Saturday, June 22

Capitalists beat Government at reducing smoking

Governments across the Western world have tried, with varying degrees of failure, to stamp out smoking once and for all. The use of increasingly draconian regulations and taxes on tobacco in Australia and New Zealand have created poverty, illegal markets and increased violence for those who trade and purchase tobacco products.

Where the state fails, the free-market will usually succeed (prompting the state to react with further damaging policies). Cultural change has altered the way many people consume alcohol with sales continuing to decline over time as well as the emergence of a growing alcohol-free beer, wine and spirits market. In the early 2000s, alternatives to illegal drugs such as methamphetamine and MDMA were created in the form of BZP and the benign synthetic cannabinoid product Spice. Wowserish hysteria resulted in these substances being banned while industry cowboys created more harmful alternatives to fill the void. Eventually ‘synthetic cannabis’ became illegal then deadly. Safer alternatives to smoking tobacco in the form of vaping have slashed smoking rates in New Zealand faster than any taxes or regulations before but as the Australian Federal Government plans to ‘ban’ vaping, some in New Zealand want to follow suit.

Firstly, it is important that we do some fact-checking of the headlines on both sides of the Tasman. These headlines state that vapes will only be allowed to be sold in a chemist to people with a prescription. I moved to Australia two years ago, prior to the first regulations being passed in late 2021. Those regulations made vapes prescription only and I had to obtain one to continue importing vape products from New Zealand. The only vaping products that have been legal without obtaining a prescription up until now are nicotine-free vapes. Nicotine-vape products have already been illegal to sell without a prescription for 18 months, so not much will change in that respect; the regulations have already failed and continue to be openly flouted.

Additionally, Australia has some of the most expensive cigarettes in the world with the current tax per cigarette sitting at NZ$1.25 ($25 for a pack of 20) compared to $1.10 in New Zealand. The cheapest pack of 20 cigarettes in a supermarket is Chesterfield, costing NZ$31.20 while a pack of Winfield Original 20s will set you back an eye-watering NZ$45.69. That tax is set to increase a further 5% per year for the next three years. Illegal tobacco sales are rampant in Australia with countless convenience stores selling smuggled foreign packets under the counter. However there are also specialty tobacco and vape stores openly floating those regulations also. Outside Melbourne Central Mall is a store with hundreds of packets of cigarettes which do not have dirty-green plain packaging (hence are smuggled illegally) sitting in the window, visible from the street. In the window is a cardboard sign with ‘Cigarettes $20’ written by hand. Despite the store’s entire trade being in black market products, it remains open.

Eight hundred tonnes of loose tobacco and 700 million cigarettes were seized at the border last year. Meanwhile major retailers warn the Federal Government that they face losing up to NZ$5.4 billion in tobacco levies and GST as smokers switch to vaping or illegal cigarettes, with Coles and Woolworths revealing tobacco sales are down by as much at 15%. In 2020-21, tobacco tax evasion was estimated to have cost the Australian Tax Office nearly NZ$2.1 billion.

The proposed new rules in Australia will see disposable vapes banned, with plain packaging and plain flavours of all vape liquids which can only be sold from pharmacies. Incredibly, this ban will also apply to non-nicotine vapes which have no addictive properties whatsoever. Ironically, while deadly cigarettes will be available at tens of thousands of retailer stores throughout Australia where they can just as easily fall into the hands of children, vaping products sales will be restricted to pharmacies and nicotine-free vapes banned entirely. Even as some states permit heroin-injecting rooms and ecstasy pill testing regimes, the Federal Government responds to the most effective quit smoking tool ever with a ban.

Prohibition of any substance does not work and the United States of America did an excellent job of proving this when alcohol was banned by constitutional amendment in 1919. While consumption had already been decreasing on a per-capita basis since 1910 and the ban clearly had some initial success, alcohol consumption under prohibition exceeded previous levels while legal by 1923.

The Government of Bhutan was lauded on the world stage for passing reforms to virtually ban the use of tobacco in their kingdom in 2005. From 2011, personal use import limits were implemented at a maximum of 200 cigarettes per month with a maximum prison sentence of five years for breaching this. A few years later, the prison sentences were abolished and the import limits increased. The tax on cigarettes imported for personal use was set at 100% however by 2019 the price of a pack of 20 cigarettes on the black market was just NZ$7 compared to NZ$26.00 for the cheapest cigarettes in New Zealand. Smoking rates amongst youth aged 13-15 years increased from 24% in 2006 to 30% in 2013, compared to New Zealand 13-15 year olds which dropped from 14.2% in 2006 to 6.8% in 2013. The most recent Bhutanese health survey available showed that smoking rates amongst the general public increased from 18.8% in 2009 to 24.8% in 2014. In June 2021, tobacco prohibition was deemed a failure with the national legislature voting 33-2 in favour of new regulations legalising smoking.

Australia has taken a harder line on the tobacco market than New Zealand in most ways (excluding the Smokefree Environments and Regulated Products (Smoked Tobacco) Amendment Act 2021 which is yet to take effect) with higher tobacco excise rates and leading the way on plain packaging of cigarettes. Despite this, Australia’s  current smoker rates are still higher than New Zealand. The most recent figures available for Australia are from 2020-21 and they show that for the financial year taxation per cigarette was NZ$1.18 (vs. $1.05 in NZ), the proportion of daily smokers was 10.7% of the population (vs. 9.4% in NZ) and the proportion of people currently using a vaping device was 2.2% (vs.6.2% in NZ).

For several years I have been maintaining a record of the annual New Zealand Health Survey; specifically the data on smoking to see how particular public policies impact smoking rates. Originally I was monitoring the impact of the 10% above inflation excise tax increases implemented by the Maori Party in 2011. The first survey to consistently trend e-cigarette use rates was in 2017/18. Prior to that, from 2011/12 to 2016/17, excise tax per cigarette increased by 67% (from 44.21 cents to 73.81 cents per stick). Across that time period the total percentage of New Zealanders who are daily smokers only reduced 15.3% (from 16.3% to 13.8%). Maori daily smokers reduced 13.8% (from 37.7% to 32.5%), Pasifika daily smokers reduced 3.5% (from 22.6% to 21.8%), European/Other daily smokers reduced 15.1% (from 14.6% to 12.4%), Asian smokers reduced 17% (from 7.8% to 6.5%) and the 20% most socio-economically deprived New Zealanders decreased only 5.8% (from 25.9% to 24.4%).

Additionally, the amount of tax each smoker was paying each year (measured by multiplying mean cigarettes per day with excise tax per stick) sky-rocketed over the same period with total daily smokers paying 52.1% more (from $1807.30 in 2011/12 to $2748.06 in 2016/17). For the 20% most socio-economically deprived New Zealanders, I suspect tobacco tax probably cemented that deprivation as the average annual tax paid increased by 56% (from $1742.76 in 2011/12 to $2721.12 in 2016/17).

The number of daily vape users was included in the New Zealand Health Survey from 2017/18 and there is solid evidential data which shows vaping has had a massive positive impact on reducing the number of daily smokers; much more effectively than tax increases. The final inflation plus 10% tax increase was implemented in 2019/20. By 2021/22, daily vape users exceeded daily smokers for the first time. From 2017/18 to 2021/22, the tax per cigarette increased 27.2% (from 82.66 cents to 109.84 cents), the percentage of New Zealanders who smoke daily dropped 38.9% (from 13.8% to 8%) and the percentage of New Zealanders who vape daily tripled (from 2.6% to 8.3%). From 2019/20 to 2021/22, tobacco excise tax increased by only 5% but the percentage of daily smokers dropped by 31%.

New Zealand’s experiment with promoting vaping as a tool to quit smoking while avoiding crushing regulations that make electronic cigarettes difficult to purchase legally has impacted smoking levels like no regulation ever could. Free-market innovation has achieved in a few years, what the Government has failed to do for decades, provide an alternative to smoking that can impact the hardcore user in a way draconian tax levels cannot.

It is disappointing that minors have swarmed to vaping due to it being cheaper than tobacco but the Australian Government’s crackdown on vaping will not prevent young people getting vapes. It is already illegal to supply them to minors so placing new restrictions on access for adults won’t make a difference. It is already illegal to smuggle cigarettes into the country without paying excise tax yet there is a booming black market of convenience stores openly flouting the rules. Cannabis is also illegal but that doesn’t prevent it being supplied in schools. What we can be sure of is that if vapes have exposed as many non-smokers to nicotine addiction as claimed, tobacco use will increase with reduced numbers of smokers successfully quitting.

It is crucial that New Zealand politicians do not allow hysterical school principals and clueless parents to let their emotive arguments cloud the hard data. The overwhelming evidence proves that vaping is the most effective tool we have ever had to help people quit smoking and that smokers are quitting at a rate never seen before.