Plain speaking – not packaging – required

Jeff Rogut

Jim Hacker in the Yes Prime Minister Diaries [thanks to The Australian]:

“HUMPHREY,” I said, “when cholera killed 30,000 people a year in 1833 we got the Public Service Act … But cigarettes kill 100,000 people a year and what do we get?”

“Four billion pounds a year,” he replied promptly … “Cigarettes pay for one-third of the total cost of the National Health Service. We are saving many more lives than we otherwise could because of those smokers who voluntarily lay down their lives for their friends. Smokers are national benefactors.”

Last week we saw the hypocrisy of a government in financial crisis through their raising of the excise on tobacco in the name of good health. AACS took strong position on this in the media as did many commentators [see article below as an example]. Sure the health issues around smoking are well recognised, however the government is simply using this as a cynical smokescreen for revenue-raising.

Had the PM been honest and firstly explained that this was being done to fill a hole in the budget, and by the way there may also be some health benefits we could have understood the motivation. Had the PM consulted with our and other industries potentially affected by this move, we could have voiced our concerns and sought possible support. But we are not the car industry, just many small businesses working 24 hours a day to serve our customers.

The government has rarely consulted with small business on impacts of this nature and just forges ahead hoping that silence will ensue and their will be no repercussions.

Well, with over 6000 stores and over 40000 people in our industry, they forget that we are national, in some marginal seats as well, and we vote.

Make your voice heard and don’t just accept what is thrown at us by governments that are not close to our industry and do not seek to understand the unintended consequences of their actions on your business.

Warning: poor arguments damage fiscal debate
The Australian
August 02, 2013

IT is time to get serious about addiction. Kevin Rudd should spare us the sanctimonious excuses and admit that raising the price of cigarettes has little to do with reducing smoking and everything to do with his government’s inability to control its $1 billion-a-day spending habit. The electorate may appreciate a little straight talking. It knows the books must be balanced and if governments lack the courage to cut expenditure, they are obliged to lean on the taxpayers. Unlike other taxes, at least this one is possible to avoid.

When the Prime Minister gave his homily on the evils of smoking on Wednesday, complete with a hard hat decorated with the Cancer Council logo, it was clear what he was up to. It is a trick he has played before, notably before he increased the tax on sweetened pre-mixed spirits, known colloquially as alcopops. He assured us between hand-wringing that it would help end the scourge of binge drinking that was afflicting the young. It did nothing of the sort. It simply changed patterns of consumption, encouraging young people to mix their own drinks, sometimes without the steady hand that sobriety requires.

Restraint can be Mr Rudd’s problem too, particularly when it comes to big numbers. Smoking, he told us earnestly on Wednesday, costs the community $31.5bn a year. It is a figure precise enough to sound as if Mr Rudd knew what he was talking about but silly enough to make the curious think twice. It is a figure derived from a six-year-old report based on fruit cocktail economics: the bundling of apples and oranges with a few bananas thrown in.

The actual burden on the health budget is less than $2bn, a bill comfortably covered by the $6bn the government collects in revenue from tobacco. The remaining $28.5bn consists of theoretical costs such as pain and suffering, $19bn of which are labelled “intangible” – in other words, hard to pin down.

The truth is that the government would be out of pocket if everyone stopped smoking today since smokers are net donors to the Treasury. A sad fact, rarely acknowledged, is that the lower life expectancy of smokers reduces their lifetime demand on health services.

Even so, there is a public policy case for increasing the price of tobacco. It is just that the government has failed to make it, just as it failed to make the case for plain-packaged cigarettes before it jumped in to legislate. Once again good process has been abandoned in obedience to muddled policy aims buttressed with a faux-moral argument. Discouraging smoking and balancing the budget are laudable aims but it is hard to see how a sin tax can do both at the same time. Is the aim to discourage smoking, in which case revenue would be expected to fall? Or does the government expect smokers to light up regardless to subsidise a spendthrift government?

The medical advice against smoking is clear enough. There is no need to sex up the argument with wild guesstimates of the cost of a human life forsaken, which can only be a distraction. The health policy challenge is to assist the hardened cohort that is struggling to kick the habit, including indigenous Australians and the mentally ill. The fiscal challenge is to persuade flabby governments to resist their craving to spend.