Now all we need is volumetric taxation of alcohol in the Henry Review to raise the price of bottled beer and we’ll have the classic “beer, cigs up”.

For what was, by universal agreement, a shameful distraction from the government’s bad week of election deck-clearing, the cigarette announcement sure distracted plenty in the media.  That was partly because the government’s usually slick handling went awry, and not for the first time this week.  The announcement was intended for newspapers and under embargo, but Laurie Oakes got a hold of it via a leak, meaning Nine and then Seven ran with it on the evening news bulletins.

If anything, that appeared to generate more coverage for the government, not less.  The ABC, which regularly jacks up about the government dropping stories on other media outlets, was trying to make an issue this morning of the timing, but such press gallery tail-chasing just made the distraction more, um, distracting.

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So we all hate smoking, right?  And tobacco companies — vile people. And their cheeleaders in the media — the IPA was straight out of the blocks today to predict dire consequences from the packaging requirements.

But what’s this actual policy intended to achieve — other than get the shelving of the ETS off the front pages?

Well there’s the most important thing as far as the government is concerned: the money.  The excise increase will raise $1.25 billion a year, generating $5 billion over four years, ostensibly for health funding.  That’s a more than 50% increase in the level of tobacco excise.  A whole slab of promises to recalcitrant premiers last week has just been paid for.

Unfortunately, tobacco excise is a heavily regressive tax, because smoking is now more or less confined to low-income earners, so that will be coming directly from the pockets of those least able to afford it.  Not exactly flash in equity terms.

And then there are the health benefits.  These are less clear.  Because Australia would be the first country to ban cigarette packaging, the evidence of its efficacy in preventing people from taking up smoking, or encouraging them to quit, is unclear.  But the massive increase in excise will have a substantial impact on smoking rates — the government expects it to reduce from 16.6% to about 14% of the population.

Some economic benefits will flow from this through lower health costs and higher productivity and workforce participation.  But smokers are more than paying the economic costs of their habits already.  A study last year by David Collins and Helen Lapsley tried to estimate the costs and benefits of the Australian tobacco industry.  Collins and Lapsley emphasised the total social costs of tobacco — including the economic cost of resources diverted into the tobacco industry that could have been employed elsewhere.  Their figure of the social costs was a whopping $31 billion in 2004-05, which dwarfed tobacco excise of about $5.7 billion.

But the direct health costs of tobacco use were far smaller, around $260 million — considerably less than the excise obtained from smokers, even after Collins and Lapsley had netted off taxation losses caused by premature death and ill-health, which they calculated to be around $2.8 billion.

In their view, the question of whether smokers “pay their way” should be answered using “social costs”, not direct health costs, but from the smokers’ point of view, they more than pay their way once you take into account their costs to the health system and their lower income due to premature deaths or poor health.

That will be much more so with the excise increases that will apply from tonight.

There’s a basic principle here, which has long been overridden on smoking.  To the extent that smokers’ decisions to be stupid enough to smoke affects others, either via the costs they inflict on society, or the impact of their own second-hand smoke, governments should act to restrict it.  The curbing of smoking in places where second-hand smoke will harm others is well under way, although not yet complete — I reckon parents smoking near their children in any circumstances should be considered a mild form of child abuse and punished accordingly.  And excise more than covers the health costs associated with smoking.

Beyond that, there’s no role for government.  If smokers are not imposing any net cost on society, why are we endlessly assailing them and the companies that cater to their addictions?  Their decision to undertake an activity that has no net social harm is no one else’s business, however much the rest of us might hate it.

And the preventative health lobby won’t stop there.  They want alcohol and junk food on the same punitive curve as smoking.  Not for them the distinction that mere use of tobacco is harmful, while alcohol and high-fat, high-sugar food have to be abused before they are harmful.  It starts with advertising controls and then keeps going until individual sovereignty is seriously infringed, all in the name of “preventative health”.

It’s easy to see the harmful effects of smoking — or for that matter of alcohol abuse or poor diet; the corrosive effects of the increasingly successful efforts of the preventative health lobby to restrict individual and market freedoms are harder to see, but no less real.  The principle that governments can interfere with people even when they do no harm to anyone else is well established and gaining in strength.

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Peter Fray
Peter Fray
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