItS~~' renced,

or' no discussion ~e ofthe potential adverse impacts regarding how and where tobacco anies se-focus their efforts in the absence of displays, such you tube or product

~ ~acemet t adv .. .

"> ~he arg a e in paragraph 37 that retailers may be able to replace displays with more proaEble isis inconsistent with the actions of retailers currently (i.e. if it was profitable to do

~ a n't they already removed displays in significant numbers?) and inconsistent with the

"', oin a e elsewhere in the paper that the number of retailers selling tobacco is increasing. When

~ er mentions "some retailers" have already removed displays, there is no quantification as to

~ ow widespread this is.

o em tation:

~ . The paper is stHllacking a lot of implementation detail such as whether displays will have to be

under counter, or just behind doors etc. Some of these details will have a significant impact on

© compliance cost. o The timing of the paper is not ideal given the Maori affairs select committee is yet to report back,

and the analysis on plain packaging yet to be done. From a policy perspective, these issues should all be considered in conjunction and as part of a comprehensive tobacco control strategy. These issues should, at a minimum, be discussed in the paper,

.. Financial implications: o The financial implications section does not include costs in addition to the one-off fit out costs (such

as sales revenue implications) and seems to be based on some large assumptions and a small sample size. The figure given is also less than half of what was originally quoted in early meetings, and a quarter of what retailers quoted. These caveats should be included in the paper.

"

o There is insufficient information regarding what the administrative and implementation costs will be

e RIS:

to the Crown and how this will be funded Le. what will be reprioritised or given up to fund this work?

o There is minimal analysis (other than the table on page 19) regarding the relative impact of the status quo vs. alternative options. ~

o The problem definition and objectives should not be defined in a way Whic~mlnes the ~~

[Withheld under s9(2)(g)(i)J

cor'''O''''''HY NOTl(£ ~ 1\ ~ I he II~forn:"tl()11 in thl" <'mail 1<; confldelltlal to till' fre8sury, ilitend"ej (lIIIV for the add res e', 'Id "lV 2150 be I~' '.lIy ')~~d It YOli are not ~n in,enci0d

,l(ldrbS€I=, ;)~ '"

,. pi"" lemo"',," d,I,,, "" em,eI ",,' """" ," ,,'"'"" by"",," ec",,1 '" C e'" 472 V ~ .~

To: Alison Cassar; Alison Handley; Benesia sm~, ~It~el under s9 ~ Siakimotu; MARSHALL Kirsty; Te Rina Moke; [Wiilt~der s9(2)(g) J a on (LGL/TLU); Susan Wauchop CC: [Withheld under s9(2)(a)J ~'

Subject: Re: Tobacco Retail DISplays~aper Draft ~~tlon

Fo"he> to my ,-moo y",c"'daY'Y~ dmft ltrc:» :::hecahP,pedO"O~~ ~

Jon

2) the RlS foc ~""d comment ~ (Pl~~.ve not~stry of Hellith intemal Cabinet pap" appmval 0' RlS adequacy ,,,,,,ment pmoe""

<f~Everett ~~l Policy Analyst

S c or Capability and Implementation Directorate , istry of Health

[Withheld under s9(2)(a)J

Matthew Everett/MOH To [Withheld under s9(2)(a)J "Alison Handley"

2

[VVithhe/d under 89(2)(a)J 28/09/201014:12

cc

Subject Re: Tobacco Retail Displays Cabinet Paper Draft for ""liatkmLink ~

~:~::::::ou rul by emllil on 15 Septembe<, and ,orne of you m,y have been wund~ ~ OfJ!r © Apologies that I was not in a position to circulate the new draft of the Cabinet ~ draft~ RIl y, s I had intended.

There have been a few twi,t, of Me to cootend with, including ruch thid~ti: wi~~Q '"chedule, pnliti,," consideration of the member's Bill, some internal MoH learning o~~o/"ro~, ~

Howeve<, the up,",ot i, th" we are ,till expected to pmdUC::-~ to go to;~ Octob"', " pmio",ly advi"d,

Uofortunately I cannot c"cuble aooth" d"ft Ofth~~~:' the ac ~S until ","uod midday tomorrow, But that is intended to be a (nearly) final draft. ~

vel internal cabinet paper committee and final RIS The process from there is that it will be fo~onSidered by ~ QA process this Friday 1 October. ~~ 'V

Fmm there it will go to Mi.i"", T~;n)l~ IDt, "d a@soc committee fo' cO",ide"tion on Tu"day 5 Octobe"

And then it can be fi",li"d f~~ruIlin~m Thu"day 7 Octobe<,

The next ve<~on "eS,;;;o< ow will ~~uite a bit in ,tructme "d tightened up on the det,,;l, but the elemen" of the pmpo,ru" ~ 'all ",me" in ~~"'ion, M"h of ~ , that "d~i' now coven,d in the RIS, leaving a ,",o<te<, rome foc",,,d Cabi"t pape,

~~// 'ired all t;ssee Y. on the previous version, and endeavoured to deal appropriately with it all. There does not at . ~~ar~a a disagreements or obstacles to the proposal proceeding to Cabinet. But I am sure Treasury and

ill be ke 0 se 0 your issues have been handled, and Justice and MFAT also have one or two important interests to ch ove<, ~" au who have expre,,'" unquruified "ppmt fa, the pmpo"l, m",y thank"

Th"«~: thi, e-m,,;l i, to give you rul the h"d, up thut we "e getting to the bu,ine" end of the pmee", and unfo"un,tely ~t(9;~ty for further input has had to be constrained.

~ ~viding you this detail now to asist you in planning your time and any internal steps you may need, depending of course ~he degree of priority and risk you may see in the further progress of this proposal based on what you have seen so far.

There are two avenues for further comment and input.

For significant substantive issues, please alert me to these by phone as soon as you are able to after considering the drafts you receive tomorrow. I will take this feedback (by phone/meeting if preferred) any time up until late Thursday afternoon, so that it can be incorporated and considered by our sign-out commitee on Friday morning, probably by tabling a new version of the papers produced over night. My hope and expectation is that we can identify and resolve any issues by this point. However, if any major issues emerge and have not been satisfactorily resolved on Friday, there will be further opportunity through to late Monday to deal with these before the OSOC meeting on Tuesday. Also of course we may receive further instructions from Minister Turia

3

next week. So the paper will be essentially live, if needed as a last resort, until late Wednesday next week when the final version goes up for signing to Cab Office.

For minor issues, drafting suggestions etc. the earlier the better, but I can guarantee to consider these for inclusion at any stage until midday Monday at least. After that, and you'll be taking your chances. But potentially right through to the paper being finally signed out next Wednesday.

I 'pp,oci,te thi, i, pmb,bly not id,o!, bot I run doiog my b"t to ,",bl, th, b"t po,"ibk d,p"'tm'nt,~,.on given fr:> ~ ""om,"",,,, PI,,,, don't h",,,,, to g,t in toooh - indoding by [WJ~heJd ""de< ,'(2!1,)} ;;~>~Y ~

M.uy th,nkdnodvon", V ~~ V \5 -& kind regards

Matthew

Matthew Everett Principal Policy Analyst Sector Capability and Implementation DIrectorate Ministry of Health [Withheld under 89(2)(a)J

~ ~~

~ ~ legal privilege. \? If you are no (it int d reeipie~~~~ read, use, disseminate, distribute or . essage or atrit~~3,uents. If you have ree . his m sage in error, please notify the sender immedi a elete this s .

t and Vi s F te' g Gateway

. - -, ~ -, - -- - -

~ ©~

4


In Confidence

OFFICE OF THE ASSOCIATE MINISTER OF HEALTH (Hon Tariana Turia)

Cabinet Social Policy Committee

Proposal ~

1. This paper proposes changes to the controls on tobacco re . un er the Smo - ee

Executive Summary ~ 2. Current controls on the commercial marketing ~~~~IY Of~ I ok

increasingly inadequate and are undermining t 'venes~~~s to reduce smoking, such as tobacco excise increas~~ t ove~n ' nority health target to provide Better Help for Smokers to u N

3. The Smoke-free Environments Act 1 9 s' s reta' iSQlay some extent, but still enables tobacco companies tO~i Relr roduct pr 'iWiJ Iy in some 10,000 dairies, supermarkets and petrol stations. 's ryday r en of tobacco products increases the susceptibility of g p ople t e . t with smoking and can trigger relapses by addicted smokers w e tryi 0 't

4.

agreed a further r f sultati ~ in more detailed views on options for in both Governm~et r: i ment~ ses since 2007. In March 2010 Cabinet

restricting th~~ 0 bac~o 0 ::Ibctsi . retail outlets. 5. Since the wi eS emova acco advertising and sponsorship, increasing

eVidence~s ed a~o~ e e that retail tobacco displays play in 'normalising' tobacco. ~~e~rch indi t resence of retail displays increases the likelihood that C$h'l n i'oung pe~ s art smoking, and prompts impulse purchases among e - ~ and smoker t i g to quit. Continuing to allow the displays undermines oth cco p$iicies and ompromises the value for money of programmes aimed at

~ed . g the ha '-C(~d by smoking. Removing displays is an appropriate regulatory

nse r~ ~V~ping with tobacco's known addictive and dangerous properties. sudden 'i\?k;lmatic drop in smoking prevalence is likely solely because of this

~ measu. t will play an important role in helping reduce tobacco uptake over time,

() par~rl ong young people, and it will also support smokers to quit.

6. = ai ownside to the proposal is that there will be costs for retailers as they modify

~. fittings to comply. These costs will vary according to the options and

'm ames made available for removing displays from sight. Minimising the compliance

~ costs has been an important consideration in developing the proposals in this paper.

7. t is proposed to legislate for the removal of retail displays, and then provide a range of

© flexible options and timeframes for compliance through more detailed regulations, supported by education and guidance. This would allow officials to work with retail business interests on the detail of how the changes should be implemented, as requested in their submissions. Costs are very sensitive to this detail.

8. This paper also takes the opportunity to tighten and improve related controls on tobacco retailing, including stronger powers for smoke-free compliance officers to discover information and to enforce compliance with the prohibition on sales to people under 18.

DRAFT 29 September 2010"

9. The paper also notes that Australia has announced its intention to introduce plain packaging of tobacco products in 2012, and proposes exploring the possibility that New Zealand might introduce similar measures in due course in alignment with Australia.

Background ~ 10. Government has been considering options for tightening the restriction~ail ;: ~

displays for some time. Proposals to prevent retailers from open~y . p' bacc~g were first consulted on in 2007, with submissions closing early in O. II displa were also the subject of two petitions to Parliament's Healt=C . e' 2008. ~

11. In October 2008 Cabinet agreed two preferred options for eta d work to r back in February 2009. In February 2009 the new Government It W~'th matt r and issued its response to the Health Committee rep~.~ t the time th ment did not consider there was sufficient evidence that a ~ visible toba ~isp ays in retail outlets would be the most effective strateg~re e mOki~aOd tobacco consumption. The proposals were put on hold, n onito~rin f in ernational experience with display bans and emerging' n t~eit: t ss.

12. In September 2009 the Maori Affairs Sele t 0 it ee la d a nquiry into the tobacco industry in Aotearoa and the c e es of obacc e for Maori, with

13. Late in 2009 the matter was a r' d in co . ith other Ministers, and in a feature of many sUbmissions~ ~

March 2010 Cabinet agreed a fu tJj ound~c I ion seeking more detailed views' on options for regUlatin~'SPlay of to~~ r cts in retail outlets.

14. This paper respon~s 0 bi 1's inv~'t ~. n 0 a eport back to SOC on the outcome of the consultation pI: ith pr ~t whether or not to proceed with a ban on the display of toba c ucts~. e IilQVt ts." [CAB Min (10) 10/12 refers]

International o~s ~ 15. New ze~;~;fied~h~ a ramework Convention on Tobacco Control (FCTC).

P41'1 0 r ducing initi I n tobacco use and encouraging cessation. It entered into The~ hjective ~o a sh a global agenda for tobacco regulation, with the

foro' 5 and currently 0 countries and the European Union are Parties to the

~reat he F~ ad9')esses tobacco advertising and the packaging and labeling of

~ paoco pro ~ ~g its core concerns.

. der A~iCI ~ he FCTC, Parties have agreed to comprehensively ban all forms of

~ obacco e ring, promotion and sponsorship. Implementation guidelines adopted by

J the~s e clarified that retail displays are a form of advertising and that tobacco dis I ys ould be prohibited as part of Parties' comprehensive bans. The FCTC is not ~~ ding, but compliance is closely monitored by the World Health Organization.

«);~inistry of Health reports regularly on New Zealand's compliance with the Treaty.

«~~nt regulation of tobacco retail displays

~17. The Smoke-free Environments Act 1990 bans tobacco advertising, and while retail ')\ displays potentially come within the general definition of advertising in the Act, specific !) provisions allow for retail displays that meet a number of restrictions, including:

• at each point of sale, the tobacco display is limited to a maximum of 100 cigarette packets and 40 cartons

• each tobacco display may include a maximum of two packets of the same variant (no block displays)

• tobacco products may not be displayed within one metre of products that are marketed primarily for children, such as confectionery, ice cream, and soft drinks

2


• tobacco products may not be displayed on a counter top or similar surface, whether at a point of sale or not

• if tobacco products are displayed within two metres of a point of sale, a sign stating 'SMOKING KILLS' must be displayed in clear view of the customer at the point of sale ~ (the Ministry supplies free signage). ~

International experience with removing retail displays (? (\ 18. Iceland was the first country to ban retail displays of tobacco Pro~1 1. Thaila~

has prohibited the display of tobacco products since Septem~ . Irelan~hB July 2009 tobacco may only be sold by registered tobacco ~~~ w must keep, V tobacco products stored out of view. Norway introduced a ban_~isible . lay 0

tobacco products at points of sale with effect from 1 J~ry 2010.

19. In Australia packaging and labelling requirements sdC~~~~alth wf§~' m under federal jurisdiction, but retail displays are regUI~~ t e evel. -~' s lian Capital Territory, New South Wales, Tasmania, Victori ~ tern ~~ ve now all passed legislation requiring tobacco prodm:s-t ~'Of~i e I retail out. lets, and apart from Victoria the policies are al adY1 ef ect. ern rritory, Queensland and South Australia have ~~hq~ ced their Int ~n of banning point of sale advertising with proposed com~~ dates ~anuary 2012.

20. Following the lead of saskatch~'n 02 all pro . c no territories in Canada have now enacted their own legislat' re 'ri g tob G ts to be out of public view. The United Kingdom has also pa egisla io c rohibits tobacco displays at the point of sale in England,)At:tI s and North tn;I la ,with implementation scheduled to commence from Octotm~ . Consulta' mA ;egulations setting out the details has been undertaken i Mol he PI' a e new Government on advancing this is

an offence to ?Jm:>~a cco p moking related products. Consultation on proposed re~ on=IU e .0 July 2010.

The case f~ "Ohib1ti'ng re ~I~ ays of tobacco products 21. In th overnme~~ d not to proceed with retail display proposals pending

n '0 e from the irlt$ational experience that this would be the most effective stra 0 redu~mOking rates and tobacco consumption.

~~~~ is em~'n . nce from Iceland and Canada of the impact tobacco display )~have ElP--9 oking prevalence among young people. In Saskatchewan the

~ eeline ~r~Yarence rates in 15 to 19-year-olds has accelerated, falling by almost one

/J qU~~1 e ban was implemented in 2002. The impact of point of sale bans also V ap ars b positive in Iceland, where the decline in the prevalence rate among 15-

~~ as increased since the ban was enacted in 2001.

~'~ ~ill too early to comprehensively assess the removal of retail displays in other

~ ountries, and the impact on quit rates and youth smoking uptake cannot be confidently eparated from other supporting measures to address smoking and tobacco control.

However, the case for removing retail displays presented in this paper does not depend

O solely on the evidence that removing retail displays will lower smoking prevalence.

~ 24. There are in the order of 10,000 retail outlets selling tobacco products in New Zealand. These include supermarkets, petrol stations, dairies and other convenience stores, and also bars and restaurants. The number of outlets has continued to grow, particularly with the entry of petrol stations and franchise convenience stores into the tobacco market, even as smoking rates have fallen and total cigarette consumption has dropped.

25. Point of sale advertising, such as retail displays of tobacco, is a promotional tool used to generate awareness of products, promote interest, stimulate trial and encourage repurchase. Tobacco products, primarily cigarettes, are usually displayed in large, wall-

3


mounted, shelving units. Even at the minimum one metre distance, they are still often visually connected in plain line of sight to displays of snack foods, confectionary, magazines, and other 'impulse' purchase items.

26. Although the size of the displays is limited to a maximum of 100 packets of cigarettes ~ and 40 cartons, per point of sale (i.e. per till or checkout) retailers, part~'C rly superettes and larger service stations, often put shelving units side by create a~_:> much larger display, sometimes referred to as a 'power wall'. ~ C

27. After the Smoke-free Environments Act prohibited more general t acco advertising and sponsorship in 1990, the ability to display t~oo du ts that ~ sale inside a retailer's premises and the design of the cigar tol] cco pack it became the main vehicles for promoting tobacco products. The acc~i stry's response was to pay greater attention to in-store disp which becam - elaborate and prominent and displayed a wider range of toba cts. T~e investment in these displays has been SignifiCa~, ug e ting the i ~ s them an effective advertising method. V

28. Tobacco companies maintain that the pu~r~ . diS~1 ~"o 0 recruit new smokers, but rather to compete for the br cli ce of ex' i ~~~~ers. Yet they also maintain that the removal of retail displ~ ~ have egati conomic conseque. nces through reducing sal~)venience ~ nd other outlets. These arguments are contradictory an~~~_ be sel rv . hat evidence there is on brand-switching behaviour sug sts at smok i Iy brand loyal and know exactly which cigarettes or tobac t: duct the 0 purchase.

29. Currently, the location ~co diSPlay~ . t of sale means that they are highly visible to all customers . cI ing vulneraSlIM umers such as children, young

people, ex-smoke~ ers tr~Yt~~\ '. 30. The weight of evi (lQ m aE~~ udies indicates that exposure in everyday

retail setting~~C displ . re es the susceptibility of children to experiment with smOking\a~~tjcome as'c Similarly there is growing research evidence of the way tOb~ctL$TaYS infl~CJ ers who are attempting to quit, providing a psyc 010 I H:rigger t~fl~ oking in a setting where the product is readily av f such an imp e urchase.

31. Be f thes effects, r tail displays undermine the impact of other Government initia I s such t b 0 excise tax, graphic health warnings on tobacco products,

~ ·tlised ~ne- acement therapy and anti-smoking medicines, and promotion of

oking ces~~ervices through media campaigns and the Government's priority ~ ealth t~~tiCh are all designed to encourage smokers to quit. '% 'V EVide.u..=;;fi>~Ctlveness and public support

~~~ternational journal article 1 reviewed the evidence from 12 frequently "Y~nced peer-reviewed studies and concluded that, given the addictiveness of

~ obacco, the severity of the health hazards posed by smoking, the evidence that tobacco romotion encourages children to start smoking, and the consistency of the evidence

© that point of sale promotion influences children's smoking, ample justification exists for

() banning point of sale displays of smoked tobacco products in New Zealand.

33. There is also new evidence on the influence of point of sale cigarette displays on unplanned purchases. An Australian stud/ which interviewed 206 smokers as they left retail outlets after purchasing tobacco found 22 percent of participants made unplanned cigarette purchases. Forty-nine percent supported a ban on point of sale tobacco displays versus 12 percent who opposed. Twenty-eight percent agreed that such a ban

1 January 2009 Drs Janine Paynter, ASH, NZ, and Richard Edwards, University of Otago, Wellington, in Nicotine & Tobacco Research - correct reference required 2 , Owen Carter et al. (BMJ Journal of Tobacco Control 24 March 2009)

4


would make it easier to quit. These results align with Ministry of Health Tobacco Use Surveys which found two-fifths of recent quit attempters agreed that cigarette and tobacco displays in dairies, petrol stations, supermarkets and convenience stores make it more difficult for smokers to quit smoking or stay quit.

34. Surveys conducted by UMR for the Cancer Society have shown strong an /( increasing public support found for the complete removal of tobacco di ;; ~ from 68% in 2008 to 76% in 2010. The level of support is almost as~~ g ~ (\ smokers and also growing. A survey undertaken by the Wellingt~'c chool 0 increased from 62% to 68% between 2006/07 to 2008/09. '[ mo s most like found smokers' support for complete bans on displays of cigar I si shops ~

support a ban were suffering financial stress, were planning 0 in th~n t mon or had quit recently. The New Zealand Association of c~nience tores a ported a survey it conducted found 38% thought a tobacco di n would re e age smoking while 57% thought it would not. ~ ~

Compliance costs and impacts on business ~Q 35. Prohibiting retail displays involves comPliat and C~i ts on retail

businesses which sell tobacco. Thee"f C ould be e ~-o f costs of modifying shop-fittings to remove displays. Ba issio ~ reta er interests and an

likely amount to around $1,500- ,0 etailer, ro d $15-20million in total, independent assessment carriget mer 'al i~~ consultant, these would

spread over the time period allo j tb)come i 0 nce, say 2-3 years. The flip side to these costs for tobacco ret kfs iS~'r . ulus to the shop-fitting industry.

36. Other compliance cost~pacts on t ~ tailers are considered to be relatively minor. The curre~t t strict~' s-on il displays are complex to understand and existing com ca Itself b ~ s. This would be simplified. The current compliance 9~ideJi e u~O ~e6 ocument. Most retailers rely on shop furniture sup i~t main 0 companies and support from tobacco industry sales represe ~ to c~. acco companies may continue to supply compliant ShOP-fitti~ if the A, t e standardised nature of the displays they currently sUriP m m mu~~ e to remove and replace.

37. S r t . rs have al~e~ade their own commercial decision to remove tobacco disp , nd wi retail margins on tobacco beginning to decline as excise increases

<;t\!a'r09 ite, ther I Ii to be further potential for other retailers to replace tobacco ') ~lB.ys wit ~ f ce for other possibly more profitable items.

. order d aYr onsibly with the compliance cost issue and the impacts on small

cle r e . h the new policies on removing retail displays and related matters, and

= dly to develop detailed regulations and guidelines in consultation with retail

itM e law and reasonable transition criteria and timeframes to minimise the downside ~'n s. These regulations and guidelines would lead to flexible solutions to comply

~ . pact on business, particularly vulnerable small businesses.

39. he process would also provide an opportunity to further educate retailers and explore

© business opportunities from being 'part of the solution', ego selling nicotine replacement patches, lozenges and gum to help smokers quit. This would enable people to choose between an expensive product that harms them, and an inexpensive product that helps them quit, and could provide convenience stores with a new line of business to replace tobacco.

Other enforcement and compliance issues

40. Amending the Smoke-free Environments Act to better deal with retail displays also provides an opportunity to improve a number of other enforcement and compliance difficulties with the existing legislation.

5


Related issues with current regulatory controls on advertising

41. The legislation currently provides another exemption from the general prohibition on tobacco advertising by expressly allowing retailers to use trading names including words or phrases that effectively advertise the availability of tobacco and to display these ~ names on the exterior of their premises.

42. A relatively small number of businesses have made use of this exemp~i02 i tended~' . , although there have been some concerns, particularly with bUSin~s . rms s as "discount tobacconist" to imply sale prices on tobacco produc r ',g tobacc for sale at temporarily reduced or discount prices is not per~m' E ~

43. Smoke-free enforcement officers have been reporting a rec i rea e in the nu 1\It)-€ r of businesses trading under names suggesting cheap tobacco a hOldii?'n emse s out as specialist tobacconists. This trend is eXPlaine~art by retail.e~ . ating the prohibition of tobacco displays from regular retail ou Efts;' he a~s9]m' re would be different regulations for specialist "tobaccon~' "s' numbe s s jurisdictions that have removed tobacco displa. IS als~' cr e in the use of names suggesting discounted tObacco~'1:) . ed~to e e excise increase in April 2010. It was expected t GaM 0 the i .c{1J~ Y Id respond to the excise increase rise by absorbing s~m t~W'ce increase aggressively marketing to lower income and pric s 't e mOker~ave higher rates of smoking than the general pOP;$lar. ~

44. The Smoke-free Environment t regUla~ rtising of smoking accessories (which could provid enue 0 marketing imagery suggestive of smoking), display and' ge require 0 tomatic vending machines, rules for Smoking Kills sign, ic I ts etc. W . urrently problematic of themselves,

with any amendm t regil ti n on r tail displays

Enforcement of t~@~~ les to n - 8s

45. Anyone ~I k p' tOb~C r bal smoking products to a person under the age of 18 years Jm~s an off c r the Act punishable by a fine up to $2,000. The

46. S r enforcemen~cers appointed by the Ministry enforce the prohibition by of~e is ec>f strict ~~ .

con I g congled purchase operations for tobacco products with the help of a

~~Oly,nj er under F\~ of 18. Prosecutions of this offence are cumbersome and costly, ') Wmore t~O' 0 spent in 2009 on Crown Solicitor fees alone, at an average of

3,000 ~c e average penalty imposed by the Court is $300, and total fines

~ am?iu e s than $5000. In a number of cases involving young defendants or first-

Q timptre~ Courts have discharged the defendant without conviction. The Ministry ~ ~ 90es not take prosecutions against anyone under the age of 17

~'13~ misuse of 'normal' trade discount and rebate provisions

~ ection 28 of the Smoke-free Environments Act 1990 prohibits promotional techniques ch as reward schemes and sale or distribution of tobacco for free or at a reduced

charge. However, section 36 (4A) provides a defence for discounts and rebates if the

O person charged proves these are 'normal' trade discounts or rebates. o 48. It is apparent that rebate schemes operated by tobacco companies for retailers are commonplace. The rebates are linked to the volume of tobacco sales. The Ministry of Health has investigated these schemes and suspects the companies' rebate practices are in breach of the law.

49. Progress towards potential prosecutions has been constrained by the Ministry's inability to require tobacco companies to disclose details of the schemes. Tobacco companies have asserted that their rebate arrangements are lawful, normal trade discounts. The

6


industry and retailers claim the terms of their agreements are subject to confidentiality provisions, and that disclosure would put them in breach of contract.

Key elements of a more effective regulatory regime for retail tobacco supply

Retail displays ~ /(

50. The central proposal in this package is to extend the current controls a vertisin~~ ~ and promotion of tobacco products by prohibiting visual display for e. .

51. This would be implemented by a combination of amendments to e-free Environments Act and subsequent regulations. It is propos~w r these up ~.~ active input from retailers and smoke-f~ee enforcement offi en ure effectiv ~¥fld workable solutions that achieve the policy goal but minimise as as POS~I e the

. regulatory impacts and compliance costs, relative to='ze of the bU~' )sSe ffected. This will require amending the current regulation-m rn,g'A ers ug. t ke-free Environments Act to ensure resulting regUlatio~. approp~ ~ i . Ity to provide options for different types of business , and ~~~f r adequate lead-in times for compliance in each case~ ~

52. Regulations would also be used to deal w' u ber of m ters such as display of smoking accessories, displa d I age r irem {) s for automatic vending machines, rules for Smokin s ns, price~, . The Act would also be

reasonable timeframes.

Infringement notices for iIIe~al Ie of to cco P5t der-18s

53. It is further proposed t ((nabJ smoke-fre· f ment officers to issue infringement notices to first-tim~e Td'e.rs'. An inf~' notice is a proportionate response to first time offending. It b more e f cie t nd cost-effective method of encouraging compliance w~)h y imp . inancial penalty, while holding the defendant accountable o:u~. tion, a ids the formality of court proceedings.

penalty, ~ ble re=f t cover detailed provisions such as fees and forms. F~r I op tional gui' ould need to be developed to ensure that enforcement o ~!,~'n a consisten anner when issuing infringement notices and considering

~whe~n alte ative action such as an oral or written warning is more appropriate.

~R(90Sions 0 the ary Proceedings Act 1957 may be used for the District Court to r 'ew or e f'qf-9 Infringement notice. Subsequent breaches could lead to rosec~1u..Q fI;l\fx: vlng the full range of penalties available under the Act.

~ owergibi)hVnformatiOn

~ 'V 56.~·S P ed to give enforcement officers the power to require a person to furnish any

~. 'on or records reasonably suspected to be in their possession and which may e evant to the operation or enforcement or the investigation of a suspected breach of

~ he Act. Failing to furnish the information required without reasonable cause would ecome an offence.

© 57. It is further proposed that for the purposes of the Act, an enforcement officer may at all reasonable times enter any premises where it is known or reasonably suspected that records are kept relating to the sale or manufacture of tobacco products in breach of the Act, and may search for and examine, take possession or make copies of those records.

Contracts void

58. It is proposed that any contract, agreement, undertaking or understanding, whether or not legally binding, which offers a sponsorship, gift, rebate, prize or reward in exchange for the promotion or sale of tobacco products is void to the extent to which it is inconsistent with the Act.

7


Removal of 'normal' trade discounts

59. The proposed enhanced powers of discovery, entry, search, and seizure combined with the ability to void any contract that provides for rebate schemes would enable the current law to be properly investigated and enforced. The question remains whether the ~ Act should also be amended to remove the current exemption for "nor~~l" trade discount and rebate schemes. Further analysis is required to determi ther this is warranted over and above the additional investigative and remed~.al 0 r. lined © above. It is proposed that this issue is best resolved during the 9 oc s 0 gal draftl (but before any legislation is introduced to the House). ~ '" \~

Alignment with Australian moves on 'plain packaging' v ~ . \) ~ 60. It is proposed to begin exploratory work to consider ~u~~regUlating th~ ing of

tobacco products in conjunction with Australia, with ~Q, trans-Tas requirements for plain packaging to be harmon~'s if i P '6ves dg,~1'GJf e.

61.ln May 2010, the Australian Government anno ~ i I tenti~1~1 te to force

Australian general election is clear, it app s t I propos . I be ogressed. Officials tobacco to be sold only in "plain paCkagin~" O~ . N~ e of the

propose to monitor progress in Australi~~ I lain pacKagl 'proposal, explore the potential for regulatory alignment, a~~'r) ack to ~ in 011.

62. Exploring the possibility that N~W. ~~might i d c similar measures in due course in alignment with Austr . is nsisten't oposals in this paper. Removing retail displays add res e im~t ~ltJi tte and tobacco packaging in mass form in the retail ~~ment. Plai pay I.gi{Tg would address the impact of tobacco branding and ')~g in other iJe(rN settings.

Consultation !?/) ~. ra 63. There has b~~ pUb~~n on the proposal to remove retail displays

of tobacco p y.e-tj>. Most r~ in March-May 2010, in response to the consultation letter P/l~al tQjJl n ret?~ c displays in New Zealand, 1002 submissions were received. ~ d 850 ~'t~~e re duplicates of various template letters promoted by in~g ps on botli ~~f the debate.

64. Til s ses to this sec d round of consultation were largely similar to the

~ons ion pr~s u dertaken in 2007/08. There was some new and additional

~ f ation~h ived strengths and weaknesses of the more detailed proposals

out this i ., ' some further insights into the costs and benefits of specific lemen~n~ tions.

~ . Vi~ee arised with the health sector, NGOs, public submitters and some retailers str Iy 'n favour of removing retail displays. The tobacco industry and most retailer 1Qt~'rel ere opposed.

~J~aper was prepared by the Ministry of Health in consultation with the Ministries of

~ Economic Development, Consumer Affairs, Justice, Pacific Island Affairs, Youth

evelopment, Foreign Affairs and Trade, and Social Development, and the Treasury, ~ the NZ Customs Service, Te Puni K5kiri and the Department of the Prime Minister and Q Cabinet.

Financial implications

67. The main financial implication of the proposal fall on the retail businesses required to modify their shop fittings to comply. This could amount to as much as $15-20 million across the entire convenience retail sector, spread across 2-3 years.

68. There will also be administrative and implementation costs for Government. Existing resources for tobacco control policy and smoke-free enforcement and compliance would

8


be reassigned to the new work, and any additional resourcing requirements would need to be met as an additional pressure through reprioritisation within existing baselines.

Human rights

69. The proposals contained in this paper have been assessed as capableJieing enacted /<. in a manner consistent with the New Zealand Bill of Rights Act 1990 ae Human : ~ Rights Act 1993. Tobacco advertising controls already place som~' 11 n edom ~ expression, including the requirement for graphic pictorial health a 1)11 • he proposals in this paper seek to extend the controls by reqUi~in c 0 be hi~ from view. V

70. The Attorney-General recently reported on a Member'S Bill prop . g the~val tobacco displays, and found some specific aspects rei i to a blanketS the display of smoking accessories such as pipes and ~ 0 be more onably necessary. As a result the Member's Bill as in~ro ce as found p-B' sistent with Bill of Rights Act. However, the body of t ~ -Gene al s~p t clarifies the general point that to further limit freedom ~f r . by~e tobacco displays can be justified as this would stil a e wen the ectrum of freedom of expression compared to the dang~r of tobac the impact of retail displays in promoting its use. ~

Legislative implications A ~ ~,,\) ~ 71. A Smoke-free Environments A~dment . . e 2010 legislative programme

with priority level 5, ie drt+A instructions~. ed in 201 O. T~is Bill is the appropriate legislative ~ or progres' h¢proposals outlined in this paper. It is now proposed to c~leteWc I dra~ 0 so that the Bill can be introduced to the House and have i~~~ ~ ing bef0 iament rises for the Christmas recess.

Regulalory imp~~s (?~ 72. A full re tatQry<1lJ'lpact stat~~attached to this paper. The regulatory impact

analy is ~jSAhe re=a~~sures proposed in this paper, focussing on the re 0 t bacco pro ~S'-ftom retail display. The regulatory impact statement was in Iy reviewed . 'n the Ministry of Health and the analysis was assessed as [me the q~ ~urance criteria.

~~mpliC~~~ Disability perspective here a o' nificant implications form a gender or disability perspective. The ~ proee~ elp address high smoking rates among target groups such as Maori and

~ 'V~~~omen. Smoking rates are also higher among people with disabilities.

~ t is proposed that this policy be announced once agreed by Cabinet, including

roactive release of the Cabinet paper and] publication of the Regulatory Impact Statement.

O 75. The announcement could also make appropriate reference to the Parliament's Maori ~ Affairs Select Committee Inquiry into the tobacco industry in Aotearoa and the

consequences of tobacco use for Maori. The Committee is on the point of reporting. The overwhelming weight of submissions has been in favour of reducing smoking rates effectively to zero by removing commercial tobacco supply altogether. Once the Committee reports the Government has 90 days to respond.

Recommendations

76. It is recommended that the Committee:

9


1. Agree to a package of new and improved controls on the retailing of tobacco products, including:

1.1 prohibiting the display of tobacco products for sale;

1.2 tightening controls on the display of trading names that include erms signifying /<. the availability or price of tobacco for sale; .~ ~

1.3 taking a consistent approach to the regulation of rela~td a ch as ~e retail display of smoking accessories, display and si a e irements rb~ . automatic vending machines, requirements for h~el r in and "!!i'bk' Kills" signs, and display of tobacco product price Ii . , V

1.4 providing smoke-free enforcement officers with strong pow~r infor tion discovery, search and seizure to aid their~' i ation of co . with the controls on tobacco retailing; ~

1.5 providing smoke-free enforcement O~Wi h infri~nnt tice powers to issue instant fines to first Offend~r Ob~CC 0 people under 18 of age during controlled purc e Ions;

2. Agree the package described in p~ aboiwou est be implemented by a combination of amending <f~' ry leg ,:--!1~ namely the Smoke-free Environments Act 1990, and ve a In furth e tld1'1s under this Act;

3. Note the combination of en d legis' developing further regulations

unnecessary comp~costs and i ~ 0 mall retail businesses;

4. Invite the ASS=' t .. er Ofe s uria) to direct the Ministry of Health to work with re~' a smok - ree n orcement officers on effective options to minimis~elPi(a6ercost~ p on small retail businesses;

5. Invite th ~Ss a1¥e Mi~' t Health (Mrs Turia) to direct the Ministry of Health to rep~c SOC WI r sals for further regulations under the Smoke-free Envi ~ ts Act~G 2011;

6.~' e Associate :Mm~erof Health (Mrs Turia) to direct the Ministry of Health to JAiftJr progress by stralia on its proposal to legislate for plain packaging of

~ 2lCco p cts and explore the possibility of New Zealand harmonising or

develo iIten"1&-: arrant it [or] by 30 June 2011 ; ~ herwi ~Iig( with Australia, and report back to Cabinet as appropriate when

Q h~cisions in paragraphs 1.1-1.5 above, including any necessary changes to gu tion-making powers; ~

. ~r~o\ end the Smoke-free Environments Amendment Act 1990 to give effect

~~~o e the Smoke-free Environments Amendment Bill is in the 2010 legislation 5' ~rogramme with priority Category 5 (instructions to the Parliamentary Counsel

~ Office to be provided in the year);

~ 9. Agree that drafting instructions for the Smoke-free Environments Amendment Bill Q 2010 be issued to the Parliamentary Counsel Office by the Ministry of Health.

10

DRAFT Regulatory Impact Statement

Better Retail Controls on Tobacco

Agency disclosure statement ~

This Regulatory Impact Statement has been prepared by the Ministry of He~. ~ ~ It provides an analysis of options to deal with the problems caused~O ¥~j to allo~ tobacco displays in retail outlets. Some related problems with the cur n r u ry contro s for tobacco retail are also considered. A ~ \.~

The preferred option Is a package of amendments to the Smok"", ~v nments AC~ ~ • prohibit the retail display of tobacco products

• prevent the use of trading names in a way that adver s cco produc

• aid their investigation of compliance with the reg r ontrols ~~ c retailing

• provide smoke-free enforcement officers ~~ ment ~_e)~ers to issue instant fines to retailers who sell tobacco prod ~~Ie under\(8~ge.

The analysis assesses these propos s .. wider co ~ .

economic burden it causes

• the Government, 's int~eal commitm~t i duce a coherent set of policies to address the harm ca IJ smoking, i In a comprehensive ban on all forms of

tobacco advertisi~ f91 • the role the~r a Pla~. !ppor' g the effectiveness and value for money of

other meas taken 0 r ce smoking initiation by young people and also encourage a ort ~m~ r ~uit

• the ext~' onsultati \~ Ken on the proposal to prohibit retail tobacco displays s~'n 20b~ st rece~~g a detailed consultation letter issued in March 2010.

, Wit' 's er context, t~vel and type of analysis undertaken on the specific issue of I.~retail co dis s is commensurate with the implications of taking this additional step at 1 . ti . The wei 'bmissions and evidence received in response to the consultation

~! Ie Ogeth!~ot r research evidence, overseas experience and indications of public

. i 'nion, P~i ~#rcient analytical support to warrant progressing with the proposal.

~ I he~. ory impact of the proposal arises from the costs that removing existing ! toba 0 di I s in retail outlets would impose on those businesses, primarily the need to I ~~ -fittings in o.rder. to comply. Representative costs have been assessed and

~i j)~ or a range of situations.

~I ey aspect of the proposal is to further assess and minimise these costs by working with i ilers to identify workable solutions and allow for flexibility over compliant methods and , timeframes for implementation. These refinements to the proposal would be introduced

(Q) I" through subsequent regulations to be promulgated under the amended Act. This process i will ensure that any gaps or uncertainties in the assessment of business impacts and I compliance costs are addressed before the final regulatory details are confirmed.

[Name and designation of person responsible for preparing the RIS]

[Signature of person] [Date]


Introduction and context 1. The specific issue addressed by this regulatory impact statement is the adequacy of

current regulatory controls on the marketing and retail supply of tobacco, and in /Z particular the restrictions on the display of tobacco products at point Of~ ~ ~

2. To provide the necessary context to properly understand and analy t's , this ~ (\ section first summarises the significant health, social and econo'c e at the 0 current levels of smoking place on New Zealand, and descr~'be n g ~ development and implementation of a comprehensive and ent licy respo this wider problem. ~

3. Reducing smoking rates is a clear Government POlic~The unavoi~ ative consequences on human health and mortality from . obac~e established. Tobacco smoking is the single le~a)gA>r ntable c ~~~e Iy death in New Zealand, killing more people than all othe ~~)a Ie ca~~~ th combined. Half of all long-term smokers die of a smo~. ~lIne~s s· a verage of 15 years of life. An estimated 5000 New Z n s aie ea ar to direct smoking or exposure to second-hand smoke, a~~ 500~tfies aths occur in middle-age (35-69 years) representing a si~~l)o sin pr i capacity.

4. Smoking causes around 85% per~~~ung ca c , Ich are the leading cause of cancer death in New Zealand, <lind is II ked to types of cancer. It is a major cause of heart attacks, strokes, dtb~ ardio s iseases, major respiratory diseases such as emPh;ebronchitis ~ t a, and also a range of other conditions inCIUdin~li es nd infertili Ii additional health system cost that can be attributed to sm' d dise§]. c ently estimated at $1.9 billion per annum 1

. V 5. Smoking is a~~a. contri~o ealth inequalities in New Zealand. Maori women

are twice as IW: be ~urr~ kers as women in the total population. Maori men and pac~ .. ~ n e 50 e: t e likely to be current smokers than men in the total pop tio lYJ resul~~ ps are over-represented in the statistics for smoking re e t and diseas~ have reduced life expectancy.

~cr~ rngly take prehensive approach to addressing the harm caused by 6. Sm I ates ~ve been falling since the 1970s as successive Governments have

~) ~ing, in~~ ough the Smoke-free Environments Act 1990 and subsequent

mend~t.v

~ . Rai5'lJ!Pt r e of tobacco through excise tax has been an important policy tool. Most

rec tly,' pril 2010 the excise was increased by 10% on manufactured cigarettes and

~oo oose 'roll your own' tobacco (to equalise the level of excise by weight of

~o co content). The excise will increase twice more by at least a further 10% tlep nding on any additional inflation indexing) on all tobacco products in each of

~ anuary 2011 and January 2012. With excise tax and GST comprising about 70% of he retail price of cigarettes, these excise increases have a significant impact on price.

O Price elasticity studies indicate that each 10% rise in tobacco price leads to a 5% o decline in demand, including prompting 2% of current smokers to quit.

8. Significant new funding for tobacco control initiatives was provided in the 2007 and 2008 Budgets. Much of this funding is directed at increasing access to cessation support for smokers to increase quitting. In 2009, Providing Better Help for Smokers to Quit became one of the Government's six priority targets for the health sector. This health target is driving clinicians to systematically assess and address the smoking stc;ttus of hospital patients. The approach is now being extended into the primary care sector, and

1 Ministry of Health (detail to come)

2


is supported by government-funded smoking cessation services such as Quitline and subsidised nicotine replacement therapy (gums, lozenges and patches) and other pharmaceuticals.

9. The Government also funds media campaigns, such as the Health SPiErshiP ~ Council's Smoking Not Our Future campaign targeted at preventing y e pie fro~~ ~ taking up smoking and the Face the Facts campaign aimed to e~n ers to quit, particularly among target populations such as Maori and pr 0 en

10. Despite all these measures, about 650,000 New Zealander~ o'ri I every five~ over the age of 15, continue to put their health and lives at S(g~ant risk by smo~ry o-n a daily basis. ~

11. Nicotine is a highly addictive substance, but unlike ~ ilarly addicf an erous substances, tobacco is a legal product and sm~' ci Iy ent~ haviour. This is in large part due to decades of concert tl 0 istic~e om ercial marketing by tobacco companies. ~ =

12. However, public opinion as measured b IQ and m' nte analysis has demonstrably shifted against smoking ~ attituicon' e to harden. The 2010 tobacco excise increases wer p e by an ov i!ing Parliamentary majority of 118-4. Surveys also show tha~. majO~ity s rs are increasingly aware of the damage it is causing their ~Itl e ret th me addicted and express support for stronger anti-smokin~m sures. survey, 44% of smokers reported having tried t~o. 'n the last ye~

13. New Zealand's cUilr t ~ ettin

5gs ro~t he objectives, principles and key elements

of the World Heal a 's ion's r~\ 0 Convention on Tobacco Control (FCTC), which New Zeala r tifiei~tiJ came into force in 2005. Amongst other commitment~~ FCTe, . Ipating countries including New Zealand have agreed to pr~it)l for~mt co advertising. Subsequent non-binding guidelines develo~~MiCiPati . n to assist in implementation have clarified that retail d~;: ~a1brm of ~~ ertising that should be prohibited under the FCTC.

Stat~ an~~ definition

d~~a~CC:~~~Vironments Act 1990 and its subsequent amendments and

~~e~UI i ~ain a number of provisions restricting the promotion of tobacco and

pr .. i vertising of tobacco products in all media, including both inside and

=. e ail outlets.

~ ever, tobacco products available for sale may still be displayed in retail premises,

ub ct to a number of restrictions, including:

!?~ Tobacco products must not be visible from public places outside the retail premises

0~ · At each point of sale, the tobacco display is limited to a maximum of 100 cigarette o packets and 40 cartons.

• Each tobacco display may include a maximum of two packets of the same variant

• Tobacco products may not be displayed within one metre of certain products such as confectionery and ice cream, soft drinks and products that are marketed primarily for children.

• Tobacco products may not be displayed on a counter top or similar surface.

2 MoH TUS 2006 (detail to come)

3


• If tobacco products are displayed within two metres of a point of sale, a sign stating 'SMOKING KILLS' must be displayed in clear view of the customer at the point of sale (the Ministry of Health supplies free signage). ~

16. At issue is the continued adequacy and effectiveness of these regUlato~~~~ictions on retail displays in achieving the Government's policy goal to reduce sm ~ ~~i9ht Of©

both: ~ • how the industry has responded over time, and ~ ~

• new understandings of the role of retail tobacco display mo ng SmOking\? undermining other elements of the Government's tobacco co I inii:,iar s.

17. Retail tobacco displays are a common feature in so~oo dairies, er kets and petrol stations. The number of outlets sell~'n 0 s be~~~e . g even as the average cigarette consumption per adult N la er has ~ ing.3

18. With the prohibition of other forms of tOba~~ . . g an ~'atie, tobacco companies have responded by channelli <their arketin (tQ~~ maximising the impact 01 the allowable retail diSPlay~t . ~~. the visibl ity"ah prominence of their

product. ~ 19. In many retail settings the spatial a 'on of 0 e rom children's products still

allows a visual impression of ' a't 'along . s of snack foods, confectionary, magazines and ot -call ,s purchase items. Retailers with more than one point o~ften put she ide by side to create a visually larger display, someti re e red to as a ' all'. These prominent tobacco displays are a reg~ of lar re~ v . nce stores and petrol stations.

20. Tobacco diSriP e t~e to fa~r, the prod\.lct of a sophisticated marketing approach de I~~ aximi re ss of the existence and ready availability of

tobacco Rrod ~ ~ 21. There iS~~ s'ng evid 0 t the role that retail tobacco displays play in

'nor. lisi 'to acco, ~~s· g the likelihood that children and young people will start s . d prompting lnWu se purchases among ex-smokers and smokers trying to quit. e is a 0 increasing public concern about retail tobacco displays, widely seen

~s ~ nomaly i ealand's otherwise comprehensive tobacco control programme, w,"> ~ the P~'~IT sibility they afford tobacco products in the retail setting. Displays re see=o tra£lict the otherwise clear message that children and young people

V rec~~ and smokers attempting to quit. ~ receive ute dangers of smoking and act as a prompt for impulse purchases by

22.=~t of evidence from a number of studies indicates that exposure in everyday

~ . settings to tobacco displays increases the susceptibility of children to experiment

~ itli moking and become addicted. Similarly there is growing research evidence of the ay tobacco displays influence smokers who are attempting to quit, providing a

psychological trigger to resume smoking in a setting where the product is readily

© available for an impulse purchase. This undermines the impact of other Government

() initiatives such as tobacco excise tax, graphic health warnings on tobacco products, subsidised nicotine replacement therapy and anti-smoking medicines, and promotion of smoking cessation services through media campaigns and the Government's priority health target, which are all designed to encourage smokers to quit.

3 detail to come 4 The number of brand variants available for sale in New Zealand increased from 152 in 2002 to 184 in 2006. The 2003 amendments restricted displays to 2 of each brand variant at each point of sale. 5 detail to come

4


23, In summary, the key problems with existing tobacco displays are:

• children and young people are regularly exposed (in around 10,000 retail outlets) to prominent commercial display of a product that is not an ordinary consumer good, but /"( a highly addictive and harmful substance ~ ~ ~

• smokers who are trying to quit or who have successfully quit are~n i(a(/y gularly((=> (\ exposed to the prominent visual cue of tobacco displays, pot~~gg ring rela~

• displays present tobacco products in a way that diSgUiSe~ti_ ~ces the ~ effectiveness of the graphic pictorial warnings required cco packaging t ow the variety of dangerous health consequences of smoking ~

• tobacco displays are an exception to what is oth~1 comprehen" on tobacco advertising in New Zealand, As th~'n d I forsm t ing open to them, tobacco companies have invested co' b esourc into esigning, placing and furnishing the displays in a w t~ imise ~~ otional impact.

24, The evidence for these issues is well est 'sh ,as set I t~x below:

2~~~Jt~~rt~£e~~~~i:;:'~bF~~tf~J.~~1~~~~r~~lf~!~~1~~!~~: a maximum of 100 packets ~I ttes and 4.' . rt9 ,per point of sale (Le, per till or checkout). However, retailers oftei]ns ~ units s~ 'de to create a visually larger display, sometimes referred to as a 'power ~ , G _ Point of sale advi!i' , g, as re~is ~ f tobacco, is a promotional tool used to ~enerate awareness of pro , unicat i ation, stimulate trial and encourage repurchase.

Currently, th QQ.?tio obac~' a t the point of sale means that they are highly visible to all customers - N:reJikf 9 vulner I n umers such as children, young people, ex-smokers and smoker yin ifuqult. ~ ~ Point plays haveb~escribed as 'the industry's most important sphere of influence'?

othe ue$ f. r6m()tinganOqdvertisipg tobaQcqprodl.lct~ hayebe~rirestrictecJ.c)r b~nn'ed" t·l.to~o display.. V: .... ecomeiik:rea.singlyiillpprtant·tq t~eind~9try.t'hEl:tp~ac8bindu:3trY is

i. Jei~~i:~~YrTiiSr~m. :[:e'~~it~:~t~:t:l~~n;~;I's~ilf!\~~t;t~:~~JC:~~£nt\:l!~~~~1 ••. · .. incenti~~llrqm tqbaccco cqnipanies to releile,s as tob"cW C<i!J1P~pJescoll) pete,over the· . ~~ayments of $10,000 to stobkcertain brands of cigarettes. lO .•••. •...••........ . ~

~o.c~. '~~~. ' •. d ~ti~~fpt:;."~~~.'." •. i~ilr~~~~.c. ~~.d, 6.shk.ay~.~ ... dr. aN. r:;o~. es.a.J~g~.'st~drfh~f~~m .. e.-~.n .... d~~i.6~ .. ·.~~~O~~J~ ..... " cco companies have argued thClt retaildispl~ys .. are ." int~nded. t8 ir1rbr~ cu~tomers of, the . pro ucts available to thern and to promote brand ~V\fitching, H<:lw~ver; research has found that smokers are actually highly brand loyal and generally 'do not switch brands, each year only about 7%

6 McCarville, R. & Bee, C. 1999. Point of purchase techniques and their influence on tobacco consumption: A review of literature in private sector Journals.

Report prepared for Centre of Behavioural Research and Program Evaluation, University of Waterloo, Ontario.

7 C-Store: The route trade and oil channel magazine. 2006. Putting a squeeze on cigarettes. 8(2): 6.

8 Lavack, A & Toth, G. 2006. Tobacco point-of-purchase promotion: examining tobacco Industry documents. Tobacco Control Online. 2006; 15:377-384. 001:

10.1136/tc.2005.014639.

9 Rook, C, Cheeseman, H, Dockrell et all. 2010. Tobacco Point of Sale (PoS) Displays in England; A Snapshot Survey of Current Practices. Tobacco Control

On-line May 14, 2010.

10 Forbes, S. 2005. Big cash for smoke-sellers. Article In Central Leader newspaper. Published 10/5/2005

5


of smokers switch brands. 11 One Australian study has shown that l.ess than 1% ofs,mokersuse tobacco displays to inform their brand choice. 12 This suggests that tobacco qisplays are actually an ineffective means of encouraging brand switching. .. '"

A number of international jurisdictions have implemc:mted or are considering impl tobacco, displays in retail outlets and there is e)1Jf3rglng evi,d(3rice supporting . such bans. . ". ." ....

Qomparable countries ~uch as Australia, the United Kin9dOrh, Gaha.darlrn J..la d ,andNo . have all taken steps to remove retail tobaccgdisplays.,Voul!1§rno· ',. t ,s., ve subE\~IY, declined' in . Iceland (2001)13 and Saskp.tchewaflL(2q02hth~Ui.rst·. r' . ctio,t() rem,ove ,'tOJ?aCG6

The average 'age of smbkl~glnitlalion In N~>VZIr-~e~is,' ···.~e,eiar ininl~unii

~~Ek~!~~~~~~~~~~r~~~~n~:;lm~C~ilf. '.~ · .• '··,.oo~ie~~f~ ~~~!bt~et~i9~~ci~YPcH~~l:~" A study by the Welling . '.' .... I ~f ~e iC'nQ?S:sed fn Octob€)r2006,foUlld that E;tore.sin ar~as i~:.t c.~a.r. '.~~ .. t,·."~.~.'~.··I~~ ...•... ta ".S' 1 ... o. uth ....•. i, ... ' ....•••. l.j ... ~ .. G ... a •••....••.•• o. p.,.,:.U. 1 ... ,.a.t .•.••. iO. :.n ...••...... '.w.: ..• ,.e .••.. r ...• e.,.,.t .. h •...•. e ....• " m .. o ... s.t. n.;eIY. ' .... to.:,; ..•. b. e." ..•.••....•. i.n ~iO .. la. t ..• iO ... n .. ,' .. Of.,' Thepromih~' ~~ tOb~eG~~S'Cangiv~the jtTlpres~ibri, especially tb children, th~t sploking 's 1Vw~omll1on .. ~~~llyis .. ;.Be§e!3-fc,h.· jflclicC\~es.that .... · f~I)1Hiari~ing,cbHdreh' ..• lfoIith .. ',.\

li,%wC .. ~.u . t6na;~:~~~ifb~~ti.ma~J~h~§H~~fI6:ilicbe:C~#e~r~~G6~s~~~~v~e~ei~Z1~:~ctmhok~n~1~'.·'···'·

generglated, t yare more Iik(3lytp~tadsrn()~ing:18 >';' ' , .....•.... ;.'

. . .

smoke whih to uit

•. ,6t, mo,~~rs. w.~ .... Ifout'findit vJrYd;iff19ult'to80,so1due,tO'th~.hi9h,IY adqi~tive'natureOf.the; •.. ~ Ine CO~, tobacco products." The NewZealand'Tooacco Use Survey ,20013 s.howedlhat·,

~c 41., f . Bee, C. 1999. Point of purchase techniques and their influence on tobacco consumption: A review of literature In private sector journals.

e ort pre~IHed for the Centre for BehaVioural Research and Program Evaluation, University of Waterloo. Ontario.

~ akefield, M, Morely, C, Horan, J, & Cummings, C. 2004. public opinion about point of sale tobacco displays in Victoria. Report for the Centre for Behaviourat

earch in Cancer. The Cancer Council of Victoria

© 13 detail to come

()

14 Ministry of Health. 2007. New Zealand Tobacco Use Survey 2006. Wellington: Ministry of Health.

15 Lovato, C, Linn, G, Stead, LF & Best, A. 2003. Impact of tobacco advertising and promotion on Increasing adolescent smoking behaviours. The Cochrane

Database of Systematic Reviews. Issue 3. Art. NO.:CD003439. DOl: 10.1002/14651858.CD003439

16 Paynter J, Edwards R, Schulter P, McDuff I. 2009. Point of Sale Tobacco Displays and Smoking among 14-15 Year Olds in New Zealand: A Cross Sectional

Study; Tobacco Control 2009; 18; 268-274

17 Cigarettes and Candy - A Study of Retailer Compliance with the Point of Sale Tobacco Display Regulations in the 2003 Smoke-free Environments

Amendment Act. Department of Public Health, Wellington School of Medicine and Health Sciences, 2006.

18 U.S Department of Health and Human Services. 1994. Preventing tobacco use among young people: A report of the surgeon general. Atlanta,

Georgia: U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control and Prevention, National Center for Chronic

Disease Prevention and Health Promotion, Office on Smoking and Health.

6


around 65% of smokers had tried to quit in the last five years, and that approximately 45% of smokers had made a quit attempt lasting at least a week in the last year19 .

Research has found that point of sale stimuli, in particular bright visual ima~es ~such asthose on cigarette packages in tobacco displays) encourage unplanned purchases.2 2122 3 Retail tobacco displays have a particular impact on vulnerable consumers, Ell1ch as peop '/experiencin nicotine withdrawal sYmptoms, and can prompt impulse purchases. 2425

Related issues with current regulatory controls on advertising V

tobacco advertising by allowing a retailer'S trading n9-=be displaye xterior of the business regardless of whether the name~'n 101 s th~~ I Y advertise the availability of tobacco, so long as c c mpany, ~ a d brand names and trade marks are not involved, ~~

26, A relatively small number of businesses ~d se o~' ~Ption as intended, although there have been concerns r~i~~~,'R~ larly wi IJ 'esses using terms such as "discount tobacconist" to im ~ 'es on cco oducts, Promoting tobacco for sale at temporarily re~~~l coun~ri ~ t permitted, There has been a clear recent upsurge in he ~r of bus' e rading under names suggesting cheap tobacco an di thems specialist tobacconists, This upsurge has been linked to th~sal to ;e~~~¥i'cco displays from retail outlets. A number of jurisdictio ave remo e{J9ba~i~~layS have provided different regulations for "tO~I.~The ~u ~~~nt f sale display limits do not apply to "tobacconists"" It ~~Ien lin ~cf~~ obacco excise increase in April 2010, This indicates ad' attem t l ~ r the intended effect of a price rise by absorbing co osts a r' ely marketing to lower income and price sensitive sm 0 hav i rates of smoking than the general population.

s 've f smoking), ' I Y and signage requirements for automatic vending ma ' ,rules or Smokin Kills signs, price lists etc. While not currently problematic

oms kin c ssorie~ could provide an avenue for general marketing imagery

<::Rf t~ selves, e visions would need to be kept relevant and internally consistent

~) ~jUncti~ith amendment to the regulations on retail displays

D rceme n):? mpliance issues

~ 8. Th~' ~ Health is the agency responsible for the administration and enforcement ~ 'V ~~ S ke-free Environments Act 1990. The Act provides for the appointment of

~ - I' e Enforcement Officers to enforce its provisions through investigation of

~19 ip lry 01 Health. 2007. New Zealand Tobacco Use Survey 2006. Wellington: Ministry of Health.

© 20 Carter, 0, Mills, B, and Donovan, R, 200B; The effect of retail cigarette displays on unplanned purchases: results from immediate post purchase interviews,

()

Tobacco Control, June 2009; lB: 21B-221

21 McCarville, R & Bee, C. 1999. Point of purchase techniques and their influence on tobacco consumption: A review of literature In private sector journals.

Report prepared for the Centre for Behavioural Research and Program Evaluation, University of Waterloo, Ontario.

22 Wakefield, M, Germain 0, and Hendriksen L, 2008. The effect of retail cigarette displays on impulse purchase, Addiction, Vol 10. 103 Issue 2 pp322-32B

23 Hoek, J, Gifford, H, Pirikahu, G. Thomson, G. Edwards, R. 2010. How do tobacco retail displays affect cessation attempts? Findings

from a qualitative study. Tobacco Control 2010;19:334-337.

24 New Zealand Tobacco Use Survey 200B:Quitling Results, Ministry of Health, November 2009, pp 48-50

25 Lavack, A & Toth, G. 2006. Tobacco point-of-purchase promotion: examining tobacco industry documents. Tobacco Control Online. 2006; 15:377-384. 001:

10.1136itc.2005.014639.

7


complaints and the collection of evidence. These officers are employed by the Public Health Units of the District Health Boards.

29. Smoke-free enforcement officers respond to complaints of alleged breaches of the ~ legislation, and also undertake proactive enforcement and compliance~k such as controlled purchase operations, where a young volunteer under the a e<6f::,f8 ttemp~ to purchase tobacco. ~

30. Anyone who supplies tobacco or herbal smoking products t~a er the~ 18 years commits an offence under the Act punishable by a'n up a 2,000. T V offence is one of strict liability.

31. Smoke-free enforcement officers appointed by the ~i '~nforce the51Tl~ion by conducting controlled purchase operations for toba (pt cts with the ~~ a volunteer under the age of 18. Prosecutions o~t 0 ce are c~ and costly, with approximately $67,000 spent in 2009 on r ~. itor f~eone. The average penalty imposed by the Court is $300, an~~ mo~n an $5000. In a number of cases involving young defen nts fl sHim en Courts have discharged the defendant without co§:v~. ~~i Ministr 0 Ith will not take a prosecution against anyone under t~;t ~

32. There is some evidence that t~he~acco I la ovisions in the Act are not being followed. A 2006 study th ;~;gto Medicine found that 64% of retail outlets were not fully comp .

compliance than ~a f . the e~r §1' r rc by the Wellington School of Medicine, however, non-co e s high r(ff1at:l\d irable. Overall, 39% premises visited were non-co~ia . ial i~nc.~ rther checks by Ministry of Health officials found that 2 ~ r ses w r n- pliant on the first visit, subsequent follow-up found that on remis f premises initially visited) was still non-compliant.

34. InfOrma!~! these c . n checks suggests that issues of non-compliance are p~adu the comp~~ d lack of clarity about what is meant by some of the d' sions, rathe~ deliberate non-compliance.

~e~ misuse~o'JT>al' trade discount and rebate provisions

~~5~on 28 ~l~~rohibits free distribution and reward schemes, and places

estricti~ e offer of rebates by manufacturers, retailers and others with regard

() • m u cturer, distributor, importer, or retailer of tobacco products may distribute or ~ to t~b c r ucts. In summary, the Act states that:

~ ~pl ny tobacco product free of charge or at a reduced charge

«~~duced charge includes providing tobacco with another product that is free or reduced.

~~ A reduced charge excludes a normal trade discount or normal trade rebate

• no person may offer a cash rebate to a retailer, including as an inducement in relation to

© purchasing, selling, advertising or locating tobacco within the retailer's business.

, 36. It is apparent that rebate schemes operated by tobacco companies for retailers are commonplace. The rebates are linked to the volume of tobacco sales. The Ministry of Health has investigated these schemes and written to each of the three main tobacco companies setting out where the companies' rebate practices appear to be in breach of the law. Responses from Imperial Tobacco and Philip Morris assert that their rebate arrangements are lawful, normal trade discounts.

26 Cigarettes and Candy - A Study of Retailer Compliance with the Point of Sale Tobacco Display Regulations in the 2003 Smoke-free Environments

Amendment Act. Department of Public Health. Wellington School of Medicine and Health Sciences. 2006.

8


37. While the Ministry believes that the rebates breach the law, progress has been constrained by the Ministry's inability to require tobacco companies to disclose details of the schemes. The industry and retailers claim the terms of their agreements are subject to confidentiality provisions, and that disclosure would put them in bre~ contract ~

Objectives ~~ (? (\ 1. The over-arching policy objective is to ensure that the regulat r on the~0

commercial marketing and retail supply of tobacco support ov ment's ov :cw policy goal of reducing smoking, are consistent with New Zeala ' intern ional

tobacco excise increases, health warnings, media c R s and the «~11 nt's priority health target (Better Help for Smokers t~i ~v

2. In ~articular, a specific objective is to counter t~t of ret~of tobacco

~h:~:;ease the susceptibility of young ~~\tart sm~ • can trigger relapses among smo~~~g to ~ • provide a means for tObacc~c ~R~S -to ~ff c el dvertise their product, despite

international agreements a e ealand tobacco advertising

• contribute to perCep~iQ of toba co a~' r r even desirable consumer good, undermining the eft v· ss of heal I s to inform the public of the risks of smoking and m~ ~ gns d~ j discourage It

Regulatory I~~IYS~ Options ~ ~~ A T¥J/JI},~doPtion~

~Th~{osed ~n ~o implement a comprehensive package of improvements to the

W u t reg~~~gements for the retail supply of tobacco products.

e pac~g include a combination of amendments to the Smoke-free

~ Environ t ct, and subsequent regulations to be promulgated under the amended

<) ACrrw~' ~ ~ting the display of tobacco products in everyday retail settings

«/)~~reventing trading names with terms like "discount tobacconist" from being displayed in

~0, a manner akin to advertising (eg. on signs or hoardings)

• New powers to improve enforcement and compliance with existing regulatory controls

O on tobacco retailing, including: o - Instant fines (infringement notice powers) for sale of tobacco to under-18s

- Requirement for retailers to provide enforcement officers with information or records, including enhanced powers of entry, search, and seizure to discover information and records

- Resolution of the "normal trade discount/rebate" issue:

9


Retail displays

40. The central proposal in this package is to extend the current controls on the advertising and promotion of tobacco products by prohibiting visual display for sale. ~

41. This w~uld be implemented by a combination of amendments to the A~SUbSeqUent regulations. ~ (\

42. It is proposed to work the subsequent regulations up in consulta . 't r ailers and~ smoke-free enforcement officers to ensure effective and wo~e uti ns that~ the policy goal but minimise as far as possible the regulatm' act nd compli costs, relative to the size of the businesses affected. ~

43. This will require amending the current regUlation-m~aowers under~ 0 ensure resulting regulations can provide appropriate flexi ill i'e{)j mp~y. J-bthli s or different types of business, and also allow for a t d-in ti for'~ m liance. (Note: regulation making powers may need to gistrat~' ces s of some kind to implement exemptions and flexible op~ . diSP~16 ,eg. for specialist tobacconists who may have partiCUI~r r ~,ts.) v ~

Restrict trading names to avoid tobacco a v . i ~ 44. The Act would be amended to n ain ter . ~~ng names to be prohibited by

regulation, with reasonable tim m.

of smoking accessorie (Whi~ could oth' vide an avenue for tobacco companies to p~otr ~'e{p:l, arke~~~ ry suggestive of smoking), display and signage require r omatic v~ I machines, rules for Smoking Kills signs, price lists etc~.../ «~

Infringement Offe~~me~ fr ~elating to sale of tobacco products to under-18s

46. It is pro~ amend enable Smoke-free Enforcement Officers to issue in~r' em notices t~NI e offenders. An infringement notice is a proportionate ret first time off~rijng. It would be a more efficient and cost-effective method of enc ng co~lian.~~ with the Act by imposing a set financial penalty, while holding ~ e~dant ac~'t)le for their action, and avoids the formality of court

~«'1 '\ ;:d~In:~n amendment to the Act establish the infringement offence scheme, Q ~ se~:rta~:;rn~-:he power to make regulations to enable detailed provisions such as

fe s an Me) s. Formal operational guidelines would need to be developed to ensure

S1 r. ement officers act in a consistent manner when issuing infringement notices

~ co sidering whether an alternative action such as oral or written warning is more

pp priate.

~4 rovisions of the Summary Pro'ceedings Act 1957 may be used for the District Court to review or enforce an infringement notice. Subsequent breaches could lead to o prosecution involving the full range of penalties available under the Act.

~ Power to obtain information

49. It is proposed that where an Enforcement Officer has reasonable cause to suspect that any person has information or records in their possession which may be relevant to the operation or enforcement of the Act, or the investigation of a suspected breach of the Act, the Enforcement Officer may require that person to furnish any information or records in their possession.

10


50. Any person who without reasonable cause fails to furnish the information required would commit an offence.

Power of entry, search, and seizure· /(

51. It is proposed that for the purposes of the Act, an Enforcement Office~r,all ©: ~ reasonable times enter any premises where he or she knows or re n spects that records are kept relating to the sale or manufacture of toba r u s in contravention of the Act, and in any premises entered by hi~~ ITE r, se ch for ~ examine, take possession or make copies of records. v~ \) -

Contracts void

52. It is proposed that any contract, agreement, undert ~ nderst J:l i, her or

for the promotion or sale of tobacco products i I t e ext~~ ~ 'c it is inconsistent with the Act. ~ /(, ~

Removal of 'normal' trade discounts ~ ~ V ~ 53. There are a number of options to d~Wifu ~is issue'm~ . g using the new powers

proposed above to obtain inform~1 , am~ed t rovide that any contract that provides for rebate schemes i(VQio, n enh . s of entry, search, and seizure if a Smoke-free Enforcement offiCe ason p ts that records being kept in any premises relate to the s manufactur ~t 0 products in contravention of the Act. S)

this is warra e dab a ional investigative and remedial powers trade discount an sChi' r r analysis is required to determine whether

outlined abo ~~ pro~p~ f this issue is best resolved during the process of legal drafting~any I .~. introduced to the House).

OthepfP))o?Jf - ~

~Th~~sal t~n retail tobacco displays has been under consideration for some time, . c mg two for nds of Government consultation (in 2007/08 and 2010) and also

~ siderati~ lament's Health select committee in response to Parliamentary

etition~'n '. he issue has also been addressed by several submissions currently /J und 'd tions by the present Maori Affairs Select Committee inquiry into the V to co . try in Aotearoa and the consequences of tobacco use for Maori.

. ct statement were:

~ A. Take no further action at this time

B. No regulatory change, but rather invest additional fiscal resources into countering

© commercial marketing of tobacco with government-funded anti-smoking advertising

() C. A combination of minor regulatory change and investing additional fiscal resources to improve compliance and enforcing the current display controls

Analysis of costs, benefits and risks

57. The Ministry engaged an independent consultancy specialising in retail interiors and construction to assess the likely changes need to comply with the proposal to remove tobacco displays from sight, and the costs involved.

11


58. A detailed assessment was undertaken of 11 sites. The sites were assessed for current levels of compliance, ease of altering existing displays, limiting factors in accommodating the changes, and likely impact on the business from the act of carrying ~ out these changes. While too small a sample to be considered fully re~r entative, the 11 sites were a careful selection of typical retail outlets of different siz

configurations * (? (\ 59. Of the 11 sites surveyed it was found the vast majority of tobacc ~~s OUld~V~

to make changes to comply with the proposed display chan~ah~oUld incur . doing this. v~

60. Across the sites, the following points were observed~: ~ • Average cost of implementing a solution to comp ,520.0 i an

upper quartile of $2,130.00 + GST

their business in the process on imple t' nges.

• Stores that had custom joinery face e' st comphan osts

• Stores that had existing tobacc I'>ao display ~, found that often the best

• Stores with large tobacco dis r high t product would require more extensive managem~d after our~ sure minimisation of impact on business operation . <r~ ontributed . ~ant premium to the cost of

implementing S~iO ~V ~ • The cheapest . st t~o. Q atisfactory solution was to modify existing

under cou~r s whe i to suit the storage and sale of tobacco. Unfortuna . SOIU~iO~ w ften not appropriate or available on the site due to the d' 's Itly terin I rn out existing joinery to suit. Replacing full count ~ oPtio~~~r hat attracts a higher than average cost.

.~ ounter draw ~~y have the added benefit that shop staff would not need way from the cu tomers, helping reduce opportunist shoplifting.

~ O~t e 11 Sit~,r~/ed, only one currently complied with the proposed changes. /?/> ~weve i~t~{ this is not representative of the market.

~& 0 It ~ohs rved that tobacco product displays often took up all of the available wall

Q ~Oe p~ d the service desks

~~ a bserved that a greater sample size would allow more accurate conclusions /?~~ etter estimates to be made.

~~marY of cost implications

61. Although the analysis was constrained by the small sample size, enough information rcy was gained to be able to comment on the likely upper quartile limits that the respective ~ tobacco retailer types, and tobacco retailers as a sector, are likely to face.

12


Sample no. Estimated Cost Average Upper Quartile

Dairy 466.00

2 2,100.00 1,283.00 1,691.50

Large Dairy 1,650.00

2 1,650.00 1,650.00 1,650.00

Supermarket 2,785.00

2

3 - 1,328.33

Service Station 1,050.00

2 2,200.00

3 300.00

Conv' Store 3,300.00 3,300.

Avera es $1,520.00

62. The average price for implem.f' ~Iutions ~mplY with the proposed changes was estimated to be ~o~ all retailers surveyed, with an upper quartile of $2, 13~. :I- GST.(excl f@lsherecostisnil)

63. By type, conveni~est~ ith las' are likely to face the greatest costs in gaining complian 0 tf by su rma ets (excluding those that already comply),

average. large dairies~1 . les a~ ice stations facing the lowest costs on

64. The up~ over 9it ~~ "d 2,130.00 + GST is thought to be over repr se ~ s conss~ores represent a far smaller proportion of the tobacco re ~~t that is repr ln~ by this sample.

65. As pe of the report as limited to commenting on the sampled sites, extr atibn o~ ~~ined averages across the size of the market that each retail

~ type ~~in not strictly valid. However, with accurate numbers on the type of

e ch retaile W . Zealand, it should be possible to gain an indication of the likely

~ costs t~ f~( d by retailers.

() 66. Thg?n.ts concluded the upper qUartile. values shown fairly represent the.likelY

~. i ation each type of retailer will face in complying with the proposed changes,

~ as each retailer employs a reasonable quality at a reasonable cost approach to

e' olution.

~6 otential exists for retailers to employ low cost, poor quality solutions that will comply

with the proposed changes such as keeping stock loose in a drawer or cupboard, or rcy providing a curtain across existing displays. o 68. In sites that have the tobacco on display as part of a custom built unit, or where tobacco company displays have been incorporated into other joinery, there could be higher costs in altering the joinery to provide compliance. This is due to two major factors on these sites, being that providing a custom solution would attract a premium, and that the work generally has to be done outside of normal contractor work hours.

69. Sites that have tobacco company display units as stand alone display generally will . have lower costs to face to replace them with appropriate joinery, or alter other existing joinery to allow use for tobacco sales.

13


70. All sites could be modified to accept under counter secure tobacco storage, but this is generally at a premium to the solutions detailed within the report. The expected cost to each retailer should they chose this option to comply with the proposed changes would ~ to be in the region of $1,700.00 - 2,300.00 + GST for smaller retailers an $2,800.00-4,500.00 + GST for convenience stores and other retailers with higher r er or lar~ger premises. Modifying or replacing this joinery in this way would al~se e rater disruption to the business' normal operations than the other soluf n ed in thi document.

71. These estimates included an allowance for all cleaning, h04 ~e se disposa~ management and contractors margin, as well as other ove~~keIY to~ttr~G~bl~ to working on a particular site. This may include an~t:Of"rours work p~~more extensive dust control measures, callout fees and t . . ::\:0

72. On sites where it appears that it would be impo~to nduct ~ng normal hours without adversely affecting business 0 er r custo~~ience, costs were based on work occurring during busi ~~ 0 ours ,Ia~t night when the business would ,,--V

implementing changes to diSPI~y i - nly a~'n r' ct on normal business operations and should not adv se f the~u. s normal daily trade.

74. It noted that prior planning of wo e don se of skilled and experienced contractors in live wo~rR would grea~. c ving hassle free alterations, and that the use of trades WI ut the exp OOJ c f working in these more demanding sites might cause~. ion tog' ss than is strictly necessary.

75. Manufacturing as u anYif§[ ution for a site 'offsite' and then installing as required wou~. eping io 0 a minimum. This is especially true where units as supp' he tob 0 pany Imperial Tobacco are to be replaced with new units, as J ing the-~~ refitting the push forward display units is required. M~ki t its Off-~it~l~~tory controlled environment also ensures that the qu' f t final produ t 's~Pt high against the costs incurred. Adding doors to ex' ~ is was investig d as a possible solution, but owing to the fact that all of the

~airi rveye=re sing either Imperial Tobacco or British American Tobacco

. 'cultyof ese alterations and the cost of the result relative to providing a new ~ rd dis lays re not easily adopted to take doors, it was concluded that the

~ nit did$S~ up. It was also realised that the disruption to business would be more

Q sev~! . t 9 units were altered, as more noise, dust and debris would be created, as ~t mg longer on site.

Ifi# analysis of issues raised in submissions

«/)%cco displays and their impact - the research evidence

©~76. Supporters of removing tobacco displays from public view contend that tobacco displays

() function as a highly effective advertising and marketing tool in the absence of other means of advertising. New Zealand research shows a link between tobacco displays and the likelihood that a young person does or will smoke. Australian research also demonstrates a relationship between displays and the urge to smoke experienced by former smokers and those attempting to quit.

77. Opponents argue that other factors are responsible for youth uptake, for example, peer pressure, or 'forbidden fruit'. One submitter (the UK policy think tank the Democracy Institute) extensively disputed the validity and conclusions of the academic research, in

14


particular the reliance of many studies on self-reporting of smoking intentions rather than measured behaviour.

Comment ~

78. The existence of a link between tobacco displays and youth smoking i~>r~ from the ~ ~ research, although the strength of the relationship varies. The ro~e ,Jeii1 d' lays i~ undermining smokers' quit attempts by prompting a relapse is les . I died, bu research to date is consistent with current knowledge of wh~t i e ucces~~ul attempts. (Unlike the Democracy Institute submission, whic p'e to be base~~

been peer-reviewed and published in reputable scientif literatur - includ y a ' similar submission to UK consultation on the topic, much of e . uted re5arc~~s ,

leading New Zealand author27 who refutes many of ~ ocracy Ins~ c ims).

The impact of removing retail tobacco displays on sm~~~r lence (~ 79. Opponents of the proposal argued that the r o~ci0f%Ob~CC ~~dverseas, for'

example, in Iceland and Saskatchewan, @1~€ o~~o- eff ton 'king prevalence. Supporters of,the proposal, general~~~ me sou e onc uded that removing

co;::~~yS had reduced smOking~prev ~-:j ~eCiailY ~ ng people.

80. Further work to try and clarify e f these i~ l>~ible, but it is unlikely that they can be conclusively resolved. It sile ~~ ving tobacco displays as part of an ongoing package o~o control ~ s "WIll contribute to a reduction in smoking prevalen~e tim by m~ki ;)l')acc s presence at retail outlets less prominent, but it is ~e t rem fn~ lJatco products from sight will have an immediate or dec I act~ 0~)11 ~kl!:!W revalence.

81.1t is difficult t~m e impa t1her Influences such as price changes, education initiatives or~.r paign~~::;.: e effect of removing tobacco displays. The cumulat'v of re~jft . pays is likely to be greatest on young people as to~o i r 'denQh:n~ I a. This influence will feed into prevalence figures over ti , rti larly by contr~ g to the ongoing decline in smoking uptake by young , pe I.

W~c~miC i a~lers of removing tobacco displays

~~ral eta'~ d their representatives pointed to overseas evidence, principally from

~ Canada, s e closures and a loss of profits. New Zealand retailer organisations

() exr!l~ cern about the financial effect the policy will have on their members.

~ r v ded (unsubstantiated) estimates that 36 to 60 percent of convenience store e retailers' business is from tobacco.

«~o ersely, several New Zealand retailers, mainly small retailers, who sell tobacco but

~~~ore it out of sight, indicated that the change had had little impact on tobacco sales to

existing smokers. Current smokers "knew what they wanted".

© 84. One major retailer organisation stated that the additional costs of the proposed policy cannot be estimated at this stage, for example a predicted loss in sales for smaller retailers through customers purchasing elsewhere and potential stock shrinkage.

Comment

85. The claims in relation to Canada's experience are generally unconvincing. Other factors such as the global recession and illicit trade, the latter particularly in Ontario and Quebec provinces, appear to have been particularly influential.

27 Professor Richard Edwards detail to come

15

DRAFT 29 September 201 0

86. The financial impact indicated by retailer organisations seems to suggest implicitly that the policy would be effective in reducing tobacco sales. There is a problem with the internal consistency of some of the industry and retailer arguments about the effectiveness of removing retail displays and potential impacts on thei~r~,nCial viability. /'( If the policy would be ineffective at reducing tobacco consumption the ry uld not : ~ impact on sales, and vice versa. ~ (? !\

87. The policy proposed is likely to have some impact on revenue fr c sale~s for0 some retailers and may impact on the financial viability Of= sre rs. Howe , other factors seem likely to be more influential both on rev nd . ancial viab i than removing tobacco displays per se. Over the two decades een 1 ~nd 00, retailers adapted successfully to a significant reductio the number ~.g tes sold

into the market of convenience stores as an a~~~ vice sta ?~ g that - from around 3000 cigarettes per adult to around 1 dUlt~ -~ I h entry

period, the number of tobacco retailers actuall~. ~ ~

Options for removing products from display ~ /'( ~ 88. The consultation document invited ~o n reqyjr..ft~~ tobacco products to

be stored under the counter within s - rame a~rktt er options for putting

strongly opposed placing toba puts un ter, something supporters of tobacco products out of sight. ~ 0 ind~s re rs and their organisations

the proposal generally argued fo

Comment ~ () 89. Compliance cost~1 ~ uced~ xtent if retailers were, at least initially,

able to decide th e ow best t~PIY with a requirement that tobacco products

must not be 'P(~ !? ~ . Costs ~ ~ 90. Much Of~~RI)SUltatio~ e t was concerned with the costs to retailers of refitting th~' re i es to remo 0 co from display. By and large the information provided in s . i on the costs implementing the proposed option is less detailed than had

bee . ed. ~ .... /)

~~h~stima~~~~ premises provided by manufacturers and retailer organisations ~'~(ed cons' I . Figures of around $3,000 to $12,000 were estimated for placing obacc~~ s under the counter, though one retailer currently uses a $10 curtain.

~ 2. ThS,i:ni9-~ gaged a shop fit-out specialist company to provide independent advice ~ ~ =e c ts of altering tobacco retail premises to comply with any legislation placing

t three petrol stations and three supermarkets were visited. In the draft report the ~ en.- roducts out of sight.. Eleven retailers, including four dairies, a convenience

~ costs of complying were estimated to be between $300 and $3,300. This sample of

ifferent types of retailers gives an objective indication of the likely compliance costs for most retailers. A refit with new counters, not an easy option at some of the stores

~ visited, would be more expensive. o 93. Cigar and duty-free sellers who submitted argued they would face very high costs to comply with the proposed remqval on retail tobacco displays.

94. The other major costs mentioned were the possibility of increased time required for training staff, managing stock and retrieving tobacco products for customers from drawers or closed cabinets. Some retailers submit this could impact on the viability of the business trading in other goods and services. Transaction efficiency and speed of service are seen as key to successful convenience retailing.

16


Comment

95. This situation may not arise or even diminish if retailers who have removed displays from public view find they can meet current purchasers' needs with a reduced product ~ range. The experience of retailers who already don't display tobacco ~t~ seems to

bear this out. & ~ (\ Effective date for any changes A. >;; \::::j) 96. Opinions varied considerably. Tobacco companies and reta· s~~ed 18 t ~

months to be reasonable for modifications to existing cabin r d opposed any

'immediately to 12 months for modifications and 9 m 0 3 years fo tl obacco

Comment !?/) ~ () products under the counter. ~

97. Some flexibility with the time required to ~~t~e »~ 0 visibility seems a reasonable approach, notwithst ·ng t at this ;a~s been mooted and consulted on since 2007. ~

Specialist tobacconists ~--J. ~ 98. Supporters and opponents of r sal ha lK. \fews on how to define a

Cigar retailers felt that~~ re differen (,ory, til retailers as they need to show their clientele, who are gen y t young, a 1((91 ge of cigars and pipes. Consumers visit these stores~. e ess p~o urchasing tobacco, and are unlikely to be influenced by pro I ays. V

99. Heal.t~ sUbm~ ally fel~ia IS tobacconists should be subject to the same

provIsions as'G:tlr"~bac~02 ~~. Comment ~ ------..:

1 00. ~M~t~Y has co~~ hat the 'specialist tobacconist' category could grow q. i umber if diff~~provisions applied. Some provisions to prevent this and

~oss an ag~tri<Jifn on entering such premises could be considered.

~~ ere ~~reaction to the suggestion that smoke-free officers should have ~ ir po~~ .. ed to enable them to determine whether a retailer is specialist or not.

~ t ~~t~ frr~~ee stores are currently subject to the same tobacco display restrictions as

~ ~~co retailers.

. Irport duty-free retailers also argued for special consideration on the basis of the

~ . portance of tobacco to their viability and the convenience of visitors. They noted that some overseas regulators had made an exception or different provisions for duty-free

O stores. o Comment

104. This issue will require further consideration, principally to find out more about how other jurisdictions have applied their removal of retail displays in duty-free stores. However, practice in New Zealand to date is that duty-free stores are subject to the same provisions as other retailers.

17


List of products

105. There was little enthusiasm from any quarter for the idea that retailers should have a list of products for sale which would be available to customers who asked to see it. ~ Health submitters suggested it would be a form of advertising and ret"M~re

co;::~rned about the time involved maintaining it. A ~W © 106. It could be an option with provisions to prevent it becom~ ~oMdvertiSZ'~

Surveys V '\0 ~ \)-107. Supporters of the proposal noted the high levels~lic and smom·~ rt for the

proposed changes. Wellington Medical School re t the p~p t 0 mokers supporting a complete removal of the display of~e in shop ~s plying "somewhat" or "a lot", increased from 62 to 68 etwee$Y6@02008/09. Recent UMR surveys conducted in April a h§V 0 support for the complete removal of tobacco displays, a i re e rom o· 2008.

108. A survey for a retailer's organisa' n n ome r~en hat removing tobacco from display would have health b '. Ij survey f ~ ew Zealand Association of

display ban would stop teenag 0 I g whil thought it would not. Thirty-eight percent thought a ban wou uce~e oking, 57 percent did not.

Other issues raised. ~ ()

109. Opponents Of!~-1in baccoe'sp s romoted alternatives such as improved enforcement of he I la~Q~ education of retailers and consumers, raising the m' i of pu a government working more closely with the retail industr . ~ '"

e f r. . ~

110. Seve~;e . ers and~~ th submitters linked the displays issue with the Ii~c'ng ~y A13tailers to~'G~ retailers about the legislation, and to strengthen

~. . ers ra~d co cerns about robberies and security problems and an increase in

~. i' ade f lowl removal of tobacco displays. There is no identifiable evidence

suppor P\ili; cern. Some retailers who have put tobacco products out of sight ave d s'b'tQ i crease security. Any link between removing tobacco displays and

~ illici I t uous. Illicit trade may be an issue in Canada, which is usually cited as an a e, given it shares a long border with the USA where tobacco is cheaper.

R hile illicit trade merits (and receives) monitoring and appropriate response in

~ aland, it is not currently a significant problem and more likely to be price driven.

~ . etailers were concerned about stock being seen while being dispensed or during

stocking. These issues seem manageable if any legislation provides some flexibility,

© for example, permitting retailers to take all reasonable steps to minimise the exposure of

() tobacco products, though enforcement may be difficult. Overseas precedents can be examined in more detail.

18


Summary comparison of costs, benefits and risks between options:

Option: Costs Benefits Risks

Preferred One-off costs for This is the only option Option: retailers to modify that comprehensively

Prohibit retail shopfitting <$50million addresses the problems

tobacco over 3-5 years - say caused by retail tobacco

displays $12m per annum displays, because it maximum removes them.

©~ Expected to sa~ costs and lives' <t5S medl"mt~ e quit rates rs

WhO~ Id ~ relap, ~ i e 10 e t oung

~ dono~ - n ) V

Alternative A: Reduced cost- Continued advocacy by

Take no effectiveness of exist health groups etc. who

further action poliCies S"gacco advocate removing retail

at this time excise incr ~ d displays, with high level

Gove~ of public support anti-s . m la

Reputational risk to NZ c~' has S iA Our F

in light of FCTC

~ expectations & removal of displays by comparable countries such as Australia, United Kingdom and Canada

xpenditure Minimal Public exposure to i liar reach to a This would not avoid the widespread Government

a ent average 2-impact of the retail advertising might

() display in 10,000 displays but would generate criticism ail outlets with

presentation and provide a countervailing Ongoing presence of

effectiveness monitored anti-smoking message. tobacco displays viewed

and maintained by a (Retails displays by the public as inconsistent with other

team of dedicated maximise their impact tobacco control

tobacco company sales by being eye height and measures eg recent tax

reps would cost >$100 at point of sale - this million per annum28 positioning is not increase.

available to other advertisers)

Alternative C: >$5 million per annum to Minimal, as breaches to Runs essentially the

Improved assess, support & if current display same risks as

enforcement needed to fully enforce restrictions tend to be Alternative A above

and compliance at 10,000 minor infringements

Would also be perceived

28 Based on pricing rales per m2 for sIalic billboards in shopping cenlres hHp:llwww.aab.ca.nz/lndex.php?page=shopping·cenlres·b

19


Option: Costs Benefits Risks

outlets and criticised as merely increasing bureaucracy ~ without a ately address oblem. ?

compliance

'------------'---------'-----'---~__{__J~_

Consultation ~ ~ 113. Government has been considering options for tightenin est Ictions on re

displays for some time. Proposals to prevent retailers from open displa~ toba 0

were consulted on in 2007, with submissions clOSin~gin 2008. R~,YS were

114. In September 2009 the Maori Affairs Selec it launch an i quiry into the

also the subject of two petitions to parliament's~a ~ ittee~. ~~-

tobacco industry in Aotearoa and the con~e e O~bC ~~1 aori, with public submissions closing in late Januar . s for ~ov~f retail displays is a feature of many submissions. ~

115. On 22 March 2010 Cabinet appro 11 lease ~~ onsultation letter Proposal

of the consultation process an ro a on w e ot to proceed with the removal to ban tobacco retail displays i~ a d ~n u hD port back on the outcome

of tobacco displays in retail outl .

116. Public consultation~~ce betwe~ and 21 May 2010. Over 1000

template letters pr 0 e 'nteres ~ tl . submissions were~e . d. any w~r s a al although about 850 were form or

117. About 85~e t bm~it s mot d the proposal (112 individuals, 753 form letters). Sup r ~i uded I hea h sector submissions, submissions from young people, the jemw of S~b i from the general public and a significant proportion of the re~1'S ~h6 sub a in ividuals - about a quarter of these retailers.

t . stry submis~s opposed the proposal along with the majority of 118.~e ts compri~~ dividual submissions and 107 form letters. All the

~SUb 1 • ns fro~~rs and retail organizations, a small proportion from the general

ub . nd one ~~:on from an overseas (UK) private research institute. «/PI ~ The con~' primarily sought comment from affected parties on options for &vemovi~'sbYayS and their costs. New information on the health evidence was

~ wef5j' is evidence had generally been considered in previous consultation. Su itt ere told previous submissions would be taken into account, but most ~'ni! r. still took the opportunity to repeat as well as update previous information.

~3) ~ might be expected, views were polarised with strong views expressed both for

gulatory initiatives to reduce smoking, notably the 2003 introduction of fully smokefree ~ and against the proposal. This polarity of opinion was characteristic of previous

© indoor public and workplace environments. Ultimately, the issue comes down to a

() judgment over what weight should be given to the Government's health policy goal versus the likely reduction in sales by and costs to tobacco retailers. Retailer and industry groups argue the health benefits are minimal or non-existent and the costs overwhelming, while supporters of the proposal argue the benefits are potentially considerable and the costs minimal or irrelevant in comparison with the health and social costs from smoking.

121. Opponents of removing tobacco products from display focussed on:

20


• compliance costs with estimates up to $12,000 per retailer were provided (The Ministry of Health commissioned an independent assessment which indicates that in practice average costs would be much lower, in a range from $330-$3,300.) ~

• business viability (there were assertions that tobacco makes up a sur~Pi' Iy high proportion of general convenience retail turnover - especially conveni ~or s & ~-petrol stations) ~: (7; ~ ()

• claims of large scale closures of retailers, robberies and securi e resulti~~ the proposed change (generally not substantiated with sUPR rf g e' nce).

• inconsistency with the general Government approach on busine egUlat~oliCY

supporters) ('\

• strong assertions that impacts on smoking and hea~lfits from re v I lays would be negligible (including challenges to studi s M vide~n~

• if the retail display proposal is progressed, tr r feren 0 ~t)~ requirements

all tobacco "under the counter" and ~ .

• support for alternative measures s~~ . h er enfo~;:.>of existing retail instructions and in particular the ban on sal ~~ under 8~ \? ~

122. Supporters of removing re I is I ys focu ~.

uptake and undermi <91l~ ttempts

• The need to set oSt~ retaile~' e likely to be exaggerated, against the cost to the country c arm V

• The stron9(@l~p ort for~~op ai, including among smokers who have recently

quit or int~l'lCl~ng ~~ • The n~end a co i t essage that tobacco is not a normal product, but

• ~~ nal preceden~d successes which support removal of retail displays and ~ger a d diffe~ frq 0 her consumer goods

~T ~~erien~f r~ilers who have removed displays and say it did not cost much or

~ m sal~~~ther business benefits, for example, improved security and space to

tlisplay fo ~ margin products.

~ . fJ1~~\ ry find. ings from the analysis of submissions are detailed in the earlier ~ v se I 'S_ary analysis of issues raised in submissions above.

~~\-;to and recommendations

r. hl2009 the Government's decided not to proceed with retail display proposals

effective strategy to reduce smoking rates and tobacco consumption. Categorical ~ ending new evidence from the international experience that this would be the most

© evidence of the impact of retail display bans on smoking initiation and prevalence rates will take some years to emerge, and is complicated by interactions with other policy measures. But what evidence there is supports the case for the removal of retail displays.

125. However the rationale for moving now to remove tobacco products from visible retail display does not depend solely on evidence that removing retail displays significantly lowers smoking prevalence. Removing tobacco displays will help reduce perceptions of tobacco as a 'normal' consumer good and will contribute to reducing the harm caused by smoking. No sudden or dramatic drop in smoking prevalence is likely solely because of this measure. But it will, in conjunction with other policies, contribute to reducing

21


tobacco uptake over time, particularly among young people, and also support smokers to quit.

126. The main downside to the proposal is that there will be costs for retailers as they ~ adjust their shop fittings to comply - particularly for small retailers, suc~~e typical corner dairy. These costs will vary according to the options and timef de . © available for removing displays from sight, and may well be abso~b y obacco companies as they have in the past.

127. It is therefore recommended that the Government imple~; kage of n~ improved controls on the retailing of tobacco products, inclum~ - ,\:)0_-

1.1 prohibiting the display of tobacco Products~~ e; ~ 1.2 tightening controls on the display of trid' ~ e hat i~~ignifYing

the availability or price of tobacco for .

1.3 taking a consistent approach t~o/ e ~n o~~~};; ers such as the retail display of smoking acce rie, dl play. siNe requirements for automatic vending machines,(r~qt ents for ea arnings and "Smoking Kills" signs, and display of ~'a'Qc'oj duct p i~' ts;

1.4 providing smoke-free~n e nt Offi~Wi tronger powers of information discovery, search an ei 0 aid~' igation of compliance with the controls on tobacco ret . I ;

1.5 providing sm~ enforcem~t I s with infringement notice powers to issue in~sa first OaR e h sell tobacco products to people under 18 of ag . g trolled rc s operations.

128. It would b5' ment~ e by a combination of amending the primary legislation, n e smiie- nvironments Act 1990, and developing further

further r . s would I fa f exibility over options and timeframes for compliance regUlatio~n reAct. c ination of amended legislation and developing

in m t~ oia unne~~ ompliance costs and impacts on small retail businesses.

Imple~on is~es an;;)(sks

~~ ~gag~ent nstructive input from retailers in developing detailed regulations ~ b¥id 'be a i fa tation risk. However if retailers are not sufficiently motivated to

evelo~~ olutions it suggests the costs of compliance have in fact been

~ ove=~~~ ot such a big issue.

130. isk round enforcement and compliance and the resources and systems required ~'tJi this are essentially unchanged as the proposal modifies and if anything

~~i~fies an existing regulatory regime, rather than introducing major new roles for

~ enforcement and compliance. The main implementation issue relating to enforcement

nd compliance will be implications for the training of Smoke-free Enforcement Officers relating to the use of their statutory powers, for example, issuing of infringement notices.

r(J 131. Ensuring that all retailers are complying with the proposed amendments will also be o resource intensive given the large number of retailers that sell tobacco.

Arrangements for monitoring, evaluation and review

132. Established Ministry processes for monitoring will be used to evaluate and review these proposals. The Ministry of Health has in place good surveillance systems that monitor smoking prevalence at both an adult and youth (Year 10) level. There are also monitors such as the Health Sponsorship Council "lifestyle" survey which could help with measuring the denormalisation or people's attitudes towards tobacco.

22


133. Questions that would help measure behaviour change could also be included in the Year 10 Survey and possibly through question in the New Zealand health survey.

134. New Zealand is also part of the International Tobacco Control (ITC) Policy ~ Evaluation Survey. The ITC project is a mUlti-country study that inclu~dew Zealand arm. ~

135. The International Tobacco Control Policy Evaluation Project ~ Ject) is a international collaboration of tobacco control researchers w~o I 10 's to ev~ the psychosocial and behavioral effects of national-level tob co I policies throughout the world. The ITC Project consists of parallel a n urveys eing conducted in 20 countries, inhabited by over 50% of~orld's p pulat' n, % of the world's smokers, and 70% of the world's tobacco us : ada, Unite s United Kingdom, Australia, Ireland, Thailand, MalaYSi~a~ or ,Chi9' Uruguay, New Zealand, France, Germany, Netherlands, . B gladesh au i ius, Bhutan and India. Additional ITC Surveys are bei~g ad' ot~hr ~. . II ITC Surveys are designed from the same conceptual fr. r nd me ds, d the survey questio~s are designed to ~e identic~~I~ ti allyequi in rder to allow strong compansons across countnes. ~

136. The ITC Project is evaluating ~~ owth ra Convention on Tobacco Control (FCTC)-the first ever ~t ~at1, whic e ratified by over 160 countries. The extensive I u ys incl easures of each of the demand reduction policies of th~~Whl call~

• More promi~~ labels ~ ~ • Removal O(~h ild", an~decePtive descriptors and brand imagery

• Restr~~6hibiti~~ \'~o advertising, promotion, and sponsorship

• ~~u;;:~<;;;;;;;;va~ displays).

~a~ too reduce~~e tobacco smoke pollution (also known as secondhand

e or envir~~~~tal tobacco smoke)

~ Jt objecti~f ~ ITC Project are to:

~ "V co~ ~~s evaluation of FCTC policies at the level of the individual

~ ~ rstand the causal mechanisms responsible for policy impact-to ~ 'V U erstand how and why a policy had its impact

~~ ~ 0 actively disseminate research findings not only to researchers, but especially ') ~ to policymakers, advocates, and the tobacco control community more widely in

~ order to promote strong, evidence-based implementation of the FCTC.

©

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tobacco oia 2011

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