Senator DUNIAM (Tasmania) (09:32): Last night I was mid-flight, talking about the history of tobacco excise in Australia. Given that I was cut off midstream, I think it is a good opportunity for me to recap some of the statistics that—

Senator Ian Macdonald interjecting—

Senator DUNIAM: Yes, I thought that would be a good idea, Senator Macdonald—to recap on some of the statistics around the importance of dealing with tobacco related and cancer related diseases. I mentioned yesterday the fundamental fact that tobacco was responsible for about 7.8 per cent of the total burden of disease and injury in Australia, as reported in 2003, which I am told is the equivalent of 15,000 deaths per year. And, as was noted by a number of other speakers in the debate, it is responsible for a cost of around $31.5 billion in health, social and economic related costs in the years 2004-05. You have to wonder where that cost is at today. So this merely highlights the importance of this piece of legislation as one of the suite of measures that have been put in place by this government to deal with smoking and smoking related diseases.

Some of the other statistics I went through yesterday related to our home state of Tasmania and where we stand with reference to the rest of the country. Some of those statistics were quite alarming. In terms of my own cohort, younger males in Tasmania between the ages of 25 and 34, about 40 per cent of that demographic are smokers. Then you move up to the 35- to 44-year-olds and it is not much lower—about 38.6 per cent—far too high, as I said yesterday. I think most senators in this chamber would agree.

The one most concerning statistic about the health and wellbeing of younger Tasmanians, as I said yesterday, is that Tasmania continues to have the highest proportion of women who smoke during pregnancy. That is not just impacting the individual smoking, but the unborn child. The prevalence of young women smoking during pregnancy in Tasmania was 35.7 per cent for those under 20, and 30.8 per cent for those aged between 20 and 24. Amongst Indigenous Tasmanians it was found to be almost 50 per cent of the population in 2008—44.5 per cent.

I touched on the problems related to minors smoking tobacco in our state. The 2011 Australian secondary school alcohol and drug survey showed that six per cent of 12- to 15-year-olds were smokers. I certainly was not smoking back then. I did not really even have a good understanding of what these sticks that people were putting in their mouths were. But to learn that five years ago—and I hope that number has gone down—six per cent of people in that age group, 12 to 15 years of age, were smoking is just incredibly alarming. Then you move to the slightly higher age group 16- and 17-year-olds—still under the legal age—16 per cent of them have taken up the habit.

But the best statistic, I think, is in relation to how younger people have become aware over recent years—through various education campaigns, through the packaging legislation and the like, and various community attitudes which seem to be prevailing at the moment—about the impact that smoking has on one's health. The 2011 survey that I mentioned earlier on reported that 96 per cent of students agree that smoking causes lung cancer and harms unborn babies. So, while there are those alarming statistics, which I have recapped on now, I think it is great to know that young people, who have their whole lives ahead of them, are beginning to appreciate the damage they are doing to their bodies, and those around them, with reference to smoking.

I was also speaking about the history of tobacco laws, particularly the excise tax situation in Australia, but one thing I want to touch on in Tasmania are smoke-free zones. Over the years, there have been a number of legislative measures put in place in the state of Tasmania regarding restrictions on smoking in certain areas. We all know you cannot smoke in planes, workplaces and other obvious locations, but in Tasmania in the year 2001 it became illegal to smoke in workplaces and in enclosed public places, such as shopping centres, restaurants, factories, hospitals, corridors and toilets.

Further smoke-free areas were introduced in the state of Tasmania, including three metres outside entrances and exits of aforementioned locations; within 10 metres of ventilation equipment, air conditioning towers and things like that—which I think is a good move, because what is the point of restricting smoking inside if you are just going to blow it in through the air conditioning ducts; inside work vehicles and also in seating at cultural and sporting events and venues.

Then you move through to 2005, where gaming areas and nightclubs were added to that list, and then a 50 per cent portion of outdoor dining areas. In 2006 pubs and clubs and hotels in Tasmania became smoke-free on the inside—completely smoke-free. Then, fast-forwarding to 2012, there were new smoke-free areas introduced, including playgrounds, patrolled beaches, pedestrian and bus malls and bus shelters. Then it was 100 per cent of outdoor dining areas, which is something I recall in the local media in Tasmania caused a great deal of consternation around people wanting to enjoy a cigarette while having their meal or their drink. But I think for the most part people welcomed the right to have a meal without having to inhale their neighbouring table's smoke.

Then it was competition and seating areas at sporting events and other large public events. Later that year, carols by candlelight events were required to be smoke-free. The next year, 2013, selected markets and food and wine festivals and music festivals were added to the list. This was in addition to specific measures by the Hobart City Council and the Launceston City Council. And it is this combination of approaches to restricting where smoking can take place, and indeed measures like this—like the excise tax—which have helped Australia tackle the problem of smoking and the impact on health in our country. Thank you, Mr President.

Senator XENOPHON (South Australia) (09:39): I support the Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016. This is important legislation, given that each year smoking kills an estimated 15,000 Australians and costs Australians $31.5 billion in social—including health—and economic costs. These are statistics from the Department of Health; they are uncontroverted. We know the damage that smoking does. There are some aspects of this legislation that ought to be ventilated in the context of how it will operate. I also want to raise the issue of the paucity of anti-smoking measures and support for those that want to quit smoking.

Back in 2004, as a member of the South Australian Legislative Council, I moved an amendment to legislation that the South Australian Labor government introduced to ensure there was a trial of at least 1,000 places, 1,000 individuals, to get the benefit of free nicotine replacement therapy. It was something that the Labor government in South Australia inexplicably opposed. It was supported by the opposition and the crossbenchers, and at the end of the day it got up and the trial went ahead, as I understand it.

The issue here is an important one. It is as relevant now as it was back in 2004—that is, governments seem to be willing to rake in massive amounts of revenue from tobacco excise. Let us put this in some perspective. In 2009-10, $5.6 billion was raised; in 2010-11, $6.3 billion; in 2011-12, $5.4 billion; in 2012-13, $5.8 billion; in 2013-14, when there was a jump in the excise, $8.4 billion; and, in 2014-15, the most recent year that I have details for, $8.8 billion. That works out to something like $40 billion over that period. How much did the federal government spend during that period on anti-smoking campaigns? The figure I have for that period is $135 million. When compared to something like $40 billion in revenue, that is a pretty poor effort.

If we are serious about reducing the smoking rate as quickly as possible to reduce the impact of smoking on the community, to ensure that we do not have 15,000 Australians dying each year because of smoking and to ensure that it does not cost our nation $31½ billion a year in social, health and economic costs, then we need to be fair dinkum about providing more resources for anti-smoking campaigns. We need also to make it easier for people wanting to quit by giving them all the support they need, and we need to ensure that we do not demonise smokers.

In relation to nicotine replacement therapy, an issue that I raised in the South Australian parliament back in 2004, the cost to government in repatriation, in PBS benefits for smoking cessation therapy, for 2014 was $47.8 million. There is a real issue as to whether nicotine replacement therapy ought be free or ought to be trialled on a free basis, rather than people having to put their hands in their pockets, to make it much easier for people to kick the habit. It is a very addictive habit. We need to assist people to kick the habit as soon as possible.

I will be asking the government what commitments they will be making with the additional excise they will get from this legislation. What commitments will they be making to ensure that there will be more help for people to quit smoking? I note the objective of these bills is to improve the health of Australians by reducing their exposure to tobacco products. Under this legislation, increases in excise ensure that average cigarette prices are more closely aligned with the World Health Organization recommendation concerning the proportion that excise and excise-equivalent customs duty should comprise of the price of a cigarette.

I hope this legislation will be examined in a short committee stage. I ask the government what commitments there are to spend the massive increase in tobacco excise the Commonwealth has been getting in recent years on nicotine replacement therapy, on Quit campaigns and on funding organisations such as Action on Smoking and Health, which I worked with over the years and which did a terrific job of advocacy in the public health space in relation to this. These are important issues that much must be dealt with, in my view, for the government to tell us what is happening in relation to this matter.

There is also another issue that concerns me and, whether you support or oppose this legislation, it ought to concern all of us. It relates to the flaws in the collection of this excise. An article in The Australian FinancialReview on 30 May this year by Joanna Mather and Fleur Anderson states:

An audit report has identified serious shortcomings in the collection of taxes on imported tobacco products, which are worth about $8 billion a year.

That report, by the Auditor-General, headed Administration of tobacco excise equivalent goods, in respect of the Australian Taxation Office and the Department of Immigration and Border Protection, was transmitted to the Speaker and to you, Mr President, on 5 May this year and raised some very, very serious concerns.

The ANAO report found that there were few checks and balances in place when it comes to the administration of tobacco excise equivalent goods and that the collection of customs duty had fallen far short of effective practice. I repeat that: the Auditor-General, no less, said that the way we collect tobacco excise in this country has 'fallen far short of effective practice'. The report says that the risk of noncompliance was assessed by the ATO as ranging from moderate in 2011 to significant in 2015, when there was:

… an observed increase in the number of entities displaying non-compliant behaviour that are importing tobacco and/or storing imported tobacco.

The Auditor-General's report goes on to say:

The ATO advised that the reason for the changed risk ratings over the years is largely a consequence of shifts in focus brought by different ATO managers when scoping risk assessments.

The Auditor-General says that the fact that the risk was raised to 'significant':

… was driven by the reputational risk for the ATO and DIBP—

that is, the Department of Immigration and Border Protection—

as a result of large seizures of illicit tobacco … and a noted increase in the incidence of theft from smaller warehouses (that account for approximately two per cent of the revenue collected).

The government ought to tell us what it is doing in response to an Auditor-General's report of May of this year that was very critical about the lack of checks and balances in place when it comes to the collection of tobacco excise. These are issues that ought to be raised. I again put the government on notice, given that there are a number of other speakers on this debate. What will the government do in terms of increasing the amount available for Quit campaigns to make it easier for those people that want to quit to get the help and support they deserve so that we can make even greater inroads into reducing the awful death rate from tobacco products and the enormous cost—the $31½ billion cost—to our community as a result of the consumption of tobacco in this country?

Senator HUME (Victoria) (09:48): I rise to speak on the Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016. The coalition is particularly proud of these bills, which will increase tobacco excise charged on domestic production and equivalent customs duties charged on imports by way of four annual increases of 12.5 per cent a year from 2017 to 2020. These increases will replicate the annual increases that were put in place by the former government and continued by this government from 2013 to 2016. In addition, adult average weekly ordinary time earnings based indexation of tobacco excise rates will continue. The next biannual indexation of tobacco excise will occur on 1 March 2017.

From 1 September this year, the excise and excise-equivalent duty rates on tobacco are just over 61c per stick and $763.20 per kilogram of tobacco content. This equates to $15.26 in excise on a packet of 25 cigarettes, which currently retails for approximately $25. Ignoring biannual indexation, the 12.5 per cent increases will increase excise per packet of 25 cigarettes by around $2 each year. This means that, after the final increase in 2020, the excise component of a packet of 25 cigarettes will be around $21.50. The increase in excise and duty will move Australia towards the World Health Organization's recommendation that excise should comprise around 70 per cent of the price of a cigarette. The precise impact on price is uncertain, because tobacco companies may alter their prices beyond that excise change, and that is something which is out of our control.

A number of speakers have already mentioned that each year smoking kills an estimated 15,000 Australians and costs Australia $31.5 billion in social costs, including health costs. This bill particularly aims to reduce the prevalence of smoking in Australia and therefore to minimise the harm of cigarette smoking to the community. The Turnbull government is greatly concerned about the serious health risks of smoking and has continued the efforts of previous governments to support and build on Australia's great success in tobacco control. The excise increases announced in the 2015-16 budget are firmly based on the evidence that they will further help reduce smoking rates in Australia.

To give a brief history of tobacco control in Australia, in 1997 the government implemented a national tobacco campaign. In 2006, graphic health warnings were introduced on most tobacco packaging—and they still scare the bejesus out of most people on a daily basis. Some of those pictures are just terrifying. In 2010, there was a 25 per cent increase in tobacco excise. In 2011, tobacco plain packaging became law. There was some controversy surrounding that, but we believe that it has certainly had an impact. In 2012, all tobacco products sold in Australia were required to be in plain packaging, with updated and expanded health warnings. In 2013, we started seeing stepped tobacco excise increases, with 12½ per cent increases in 2013, 2014 and 2015. In 2016, a post-implementation review published on the Office of Best Practice Regulation website on 26 February found that tobacco plain packaging had begun to achieve its objectives. The last 12½ per cent increase in excise kicked in very recently in 2016.

Increasing the price of tobacco products through taxes is widely recognised as an effective and cost-effective tobacco control intervention for reducing tobacco use, particularly among youth and people from lower socioeconomic groups—those disadvantaged communities where smoking is most prevalent. Increased prices may cause some financial stress; that is understood. However, we do believe that that is offset in Australia by the provision of accessible and affordable cessation treatment—something that Senator Xenophon recently spoke about—both in services and in therapies. In Australia, the 2010 post-implementation review, PIR, conducted by the Treasury, estimated that, of the 25 per cent tobacco excise increase, there was an 11 per cent decrease in tobacco consumption. That was based on import data. That was just over two years, which is a fairly significant impact.

The guidelines that the World Health Organization issue recommend that excise account for at least 70 per cent of the retail price, and it has been very challenging for Australia to reach those World Health Organization targets. Tobacco manufacturers have taken the opportunity to increase the price of their product at the same time that excise increases, which is sort of muddying the waters. As reported in 2015 in the World Health Organization report on the global tobacco epidemic, as of mid-2014—and since then there have been already two more 12.5 per cent excise increases as well as biannual increases in excise in line with wage inflation—Australia's total taxes applied to cigarettes were the sixth highest among 106 countries who reported to the World Health Organization.

It also accounted for, at this stage, 47.67 per cent of the total retail price of the most popular brand of cigarettes, which was Winfield 20 packs. Goodness me, when did Winfields become the most popular brand? I speak as an ex-smoker. I was actually one of those smokers who gave up when they became pregnant. But I was a passionate smoker. In fact, I think I might have smoked for Australia at one stage; I was very good at it.

Senator Ian Macdonald: A carton of Winfields.

Senator HUME: A carton—that is exactly right. It was not quite a carton of Winfields. I think I smoked something far more glamorous than that. I was one of the few people, I think, that made smoking look attractive and sexy.

Senator Ian Macdonald: And you would have.

Senator HUME: Thank you.

An opposition senator interjecting—

Senator HUME: No, I did not. It is a terrible habit. So, at that stage, those excises accounted for just over 47½ per cent of the total retail price of the most popular brand and gave Australia the seventh highest after-tax cigarette price in the world.

Tobacco is one of the leading causes of preventable disease and premature death in Australia. The ABS data indicates that smoking rates in Australia dropped to 14.5 per cent among adults in 2014 and 2015, compared with 16.1 per cent in 2011 and 2012 and 22.3 per cent in 2001. The ABS data also demonstrated that significant gains have been made in reducing the prevalence of daily smoking in Aboriginal and Torres Strait Islander people aged 15 and over, which is down to 39 per cent in 2014-15 from 45 per cent in 2008 and 49 per cent in 2002. So headway is certainly being made with this particular community where there is entrenched socioeconomic disadvantage.

Australia has a broad range of tobacco control measures in place already and has sustained a multifaceted approach over the past several decades, which has helped to achieve the decline in national smoking prevalence. Interventions include excise increases, very effective education programs and campaigns, plain packaging of tobacco products, large graphic health warnings, prohibiting tobacco advertising and promotion, and providing support for smokers to quit the habit.

Ongoing tobacco interventions, including excise increases, are critical to ensure that the prevalence of smoking in Australia continues to decline. It is incorrect to assume that the rate of reduction of smoking prevalence can be maintained without additional tobacco control efforts. Evidence from Australia and overseas shows that when tobacco control efforts stall so does the decline in smoking prevalence.

Increasing the price of cigarettes via taxation is one of the most effective ways of reducing tobacco consumption and preventing the uptake of smoking. Higher prices encourage smokers to quit or reduce their consumption, while also discouraging potential smokers, including young Australians, from taking up the habit.

The adult daily smoking rate was 14.5 per cent of the population in 2014-15. This measure—increasing the excise on tobacco—will assist the government to make progress on the Council of Australian Governments' target to reduce the adult daily smoking rate to 10 per cent of the population, and to halving the daily rate of smoking among Aboriginal and Torres Strait Islander people by 2018. That is a target of the Council of Australian Governments.

Aboriginal and Torres Strait Islander Australians, people in remote areas and people on the lowest socioeconomic status all have higher rates of smoking compared to the general population. Although these groups will, undoubtedly, experience a decline in purchasing power if they keep smoking, they will also receive the income and health benefits from quitting.

This change sits alongside the numerous interventions that the Commonwealth has taken to reduce the prevalence of smoking, including a comprehensive ban on tobacco advertising and promotion, retail display bans, Pharmaceutical Benefits Scheme subsidies for smoking cessation supports, and extensive and continuing public education campaigns.

These bills will raise $4.59 billion across the forward estimates period. Goods and Services Tax receipts are estimated to increase by $430 million over that same period. The revenue gained from higher tobacco excise will be used by the government to provide a range of services but, importantly, that range includes health services. It is a very important measure. It is an important part of the government's comprehensive tobacco control strategy, which includes investment in anti-smoking social marketing campaigns, subsidies for nicotine replacement therapies and the introduction of plain packaging for tobacco products.

The government announced in the budget that it will strengthen the penalties for illicit tobacco offences and will provide an additional $7.7 million for the Tobacco Strike Team to combat illicit tobacco activity. The primary responsibility for the illicit trade in tobacco rests with the DIBP and the Australian Taxation Office. The DIBP received funding in the 2016-17 budget to tackle illicit trade in tobacco. Currently, there is no reliable estimate of the size of the illicit tobacco trade in Australia. The DIBP and the ATO are working to develop a reliable estimate.

Some commentators suggest that tobacco control interventions, such as excise increases and tobacco plain packaging, increase this illicit trade. There is, in fact, no reliable evidence that this is the case. However, there is international evidence to suggest that illicit tobacco market size does tend to be driven more by supply factors, including the cost of supply to market, which is very high in Australia, and also the level of law enforcement activity, the presence of corruption, the likelihood of detection, and the scale of penalties.

As such, tackling the illicit trade in tobacco should not involve weakening effective tobacco control measures; rather, it should be addressed by strong enforcement and compliance measures. Australia has a strong and active enforcement regime aimed at combating the illegal trade in tobacco products, and this is made stronger through the most recent budget allocations to Border Force. The trade in illicit tobacco attracts significant penalties under the Customs Act 1901 and the Excise Act 1901. Tobacco smuggling is punishable by fines and up to 10 years imprisonment.

Public health advocates say that the latest tax hike on cigarettes will cut smoking rates even further from the already steep falls that we have seen in recent years and could even lead to Australia becoming practically smoke free. The number of smokers in Australia has dwindled over recent decades. As I said, it was nearly one-quarter in the early 1990s and it is now closer to only 13 per cent. That is due to previous excise increases and public health measures like banning smoking in public areas and plain-packaging laws.

The chief executive of the Cancer Council of Australia, Professor Sanchia Aranda, said that price is an important factor in people's decision to smoke. She said:

Every time you increase the excise consumption goes down. We anticipate if there were four of these recurrent tobacco increases over time, that about 320,000 current smokers would attempt and be likely to quit as a result of all four increases, and about 40,000 teenagers would be deterred from taking up smoking. In the longer term that means tens of thousands of cancer deaths would be prevented.

Professor Aranda also that lung cancer was still the most significant preventable cancer in Australia.

But there is a view that increases in tobacco excise punishes those on low incomes. The reality is that tobacco tax increases are particularly effective in prompting people in those lower socioeconomic groups—those most disadvantaged in our society—to quit smoking. This is very important because disadvantaged groups tend to bear a disproportionately heavy tobacco death and disease burden.

There is also a claim that increasing tobacco excise would be a tax grab. But what does the community think? It is very hard to imagine any blatant tax grab being popular; however, the Newspoll research shows that 73 per cent of Australians support an increase in tobacco excise. That is not just the nonsmokers talking. Recently, Quit Victoria research showed that 60 per cent of smokers supported a tobacco tax increase—and why wouldn't they, when it can literally save their lives.

The tax grab theory has another major flaw: increasing tobacco excise is the most effective measure available to governments for reducing the social and economic costs of tobacco use. The World Bank and the World Health Organization say so, as do analyses of Australian trends in tobacco consumption done in the 1990s. So the health benefits of the tax are really what matter. The revenue should be seen as a fortuitous by-product, generating funds to reinvest in public health.

Some critics point to the tax increases potentially boosting the tobacco black market—and, yes, illegal tobacco is a very serious issue. But this can be addressed, and is being addressed, in this bill through tighter policing. Ultimately, as policy measures such as increased tobacco excise continue to denormalise smoking in our communities, the market itself will become far less lucrative.

Smoking is the leading cause of death and disability in Australia. If there were any other preventable cause of so many deaths—an infectious disease, terrorism or road trauma—the government would be expected to take action. This government is taking action. Quite frankly, the Australian people should expect nothing less of us.

Senator PATERSON (Victoria) (10:08): I warmly welcome the opportunity to contribute to this important debate on an important piece of legislation—the Excise Tariff Amendment (Tobacco) Bill 2016—being put forward by the Turnbull government. After decades of advertising, education and taxes, every Australian now knows that cigarettes are bad for your health. It would be hard not to realise that, given the mountain of effort being put in by governments around the world, particularly in Australia, on educating people about those risks.

Personally, I have never been a fan of smoking, whether it is cigarettes, cigars, cigarillos, or any other smoking products. They just do not agree with me. I have never been able to bear smoking myself, but I do recognise that there are other people who do smoke and enjoy it—and I will come to that later.

My late nan was a very heavy smoker for many years, and late in her life she suffered emphysema as a result of her smoking. I have to say it was not a very pretty thing to watch—it was very sad to see her health decline as a direct result of decisions that she had made during her life.

So I am not sad, and I do not think anyone in Australia would be sad, to see the continuing decline of smoking as a habit. That is something I think we should all welcome. The adult daily smoking rate in 2014-15 was 14½ per cent. While that is still a high figure, it is certainly a dramatic improvement from the figures only a few decades ago. COAG has agreed to a bipartisan intergovernmental target of 10 per cent, and I think that is a reasonable target although I am sure all Australians would hope that in due course no Australians will be choosing to smoke.

The excise on a packet of cigarettes today is about two-thirds of the total value of a packet of cigarettes. Today a packet of 25 cigarettes retails for about $25, and about $15 of that $25 is excise which is collected by the government. This measure proposed by the government will only increase the proportion of a packet of cigarettes that is collected by the government. It is somewhat ironic that in many ways it could be argued that the government profits from the sale of cigarettes more than tobacco companies do. Given this, it is vitally important that the government should take complementary action at the same time to combat illicit tobacco. When we charge an extra dollar of excise we increase the incentive of people to buy, sell and traffic in illicit tobacco, which, by its very nature, avoids excise.

Illicit tobacco is a serious problem around the world and it is a serious problem in Australia. A report by KPMG this year estimated that the revenue lost to government from the illicit trade is more than $1 billion a year. From a public policy standpoint that is obviously a very serious problem, but it is not the only problem from illicit tobacco. Illicit tobacco also fuels criminal behaviour, including organised crime, bikie gangs and international criminal syndicates. It hurts law-abiding small businesses, who find it very difficult to compete with people who are able to charge much lower prices for illegal products because they choose not to pay the excise they should. The quality of the illicit product, such as you can measure the quality of a tobacco product, is vastly inferior to the quality of a legal product and is even worse for human health than legal tobacco products.

Predominantly the illegal tobacco that we have in this country is now imported—it is mostly sourced from overseas and it is mostly smuggled into Australia using various means. However, there is still, as there has been for some time in this country, a domestic illegal tobacco growing industry. As reported by Rob Harris in the Herald Sun in April this year, the Australian Taxation Office conducted a raid and seized a record $15.4 million worth of illegal tobacco growing on a northern Victorian farm. A community tip-off led to the ATO raid on what they described as a large and sophisticated growing and processing operation near Kerang. This tobacco that was seized amounted to about 30 million cigarettes—and this is just from one farm in one area of northern Victoria. It demonstrates the strength of the illegal tobacco industry here in Australia and the importance of cracking down on it.

This government takes the threat of illicit tobacco very seriously. That is why we established the Australian Border Force tobacco strike team—to crack down particularly on that imported tobacco—and that is why the ATO continues to investigate, raid and crack down on the domestic growing of illegal tobacco. In the latest budget, as a complementary measure to the legislation we are discussing today, the government announced that it would provide an extra $7.7 million for the tobacco strike team to help crack down on illicit tobacco.

I want to make two wider points about this debate and policy. Ultimately, tobacco is a legal product in Australia. Although I strongly disapprove of it and strongly encourage people to not start smoking in the first place—and if they are smoking today, I strongly encourage them to quit smoking—ultimately, I think we have to accept that there will be some people who, even understanding the very serious risks of smoking, will still choose to smoke. In a free society, people must be able to make decisions which we disapprove of, as much as we counsel them against it. While ever we decide that tobacco remains a legal product—and I am not aware of any proposals, at least before this chamber, to make it illegal—we have to accept that some people are going to smoke, and that is their choice.

There are people who still do choose to smoke. I have spoken to people who, understanding the risks, still think it is worthwhile and something that they enjoy or because they are addicted have difficulty giving it up. This ties into my second point: that there are two potential solutions to this problem. The first is the government driven approach. This is something which has been used quite effectively in Australia over the last 30 to 40 years to significantly reduce the rate of smoking. There is no doubt that there has been a great success in this area. We have used quite high levels of taxation, taxpayer funded advertising and education in the community, particularly through our schools, to educate people about the dangers of smoking and to encourage them to quit. The result of that has been a significant reduction in the rate of smoking.

What we have noticed though in recent years, particularly over the last decade, is that the rate of reduction of smoking has begun to plateau as we get down to the more hardcore smokers,—who are committed and understand the risks; who bear the cost and continue to smoke. That is why the government has, in a bipartisan way, considered some other, more exotic measures, to address this, such as plain packaging of tobacco products, as a way of getting through that barrier and further reducing smoking. That is why this government has decided to further increase excise. Excise has certainly been an effective approach and I will be supporting this bill for that reason.

However, I think it is important that, while we support these measures, we acknowledge that there are some drawbacks for these measures. I am concerned, as I know many Australians are generally, about property rights in this country and the need and importance of protecting those property rights. I think that property rights are not just confined to physical land and property and that the seizure of that by government should be protected by our Constitution and our courts; also that intellectual property is property and that it should also be protected. We should be aware that the plain packaging legislation and the High Court decision that followed effectively removed the ability for companies to use a property right which they created. We should be mindful of the limitations of that. We may still decide that it is a worthwhile thing, but we should be aware of the costs of that.

Another thing which I think we have to be particularly aware of in the taxation space is that excise taxes on products like tobacco—but not only tobacco; including alcohol as well—disproportionately affect lower income people. These are taxes which are not levied according to their ability to pay; not levied according to income, wealth or any other measure. They are levied according to a lifestyle choice which people make: to smoke or, in other cases, to drink. The evidence shows that lower income earners disproportionately still choose to smoke. When we increase these taxes, we are, in effect, increasing what is a regressive tax. I know, when we debate other taxation measures in this place, some people who favour an increase in the GST—I am not one of them, but some people do—have come up against resistance that it would be regressive and would impact the poor less. The GST, at least, applies relatively equally to everyone; tobacco excises apply disproportionately to the poor. That is something that I think we need to be very conscious of.

The second thing is that we are running into the limitations of the approach we have taken over the last 30 to 40 years. We have reduced it dramatically, but the rate of reduction has started to slow. I think that means we should start to look at wider measures and other measures to address this. One which I think we should consider is a more free market approach—that is using choices that people are already making in their lives, enabling them to make those choices that are healthier choices than smoking conventional cigarettes. In this area, we have a range of new products that technology has brought to us, including e-cigarettes and other forms of smoking, sometimes called reduced-risk products, which use technology to reduce the impact of tobacco smoke and particularly the burning of tobacco, which is very toxic to inhale. This is a free market approach because it does not rely on mandates or taxes; it relies on choices.

In Australia right now, it is not lawful to sell e-cigarette products, but there are many people who have chosen to take up these products because they prefer them to cigarettes or as a measure of reducing their reliance on cigarettes, or just as something which is more convenient than cigarettes. That is even with them not being lawful. I think we have to look very seriously at whether or not we should legalise these products, and there is an application, I understand, before the Therapeutic Goods Administration right now to legalise an e-cigarette style product as a tobacco cessation measure—as a measure to get people off tobacco. I think that would be a very good thing.

So I just want to summarise some of the research and views on this issue. It is fair to say that the public health lobby in Australia are not supportive of e-cigarettes. They are very sceptical about them. People such as Emeritus Professor Simon Chapman, a noted sociologist and advocate of tobacco control, have been very much opposed to allowing e-cigarettes to be legalised, as have bodies such as Quit Victoria, who last year called for e-cigarettes to be clarified to be illegal—for their retail sale to be banned in Victoria—and, interesting, for smoke-free laws to be extended to cover all e-cigarette use. That is an interesting one given that what is emitted from an e-cigarette is water vapour. We should be concerned about second-hand smoke. That is an issue. You can get cancer from second-hand smoke; that is what the science suggests. You cannot get cancer from e-cigarette water vapour, though. There is no evidence of that, so it does seem strange to me that we would apply laws designed to limit second-hand smoke cancer from conventional burning of tobacco to a water vapour which carries no tobacco at all. In fact, it only delivers nicotine to the user; it does not even deliver it into the atmosphere around them.

Thirdly, there are calls to ban advertising and promotion of e-cigarettes. Again, I understand what is perhaps the rationale behind this, but one of the limitations of banning advertising is that advertising is information. It allows people to learn about new products, and it would allow, for example, retailers of e-cigarettes to notify current smokers that they may be able to reduce the risk and harm to their health by switching from cigarettes to e-cigarettes. That is Quit Victoria's position.

The Heart Foundation in the ACT are also opposed. They have lobbied to make sure that e-cigarettes are more strictly banned than they are and to prevent them. I think that is broadly representative. The Cancer Council of Australia has issued concerns. Professor Ian Olver, writing for the Cancer Council's website, said that there is not sufficient evidence that electronic cigarettes would help smokers to quit, and there are also concerns that electronic cigarettes could keep smokers addicted to tobacco by providing a nicotine hit in smoke-free places. There are also concerns that e-cigarettes may, in the words of some, 'normalise' the use of cigarettes. I am not sure that there is sufficient evidence to back that up, but that is the view of some in the public health industry.

But I have to say one of the puzzling reasons for opposing the sale of e-cigarettes put forward by Professor Ian Olver is that it might allow tobacco companies to continue to be profitable and to continue to exist. I think that is a very strange reason when our focus should be on public health. I think, actually, it would be a good thing if cigarette companies got rid of their old products and moved towards newer products which are healthier and safer. They may still have some risk but, I think, certainly pose less of a risk than cigarettes. I think that would be a very welcome development, but some people are opposed to allowing these products to be legal because it would continue cigarette companies' profitability and allow them to continue to exist.

The Australian government, I think it is fair to say, has taken a generally sceptical approach to e-cigarettes. The TGA issued, in March last year, some preliminary commentary on e-cigarettes. They described them in the technical detail of how they work, and they said that at the moment there is not a great deal of evidence to support their use—certainly as a nicotine replacement therapy. But since the government issued that view I think there has been a development of the evidence base in this area, and I am encouraged by the developments. As the National Health and Medical Research Council in Australia has said, there is a widely held belief that e-cigarettes are likely to be less harmful than tobacco cigarettes because they expose users to fewer toxic chemicals. They say that there is some preliminary evidence which supports that view, so I think it would be fair to describe the NHMRC as cautiously open to the potential benefits of e-cigarettes, although, as I said, the Australian government's position is generally sceptical about the construction of e-cigarettes.

I want to refer to an excellent article written by my former colleague at the great organisation the Institute of Public Affairs Simon Breheny. It was in The Daily Telegraph in March last year. He reviewed some of the evidence available on this at that time. He cited one article published in August 2014 in the peer-reviewed Journal of Public Health. What the journal concluded was that the use of e-cigarettes can reduce the number of cigarettes smoked and the withdrawal symptoms. In an article for BMC Medicine last year, Peter Hajek of the Wolfson Institute of Preventive Medicine said:

Although there is no doubt that smokers switching to electronic cigarettes (EC) substantially reduce the risk to their health, some tobacco control activists and health organisations discourage smokers from using EC and lobby policy makers to reduce EC use by draconian regulation.

One thing which I think is becoming increasingly clear is that Australia is getting out of step with the rest of the world on this, and particularly the United Kingdom. The United Kingdom have been quite forward-looking on this issue and have been—and their public health community in particular—much more willing to contemplate this. Public Health England, which is a government body, has said:

In a nutshell, best estimates show e-cigarettes are 95% less harmful to your health than normal cigarettes, and when supported by a smoking cessation service, help most smokers to quit tobacco altogether.

The UK Royal College of Physicians have made a statement on this. They say:

The RCP recognises that electronic cigarettes and other novel nicotine devices can provide an effective, affordable and readily available retail alternative to conventional cigarettes. These innovations could make harm reduction a reality for smokers, as proposed in our 2007 report.

There are other reports on this, a lot of academic reports, that are now suggesting that, in the UK in particular, people have begun to take up e-cigarettes as an alternative to smoking and that they have reduced their reliance on conventional cigarettes, and I think that is a really good thing. Pleasingly, there is also now evidence in Australia that this may be the case. Even though in Australia it is not currently legal to smoke e-cigarettes, to sell or to buy them, some people have imported them from overseas in a personal capacity and smoked them here. As part of a joint research paper by the Australian Catholic University and the University of Melbourne in 2015, they did a survey of 1,242 smokers. Eighteen per cent of those smokers reported that they had already given up smoking by using e-cigarettes, and the report found that e-cigarettes were also helping those who continued to smoke to cut back on the number of cigarettes they smoked. As Dr Aziz Rahman, the lead researcher, said:

E-cigarettes are becoming an increasingly popular method of giving up smoking, especially for middle-aged smokers. As cigarettes contain more than 4,000 toxic chemicals and cancer causing agents, e-cigarettes are a better choice, in terms of a harm reduction strategy.

…   …   …

If the safety of e-cigarettes is proven in the long run, they may assist healthcare providers to address smoking cessation challenges more effectively.

I think this is a very encouraging area of development. I think we could in our lifetime see the end of conventional cigarette and tobacco smoking, and it could be replaced by a much safer alternative of e-cigarettes. I think that is a really welcome development and I hope that the government in Australia will be welcoming of that development and will help facilitate the development rather than block the development, as some in the public health community have lobbied for them to do.

Senator REYNOLDS (Western Australia) (10:28): I too rise to speak in support of the Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016. These bills will increase tobacco excise charged on domestic production and customs duties charged on imports with four annual increases of 12.5 per cent a year from 2017 until 2020. There will be no direct impact on tobacco companies from the staged excise and customs duty increases—these will occur on the same day as the usual indexation changes.

In addition, adult average weekly ordinary time earnings based indexation of tobacco excise rates will continue. The next biannual indexation of tobacco excise will occur on 1 March 2017. From 1 September this year, the excise and excise equivalent duty rate on tobacco is around 61c per stick and $763.20 per kilogram of tobacco content. This equates to $15.26 in excise on a packet of 25 cigarettes, which currently retail for approximately $25.

Together, these bills will raise $4.59 billion across the forward estimates period. Goods and services tax receipts are estimated to increase by $430 million over the same period. The excise increase announced in the 2015-16 budget are firmly based on the evidence that this will further help reduce smoking and will replicate the annual increases that were put in place from 2013 through to 2016.

As my colleague Senator Paterson has noted, tobacco is a 'legal product' in Australia and people choose to smoke, noting that there are health consequences for both themselves and others around them. Smoking today is recognised as the largest single preventable cause of death and disease in Australia. It is associated with an increased risk of heart disease, stroke, cancer, emphysema, bronchitis, asthma, renal disease and eye disease. Tobacco contains the powerfully addictive stimulant nicotine, which can make smoking a regular and long-term habit that is pretty hard to quit. Each year in Australia, smoking kills an estimated 15,000 Australians and costs Australia $31.5 billion in social, health and economic costs. In Western Australia alone, own home state, over 1,500 people a year die from smoking-related illnesses.

The Turnbull government is greatly concerned about the serious health risks of smoking and it has continued the efforts of previous governments to support and build on Australia's great success in tobacco control. In recent years, the negative effects of passive smoking have also received considerable attention; demonstrating that the risks of smoking affects more than just the individual smoker. Passive smoking increases the risk of heart disease, asthma and some types of cancers. It may also increase the risk of sudden infant death syndrome and may predispose children to allergic sensitisation.

The increase in excise and duty will move Australia toward the World Health Organization's recommendation that excise should comprise 70 per cent of the price of a cigarette. Increasing the price of tobacco products through taxes is widely recognised as the most effective and the most cost-effective tobacco control intervention for reducing tobacco use, particularly amongst our young and those from lower socioeconomic communities. In Australia, the 2010 post-implementation review, conducted by The Treasury, for the 25 per cent tobacco excise increase estimated that an 11 per cent decrease in tobacco consumption over two years had resulted. The 25 per cent tobacco excise increase had resulted in an 11 per cent decrease in smoking in Australia.

As reported in the WHO report on theGlobal tobacco epidemic, 2015, as of mid-2014 there have been two 12.5 per cent excise increases as well as biannual increases in excise and Australia was ranked sixth highest for total taxes applied to cigarettes amongst 106 countries who reported to the World Health Organization. The taxes also accounted for 47.67 per cent of the total retail price of the most popular brands of cigarettes, which in Australia is a Winfield 20-pack. Also, Australia's taxes applied to cigarettes gave Australia the seventh highest after-tax cigarette price in the world. I think it is clear that it has been proved that higher prices encourage smokers to quit or, at least, reduce their consumption, while also discouraging potential smokers including in particular young Australians from taking up smoking.

These two bills will support Australia's domestic and international commitments to reduce the prevalence of smoking in Australia and thus minimise the harm of smoking to the entire Australian community. These particular changes sit alongside numerous other interventions the Commonwealth has taken to reduce the prevalence of smoking. Firstly, the Commonwealth has adopted a comprehensive ban on tobacco advertising and promotion. They have also legislated for retail display bans, Pharmaceutical Benefits Scheme subsidies for smoking cessation supports and have funded extensive and continuing public education campaigns here in Australia.

In any health-related campaign, it is always to helpful to review and understand the statistics, the context and the trends that they highlight. In Australia, the facts are as follows: in 2011-2012, the Australian Health Survey reported that approximately eight million Australian adults aged 18 years and over had smoked at least some time in their life. In 2011-2012, 3.1 million people were still current smokers, with the vast majority—90 per cent of that 3.1 million people—smoking daily. Between 2001 and 2011-12, the overall rates of smoking had decreased for both males and females. The age-standardised rate of current smokers for males aged 18 and over fell from 27 per cent in 2001 to 20 per cent in 2011-12. For women, it declined 21 per cent to 16 per cent. Those figures, over the course of a decade, are very significant decreases. During 2007-2008, 3.5 per cent of people who were not current smokers aged 15 years and over and 7.2 per cent of children aged under 15 years lived in a household where a daily smoker was reported to have smoked indoors. This exposes environmental tobacco smoke and passive smoking to a significant percentage of young Australians.

The Australian government's tobacco control strategies, such as mass media public education campaigns, high tobacco taxes, advertising bans and smoke-free environment legislation have helped with the steady decline in smoking rates over decades. I think the statistics on that are very clear. Between 1991 and 2010, the proportion of daily smokers aged 14 years and over decreased by almost 40 per cent. I will say that again, because that is a really significant statistic: between 1991 and 2010, the proportion of daily smokers aged 14 and over decreased by almost 40 per cent. In 2011 and 2012, five per cent of males and nine per cent of females aged 15 to 17 were current smokers. After 18 years, the legal age for purchasing tobacco products in Australia, the rate rose significantly for both men and women, reaching 22 per cent for men and 17 per cent for women aged 18 to 24 in 2011 and 2012.

Rates then remained steady for men up to around the age of 55 and for women up to 65; whereupon after those ages for both men and women the rates significantly declined. So eight per cent of men and seven per cent of women aged 65 years and over were smokers in that same period, 2011-12. There was little change in smoking rates for men and women aged 45 to 54 years and women aged over 55 years during this period. However, interestingly, for men, there were significant declines over this period in the 55- to 64- and 65 years and over- age groups respectively. Between 2007 and 2011, the rate of smoking among men, or boys, aged 15 to 17 decreased from nine per cent to five per cent, while the rate for females did the complete opposite; they increased from five per cent to nine per cent for young girls between 15 and 17.

For Indigenous Australians the smoking rate has consistently been higher than for the rest of the Australian population. In 2008, 49 per cent of Aboriginal and Torres Strait Islander Australian men aged 18 years and over were current smokers. So 49 per cent of men over 18 in Indigenous population were smokers. This was, for the time, significantly higher than the number of Aboriginal and Torres Strait Islander women of the same age who were current smokers, which was 44 per cent—but still much higher than the national average. Between 2002 and 2008, the rate really had not changed at all. For both men and women, the proportion of Aboriginal and Torres Strait Islanders who were current smokers between 2002 and 2008 was lowest in the 15- to 17-year age group. That is again very interesting. It was actually lowest in the 15- to 17-year age group, but it was still much higher than the national average. In the 15- to 17-year age group it had decreased from 33 per cent to 21 per cent—a very significant decrease.

While, as I said, tobacco is legal in Australia, it is important that the government continues to aid the reduction in smoking rates and it is equally important to ensure that we support and explore alternatives for smokers, and I believe today that includes looking much more closely at e-cigarettes. In April last year, on behalf of the Intergovernmental Committee on Drugs, the Australian government Department of Health engaged the University of Sydney, in partnership with the Cancer Council of New South Wales, to conduct a longitudinal project to explore options to minimise the risks associated with the marketing and use of electronic nicotine delivery systems, with or without nicotine, here in Australia. This project is due to culminate in the preparation of a national discussion paper this month. Public dissemination of this discussion paper will be a matter for federal, state and territory governments. I very much look forward to the release of that document and engaging in the debate and discussion on safer alternatives to smoking. I commend the government for taking steps to explore the use and safety of e-cigarettes. The Australian government Department of Health review will inform the development of regulatory and non-regulatory policy options for consideration by Commonwealth, state and territory governments in this nation.

To me, there is absolutely no doubt that the use of e-cigarettes is a healthier option for people looking to stop smoking, with nearly three million people in the UK alone now using e-cigarettes today. I think it is very instructive for us here, as we have a look at alternatives to cigarettes, to look at the experiences of other countries with alternatives such as e-cigarettes. A recent note by the UK parliament observed that there is evidence showing that the use of e-cigarettes can assist people to quit tobacco smoking. The first generation of e-cigarettes, which were called cig-a-likes, resembled tobacco cigarettes. They became widely available in the UK in the mid-2000s and were usually disposable. The second-generation products typically resemble fountain pens, and are rechargeable, with a replaceable cartridge or refillable tank. The most recent third-generation products are typically much more diverse in look and feel. These are also rechargeable and have a refillable tank. Users can modify power and resistance to adjust nicotine delivery and vapour density. Users can also download software to monitor their own personal usage patterns and can tailor the devices aesthetically for their own personal style and comfort. Later e-cigarette products offer more efficient nicotine delivery than first-generation products. Some are comparable to tobacco cigarettes in terms of the blood nicotine concentration that they deliver. However, nicotine delivery remains much, much slower than traditional tobacco cigarettes.

Public health concerns here and overseas around e-cigarettes have focused on vapers and the inhalation of vapour and bystanders' passive exposure to the vapours from e-cigarettes. The inhaled and exhaled vapour varies depending on device characteristics and user behaviour. But, again, as Senator Paterson has noted, the health impact is much less for people in the vicinity of those using e-cigarettes than for people in the vicinity of those using traditional cigarettes. There have also been concerns about possible adverse health effects for the user from inhaling vapour that can contain propylene glycol, glycerine, nicotine, flavourings, metallic elements and carcinogenic substances. Since 2014, there has been a great deal of research into vapour content. The amount of chemicals inhaled, rather than their presence alone, is an important determinant of toxicity, and current data suggests that the levels of toxins and contaminants in inhaled vapour do not pose significant health risks. The consensus is that long-term health risks to vapers require monitoring but are 'unlikely to exceed five per cent of the harm from smoking tobacco'. Passive smoking health risks to bystanders are much smaller again with the use of e-cigarettes, as current evidence shows that the levels of nicotine and contaminants released via exhaled vapour are negligible.

So I commend the Turnbull government for continuing to support the reduction measures for smoking. But it is also important that we continue to provide smokers with the support and motivation they need to kick the habit when they are ready to do so. I am pleased that the revenue gained from higher tobacco excise will be put to good use by the government to continue to fund and provide a range of services, including health and other support measures.

These measures support the national approach through the Council of Australian Governments to reduce the prevalence of smoking in Australia. The adult daily smoking rate was 14.5 per cent of the population in 2014-2015. I have gone through some of the statistics, and that is a very significant decrease over the last decade. In 2008, all states and territories, through COAG, committed to reducing the adult daily smoking rate to 10 per cent of our national population and to halving the daily rate of smoking amongst Aboriginals and Torres Strait Islanders by 2018.

Ongoing tobacco interventions, including these excise increases, are critical to ensuring that the prevalence of smoking in Australia continues to decline. It is incorrect to assume that the rate of reduction of smoking prevalence can be maintained without additional tobacco control efforts. Evidence from Australia and overseas shows that, when tobacco control efforts stall, so does the decline in smoking prevalence and there is an increase in health consequences.

So, for all of those reasons, I commend these bills to the Senate today.

Senator SMITH (Western Australia—Deputy Government Whip in the Senate) (10:47): I also rise to speak this morning about the Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016, but I want to take a slightly different perspective—a slightly different angle.

Senator Jacinta Collins interjecting—

Senator SMITH: Just yesterday, Senator Collins would have seen on the Notice Paper that in the Senate was tabled the most recent report of the Australian Institute of Health and Welfare on Australia's health 2016. It was quite a revealing report on a number of levels—not least because it did point to the facts that Australians are getting healthier and living longer but that there still exist, for some Australians in our community, significant risks to their enjoyment of that health, and it pointed to what that path to longer living might look like for them.

There were a number of interesting things in that report that I would just like to share with the Senate this morning before turning briefly to the contents of these bills, because senators would know that other government senators have illuminated the motivation—illuminated the positive benefits for smokers from reducing their smoking and the positive benefits for the economy from this particular legislative initiative. But there are a number of things in the Australia's health 2016report that are worth sharing with the Senate this morning. One is—and I will come to it in a brief moment—what is happening around death rates in our country. There is also what is happening as to the increasing numbers of risk factors for healthy Australians; and there is important information about the incidence of smoking amongst Australians generally but also across core communities.

Importantly, in the report at chapter 4 people will see a specific discussion about tobacco smoking trends in our country—information that fewer Australians are smoking, and information about the positive changes that are happening to smoking patterns across the Australian community—and then, immediately following that, some revealing or even alarming information about the health behaviours and biomedical risks for Indigenous Australians which focuses very heavily on the issue of the incidence of smoking across Indigenous communities. That is especially alarming for a regional senator like myself from Western Australia who spends a considerable amount of time in the Kimberley region of Western Australia, which has a very high proportion of Indigenous Australians who live in very remote communities, as the incidence of smoking is a significant impairment to the benefits that they can enjoy from a healthy lifestyle and the benefits that they should be able to enjoy through greater longevity.

The institute's report, not surprisingly, starts by sharing with us this very important fact: that good health, of course, is important. It is important to each of us. It influences not just how we feel but how we go about our everyday lives and how we might be able to utilise those rich opportunities that come to us as Australians. The report says that the vast majority of Australians aged 15 and over report that their health is 'good' or better, and that this can mean different things to different people. Of course, the starting position of your health is a key determinant in whether or not you can expect to enjoy much greater improvements in your health or marginal improvements. The report goes on to say:

It is now widely accepted that health is much more than the presence or absence of disease.

Importantly, 'good' or better health:

… reflects genetic, lifestyle and environmental factors; cultural influences; socioeconomic conditions; and the availability and quality of health care programs and services.

I think that what makes the tabling yesterday in the Senate of the Australia's health 2016 report important is the fact that it provides a very timely examination of the health of Australians from a variety of perspectives, including the leading types of ill health that affect us as a nation, the specific risks and health inequalities that are faced by different types of communities across our vast and varied nation, and of course what level of services are currently being provided and what level of services it is necessary to provide to prevent illness.

What is revealing in this report, perhaps even refreshing—it is quite illuminating, because the report is quite honest and transparent—comes at the end of each chapter, where the report points to future work that needs to be done if this picture of Australia's health is to be accurate and if Australia's health is to continue to be well serviced and provided for. The report also provides a refreshing account of some of the topical issues that face Australians when discussing the healthiness of their current and future lives—importantly, a discussion around chronic disease, the very important issue of mental health, the use and abuse of illicit drugs in our community, health spending across various health services, end-of-life care and trends in hospital care. So it is quite an important and revealing report.

But I want to turn in the first instance to what the report has to say about the experiences of Australians when it comes to death. In 2013 nearly 147,700 deaths were registered in Australia—about 600 more than in 2012 and nearly 15,400 more than in 2003. Since 2003 the number has risen by an average of one per cent per year for males and 1.2 per cent for females. Despite an increase in the absolute number of deaths, there has been a long and continuing fall in death rates per 100,000 population. From 1907 to 2013 the age-standardised death rate for males and females fell by a staggering 71 per cent and 76 per cent, respectively.

This is an important point, because when we talk about the tremendous amount of public money and the tremendous amount of energy that goes into our health programs, our health services and our hospitals, we are fundamentally seeking to do two things: to give the living a better quality of life and to ensure that people live longer, and that much of our energy, much of our innovation and much of our public spending go into the very important task of keeping people alive. When we look at those results from 1907 to 2013 that reveal that the age-standardised death rate for males and females fell by 71 per cent and 76 per cent, respectively, we get a very powerful and positive sign of the success of everything this country does—and not just what the public health system does, with public health programs, but also what the voluntary system does and what the private sector does to ensure that Australians live longer and enjoy all the benefits bestowed on them.

Before coming to the specific issue of tobacco smoking, let me reflect briefly on what the report had to say about other death rates in our country. In 2013 children aged five to nine years and 10 to 14 years had the lowest rates of death, at nine and 10 per cent, respectively, per 100,000 population. The rate gradually increased from the ages of 15 to 19 years, to 32 per 100,000 population. By the age of 60 to 64 the rate was 613 per 100,000 population. The highest death rate was for people aged 85 and over—not surprising. Death rates have remained higher for males than for females in all age groups.

So I thought this was a very important starting point for discussion not just about increasing taxes on tobacco but also about what we are doing to discourage people from smoking. We know about the side effects of smoking, the cumulative effects and its cost, not just to our healthcare system but also in terms of the distress it causes to families as a result of the illnesses arising from tobacco use.

Moving through the report, its second most revealing aspect—and I mean revealing in a constructive sense—is what it has to say about risk factors and about what we as a community are doing to reduce those risk factors. The report says that many chronic diseases share common lifestyle risk factors that are largely preventable—for example, tobacco smoking, excessive alcohol consumption and excessive body weight. According to the results of the Australian Burden of Disease Study in 2011, a large proportion of the burden of disease experienced by the population—31 per cent, or almost a third of the community—could be prevented by reducing exposure to modifiable risk factors. The five risk factors that caused the most burden were tobacco use, high body mass, high alcohol use, physical inactivity and high blood pressure.

Importantly, the report goes on to talk specifically about smoking rates in Australia and whether or not we have had a positive or a negative experience regarding smoking rates. I am pleased to share with the Senate that on page 16 of the report it says that smoking rates in our country are continuing to fall. It says that smoking rates in Australia are still falling, continuing a long-term downward trend over the past 50 years that the OECD has described as 'remarkable progress'. The OECD has described the downward fall in smoking rates in our country as a remarkable success.

In 2013, 13 per cent of people aged 14 or older smoked daily, compared with 15 per cent in 2010 and 24 per cent in 1991. That is worth reflecting on: in 1991, 24 per cent of people aged 14 or over smoked daily, and in 2013 just 13 per cent of people smoked daily. This was one of the lowest smoking rates in the world. The OECD average daily smoking rate for people aged 15 and older was 20 per cent.

We can be confident that those legislative and other measures that governments—this government, previous governments—have been putting in place to reduce the incidence of smoking in our community have been successful. I think it is important to note that that success has come by not infringing on people's absolute liberty to smoke. If people want to smoke, that is their business. I am not a smoker; people in my family have previously been smokers. I think it is a powerful endorsement of the sorts of things that the community, supported by government, are doing that are leading to very tangible benefits in reducing the incidence of smoking in our community.

I could go on to talk about the positive benefits that are being achieved as a result of reductions in drinking levels et cetera, but that is not the purpose of my contribution today. I want to turn specifically to the issue of tobacco smoking and what the Australian Institute of Health and Welfare report had to say in regard to that. It has some positive news for those of us who care about the public health impost that happens as a result of an increase in smoking rates. Refreshingly, the report talks about the fact that fewer Australians are now smoking. It says:

Fewer people, both proportionally and absolutely, are smoking daily and more people have never smoked, compared with 20 years ago.

The report says:

In 2013, the proportion of people aged 14 and over smoking daily (13%) was lower than in 2010 (15%) …

As I have shared with you previously, in 1991 it was a staggering 21 per cent. Importantly, when we think about the impact of smoking on young people in our community, the report was positive. It says:

In 2014, the proportions of secondary school students aged 12-17 smoking in their lifetime, in the past 4 weeks, past week or on 3 days of the last 7, were significantly lower than in 2008 and 2011 ….

That is a very positive outcome. It goes on to say:

Fewer people are being exposed to tobacco smoking, more people are delaying the uptake of smoking and smokers are smoking fewer cigarettes.

Dependent children were far less likely to be exposed to tobacco smoke inside the home in 2013 (3.7%) than in 1995 (31%).

Children being exposed to tobacco smoke in their home in 1995 was 31 per cent. Now, it is staggeringly low at 3.7 per cent. It goes on to say:

The average age at which young people aged 14-24 smoked their first cigarette has steadily risen since 2001 (15.9 years in 2013 compared with 14.3 in 2001), indicating a delay in uptake of smoking.

That has to be a positive outcome. Smokers smoked fewer cigarettes per week in 2013 than in 2001. In 2013, smokers smoked up to 96 cigarettes per week; in 2001, it was 113. The report goes on to say:

The proportion of women smoking at any time during pregnancy has steadily declined over time—

I am sure we are all pleased to hear that—

from 15% in 2009 to 12% in 2013.

So there is still some work to be done in regard to the incidence of smoking by pregnant women in our community.

I think it is also interesting to be reminded that, for different parts of our population, the incidence of smoking is very variant. It is valuable to look at these statistics before I move to the detail of the bill. The likelihood of being a daily smoker is two times as high in remote or very remote areas; three times as high in the lowest socio-economic areas compared with the highest socio-economic areas; 1.7 times as high for unemployed people compared with people who are employed; 1.9 times as high for homosexual or bisexual people compared with heterosexual people—I did not know that; it is rather revealing; 2.7 times as high for single people with dependent children compared with couples with dependent children; and, finally, 5.7 times as high for prison entrants compared with the general population. People may not be surprised to hear that the likelihood of a being a daily smoker is 2.6 times as high for Aboriginal and Torres Strait Islander Australians compared with non-Indigenous Australians.

As we have heard from previous coalition senators, the merits of the government's proposed reforms to the Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016 stand undisputed. They are positive and necessary reforms, from both a budget repair perspective and a public health perspective. I think the contributions of Senator Reynolds, Senator Paterson and Senator Hume were particularly revealing about the merits of the government's legislative initiative.

Senator Fawcett is now in the chamber and about to make a contribution, so I might draw my contribution to an end now.

Senator FAWCETT (South Australia—Deputy Government Whip in the Senate) (11:05): I too rise to make some contributions to this debate on the Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016. I wish to talk briefly about what the bills will do and, possibly more importantly, why the government is taking these steps. I would identify and congratulate the opposition: some of their policy positions have been very similar to this. Clearly, there is a bipartisan interest in supporting the health of Australians. Thirdly, I would like to talk a little bit about what potential unintended consequences there could be and what measures the government is taking to make sure that they do not come into effect. They are things like the potential for increasing demand for and, therefore, trade in illicit tobacco and whether there are socio-economic impacts that are unfair or vary across our community.

I will start with what the Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016 will actually do. These bills, as previous speakers have highlighted, will increase the tobacco excise which is charged on domestic production and the equivalent customs duties charged on imports by way of four annual increases of 12.5 per cent a year from 2017 until 2020. It is not the first time this has happened; this legislation replicates the annual increases that were put in place from 2013 to 2016. In addition, the increases which were indexed to changes in the adult weekly average ordinary time earnings will continue, and the next increase under that scheme occurs in March of 2017. What that means is that from September this year, the excise and excise equivalent duty rates on tobacco are around $763 per kilogram of tobacco content. This equates to around $15 in excise on a pack of 25 cigarettes, which currently retails for approximately $25. Ignoring the biannual indexation, the 12 per cent increases will increase excise per pack of cigarettes by around $2 each year.

So that is broadly what the bill is seeking to do. Why? There are a number of reasons. Partly that Australia is linked in with what people like the World Health Organization are doing. As they look at the damage that tobacco causes to individuals and communities around the nation, they have set a target recommending that excise should account for nearly 70 per cent of the retail price of a packet of cigarettes. Achieving that has been somewhat problematic for Australia because, in the past, when excise has increased the facts indicate that companies tend to also increase their prices at the same time—I am assuming in an attempt to shift the blame for that price increase onto the government's increase in excise as opposed to onto the fact that they are putting in an additional profit margin on top of that. So, because the price keeps going up in absolute terms, with retailers putting in extra margin, it is harder for us to reach that excise level of 70 per cent. But the target is there because of the damage that is done to health as a result of tobacco use.

The use of tobacco is one of the leading causes of preventable death and disease here in Australia. When I think back to when I first enlisted in the Army in the early 1980s, we were in an environment where it was accepted that the use of alcohol and tobacco was a commonplace part of work. That was common in the military college. But even when I first qualified as a military pilot, aircraft were still provided with ashtrays. In fact, I do recall flying once in an aircraft with another crew member who was a heavy smoker. We have two sets of rules in flying. One is visual flight rules, where you can see. One is called instrument flight rules, which is when you use your instruments because you are in cloud and when you look out the windscreen and all you can see is grey and cloud. On that particular flight I basically had to revert to instrument flight rules techniques even though it was a blue sky day, because the smoke was so thick in the cockpit that it was actually difficult to see outside and see the horizon. I recall that because of its impact on my flying, but as I look back now I wonder what the impact was on my health, as studies have shown the impact of passive smoking. So in my own professional career I have seen the dramatic change that tobacco control measures have made in terms of curtailing the acceptance of the use of tobacco in the workplace because of the damaging effect that it has.

Now ABS data indicates that daily smoking rates in 2014-15 have dropped to 14½ per cent amongst adults, compared to 16 per cent in 2011-12 and 22 per cent back in 2001. As I say, anecdotally, from my own experience, the numbers are far higher than that as you go back further in our history. I am very pleased to report now that not only is smoking banned in the back end of the Qantas planes and Virgin aircraft that we fly in regularly, but the crew also, even in military aircraft, no longer have the opportunity to smoke in that very confined workspace.

So these tobacco control measures that Australia has brought in over several decades now have a multifaceted approach, but they have been broadly effective in seeing that decline in the prevalence of national smoking rates. Those interventions have included things like the increases in excise, the education programs and the campaigns, and most recently—again, credit to the opposition—plain packaging, which has enabled the prevalence of the fairly graphic health warnings, as opposed to the slick marketing, to be the thing that people see when they look at cigarettes. Those measures and the prohibition on tobacco advertising and promotion, particularly around sports and things, all work together to see smoking reduce. This is because reducing that preventable disease and preventable early death is important. So that is why we have brought in this legislation, and we have talked about the controls.

The other thing that I think is important to consider with each piece of legislation is the unintended consequences that could occur. One of the objections that has been raised around this whole topic of indexation is the impact on people in lower socioeconomic groupings. There is data to indicate that many of them smoke. Therefore, the argument goes that the burden of these measures will fall more harshly on people in lower socioeconomic groupings.

I accept the fact that not everyone who smokes is necessarily going to be damaged by it. I have great memories as a young lad of being out in Kapunda, where my family were farmers, and sitting outside the kitchen window in the morning. The sun would come up, my grandfather would smoke his pipe and the magpies would be in the trees. They are really nice memories. He never suffered from cancer or any ill effects, but I have to say that, statistically, he is in the minority, as the vast majority of people do. And it has an impact not just on the individual—it has an impact on their family and on our society in terms of the cost burden of providing healthcare services to people who are struggling with cancer and the other problems that occur from smoking.

If we accept the fact that, as a society, these intervention measures are valid, warranted and desirable, then the impact on people in a lower socioeconomic grouping, in net terms, is positive. If something provides incentive for all of society to either not take up smoking or, indeed, to quit, then it will actually support people to make that decision earlier if their income is more limited. I do not say that from a position of being here in the parliament; I am referring here to studies, to journal articles from, for example, the Medical Journal of Australia. Dr Nathan Grills of the Nossal Institute for Global Health, based out of the University of Melbourne, has looked at excise and this aspect of the multifaceted intervention approach from a medical perspective. He specifically addresses the issue of people in lower income brackets, and the argument he puts forward is that tobacco excise is actually a pro-poor policy. Those are his words—that is the title of his article in the Medical Journal of Australia.

His reasoning goes that, because more poor people smoke, the 'tax increase targets the poor, as they end up paying more tax'. He is saying that is a short-sighted analysis because it does not demonstrate a good understanding of tobacco control intervention based on strong evidence. He argues that, in reality, the policy actually benefits the poor far more than the rich because it is a progressive tax in terms of public health and long-term economic benefit. He says:

This tax will reduce the long-term financial losses and payments more in lower than in higher socio-economic groups, by reducing medical expenses and protecting livelihoods especially in poorer groups. Ultimately it saves more lives in lower SES groups than in higher SES groups.

Professor Ian Olver, the CEO of the Cancer Council, also addresses this point. He makes the argument that, whilst there is a view that increased tobacco excise punishes those on lower incomes, tobacco taxes are particularly effective in prompting people in lower socioeconomic groups to quit smoking. He says that this is very important, because disadvantaged groups bear a disproportionately heavy tobacco death and disease burden.

The argument that both of these groups put forward is that if we, as a society, accept that intervention is warranted because of the effect on health of the individual and the family, and the cost to community, then if we have a system whereby people on higher incomes can choose to pay if they want to and suffer those consequences, but people on a lower income have a greater incentive to not start or to give up smoking and therefore will receive the greater health benefits for them and the family benefits of retaining that person as a productive and healthy member of the workforce, then in net terms this is a policy that is slanted towards advantaging those in lower socioeconomic groups. Whilst I understand the argument that is put forward, I think it is fair to say that there is an equally strong argument that this does actually work to the benefit of people who currently suffer the greatest burden of health disease from tobacco.

The other unintended consequence that is raised by people who are concerned about the increase in excise is whether or not there will be more illicit tobacco coming into the country because of the high prices. There will be more reward and, therefore, incentive and opportunity. The primary responsibility for dealing with the illicit trade in tobacco rests with Border Protection and the Australian Taxation Office. What this government has done to try and make sure that we have the resources that are required at our borders in a range of areas, but particularly here in tobacco, is provide additional funding in the 2016-17 budget to deal with tobacco. So $7.7 million over two years, the 2016-17 and 2017-18 period, has been specifically provided to expand the department's tobacco strike team. That will effectively triple the size of its workforce, allowing for three specialised investigative teams to work to detect, to disrupt and to deter the illicit trade in tobacco.

In this financial year to date the Australian Border Force has detected almost 30 tonnes in the equivalent weight of tobacco—tobacco leaf or cigarette sticks—and this equates to an evaded duty of nearly $20 million. Clearly there is already an illicit trade in existence, and we are putting resources in to make sure that we have effective measures to not allow that trade to increase but in fact to detect, to deter, to interrupt it and to close the trade down. But I would make the argument that, just because there is potential illegal activity, that should not deter us from taking steps that have the primary purpose of protecting people's health.

Just as we have border control methods for other prohibited imports, whether they be weapons, narcotics or in this case tobacco, the fact that criminal elements may wish to seek to profit from people in Australia should not sway us from putting in place policies that achieve the long-term health benefits that we are looking towards. We will take the steps necessary, and the government has made the investments necessary, to combat things such as illicit tobacco imports. We will continue to do that with not only tobacco but other areas with border control. I think one of the strong achievements of this government since 2013—and it will continue under the government recently elected—is that we will continue to make the investments and have the strength of our policy positions and convictions so that the men and women who serve in our Border Force units, as well as the Defence Force, AFP and other police units who support them, can make sure that our borders are secure.

I have outlined what this bill will do in terms of the excise and imports. I have outlined why, and it is predominantly around health. These measures have proven, as I have seen in my own life experience from those early days in the military through to now, the significant impact they have had in Australia in terms of the prevalence of smoking. Given the impact on individuals, their families and the broader productive community, I support these measures. I believe we have taken the appropriate steps to make sure that any unintended consequences like illicit trade are dealt with. I do not support the argument that the burden falls unfairly on people in lower socioeconomic groups; in fact, as articles from the Medical Journal and the Cancer Council show, that group in our society in the medium to long term are actually the greatest beneficiaries of measures like this. I commend these measures to the Senate.

Senator O'SULLIVAN (Queensland) (11:24): I too rise to make a contribution to the debate in relation to the Customs Tariff Amendment (Tobacco) Bill 2016. Let me open my contribution with a story—I know Senator Sterle will enjoy this story, being a man of the fifties. I recall, as a youngster aged 13, convalescing at the Rockhampton Base Hospital men's ward after some surgery. For those of us listening who sadly can remember the sixties, I found myself in a men's ward with the traditional old lime-green floors and walls. That seemed to be the colour of choice for hospitals back then. There were about 40 or 50 men, if my memory serves me correctly, who were convalescing in the ward with various injuries or recovering from surgeries, and the majority of them were lying there smoking with ashtrays on their chests. I can remember my physician—I cannot remember his name but I can remember quite distinctly him coming in with a very large bendy pipe in his mouth. I can remember the nurses—part of their duties was to come around and empty the ashtrays into old powdered milk tins then.

I have often wondered since that time—these issues did not strike me at the time—what would have happened, if I had stood up on my bed and announced to those men in that ward that it would not be long before they would not be able to smoke in the hospital, on the verandah of the hospital, down in the car park, over at the racecourse, at railway workshops, in a car with their children, within 100 metres of a government building, in an aeroplane or at any of the other places that other people have reflected on in their contributions.

I can say to you—more particularly, as I got involved in politics and now as a member of the Senate and a legislator—that it has always remained with me that the power of public policy and shifts in the culture of societies can over time make some very, very positive contributions to our amenity of life. Indeed we have seen a reduction in the use of tobacco and tobacco products—except for some age cohorts within society—and have also seen, I think, a much more responsible approach to the consumption of alcohol over that time. I think that that has come about through a range of initiatives, including public initiatives, but also through changes in culture in our society, as people become more aware of the potential negative impacts in certain circumstances of the consumption of the topic of choice today of tobacco—and indeed not just with tobacco but with alcohol and even the consumption of illicit drugs. It remains a challenge most certainly in this country, but I think a more educated society in part is what contributes to changes in cultural attitude to these things; however, as with everything in life, as our society goes forward, it can be given assistance in other forms. In this case, the introduction of this bill is a decision of the government of the day to use some fiscal measures to make a contribution to the ongoing battle—it is a long way from being completed—regarding the consumption of tobacco products.

It would surprise me, if any senators making a contribution to this bill were to rail against the bill. In fact, the methodology of increasing the excise on tobacco is almost a bipartisan measure, because many of these measures were introduced of course under the Labor administration of Prime Minister Gillard. I have to say—and I do not do this very frequently—that the Labor Party need to be congratulated on leading in this way, because the reforms introduced under Labor—

Senator Jacinta Collins interjecting—

Senator O'SULLIVAN: Make note of it, Senator. I will send a highlighter pen around. You can highlight the Hansard and frame it. I am paying great tribute to the Australian Labor Party for their leadership in this space. The initiatives that they undertook—

Senator Whish-Wilson interjecting—

Senator O'SULLIVAN: All right, and the Greens perhaps may have been involved somewhere on the early initiatives. We will recognise them as well.

This introduction of an increase in the excise is not a new measure. This is a measure and a model that was adopted by the Australian Labor Party—and they provided leadership in this space—back when they reviewed the excise and increased it, from memory, by about 25 per cent. We need to look at, along with all of the other measures that exist in society to inhibit the consumption of tobacco products, the efficacy of measures such as increases in the excise. I heard the very valuable contribution by the previous speaker, reflecting on resistance to such measures as it heavily impacts on the lower socioeconomic strata within our society. That is following on from the evidence that people in lower socioeconomic stratas—in fact, people who live in my beloved regional and rural Australia—are more inclined to consume tobacco products per capita on average than others who live in more metropolitan and urban areas. There are any number of reasons for this. But going to the heart of the question of whether an increase in the excise impacting on them is a right and proper thing to do, I think one needs to consider the flip side of the coin and the impact it will have on their life for any person who consumes tobacco products.

I think that anything that government does with a pure heart is a good thing. I know there will be those who will suggest that this is simply a revenue grab and that it is not designed to do anything but increase the income in the coffers of the nation. I would say to them that I think it is a very genuine measure. I think it is a legitimate measure. In fact, there is evidence to suggest that this works.

What we have seen after a range of measures—including that one-off 25 per cent increase to the excise that I have attributed to the Australian Labor Party and, indeed, which I support conceptually—is a significant reduction in the consumption of tobacco products of some 11 per cent. Anything that we can do through a policy measure that increases, if that is the intention, or decreases a number into double digits falls into the success basket. It is not to be sneezed at that an 11 per cent reduction occurred as a result of the last increase in excise. I know this is not what will happen this time but, with these increases from 2017 onwards, if we are able to achieve double-digit decreases in the consumption of tobacco then we will be heading towards very, very acceptable rates of consumption. That is not to say that any consumption is supported, but it will get us down to much more manageable rates.

Initiatives such as the increase in the excise will not work simply in and of themselves. I think some of the credit for that decrease in consumption has to go to other initiatives that have taken place. Governments have played a part in some of them. These things help mould and shape people's culture and attitudes to these things. There have been measures such as the reduction in tobacco advertising. In fact, I do not think I can think of a circumstance now where tobacco can be advertised. But most of us are of an age that we will remember the advertisement of tobacco. As a young man I used to pretend I had a cigarette hanging out of my mouth when I pretended to be John Wayne while playing cowboys and Indians. You might remember that very prominent people in our communities—

Senator Whish-Wilson: Marlon Brando.

Senator O'SULLIVAN: Yes, Marlon Brando. I can remember the announcement of the assassination of John F Kennedy. Walter Cronkite paused before he came to the punchline to take a draw on his cigarette as he announced that that prominent American president had been assassinated.

But this 11 per cent reduction is not just due to excise increases, although evidence was given on this to public hearings held here in August 2011 by our House of Representatives Standing Committee on Health and Ageing as part of its inquiry into the plain packaging legislation. The then Chief Executive Officer of British American Tobacco Australia, a very, very large player in the field of tobacco products, gave evidence where—and I will quote him so that there is no chance of confusion—he said:

We understand that the price going up when the excise goes up reduces consumption.

That is worth repeating because you would think that the CEO of British American Tobacco Australia may well have been more inclined to try to diminish the impact of such a policy measure and, in fact, try to indicate to the government that it was not working so that it did not impact on them and their market share of tobacco. But he said:

We understand that the price going up when the excise goes up reduces consumption.

He went on to say—and this refers to the efficacy of the increase that occurred in 2010:

We saw that last year very effectively with the increase in excise.

So he attributed the double-digit reduction in consumption specifically to the introduction of the excise. He said:

There was a 25 per cent increase in the excise and we saw the volumes go down …

In his view, there was a 10.2 per cent reduction in the industry. That is not that inconsistent with the figures of the review that was eventually conducted consequent to that inquiry to determine just what impact the increase in excise had had.

This bill is quite specific. It is continuing a trend of governments and it does not matter what the persuasion of the governments are. What it has done is look back and seen a measure—in this case, a fiscal measure by a Labor government—that was successful. So the introduction of these increases, particularly after 2017 and onwards, I think, is based on sound thinking. As I said earlier in my contribution, I imagine that this measure will be supported by everyone here in the Senate because the results are in. The evidence that this works is in.

But, again, the measure needs to go hand-in-hand with an increase in advertising efforts to not only reduce tobacco consumption but create within society arrangements where people do not start smoking in the first place. They have to go to the key element, to the root source of this terrible addiction to try and help young people as they come through to avoid the pitfalls.

We all need to recognise that this is a very significant addiction in society. Those who have smoked and who have been able to give smoking away will tell you it is a lifelong addiction. We have to increase measures by government in advertising and education not only to increase the awareness of the impacts the abuse of tobacco products have on individuals but also to try and prevent or dissuade young people from taking up the habit in the first instance.

Support services require funding, and I can say our government proudly continues in our tradition as set by former governments and Labor governments in making sure that we fund all sorts of support services in our community, where people can readily access information to help them to determine what potential impacts their behaviour may have, not just with tobacco but across the abuse of both legal and illicit products, including alcohol and drugs. The increase in support services has been on an appropriate trajectory for governments. That needs to remain on the current trajectory so that we can increase the places people can go to gather the awareness they need.

The previous speaker spoke about making sure that we clamp down on illicit tobacco trade. Up until the end of the last parliament, I was a member of the Senate Legal and Constitutional Affairs Committee that visited on this issue on a number of occasions. I think there were inquiries conducted but I did not participate in them. And I know there was a lot of time and energy expended on Border Force during estimates for us to track just what efforts they were putting in place to see that we do not have illicit, cheaper tobacco in Australia that would offset, I suppose, the benefits that we are seeing from measures such as these increases in excises.

Plain packaging had another impact. You could take the plain packaging and put it in the same category as a reduction in advertising. I think that took away a bit of a trendy attraction to cigarettes. For those who smoked in earlier days, you will remember you may have been Craven A man or a Rothmans man or a Camel-without-a-filter man. I still have not got over the first Camel I had without a filter—I think I am still suffering from that 30 years on. I thank the plain packaging initiative. Again, I want to pay credit to the Australian Labor Party, who led the way on this. It was a great initiative and there is evidence that it had a significant impact on the trade also.

Society is playing its bit, playing a very important role. I remember as a young fellow that if you wanted a breath of fresh air, you went outside and everyone stayed inside smoking but of course that is now reversed. Smokers are often very socially conscious, I am told, and will find themselves trying to find a quiet spot in the car park behind a bush to have a cigarette rather than be seen. Most people now accept it is not a very socially acceptable practice to smoke in or about someone's home or at sporting events, particularly the school sporting events that I often go to with my grandchildren. At a stadium or some other sporting event, there is nobody lighting up in the vicinity of thousands of people.

Socially smoking has become a less accepted practice to the point that where anyone can regulate where you can smoke, they have done that. I remember travelling a lot internationally some years ago with work and probably still within a decade of today—may be a little bit longer—if you were travelling particularly on an Asian airline, the practice was still available. Then they started to shift the smokers down the back—I do not know what they thought that was going to achieve. Indeed, socially, communities and societies have taken whatever steps they can to reduce the consumption of tobacco.

I want to commend this measure to the Senate. I think it is a good measure. I think it is a measure that can be supported by all sides of politics. I think it is important to remind people that when it was introduced by the Labor government, it had an immediate, within 12 months, reduction in the consumption of tobacco products by double digits. If we can achieve that sort of result from each of these excise increases, we will have done our duty for our society. (Time expired)

Senator BACK (Western Australia) (11:44): Today we are privileged to have, in the student galleries on three sides of this chamber, students who have the opportunity to witness what goes on in this chamber and in the parliament. Deputy President, through you I direct an urgent plea, a request, to each of the three groups of students: do not take up smoking. Do not smoke. During my contribution to the debate on the Excise Tariff Amendment (Tobacco) Bill 2016 and Customs Tariff Amendment (Tobacco) Bill 2016, I will give you a couple of reasons why you should not. I promise you that, by the time you are adults, you will have either saved sufficient money for a deposit on your own home or apartment, to get you started in real estate, or you will have saved enough to be able to go around the world every year on a holiday during your leave. As you become parents, you will have sufficient money to be able to put funds aside for the education of your children. How good is that? If you go away from this place this week with one lesson, with one thing to remember, I urge you: do not take up smoking.

We all know that cancer is a scourge and a curse that affects every family. I had my experience in the last period of the 44th Parliament. It was just before two o'clock when my mobile phone rang. I realised it was my doctor and I stepped out. I had the first question for the government that day, and my doctor was telling me the bad news that a salivary gland problem I had was malignant. I did not really like that very much, and I said to him, 'Dale, I'm sorry I can't talk to you right now, because I have a question in question time.' He said to me, 'Chris, you're not taking this seriously. That huge growth on your thyroid is malignant.' I had had a chat with the surgeon. I am a veterinarian and I had seen the results. I was not quite as pessimistic as he was. Some people had noticed that I had lost weight, and I would very quietly say, 'Yes, I've been on an exercise program. I lost 14 kilos in about five weeks.' It was not an exercise program; it was this jolly cancer. Fortunately, I could hide it by wearing a suit and tie—nobody knew. Even more fortunately, when it was removed it was not malignant. I had that great news: no malignancy.

The message I want to give you is this: that was something over which I could have had no control, yet smoking is a practice that puts cancer-producing elements, called carcinogens, into your lungs, and that may well lead to you getting lung cancer, throat cancer or any of those cancers associated with your respiratory system, and then you will accelerate towards an early death. I say this to you whether you are a parent, a kid or—as is the case for some of us in this chamber—a grandparent. I have to say, when you become a grandparent, you have a really important cause to want to keep living for.

A member of my family is also a veterinarian. He is eight years older than me. My earliest memories of him were as a smoker. And he fits the bill, as read out previously by Senator Smith: a remote area person who worked all his life in stockyards in the bush. Members of our profession saw the pathology in animals that is equivalent to the human pathology—in other words, the disease in the lungs in humans. I used to often say, 'For someone with his knowledge, why the billyo is he smoking?' He turned up to visit his young grandchild in a Western Australian town. They all got crook about three years ago—he did, the child did and the parents did. He came home and he has not smoked since. I see his improvement in health every day and I see the fact that we are going to have him for the next few years, whereas, five years ago, I feared he was not going to see his grandchildren grow up.

The stats you have seen here today say it all. Low socioeconomic groups—in other words, people who cannot afford it—are three times more likely to smoke. If you come from a remote area, you have double the likelihood of smoking. Single parents—usually mums—with dependent children are nearly three times more likely to smoke, and are more likely to smoke than parents in homes where there are two parents. These are the stats. I ask the teachers to ask the children, 'Get your pens out.' And, if you do not, here is a bit of an exercise for when you are back at school. If you are able, have a look at the Hansard of speeches. It does not matter who is giving this one. Next week, go back and have a look at these figures.

The price today of cigarettes is about $25 per packet. If you smoke a packet a day, that is going to cost you $9,000 a year. And to those of us who pay tax—because all of this is what is called after-tax money—if you apply 30 per cent tax, the real cost of that $9,000 is $12,000 a year. That is $1,000 a month. Many of you are probably 12, 13, 14 years of age, so by 24 years of age that 12 grand a year is the $120,000 I was telling you about that you will have as a deposit on a home. But it will not be $120,000. If you have your pens out: within four years the cost of a packet of smokes will go to about $40. At $40 a packet, if you have a packet a day, that is $15,000 a year. And, again, if you apply the 30 per cent tax rate—because all of this is after-tax money; you do not get a tax deduction for helping yourself die early—the actual cost is over $20,000 a year. If you multiply that by the 10 or 12 years, by the time you are young adults there you have $200,000 in the bank earning interest, probably up to about $240,000 or $250,000—if I had the financial capacity of the finance minister, he could probably tell me what the compound interest rate would be. There is the money you have, and you have your health.

The question is often asked: to what extent are we interfering in the privacy of people by imposing taxes that make smoking more difficult? Of itself, if somebody decides to smoke, you would say, 'Well, that's their business; let them do it; let them take on the financial burden,' as I have just suggested. But there is an analogy that has been mentioned by Senator Fawcett, in his experience, of being in the cockpit of an aircraft where he could not see because of his copilot, and so he had to go onto instrument rating. It is a question of the effect on other people, of course. It is the effect of passive smoking. It is the effect on children in a car. It is the effect on other people in a room. When it goes from being something to do with the person to others around that person who can have no influence on the behaviour of that person, it changes dramatically.

I want to give you an example away from smoking. I want to direct this to the experience recently we had as a result of Senator Whish-Wilson, who asked us to participate in a Senate inquiry into marine plastics. I was involved in the committee—not that I necessarily wanted to be, but I thought, 'That's fair enough.' I knew little about this. Probably one of the joys of our work in the Senate is that we are drawn into areas that we normally would not have the opportunity or excuse to examine. I was not aware that all plastics will eventually reduce to microplastics. I was not aware, particularly, that we already had microplastics in things like toothpaste and various other items.

Senator Whish-Wilson: Beauty products.

Senator BACK: Thank you for that, Senator Whish-Wilson. I probably do not use too many beauty products, as is evident. But, nevertheless, I should have known that. We learned in that inquiry, as Senator Whish-Wilson probably already knew, that plastics break down in the environment. They do not disappear; they do not dissipate; they become microplastics. Plankton take up the microplastics, little fish eat the plankton, big fish eat the little fish and we eat the big fish.

What really drew my attention particularly to this exercise, and why it is relevant to this discussion, is the fact that there is a growing body of evidence that those microplastics are getting into the cells of human beings. Of itself, that is important enough to protect the oceans from plastics. I accept that. But when we cross that boundary to the realisation that we may well be looking at a circumstance of adverse human health as a result of this, you can bet your life—through you, Madam Deputy President, to Senator Whish-Wilson—that my focus of attention elevated.

I come back now to that comment associated with privacy. Yes, it is an invasion of privacy to tax something to the level where it probably becomes unattainable for a lot of people. Again, if that is the decision of an adult—to place themselves at risk from a health point of view—one could say that the role of government and others is to warn them of that and to let them make their own decision. That is probably right. But when it comes to the health of other people, it is not right.

The statistic that Senator Fawcett gave to us in his contribution was interesting—that is, in 2001, 22 per cent of adults in Australia smoked. That had gone down to 16 per cent by 2010. It is now 14 per cent. I actually want to give credit to the then health minister, Mr Tony Abbott. If you look at that dramatic decline—of 22 per cent at the beginning of the decade, down to 16 per cent by the end of the decade—it was in his capacity as health minister that the placing of those offensive warnings on packets had the biggest effect on young people not smoking. Again, I do give credit, as others have done, to Ms Roxon in her move towards plain packaging. I did not like it very much, but, nevertheless, it is apparent that we have seen a further reduction in adult smoking levels. So I give her credit for that fact.

I also make mention of the illicit trade in cigarettes. I note that there are funds intended to be directed for border protection to control further this issue. I also do understand, through sources, that the import illegally of cigarettes into this country is so lucrative that, if a consignment is intercepted by border protection and is, therefore, removed, the suppliers will actually supply the illegal importer, free of charge, with replacements of that number of cigarettes. So it really does become an issue of enormous importance to us. Others have mentioned the loss of excise by illegal imports of tobacco and cigarettes. But I also say that it must be so lucrative and so pervasive if the suppliers of those illegal cigarettes are willing to actually replace the products free of charge.

I am also aware that there is technology available here in Australia which, I understand, electronically identifies and marks packets and individual sticks so that government regulators can actually identify whether a packet or a cigarette has been legally or illegally obtained prior to its purchase. I would urge government—the relevant ministers—to pursue this technology further. I know that in the last couple of years I have actually recommended that those who supply such products and services meet with relevant ministers. Anything that can be done to wipe out, diminish or minimise this illegal trade, in my view, should be undertaken.

I want to turn to the impact in financial terms. My understanding is that over the forward estimates this legislation will deliver some $4.6 billion to the overall revenue base. As I understand it, all sides in this chamber support the legislation—certainly, the Labor Party, the coalition and the Greens support the legislation.

I was loud in my praise of Ms Roxon a few minutes ago with regard to her move for plain packaging of cigarettes. On the other hand, I now want to draw the attention of the chamber to something that I think was a mistake Ms Roxon made in her earlier capacity. That was when she introduced the alcopops legislation, which was always about raising tax. The coalition had no difficulty with a proposition that was going to raise tax. She should have said that it was a tax measure and she would have received little if any criticism. The mistake actually was to try to tie it up not in terms of it being a tax measure but in terms of it being a health measure, because by increasing the tax significantly on alcopops young people would in some way stop consuming them. Well, they stopped consuming them all right. As we all said would happen, instead of buying a can of mixed drink that had vodka, whiskey, brandy or whatever it was in with a mixing soft drink—of course, that was taxed out of existence—the kids then all went and bought 750 millimetre bottles of the spirits and bought the mixes separately, whether it was Coke or dry ginger ale or whatever. So, instead of just drinking the smaller quantity of alcopops they ended up drinking a larger quantity, because, as we know, no-one of that age is likely to stop drinking until the bottle is empty.

So I applaud the government and everyone in the chamber for the decision to explain very bluntly what this is. And it is two-fold. First, it is to improve directly the health of the community itself and the health of those affected by smoking, whether they smoke or they are in a smoky environment. Second, it is a measure to make sure that we can repair some of the budget.

In support of those comments I want to applaud the finance minister, the Treasurer and the shadow financial portfolio of personnel for what I understand is a measure and a move to pass the omnibus bill, which will achieve some $6 billion in savings. There has never been a more important time in the modern history of this country for us to get our debt and our deficit under control. There are black clouds over the entire world economy, and we are not immune. The best way that we can guarantee to the Australian people that there is sufficient funding for education, for health, for the legendary NDIS program, for welfare generally, for pensions, for defence and for border protection—for all of those purposes that we, and the community, regard government as having a primary role in—is to have a strong budget and move towards a surplus. So, instead of wasting $12-$15 billion a year paying interest on our debt, the Treasurer and the finance minister can turn that $12-$15 billion into savings and into supporting the lifestyle that this country has come to expect.

For those who do not think there are black clouds hanging over the world economy, you need look no further than Western Europe, Eastern Europe, the Middle East, the United States and Asia. So I commend the legislation and I commend the chamber for its support.

Senator SESELJA (Australian Capital Territory) (12:04): It is good to follow my good friend Senator Back in contributing to this debate. I might just pick up a little bit where Senator Back left off in terms of budget repair. I will go into some of the details on smoking rates and the like in a moment.

There is no doubt that budget repair is absolutely critically important. We have seen the announcement yesterday of over $6 billion in savings. That is very important. I commend Scott Morrison and Mathias Cormann for their work in continuing that work to find savings, because that is the main task. There is no doubt about it. When it comes to taxation, which I will move onto in a moment, we have rejected the Labor Party's approach in broad, which is to have a whole range of tax increases in a range of areas. If Labor had come into government they would have taxed a whole host of things more. One of those is, of course, investment in housing. The reason I make that point is that if you want people to do less of something you tax it more. That is what I am going to get into when discussing this bill. If you want people to invest less you tax it more. The Labor Party had that approach when it came to investment in housing and we see that as a shocking idea.

When it comes to taxing things like smoking, obviously there is a slightly different imperative, because we do actually want to see people smoking less—we do. We can put that into stark contrast with when there are tax grabs by the Labor Party on things like negative gearing and capital gains tax, because that is taxing investment and discouraging it. The government and I certainly want to see more investment in housing and in a whole range of other areas.

It is pleasing to be speaking to these bills, the Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016. As a senator for the ACT, I want to note the low rates of smoking we have here in the ACT—the lowest in the country. Figures from the Australian Institute of Health and Welfare show that in 2013 in the ACT we had a daily smoking rate of 10 per cent—which, as I will discuss in due course, is the target for smoking rates Australia-wide. Furthermore, in the ACT, we had the highest rate of people who had never smoked—with 65 per cent of Canberrans having not taken up the habit. I can certainly attest—as many others can—that this has all sorts of benefits for individuals, but there are also benefits from living in a relatively smoke-free city. Despite the fact that we have the lowest rates in the country, we would of course like to see those rates continue to decline, as they have in recent years.

The sad reality is that each year smoking kills an estimated 15,000 Australians and costs Australia $31.5 billion in social—including health—and economic costs. Governments of both parties have long fought to decrease smoking rates and the various health impacts that come from smoking. A range of methods have been used over the years to get these rates down. We have seen awareness campaigns, with organisations such as Quit working hard to help people stop smoking. We have also used various economic mechanisms to get smoking rates down by helping people stop and discouraging smokers from taking up the habit in the first place. These bills are another element of ensuring our success in getting smoking rates down continues.

There has been a sustained, concerted effort by all levels of government since the 1970s to improve health outcomes when it comes to smoking. Since the first health warnings were mandated on cigarette packs in 1973, it has been a long road to get where we are today.    Long gone are the days of smoking indoors, on planes, in workplaces and in restaurants. Particularly since the turn of the century, we have a good story to tell with getting smoking rates down. In 2001, 22.3 per cent of the population were smokers. In 2004-05 that had dropped by one per cent to 21.3 per cent. In 2007-08 we saw a further drop to 19.1 per cent. In 2011-12 we saw it drop to 16.3 per cent. And, most recently, in 2014-15 it has dropped even further to 14.7 per cent. So there has been great success here in getting good outcomes for smokers, with all of the flow-on health benefits for hundreds of thousands of people in our community.

Perhaps most impressively, amongst the most recent ABS figures there is a statistic that is very encouraging, which is that 52.6 per cent of Australians have never smoked. That means that we have a whole cohort of young people who have listened to the educational and awareness campaigns out there, know the health problems associated with smoking and are making the choice to not even try smoking in the first place. We know how addictive smoking can be. I have never been a smoker myself, but a number of family members have been and I have watched them try to quit, quit, take it up again and quit again. It is a very challenging addiction for many people to get over. So, of course, it is much better if our kids do not try it in the first place. I would emphasise that to young people. It is certainly a message I give my kids, and I hope that they take that advice. So far, so good—as far as I know. You never quite know what your kids are up to all the time, but I am pretty confident that none of them are smokers and I am very hopeful that none of them will be smokers. Certainly the message to them is not to engage in that habit.

A 2014 study on school students' use of tobacco found that smoking among 12- to 15-year-olds is at its lowest since 1984 when studies of this type began. Even more encouraging, the study found that 94 per cent of 12-year-olds have never smoked and 61 per cent of 17-year-olds have not had a cigarette either. So I think we can say that what was once one of our greatest health challenges is becoming less of a challenge, though of course we know that there is more that needs to be done.

Through COAG, all Australian governments have committed to getting the smoking rate down to 10 per cent. As I noted earlier, that is the rate here in the ACT—and of course we would like to get it lower than that. We have still got some way to go and I think it would be a significant achievement to get the rate to 10 per cent nationally. With that in mind, these bills will increase tobacco excise charged on domestic production and equivalent customs duties charged on imports by way of four annual increases of 12.5 per cent a year from 2017 until 2020. This will replicate the annual increases that were put in place from 2013 to 2016. In addition, adult average weekly ordinary time earnings based indexation of tobacco excise rates will continue. The next biannual indexation of tobacco excise will occur on 1 March 2017.

From 1 September 2016 the excise and excise equivalent duty rates on tobacco is approximately 61c per stick and $763.20 per kilogram of tobacco content. This equates to $15.26 in excise on a packet of 25 cigarettes, which retails currently for approximately $25.00. Ignoring biannual indexation, the 12.5 per cent increases will increase excise per pack of 25 cigarettes by around $2 each year. This means that, after the final increase in 2020, the excise component of a pack of 25 cigarettes will be $21.50. The increase in excise and duty will move Australia towards the World Health Organization's recommendation that excise should comprise 70 per cent of the price of a cigarette. All that said, it is difficult to say how this will precisely affect prices as cigarette companies may change their prices in other ways. But the central point remains that these bills aim to reduce the prevalence of smoking in Australia and thus minimise the harm of cigarette smoking to the community.

It has been very clear for some time, as we have been on this journey to reduce smoking rates, that increasing the price of cigarettes via taxation is one of the most effective ways of reducing tobacco consumption and preventing the uptake of smoking. Higher prices encourage smokers to quit or reduce their consumption and discourage potential smokers, particularly young Australians, from taking up the habit. There have been a number of significant increases in the tobacco excise, particularly since 2010, and the lowering of smoking rates over that time clearly demonstrates how this has worked.

As I have mentioned, the Council of Australian Governments have set a target of reducing the daily adult smoking rate to 10 per cent of the population. This commitment sits alongside a similar commitment to halve the daily rate of smoking among Aboriginal and Torres Strait Islander people by 2018. This measure will also assist the government to make further progress on these goals. It is one of the most unfortunate and troubling aspects of this discussion that Aboriginal and Torres Strait Islander Australians, people in remote areas and people of the lowest socioeconomic status all have higher rates of smoking than the general population. Certainly I understand, as does the government, that this means that there are challenges when we increase the excise. We understand that, for those who feel unable to quit, this does create a financial burden. It can be very tough; I acknowledge that. And that is one of the challenging parts of dealing with this issue. Obviously, the hope is that people will not end up spending so much money on smoking. The hope is that they will spend, in future, no money on smoking, as it encourages them to quit. So they will not only save the money they are currently spending on cigarettes but also gain all of the health benefits that flow from quitting smoking. They will have more money in their pockets and, hopefully, a much healthier lifestyle and a longer life. Hopefully, they will avoid some of the worst things that come from long-term smoking and that are linked to long-term smoking—particularly things like lung cancer, which of course has such a devastating impact on those who suffer from it.

As has always been the case in our efforts to reduce smoking, this change sits alongside the numerous interventions the Commonwealth has made to reduce the prevalence of smoking, including a comprehensive ban on tobacco advertising and promotion, retail display bans, Pharmaceutical Benefits Scheme subsidies for smoking-cessation supports, and extensive and continuing public education campaigns. As we have clearly established in this place during this debate, these efforts are working, so it is vital that we continue to make the changes we need to continue these great outcomes.

I note that of course these bills also play a broader role in this government's efforts to get the budget under control and to build a strong economic platform into the future. These bills will raise $4.59 billion across the forward estimates period. In comparison, goods and services tax receipts are estimated to increase by $430 million over the same period. The revenue gained from higher tobacco excise will be used by the government to provide a range of services, including health services. I know that in the other place they have been working through the Budget Savings (Omnibus) Bill 2016, and no doubt we will soon be debating it here. I particularly look forward to that debate. As I mentioned earlier, broadly, when it comes to issues around budget repair, our view in the coalition is that the primary way of getting the budget under control is to control spending—to limit spending growth and to find reasonable savings where we can find them. That is the best way to bring the budget back under control. As I also mentioned earlier, the exceptions to that are things like the tobacco tax, where we are taxing something that we would like to see less of, not taxing things like investment and economic growth and jobs, which, of course, we want to see more of. So there is a significantly different approach between the coalition and our opposition when it comes to taxation.

But, when it comes to these bills, of course, we are looking to see less tobacco consumed in this country. We are looking to see rates of smoking going down rather than coming back up again. These bills are an important part of that. This measure is an important part of the government's comprehensive tobacco control strategy, which includes investment in antismoking social marketing campaigns, subsidies for nicotine replacement therapies and the introduction of plain packaging for tobacco products.

The government also announced in the budget that it will strengthen the penalties for illicit tobacco offences and provide an additional $7.7 million for the tobacco strike team to combat illicit tobacco activity. This is a particularly important measure to ensure the effectiveness of the tobacco excise increase. I have heard from many here in my community in Canberra about the illegal importing of tobacco and the black market for cigarettes. Australia has a strong legislative and regulatory framework to control illicit trade in tobacco products. The Australian Taxation Office and the Australian Border Force will continue to have a strong ongoing role in monitoring and enforcement activity against illicit tobacco. This is an important fight, and we are going to continue to keep our borders secure and work against this illicit trade.

So it is clear that these bills are important for Australia's health and, of course, for our budget. The fact is that 15,000 people dying from smoking related illnesses is too many. Even though we have made great progress over the last few decades in getting smoking rates down, we certainly cannot be complacent. With a goal of reducing smoking to 10 per cent across all states and territories by 2018, we have a clear target to hit, and the entire suite of government efforts will continue.

History has shown that we need a range of policies to combat smoking. We need advertising campaigns and health awareness campaigns. We need to be in schools talking to young people and out in the community encouraging people to quit. But we also do need to combine these efforts with other measures, including the price signals contained in these bills. So that is what these bills do. Regular increases in the tobacco excise over the next four years will bring our policies into line with international standards. They will lift the price of cigarettes, which has been a proven way to get smoking rates down. Once again, I note that there are, obviously, impacts on those who struggle to quit smoking, and we will do what we can to encourage people and to assist people so that not only can their health improve as a result of quitting smoking but their bank balance can improve as well.

I would note once again, in closing, that I think we should be proud of the fact that here in the ACT we see the lowest rates of smoking in the country. We want to continue to bring those rates down, particularly for our young people, because it is such an addictive thing. Smoking is addictive. Nicotine is addictive. To avoid smoking in the first place, as a young person—to avoid being drawn into that—is a much better path than having the great challenges of quitting. We see it with family and friends; it is a tough habit to break. We commend those who do manage to do so. But I would advise people not to start smoking in the first place. That figure of 52 per cent of Australians now who have never smoked is good. We want to see that figure continue to go up, as we hopefully see a generation of young Australians for whom this is really not something that they do. I commend these bills to the Senate and look forward to their passage.

Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (12:22): I rise in support of the Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016, and I have to say that this legislation is of special interest to me and to my portfolio of Indigenous Affairs. I have personally seen, as I am sure have many in the chamber, the devastating impact of smoking on far too many Aboriginal and Torres Strait Islander communities. So, through my portfolio we have three priorities: getting kids to school, getting adults to work and ensuring that communities are safer. But we are not going to achieve this when our First Australians die 10.6 years earlier, for males—9.5 years earlier for females—and, generally speaking, enjoy far poorer health outcomes.

That is why the coalition government is committed to closing the gap between Indigenous and non-Indigenous Australians across a whole range of measures. Madam Deputy President, I know you would be aware that the Closing the Gap measures started as a suite of health measures and have grown over time. Part of the motivation for those fundamental measures initially was to address the health gap. If you are not healthy it is very difficult to engage in education. If you are not healthy it is very difficult to engage in employment. If you are not healthy it is very difficult to engage in the sorts of opportunities that other Australians take for granted. So one of those Closing the Gap targets is to close the gap in life expectancy between Indigenous and non-Indigenous Australians by 2031.

Closing the gap is particularly challenging because it is not only about ensuring that Aboriginal and Torres Strait Islander people live longer; it is also a matter of ensuring that they catch up with the remainder of the medical miracles that constantly make those in the mainstream live longer. So it is a very challenging gap but obviously one that is absolutely fundamental to the Closing the Gap process. If we are going to achieve this, then if there is any lever that is available to us we need to ensure that we can pull that lever. This legislation is one of those levers.

The Australian Institute of Health and Welfare report titled Australia's health 2016, which was released just this week, reinforces why we need to tackle smoking rates. Let me share with the Senate some of the report's key findings. Between one-third and one-half of the health gap between Indigenous and non-Indigenous Australians is associated with differences in socioeconomic position. Only 39 per cent of Indigenous Australians rated their health as 'excellent' or 'very good' in 2012-13, a decrease from 44 per cent in 2008 and 43 per cent in 2004 and 2005. A further 37 per cent of Indigenous Australians reported their health as 'good', 17 per cent as 'fair' and seven per cent as 'poor' in 2012-13. By comparison, more than half of Australians more generally—56 per cent—rated their health as 'excellent' or 'very good', only 10.4 per cent as 'fair' and 4.4 per cent as 'poor'. There is a stark contrast.

Chronic diseases, such as cardiovascular disease and cancer, are responsible for a majority of the life expectancy gap. Certainly it has been my observation that, particularly in very remote areas and very remote communities, the nature of the environment is a factor in chronic disease. Whilst smoking is a part of that, if a person has rheumatic heart disease, which is one of the largest killers in our communities—and I have to commend those who are working very stridently at the moment, particularly Menzies, to try to provide some respite via a vaccination or other processes in that regard—it is like an accumulation of things that can go wrong in that person's life, an accumulation of things that are negatively affecting their body and how it works.

Rheumatic heart disease, congestive heart failure, various types of lung disease—a lot of them are caused by the circumstances in the community. There may be a house that people do not themselves own, so it is very difficult to know who is responsible for it. People are coming and going, visiting the house, and it is not the normal circumstance of a house that someone is actually responsible for; it is a circumstance where a lot of people are responsible. I suppose it is a little like the 'tragedy of the commons': you cannot identify someone who is particularly responsible for this house in the way that you can in many normal households.

So the circumstance is that some of these houses are, as we would say, a bit dirty. Having many fingers at child level moving around the place makes it a bit grubby. But we are now starting to understand that such an environment has a direct impact on health. And when we see that some of these chronic disease presentations—cardiovascular diseases particularly—are being impacted by that, we have to ensure that we start to look after that environment, and that goes to how we can better manage some of our tenancies in this area and how we can assist those families, because it just gets on top of them. They have lots of visitors, lots of people going through, and they just do not have the capacity to ensure that the house does not have such a negative impact on people's health.

As I said, chronic diseases such as cardiovascular disease and cancer are responsible for a majority of the life expectancy gap. We in this place would all know about the strong association between cancer and smoking. I have to confess that I have been a smoker during my life, and if I have one or two beers there is certainly that tendency to want to go and, in the vernacular, 'bot a durry' from someone. I think even the most chronic smokers—speaking of which, good to see you, Senator O'Sullivan!—know themselves that they would like to not be smokers. And it is really interesting in communities: it is not as though communities are not absolutely aware that smoking is bad for you. If I am in a community in north-east Arnhem Land and I see someone light up in a tree, people will yell out—it is a wonderful way that they have got in north-east Arnhem Land—'Quit smoking!' They will say, 'No durries.' They will do it in a likely place, but each time, as they would say, it provides a little shame for someone who is lighting up. The whole community give a bit of a yell out in that regard.

So it is not as if people are not aware that smoking is bad for them. As I have heard from some other speakers this morning, it is, of course, the nature of addiction. The evidence is that nicotine is one of the most difficult drugs in your system to get rid of. It not only provides the circumstances where you are in a much more vulnerable demographic; also you are much more likely to develop cancer if you are a smoker. Obviously, there are a whole range of other issues. We still need to work very hard on exactly how we try to ensure that this is no longer cool in the community. There are demographics within a community that we can ensure are made aware in a way that appeals to them. It is that which this bill addresses. Whilst the smoking rate—that is, the daily and less-than-daily rate—for Indigenous Australians has declined somewhat, Indigenous Australians are still 2.6 times as likely to smoke daily as non-Indigenous Australians, whose rate is around 15 per cent.

In 2013, Indigenous mothers were 3.6 times as likely to smoke during pregnancy as non-Indigenous women. I have to say I despair sometimes because there are groups—sometimes very vulnerable groups—who do not have access to the same sort of constant education. If you go into any of the medical centres, for sure the walls are festooned with warnings about smoking during pregnancy and the negative effects it can have on your unborn child. But, given the numbers of people who still smoke when they are pregnant, clearly the message is not getting through to them. We need to do our very best to ensure that that is no longer the case.

We are not going to close the gap in life expectancy if we do not lower the rates of smoking among Aboriginal and Torres Strait Islander Australians. Of course, the smoking rates are on top of a number of other startling facts in terms of that difference. For example, in 2015, the immunisation rate for one- and two-year-old Indigenous children was much lower than the rate of all children. It was 89 per cent compared with 92 per cent for one-year-olds and 86 per cent compared with 89 per cent for two-year-olds. The immunisation rate for Indigenous five-year-olds was higher than the rate for all children—that is, 94 per cent compared with 93 per cent. This is a startling difference.

All of these statistics have a parallel. They are all connected and they are all contextualised around the actual gap that they create. If you cannot get immunisation processes right and if you cannot reduce the rates of smoking then life expectancy for our First Australians and the gap between the mainstream and our First Australians is going to close very slowly, if at all.

In 2012-13, after adjusting for the differences in the age structure, Indigenous adults living in non-remote areas were still more likely than non-Indigenous adults to not have undertaken the recommended level of physical activity in the past week. That is another 10 per cent difference.

Whether it is smoking or whether it is immunisation, all of these matters need to be dealt with to ensure that that headline of life expectancy is actually dealt with. That is why it has been so important to ensure that we have a whole-of-government approach. I have to say it is so much easier, now that my portfolio is under Prime Minister and Cabinet, to deal with some of the structural matters that we have done. We now have a cabinet subcommittee with all the other ministers who are responsible. In this case, it is the minister for health, but it is the same with Employment, Environment or whatever the area is. For the very first time, we can have a far more structured approach to those matters.

Obesity was also more common amongst Indigenous Australian adults aged 18 and over. Between 2012 and 2013, after adjusting for differences in age structure, Indigenous adults were 1.6 times more likely to be obese than non-Indigenous—that is, 43 per cent compared with only 27 per cent for non-Indigenous adults.

In 2012-13, a high proportion—26 per cent—of Indigenous Australians aged 15 and over reported that they had not drunk any alcohol in the previous 12 months. After adjusting for age differences, this was 1.6 times the non-Indigenous rate. In some areas, quite clearly there is no grey area of every now and again. Those people who are prepared to go down the road of abstinence do so quite proudly and often as a family. It sometimes cannot be done community by community or area by area. But this indicates that, to be absolutely successful at this and to ensure that we can be successful at this, we need to recognise that a family group and the peers within that family group can lead a better behaviour, a different behaviour and, in this case, a healthier behaviour than any other process might actually deliver.

In 2012-13, Indigenous Australians aged 15 and over were 1.1 times as likely as non-Indigenous Australians to exceed the national alcohol guidelines for single-occasion risk—that is, 50 per cent and 44 per cent respectively. Amongst prison entrants, the use of methamphetamine was more common amongst non-Indigenous entrants than Indigenous entrants—54 per cent and 38 per cent respectively. Whilst we have a scourge that you would expect for those populations that have had difficulty in dealing with some other health issues that I have outlined, quite clearly there are some exceptions to that, and we need to drill into those demographics to find out why they have been more resilient. I have to say, though, that I have been nothing short of petrified when I have seen the scourge of ice and the vulnerability of my community, particularly in remote communities. Yet there seems to have been a line put down that, while there are some substances that are semitolerated in the community, methamphetamine and its associated drugs are not. They have put a hard line down. People are as frightened as I am. I am delighted that these substances have not simply raged through these communities like a bushfire, as we were all so worried they would. Again, we need to tap into the leadership that can provide that sort of inoculation against those sorts of scourges. We need to ask the advice of that leadership about how we may improve the messaging, whether it is around obesity, whether it is around levels of exercise or whether it is around levels of smoking. They have shown leadership in a way that works, and we need to look very carefully at that leadership and how we might apply that particularly to smoking.

I was just an hour ago at a meeting with Julie Tongs from Winnunga Nimmityjah Aboriginal Health Service here in Canberra. We were talking about a number of these issues. When talking to Aboriginal health services, it seems if someone is smoking it is generally an indicator—there are obviously other indicators—that they are suffering other poor health symptoms. I have yet to understand a little more about that, but it is still an issue to be highlighted. If you can get people into an Aboriginal medical service, invariably as part of a health check, whatever the presentation is, someone will ask you if you are a smoker. If you are, someone will invariably say to you, 'This is having an impact on your life, it is having an impact on your family and it is having an impact on your capacity to help your family out by providing leadership by being a nonsmoker yourself.' I would like to commend the AMSs not only for the education systems that they run but also for the very strong message that they provide.

Wherever I go around the country, and I have been to over 150 communities on over 200 occasions, I always see there is a culture of smoking in communities. These bills will increase tobacco excise, which is charged on domestic production, and equivalent customs duty, which is charged on imports, by way of four annual increases of 12.5 per cent a year from 2017 to 2020. In addition, the AWOTE—average weekly ordinary time earnings—based indexation of tobacco excise rates will continue. The next biannual indexation of tobacco excise will occur on 1 March 2017.

The increase in excise and duty will move Australia towards the World Health Organization's recommendation that excise should comprise 70 per cent of the price of a cigarette. The World Health Organization have been around a very long time, and they understand that the price of cigarettes has a direct correlation to your capacity to make a decision to no longer be a smoker. It also has a direct correlation to how many cigarettes you get access to at any particular time. We have not reached a 70 per cent excise level, but I think we have certainly made a very serious move towards it. Each year smoking kills an estimated 15,000 Australians and costs Australia $31.5 billion in social costs—including health and economic costs. Increasing the price of cigarettes via taxation is one of the most effective ways of reducing tobacco consumption and preventing the uptake of smoking.

The government announced in the budget that it will strengthen the penalties for illicit tobacco offences and provide an additional $7.7 million for the tobacco strike team to combat illicit tobacco activity. This is in recognition of the fact that there is no point saying, 'We are going to put an excise on it and we are going to make it more expensive,' without recognising it increases the attractiveness of criminal behaviour. We acknowledge that whatever you do there is a consequence. When you have a consequence, you have to be a sophisticated enough government to react to that. Australia has a strong legislative and regulatory framework to control illicit trade in tobacco products. The Australian Taxation Office and the Australian Border Force will continue to have a strong ongoing role in monitoring and enforcement activity against illicit tobacco. Again, that is a sophisticated approach, and it has to be. Every time we introduce legislation we know there is going to be a consequence and we have to be across that.

These bills are an important plank in helping to turn that culture and lower smoking rates, particularly in communities. We need to pull every lever against smoking, which is at 2.6 times the non-Indigenous rates. I commend these bills to the Senate.

Senator CASH (Western Australia—Minister Assisting the Prime Minister for the Public Service, Minister for Employment and Minister for Women) (12:42): I too rise to make a contribution to the debate on the Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016. These will increase tobacco excise charged on domestic production and equivalent customs duties, which are of course charged on imports, by way of four annual increases of 12.5 per cent a year from 2017 through to 2020. Certainly, in listening to the address that was just given by my colleague Senator Scullion, the Minister for Indigenous Affairs, I think one begins to understand very much the purpose and the reasons behind the government proceeding with these bills.

The increase in excise and duty will move Australia towards the World Health Organiz ation's recommendation that exc ise should comprise 70 per cent of the price of a cigarette. There are very, very good evidentiary reasons for this. You see this in advertising and you see it on the cigarette packets themselves, but it is a fact that each year smoking kills an estimated 15,000 Australians. If that was not bad enough, you also have the cost to the Australian economy. Each year smoking costs the Australian economy approximately $31.5 billion in social costs, and economic costs. Those costs include the huge impact of smoking on our health system. So these bills are very much aimed at reducing the prevalence of smoking in society and thus, of course, minimising the harm to the Australian community of cigarette smoking. It is a fact that increasing the price of cigarettes via taxation is one of the most effective ways of reducing tobacco consumption.

Debate interrupted.

Senator WILLIAMS (New South Wales—Nationals Whip in the Senate) (15:40): I move:

That the following matters be referred to the Parliamentary Joint Committee on Corporations and Financial Services for inquiry and report by 30 June 2017:

(a) the need for further reform and improved oversight of the life insurance industry;

(b) assessment of relative benefits and risks to consumers of the different elements of the life insurance market, being direct insurance, group insurance and retail advised insurance;

(c) whether entities are engaging in unethical practices to avoid meeting claims;

(d) the sales practices of life insurers and brokers, including the use of Approved Product Lists;

(e) the effectiveness of internal dispute resolution in life insurance;

(f) the roles of the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority in reform and oversight of the industry; and

(g) any related matters.

Senator GALLAGHER (Australian Capital Territory) (15:41): I seek leave to make a short statement.

The PRESIDENT: Leave is granted for one minute.

Senator GALLAGHER: The opposition will be supporting Senator Williams's motion to refer these issues to the Parliamentary Joint Committee on Corporations and Financial Services. We will not stand in the way of this important work, unlike those opposite, who are blocking a royal commission. Labor's preference would be for the government to establish a royal commission into the banking and financial services sector that would put a stop to the scandals and misconduct and that would restore public confidence in Australia's financial institutions. But we will support this motion because we believe these are significant issues that should be examined by this committee.

Question agreed to.

Senator BUSHBY (Tasmania—Chief Government Whip in the Senate) (15:42): At the request of Senator Fawcett, I move:

That the Joint Standing Committee on Treaties be authorised to hold private meetings otherwise than in accordance with standing order 33(1), followed by public meetings, during the sittings of the Senate, from 11 am to 1 pm, as follows:

(a) Monday, 10 October 2016;

(b) Monday, 7 November 2016;

(c) Monday, 21 November 2016; and

(d) Monday, 28 November 2016.

Question agreed to.

Senator LAMBIE (Tasmania) (15:43): I seek leave to amend general business notice of motion No. 3 standing in my name and also to add Senator Xenophon's name.

Leave granted.

Senator LAMBIE: I, and also on behalf of Senator Xenophon, move the motion as amended:

(1) The Senate notes that:

(a) the Australian dairy industry is facing an unprecedented crisis with the retail cost of bottled milk per litre often less than the retail cost of bottled water;

(b) Australian milk production since deregulation over 15 years has decreased from approximately 11 billion litres per year to 9 billion litres per year – a 20 per cent decrease, while New Zealand milk production has almost doubled;

(c) in 2011, a report of the Senate Economics References Committee recommended that producers' contracts with dairy farmers should offer a clear, consistent formula for milk pricing with unambiguous conditions;

(d) five years later, the livelihoods of up to 40 per cent of Australian dairy farmers are under threat because of imposed, retrospective debt, helped by unclear, inconsistent milk pricing contracts with ambiguous conditions;

(e) Australia's largest dairy producer and milk price setter, Murray Goulburn, has been allowed to force onto its suppliers unprecedented milk contracts or agreements ensuring that dairy farmers are burdened with retrospective debts ranging from tens to hundreds of thousands of dollars;

(f) Australian rural and regional communities face losing millions of dollars and thousands of jobs if a fair, long term solution to Australia's dairy crisis is not found; and

(g) the mental and physical health of dairy families and workers are being unnecessarily and unfairly placed in jeopardy as politicians, legal and industry experts argue about possible solutions to the dairy crisis.

(2) That the above matters be referred to the Economics References Committee for inquiry and report by 24 February 2017, in order to establish a fair, long term solution to Australia's dairy crisis, with particular reference to fresh milk security and:

(a) the legality of retrospective elements of milk contracts;

(b) the behaviour of Murray Goulburn; and

(c) any other related matters.

Senator McGRATH (Queensland—Assistant Minister to the Prime Minister) (15:44): I seek leave to make a short statement.

The PRESIDENT: Leave is granted for one minute.

Senator McGRATH: The coalition government strongly supports Australia's dairy farmers and dairy industry. We are delivering a $579 million dairy assistance package to help dairy farmers experiencing hardship as a result of low global dairy commodity prices and the decisions of major dairy processors Murray Goulburn and Fonterra to cut farm gate milk prices in the 2016-17 year. There was no assistance under Labor in 2009, when farm gate milk prices were lower. The ACCC is currently investigating the farm gate milk-pricing decisions of Murray Goulburn and Fonterra. ASIC is also investigating Murray Goulburn. The government has requested that the ACCC undertake a market inquiry into the Australian dairy industry. It will commence by November 2016. The ACCC will have powers to compel evidence.

Senator LAMBIE (Tasmania) (15:45): I seek leave to make a short statement.

The PRESIDENT: Leave is granted for one minute.

Senator LAMBIE: As this motion notes, the Australian dairy industry is facing an unprecedented crisis, with the retail cost of bottled milk per litre often being less than the retail cost of bottled water. Australia's largest dairy producer and milk price setter, Murray Goulburn, has been allowed to force onto its suppliers unprecedented milk contracts and/or agreements, ensuring that dairy farmers are burdened with retrospective debts ranging from tens to hundreds of thousands of dollars. Australian rural and regional communities face losing millions of dollars and thousands of jobs if a fair long-term solution to Australia's dairy prices is not found. I urge all senators, particular those from the National Party, to stand up for the rural and regional communities that are doing it tough and vote for this motion to establish a Senate investigation in order to establish a fair long-term solution to Australia's dairy crisis.

The PRESIDENT: The question is that the motion, as moved and amended by Senator Lambie, be agreed to.

Question agreed to.

Senator KAKOSCHKE-MOORE (South Australia) (15:48): At the request of Senator Xenophon, I move:

That—

(a) the Senate notes that:

   (i) the President's report to the Senate on government responses outstanding to parliamentary committee reports as at 30 June 2016, listed the report of the Economics References Committee on the future of Australia's automotive industry as amongst the reports the Government had failed to respond to within the 3 month timeframe, and

   (ii) the Government still has not provided a formal response to the committee's report, although it has been 10 months since the report was tabled; and

(b) there be laid on the table by no later than 3.30 pm on 10 October 2016 by the Minister representing the Minister for Industry, Innovation and Science the Government's response to the report of the Economics References Committee on the future of Australia's automotive industry, dated 1 December 2015.

Senator McGRATH (Queensland—Assistant Minister to the Prime Minister) (15:48): I seek leave to make a short statement.

The PRESIDENT: Leave is granted for one minute.

Senator McGRATH: The government is developing its response to the Senate inquiry. The report contains 20 wide-ranging recommendations that cut across the responsibilities of five portfolios. The government expects to respond to the report in the near term. In their dissenting report, government senators supported further work in relation to a number of recommendations, in order to give the vehicle and component makers certainty to cope with the decline in production and volumes. Government senators oppose changes to the Automotive Transformation Scheme in order to ensure an orderly transition of the automotive sector post 2017. For this reason, the government will maintain the scheme in its original form, as legislated, until that time. Firms that undertake eligible Automotive Transformation Scheme activities, excluding on the export side of their businesses, can continue to apply the funding during this period.

Question agreed to.

Senator WHISH-WILSON (Tasmania) (15:49): I move:

That the following matter be referred to the Environment and Communications References Committee for inquiry and report by 30 June 2017:

The current and future impacts of climate change on marine fisheries and biodiversity, including:

(a) recent and projected changes in ocean temperatures, currents and chemistry associated with climate change;

(b) recent and projected changes in fish stocks, marine biodiversity and marine ecosystems associated with climate change;

(c) recent and projected changes in marine pest and diseases associated with climate change;

(d) the impact of these changes on commercial fishing and aquaculture, including associated business activity and employment;

(e) the impact of these changes on recreational fishing;

(f) the adequacy of current quota-setting and access rights provisions and processes given current and projected climate change impacts;

(g) the adequacy of current and proposed marine biodiversity protections given current and projected climate change impacts;

(h) the adequacy of biosecurity measures and monitoring systems given current and projected climate change impacts; and

(i) any other related matters.

Senator McGRATH (Queensland—Assistant Minister to the Prime Minister) (15:49): I seek leave to make a short statement.

The PRESIDENT: Leave is granted for one minute.

Senator McGRATH: We do not need an inquiry established every time Senator Whish-Wilson reads an article or meets a stakeholder. The government takes advice from leading Australian and global scientific institutions, including the Bureau of Meteorology and CSIRO, on the impacts of climate change, including on the marine environment, fisheries and recreational users. Australia has some of the most sustainably managed, low impact fisheries in the world, underpinned by world-class scientific research. A well-managed fisheries system ensures a more resilient marine environment in the face of climate change. Australia's climate change policies are strong and in place and we are playing our part internationally by signing the Paris agreement and commencing domestic ratification. The government will be happy to facilitate a briefing for Senator Whish-Wilson by relevant officials to canvass these issues, rather than tie up hundreds of hours of resources through an inquiry.

Senator WHISH-WILSON (Tasmania) (15:50): I seek leave to make a short statement.

The PRESIDENT: Leave is granted for one minute.

Senator WHISH-WILSON: I was not planning to make a short statement, but given that that was a very personal response by the government I will respond. Mr President, off the coast of Tasmania, where we are both from, we have seen unprecedented warming of waters and we have seen severe damage to our aquaculture industry, to scallops, to abalone and to the oyster industry, not to mention the damage to some of the beautiful, ancient kelp forests. Right around the country we are seeing the ocean go haywire from warming waters. We are seeing marine protected area protections that the Labor Party brought in being wound back, especially in the Coral Sea, very close to an area where we are seeing unprecedented bleaching of the Great Barrier Reef. The government clearly has something to hide. They do not want an inquiry into this. I would say to the One Nation senators and others here who do not believe in climate change that this is a good opportunity to come along and ask hard questions to the experts. This is an inquiry we need to have. The ocean is being ignored in the climate change debate. It is a great opportunity— (Time expired)

The PRESIDENT: The question is that the motion moved by Senator Whish-Wilson, business of the Senate notice of motion No. 4, be agreed to.