Monthly Archives: April 2010

Australian Prime Minister: News Release

April 30, 2010

Anti-smoking action

The Rudd Government today announced a comprehensive package targeting smoking and its harmful effects, including an increase in the tobacco excise of 25 per cent.

This increase in tobacco excise will provide an extra $5 billion over four years, which along with existing revenues from tobacco, will be directly invested in better health and hospitals through the National Health and Hospitals Network Fund.

The Government’s anti-smoking action includes:
– The first increase in tobacco excise (above inflation) in more than a decade, an increase of 25 per cent.
– Cracking down on one of the last frontiers for tobacco advertising – in a world first, cigarettes will have to be sold in plain packaging.
– Restricting Australian internet advertising of tobacco products.
– Injecting an extra $27.8 million into hard-hitting anti-smoking campaigns.

All four measures deliver on major recommendations of the National Preventative Health Taskforce.

Cutting smoking will save lives, take pressure off our hospitals, and deliver significant economic benefits.

It is one of the best investments in prevention, and keeping people healthy and out of hospital, that we can make.

Smoking kills over 15,000 Australians every year, and is the largest preventable cause of disease and premature death in Australia. The social costs of smoking (including health costs) are estimated at $31.5 billion each year. Annually, over 750,000 hospital bed days are attributable to tobacco related diseases.

Through tough action over the past two decades, including tax increases and bans on advertising, the number of daily smokers in Australia has been reduced from 30.5 per cent of the population aged 14 and over in 1988 to 16.6 per cent in 2007.

This is important progress, but we can and must do better.


The Government will increase the excise and excise-equivalent customs duty rate applying to tobacco products by 25 per cent from midnight tonight. The excise on cigarettes will increase from $0.2622 to $0.32775 per stick and loose leaf tobacco from $327.77 to $409.71 per kilogram of tobacco.

This will increase the price of a pack of 30 cigarettes by around $2.16.

This measure alone is expected to cut total tobacco consumption by around six per cent and the number of smokers by two to three per cent – around 87,000 Australians.

This measure will provide an extra $5 billion over four years that, together with existing revenues collected from tobacco, will be directly invested in better health and hospitals through the National Health and Hospitals Network Fund.

In this way, all customs and excise duty on tobacco will fund a reformed Australian health and hospital system into the future.

Cigarette price increases have been shown to be effective in cutting smoking, especially among young people, who are particularly sensitive to price.

Taxes on tobacco as a percentage of the retail price of tobacco are currently just 62% in Australia, compared to 80% in France and 77.5% in the United Kingdom.

Today’s increase will bring Australia’s tax treatment of tobacco closer to comparable countries.


In a world first, all cigarettes will be sold in plain packaging by 1 July 2012.

This will remove one of the last remaining frontiers for cigarette advertising, and was a key recommendation of the National Preventative Health Taskforce.

The legislation will restrict or prohibit:
– tobacco industry logos
– brand imagery
– colours
– promotional text other than brand and product names in a standard colour, position, font style and size.

The Government will develop and test package design that will make cigarettes less appealing, particularly to young people.

Graphic health warnings will be updated and expanded. Research shows that industry branding and packaging design reduce the effectiveness of graphic health warnings on tobacco products.

The National Preventative Health Taskforce concluded that “there can be no justification for allowing any form of promotion for this uniquely dangerous and addictive product which it is illegal to sell to children”, including packaging.

The Government will also legislate to restrict Australian internet advertising of tobacco products, bringing the internet into line with restrictions already in place in other media.


At the same time, the Government will boost investments in hard hitting advertising campaigns by $27.8 million over four years, to a total of more than $85 million in the next four years, to encourage even more Australians to quit smoking.

This additional investment will be used for campaigns targeting people in high-need and highly disadvantaged groups such as low socio-economic communities and pregnant women and their partners.

This will extend and broaden the focus of the previous National Youth Tobacco Campaign.

The first elements of the new campaigns will be rolled out by the end of this year.

Through the Australian Taxation Office and Customs and Border Security the Government will continue its successful strong enforcement against the production and importation of illicit tobacco.

This comprehensive anti-smoking package follows this week’s landmark COAG agreement delivering fundamental reform to Australia’s health and hospital system, and builds upon other actions the Government has taken to improve preventative health:

– A record $872 million investment in preventative health including programs in schools, workplaces and community settings

– $103.5 million under the National Binge Drinking Strategy

– The decision to establish the Australian National Preventative Health Agency which is currently being blocked by the Opposition in the Senate.


Source: Prime Minister’s News Release (April 29, 2010)

Australia announces plain packaging

April 29, 2010

CANBERRA-Ratcheting up world-wide efforts against tobacco, Australia’s government said Thursday it plans to ban brand labels and other marketing imagery on cigarette packaging by 2012, a move that would erase iconic logos like Marlboro’s red-and-white chevron from store shelves.

Under the proposal, the tobacco industry would be prohibited from using logos, colors, brand imagery or promotional text on tobacco product packaging. The brand name would be reduced to small, uniform letters at the bottom of each pack. The dominant image would instead be the often-graphic antismoking warnings that Australian government has required since 2006.

Cigarette companies vowed to fight the measure Thursday. A spokeswoman for British American Tobacco PLC, the largest cigarette maker in Australia by sales, said the company believes the plain packaging proposal will “not hold up to close scrutiny.”

A box of cigarettes with generic packaging and a health warning, in a composite image showing the front (on the left) and back of the box, in this handout image from the Australian government Thursday.

But Australian Prime Minister Kevin Rudd, who has seen his popularity drop in recent months and will have to face an election within a year, vowed to press on. “Cigarettes kill people, therefore the government makes no apology whatsoever over what it’s doing,” he said Thursday. He also enacted Thursday an immediate 25% hike in cigarette excise taxes, a move that will raise 5 billion Australian dollars (US$4.62 billion) over the next four years.

Australian officials Thursday described the move as the first of its kind in the world, and it potentially marks a new front as governments around the world look for ways to curb tobacco use. Earlier this year in the U.S., a federal judge ruled that the U.S. Food and Drug Administration can’t block tobacco companies from using color and graphics in their advertisements, though he upheld other restrictions.

Two years ago, U.K. policy makers declined to pursue a ban on logos on packaging when they pushed forward a ban on in-store cigarette displays. However, in February the U.K.’s Department of Health said it would consider mandating generic packaging for all cigarettes as part of a campaign to halve smoking rates by 2020.

Australian Prime Minister Kevin Rudd displays a packet of newly labelled cigarettes in Sydney Thursday.

The move could be challenged on a number of fronts. Tim Wilson, an expert in intellectual property at the Melbourne-based Institute of Public Affairs, said there is a clear argument under Australia’s international trade obligations that even if tobacco companies’ property rights aren’t being taken by the government, they certainly are “being devalued to the point where they’re being ex-appropriated and there would be a very legitimate argument that you should seek compensation for that.”

Cigarette company executives in Australia Thursday complained that the rule would devalue brands but wouldn’t reduce smoking. They also said plainer packs are easy to counterfeit. “Our industry is already losing over 12% of market share to the criminal black market and the taxpayer A$600 million a year. And as everyone knows the criminal black market doesn’t pay taxes and doesn’t ask kids for identification,” said Louise Warburton, a spokeswoman for the Australian unit of BAT.

A spokeswoman for Philip Morris International Inc., the New York-based company that offers the Marlboro brand outside the U.S., said no executives were immediately available for comment.

Health Minister Nicola Roxon said the government is acting on World Health Organization advice that plain packaging of cigarettes should be considered as a measure to curb smoking. The legislation will be carefully drafted to withstand any legal challenge, she said.

“Information from tobacco companies themselves that they use their packaging as a way to market their products that kill people convinces us that this is the next step that should be taken,” Ms. Roxon said.

The government’s aim is to cut smoking rates to 10% or less of the adult population by 2018. The Australian government says smoking is the largest preventable cause of disease and premature death in Australia, killing over 15,000 Australians each year.

Australian tobacco regulations already are quite strict, with restrictions on tobacco advertising in broadcast and print media and in sponsorship of sporting and cultural events since the early 1990s. Since 2006, all cigarette packets have carried graphic images of smoking-related illnesses designed to motivate smokers to quit.

Mr. Rudd wants the legislation to be in place by January 1, 2012, with the ban to take effect by July 1 of that year-an extended time frame that suggests a confidence his government will win the next federal election due by April 2011 at the latest, but which also acknowledges the possibility of a protracted court battle with the tobacco giants.

The tax increase will raise the price of a pack of 30 cigarettes by around A$2.16. Cigarettes currently cost around A$12 to A$15 a packet, depending on the brand. Mr. Rudd said he hopes to use the A$5 billion from the higher cigarette taxes to fund public hospitals.

“Tobacco companies will hate this measure, they will oppose it, nonetheless this and other measures will help to reduce smoking,” he said. “This sort of thing should have been done by governments years ago.”

Australia’s main conservative Liberal-National opposition said Thursday it hasn’t yet seen evidence that introducing plain packaging would be effective in reducing cigarette consumption.

“There is evidence that an increase in [tobacco] excise can result in a reduction of consumption but we need to see the government’s evidence on the measures that they are proposing,” opposition health spokesman Peter Dutton said.


Source: Wall Street Journal (April 29, 2010)

Australia: Plain packaging inquiry

April 26, 2010

The tobacco industry is prepared to fight hard against a new wave of regulation, writes Nick O’Malley.

The parliamentary interrogation began badly for the tobacco executive. After the briefest of greetings, the first question was asked: ”I’d just like to read you something,” he said. ”It’s a quote. ‘We don’t smoke this shit, we just sell it. We reserve the right to smoke for the young, the poor, the black and the stupid.’ That’s a quote attributed to a tobacco company executive. Was that a quote from one of your company executives?”

The question was put last month. The executive in the hot seat was Graeme Amey, the head of the New Zealand arm of British American Tobacco Australia. Of course, he had never said any such thing. The line is commonly attributed to an actor in a commercial for Winston cigarettes, recounting what he was told by an R.J. Reynolds Tobacco Company executive on set in the 1980s.

Still, the question set the tone for the whole bruising parliamentary hearing in New Zealand, one which may soon be replayed in Canberra. The Family First senator, Steve Fielding, has proposed legislation that would see cigarettes sold in Australia in plain packets, stripped of all branding and imagery. Imagine plain white packets – save for gruesome health warnings and brand names in generic font. Submissions for an inquiry on the legislation close next week. More ominously for the $9 billion Australian industry, the Rudd government’s own Preventative Health Taskforce has recommended plain packaging.

On the record, Australian tobacco companies contacted by the Herald responded only via email and in the most politic language. Off record, it was made clear they would fight for their brands to the end.

The stakes are almost immeasurable. Last year, Marlboro, owned by Philip Morris, was said to be the 17th most valuable brand in the world, worth $US19 billion, far more than household names such as Apple, Nike and Ikea.

A report for tobacco investors in Britain published in January by the investment bank Citigroup made it clear how crucial the issue was.

”The most important issue is plain packaging, but there is no advance here – we have always said that, for investors, the No. 1 regulatory issue is plain (or generic) packaging: we believe greying out all packs would lead to rapid down-trading,” it said.

”However, the [British] government is no further along with this idea, saying it believes the evidence needs to be ‘carefully examined’. For the first time, it says it needs to give weight to the legal implications of plain packaging.”

Tobacco companies know that when countries introduce new regulations others follow suit. Canada introduced the first graphic health warning on cigarette packets in 2001. Today, 35 countries mandate them and more introduce them each year.

This domino effect has been accelerated since the World Health Organisation established its 2005 Framework Convention on Tobacco Control, which 168 nations have signed.

As long as companies can wrap their products in these brands they still reap the residual benefits of the untold hundreds of millions of dollars they spent on advertising to create them in the century before advertisements were banned.

So powerful are these brands that when images of people smoking were first outlawed from cigarette advertisements, tobacco companies were able to simply use their brands’ distinctive colours to continue advertising. It is this vast unquantifiable benefit they still receive that the anti-smoking lobby wants to kill.

Simon Chapman, a professor of public health at the University of Sydney who holds a PhD on the semiotics of cigarette advertising, has no doubt that the industry will launch a legal attack on the first jurisdiction that tries plain packaging.

”The industry really is shitting itself in Australia and internationally that there will be countries that start taking off [on the packaging issue].”

He notes that in Uruguay, where to the misfortune of the tobacco industry the health minister is an oncologist, a vicious legal dispute has already erupted. Philip Morris is suing the government, which wants graphic health warnings to take more than 80 per cent of the packaging.

In any legal battle that does arise over plain packaging, the industry will argue that the state is acquiring its intellectual property.

Jonathan Lieberman, a senior legal adviser to the International Union Against Cancer, argues that Uruguay is in a tougher position than countries like Australia and Canada because it has a bilateral trade agreement with Switzerland, where Philip Morris is based, and because it has limited legal resources. ”They just don’t have the same capacity as we do to stare down a threat from the industry.”

He believes that, for a number of reasons, Australia is well positioned to be the first country to introduce plain packaging.

”The first is our domestic constitution; it gives government a lot of scope to regulate corporate behaviour in the public interest. Our government also has very strong legal resources to stare down a threat. It can go to the best legal minds in the country on substantive issues, it can assess the threat and it can defend it when it comes to that.

”Then there are the political reasons. We have a government that is committed to prevention [in health] and it has public support.”

The Health Minister, Nicola Roxon, said the government was ”actively” considering the recommendations of the Preventative Health Taskforce, though some doubt Fielding’s proposal could stand as drafted.

A spokeswoman for British American Tobacco Australia told the Herald the company would mount a legal challenge. It would ”take every action necessary to protect its valuable intellectual property rights and its right to compete as a legitimate commercial business selling a legal product”.

The company argues there is no proof that plain packaging ”would deliver public health objectives” and said it would increase illegal sales of so-called chop chop.

The director of corporate affairs at Philip Morris, Chris Argent, said in a statement: ”Plain packaging would represent an unconstitutional expropriation of valuable intellectual property and violate a variety of Australia’s international trade obligations, such as the agreement on trade-related aspects of intellectual property rights, the Paris convention, the technical barriers to trade agreement and the US-Australia free trade agreement. It may also give rise to actions from other countries or private investors under various bilateral investment treaties.”

Both companies have made submissions along these lines to the Preventative Health Taskforce. Professor Mike Daube, from Curtin University, considers the submissions handy guides. ”Anything they object to is good for public health. The more virulently they object to it, the better it is.”

Philip Morris has even set up a website in an apparent effort to win public support for its opposition to plain packaging. It names Australia, Canada and Britain as countries considering the move.

While the Australian government considers its response to the taskforce recommendations, the industry continues probing the boundaries of the existing regulations on tobacco sales.

Since the government pockets 70 per cent of the sale price of every packet sold, selling cigarettes is a high-turnover, low-margin business. Laws dictate that tobacco companies can set any price they want, but they cannot use discount promotions. So they have to be innovative.

Some high-profile premium brands are now sold in what the companies call ”40 packs” – two packets of 20 cigarettes in a cardboard sleeve, sold at a discount to dodge prohibitions of multi-pack promotions.

One supermarket counterhand told the Herald of occasions when the store was short of sleeves ran out. When a sale was completed customers were asked to remove the packets and return the sleeve.

Documents obtained by the Herald show how hard Coles works with its tobacco suppliers to maintain sales while abiding by the law.

One memo dated January 22, 2008, and titled ”Suspension of Tobacco Multi-buys” warns staff: ”Please be advised we have received a legal challenge of the verbal upsell of the tobacco multi-buys offer. Appropriately we are suspending this activity

immediately pending advice from our lawyers.” A memo from November says: ”Ensure all team members are aware of state-specific offers & upsell to customers purchasing smokes.”

From June, tobacco products may not even be displayed at the point of sale, making the relationships that tobacco companies have with retailers even more crucial.

Larger companies contacted by the Herald would not discuss their marketing strategies but the directors of the tiny fledgling of the industry, Richland Express, gave some insight.

Richland Express has broken industry taboos by creating cheap house brands on contract for sale exclusively by Coles. The directors say that in a dark market – one without advertising – cigarettes brands thrive or wither by the support of the retailer. Richland Express is the only new company in recent times to have won shelf space alongside the big three existing companies.

As the companies probe the boundaries of the dark market, they are maintaining links with the politicians that govern it.

Despite a WHO protocol stating that governments should have no contact with tobacco companies aside from that needed to regulate the industry, tobacco maintains its relationships.

While Labor doesn’t accept donations from tobacco, since the last election the NSW Liberal Party has accepted $301,000 from the industry, according to the Greens’ project Democracy4sale.

The industry enlists lobbyists to act on its behalf federally and in all states except Tasmania. In Canberra, Intermediary Consulting acts on behalf of British American Tobacco Australia (BATA), Jackson Wells acts for Imperial Tobacco and InsideOut Strategic acts for Philip Morris. Intermediary Consulting and Jackson Wells are also at work at Macquarie Street.

And despite Labor’s stance, campaigners still criticise the party for accepting money from the industry indirectly through donations from tobacco retailers and pubs and clubs.

The Independent Retailers of NSW & ACT donated $77,820 to NSW Labor between 2003 and last December and a further $89, 820 to the Liberal Party over the same period.

During this period, the association lobbied against the introduction of new bans on displaying cigarettes in shops, and when the regulations were passed, it won concessions by having them phased in.

Pubs and clubs associations have donated $1,384, 548 to the major parties since the 2007 election and both groups have opposed greater smoking restrictions

And tobacco has funded these organisations through sponsorship of journals and annual conventions.

One of the sponsors of last year’s Australian Hotels Association convention was an organisation called Butt Free, described as an ”environmental product stewardship organisation focused on reducing cigarette-butt littering by changing the behaviour that causes it”.

Butt Free was formed in 2003 by BATA. It says on its website that BATA ”is still our major contributor, and that we actively seek funding from the tobacco industry”.

That year, the AHA boasted registration fees for the event had been kept at only $695 ”thanks to the generous support of our industry partners”, including British American Tobacco.

The 2008 annual report of Clubs NSW mentions both Kraft (owned by Philip Morris) and a company called Outdoor Inn Smoking Room Consultants.

In 2006 it was revealed the NSW government had invested $12 million in Philip Morris’s parent company. Morris Iemma, then premier, did not bow to pressure to sell the shares. ”Where do you stop? The next target then are the coalmines? Oil companies or other investments?” he said on the ABC.

The tobacco cause in Australia has also been championed by the nation’s two leading conservative think tanks, the Centre for Independent Studies (CIS) and the Institute of Public Affairs (IPA), both of which have ideological stances against regulation. It is known both groups have accepted tobacco money in the past, but when contacted by the Herald this week, the CIS denied it still did.

The director of the IPA’s deregulation unit, Dr Alan Moran, said he neither knew nor cared to know whether the organisation accepted funding from tobacco companies, but maintained the IPA’s stance against increasing regulation, noting that smokers were fully aware of the dangers associated with tobacco.

As with other industries, tobacco companies are careful to groom allies with powerful connections. Rupert Murdoch famously served simultaneously on the boards of Philip Morris International and of the Cato Institute, one of the most influential think tanks in Washington.

In Australia, the former NSW premier Nick Greiner was the chairman of BATA between 1999 and 2004. Today he chairs the Nuance Group, one of the world’s largest owners of duty free outlets.

Nuance is the subject of a complaint by the group Action on Smoking and Health for allegedly breaching bans on displaying cigarettes. International duty free retail associations are fighting moves to have tobacco discounting scrapped from duty-free outlets.

Bede Fennell, a former head of public affairs for BATA, has taken a position in the company’s London office. He was once a director of the NSW branch of the Liberal Party.

The company’s regional director of corporate and regulatory affairs, Andreas Vecchiet, is a former diplomat and was an adviser to the Hawke and Keating governments.

A member of BATA’s board of directors is Duncan Fischer. As a one-time chief executive of the gambling giant Tattersalls, he is a man with some experience in marketing a heavily regulated product.

He attracted controversy in 2008 when another Tattersalls executive accused him of shutting down a problem gambler tracking system that might have lead to costly legal action.

The executive, Phil Ryan, reportedly told a Victorian parliamentary inquiry that Fischer had said, ”and I quote, ‘screw the problem gamblers’ for as long as he could until he was forced to stop by government legislation”.

Fischer denied the allegation.

Anne Jones, the chief executive of Action on Smoking and Health, says that unless Australian governments end the tobacco industry’s interference in policy making, and ban all promotion of the industry’s product, the declining smoking rate will stall and more people will die.

The late Professor Konrad Jamrozik, whose expertise included epidemiology, estimated that in 2013, 63 years after the publication of the first evidence of the dangers of smoking, tobacco will claim its one millionth Australian victim.

Tobacco’s iron grip

Three big companies in the Australian market are British American Tobacco Australia (42 per cent); Philip Morris (40 per cent); and Imperial (18 per cent).

More than 960,000 Australians have died from smoking since the first evidence of the dangers was published in 1950.

About one in two long-term smokers will die of a smoking-related illness.

One in five Australians smoke.

About 23 billion cigarettes are sold in Australia each year, or 1300 packets of 25 per minute.


Source: Sidney Morning Herald (April 24, 2010)

France to add pictorial health warnings to cigarette packages

April 20, 2010

On April 16, 2010, France’s Minister of Health, Roselyne Bachelot, announced that pictorial health warnings will be required on all cigarette packages in France. Text warnings will cover 30% of the front of packages, and pictorial warnings will cover 40% of the back of packages, in addition to border size. Fourteen of the recommended EU health warnings have been chosen, and will be required on all cigarette packages 1 year from the publication of the official decree.


Source: La Parisienne (French; April 16, 2010)