Review of Tobacco Control Legislation - Update

The Tobacco Advertising Prohibition Act (TAP Act) and the Tobacco Advertising Prohibition Regulation (TAP Regs) have been effective in the sense that their requirements are widely understood and broadly respected by all legal participants in the market.

On that basis and subject to our comments about recent technological developments, we would submit that there is no compelling reason to regulate further in this space.

Obviously, the TAP Act and TAP Regs are not the only tobacco control measures in place in Australia and it is difficult to isolate the impact (or lack thereof) of one particular measure in isolation. Because of this a more fulsome consideration of current tobacco control measures is warranted. As such, we have provided a standalone submission where we elaborate more fully on these issues. We will refer to the more fulsome submission throughout our responses to these questions as appropriate.

Since the TAP Regs were first written, there has been a rapid transformation in technology. Indeed, the establishment of commercial Internet Service Providers (ISPs) in Australia post-dates the writing of the TAP Regs. Similarly, the TAP Regs pre-date the release of the first smart phone in Australia by more than a decade.

Consumer preferences in the field of shopping are changing, with business-to-consumer (B2C) e-commerce expanding rapidly. Roy Morgan Australia found that in the 12 months up to March 2018, 9.46 million Australians 14+ (46.8%) purchased something online in an average four-week period, an increase of 590,000 in just 12 months, and an increase of 2.3 million since 2014.

In parallel with the continued growth of e-commerce for the legitimate sale of consumer goods, the illicit trade in goods through this channel is also increasing, including for pharmaceutical, alcohol and tobacco products.

There are some minor changes required to the TAP Regs to reflect the changed commercial and technological world in 2019 and beyond.

It is important to ensure that online sales of tobacco products include robust age verification technologies, that all online sellers are appropriately licensed and all taxes paid to the appropriate authorities.

Legitimate internet retailers, complying with all applicable regulations, can offer robust safeguards in the same way a traditional retailer can. However, authorities should clamp down on illegitimate internet retailers who sell without age-control and/or trade in counterfeit or contraband tobacco and should introduce regulation which permits legitimate accountable retailers to provide existing adult smokers with genuine tax-paid products via their preferred channel of purchase.

The TAP Act and TAP Regs should be amended as appropriate to ensure that e-commerce solutions align with traditional retail. This should include:
• Specifically prohibiting the sale of tobacco products to youth under the minimum purchasing age;
• Health warnings must be featured on all branded websites and apps such that consumers cannot access the website or app (on the first and any subsequent occasion) without the health warning being visible to them;
• Introduction of requirements robust age verification technologies in line with industries such as alcohol and gambling i.e. an appropriate combination of credit cards, web cams, third-party databases, biometric verification or any other available reliable solution;
• Banning tobacco advertisements or branding on non-age restricted pages or other digital media;
• Restricting communication about tobacco brands to closed online communities of age-verified adult smokers;
• Requiring age verification before any sale is made; and
• Requiring a retail licence for the online sale or supply of tobacco products which is similar to the in-store retailer licensing scheme in Australia and includes notification of sales to the Australian Tax Office.

The advances in technology and the rise in online sales cannot be doubted. While there is no need to rely on studies to prove these developments, we refer to the figures cited in question 2 above.

We refer to our comments at 2 above.

Recent amendments relating to illegal tobacco, which refer to non-compliance with plain packaging as an indicator that a product might be illegal, are facilitating increased enforcement activity. Similarly, recent communication from the Department of Health to tobacco retailers advising of potential technical breaches has provided much needed clarity in allowing retailers to identify non-compliant products.

The tobacco control community claims that plain packaging reduces smoking rates, particularly among youth. However, the data from Australia, the United Kingdom and France tells us that the measure has neither reduced smoking rates, nor the amount of tobacco consumed by individual smokers.

Our more fulsome submission which accompanies this response provides in paragraphs 3.1 to 3.56 a detailed review of the evidence and datasets from Australia supporting the view that plain packaging has been ineffective in Australia. In response to this question, we provide an overview of the key facts and figures. Australia implemented plain packaging in December 2012. The Australian government collects data on national smoking behaviour every three years as part of its National Drug Strategy Household Survey (NDSHS). The most recent batch of data is from 2016 and reports no statistically significant decline in the overall daily smoking rate between 2013 (12.8%) and 2016 (12.2%). This is the first instance of no such decline in 23 years. How can plain packaging be said to work when the smoking rate has not declined following its introduction?

In December 2018, the Australian Bureau of Statistics released its National Health Survey results, which found "in 2017-18 the proportion of adults who were current daily smokers was 13.8 per cent unchanged from 14.5 per cent in 2014-15", further demonstrating plain packaging’s ineffectiveness.

Furthermore, BAT has commissioned research on Australian datasets to understand the impact of plain packaging, and these reports confirm this Australian government data. Expert reports by Professor Viscusi and Mr Dryden (which are the most comprehensive and up-to-date analyses of the evidence on the impact of plain packaging in Australia) show that plain packaging is not effective.

For ease of reference, the reports of Professor Viscusi and Mr Dryden are available online and included below.

Professor Viscusi: https://www.bat.com/group/sites/uk__9d9kcy.nsf/vwPagesWebLive/DO9DKJEB/$FILE/medMDAVXMEV.pdf?openelement

Mr Dryden: https://www.bat.com/group/sites/uk__9d9kcy.nsf/vwPagesWebLive/DO9DKJEB/$FILE/medMDBAADR6.pdf?openelement

The expert reports by Professor Viscusi and Compass Lexecon (Mr Dryden) include the following analyses:
• An overview of the most recent 2016 government data from the Australian National Drug Strategy Household Survey (NSDHS), as mentioned above.

• Professor Viscusi’s previous empirical analysis which:

o Analyses the Roy Morgan Single Source (RMSS) data, a nationally representative, repeated cross-sectional survey of Australians aged 14 and over. This is the most comprehensive data on smoking prevalence available in Australia, and the dataset presented in the report of Dr. Tasneem Chipty, "Study of the Impact of the Tobacco Plain Packaging Measure on Smoking Prevalence in Australia" (24 January 2016) (the Chipty Report), which was commissioned by the Australian Department of Health (and is the only econometric analysis of data that is relied upon in the Australian Government's Post Implementation Review Report of the Tobacco Plain Packaging Act 2011 published in 2016 (the Australian PIR Report). Professor Viscusi's analysis includes data from January 2001 to December 2016 (thus providing 4 years of data in the post-plain packaging period, which is a longer time period than in any published study, including 15 more months of data in the post-plain packaging period than analysed in the report of Dr. Chipty);

o Extends his previous analysis of the Cancer Institute Tobacco Tracking Survey (CITTS) data from February 2009 to June 2016 (thus providing 3½ years of data in the post-plain packaging period, which is a longer time period than in any published study);

o Reviews and comments on the Australian RMSS data presented in the report of Dr. Tasneem Chipty and the paper by Diethelm and Farley (2015) (Pascal A Diethelm, Timothy M Farley, “Refuting tobacco-industry funded research: empirical data shows a decline in smoking prevalence following the introduction of plain packaging in Australia,” Tob. Prev. Cessation 2015;1(November):6), which are relied on in the Second Consultation; and

o Reviews the Australian Government's Post Implementation Review Report of TPP Act published in February 2016.


• Mr Neil Dryden's report reviews the impact of plain packaging on price, consumption and downtrading, which constitutes the most up-to-date analysis of the Australian consumption data. Mr Dryden’s expert report:

o Provides analysis of the retail sales data regarding cigarettes from January 2009 to December 2016 for Australia, and from January 2008 to December 2016 for New Zealand (thus providing four years of data in the post-plain packaging period, which is a longer time period than any published study); and

o Presents an alternative empirical analysis on the effect of plain packaging on cigarette consumption using Australian only data.

• As these reports make clear, the evidence shows that, four years after the introduction of plain packaging in Australia:

o There has been no acceleration in the long-term smoking rate decline since plain packaging was introduced;

o Plain packaging has not increased the effectiveness of health warnings; and

o Plain packaging is associated with a relative reduction in the prices of cigarettes, an increase in the consumption of cigarettes, and an acceleration in the shift from premium to non-premium brands in Australia.

Not only does plain packaging fail to reduce smoking rates, it also results in other, problematic changes to the tobacco market. Most significantly, these changes can contribute towards a rise in the consumption of illegal tobacco.

The growth of the illegal tobacco market undermines public health, as its cheaper products encourage initiation and consumption, while its sellers do not restrict their sales to adult consumers. By contributing to an unregulated, untaxed marketplace, plain packaging also results in negative impacts on tax revenue, the business climate, and public security.

The market share of illegal tobacco increased by nearly 30% within the first two years of plain packaging being implemented in Australia in 2012. After millions of extra dollars spent on enforcement, today the market share of illegal tobacco persistently remains over 20% higher than pre-2012, representing 15% of tobacco consumed in Australia; according to the 2017 KMPG report: “Illicit Tobacco in Australia”.

The volume of legal tobacco consumed in Australia has declined since the introduction of plain packaging due to successive tax increases. However according to KPMG, this decline is offset by an additional annual average consumption of 2.4 million kg of illicit tobacco, which is the equivalent of AUD 1.9 billion in lost tax revenue for the Australian Government.

Notwithstanding our disagreement with plain packaging as a matter of policy and view that it should be repealed, the current regulations are very prescriptive, complicated to understand and inconsistently enforced. This has led to widespread uncertainty in the market as to what is compliant and what is not. Greater clarity about the exact requirements combined with more consistent enforcement of those requirements could help address this.

Given the failures of plain packaging as a policy as identified in the response to question 6 above, BATA submits that there is a case to be made for the TPP Act and TPP Regs to be repealed in their entirety. The Government’s desire to reinforce the dangers associated with smoking could be addressed by maintaining a health warning regime and other lawful limits on promotion, while still allowing , for legitimate, legal tobacco companies to compete for those Australian adults who, informed of the risks of smoking, still exercise their right to choose to do so.

Professor Viscusi: https://www.bat.com/group/sites/uk__9d9kcy.nsf/vwPagesWebLive/DO9DKJEB/$FILE/medMDAVXMEV.pdf?openelement

Mr Dryden: https://www.bat.com/group/sites/uk__9d9kcy.nsf/vwPagesWebLive/DO9DKJEB/$FILE/medMDBAADR6.pdf?openelement

Illicit Tobacco in Australia 2017:
https://home.kpmg/uk/en/home/insights/2018/05/illicit-tobacco-in-australia-2017.html

The current regulatory arrangements, which call for a review of the effectiveness of these laws, provide a valuable opportunity for all affected stakeholders to contribute to the development of sound evidence-based policy. The Department should ensure that a full range of views are sought, and a robust analysis is carried out with respect to the responses / evidence submitted.

We are concerned that the review process is not designed to solicit a full range of views. The Consultation Paper sets out a set of questions to assist participants in preparing their responses. These questions seem to make certain assumptions about the legislation under review (ie they are working well) and seem to seek particular answers. For example, it asks “What is working well in relation to the Tobacco Plain Packaging Act 2011 and the Tobacco Plain Packaging Regulations 2011?”

Tobacco manufacturers are some of the parties most affected by the tobacco control legislation under review. As such, they should be asked to participate in “targeted stakeholder workshops” in phase 2 to ensure that a comprehensive and objective review is carried out.

A robust and comprehensive regulatory impact assessment should also be carried out as part of this process.

The current regulatory framework at federal and state/territory levels is highly fragmented and often results in laws that differ or fail to align easily. This generates a high degree of costs and burdens on manufacturers/importers, distributors, wholesalers/retailers, consumers and others.

There is presently in Australia a myriad of laws and regulations in respect of tobacco currently in force in the Commonwealth and each of its states and territories. A high-level review of those laws has identified more than 900 individual tobacco laws which impose a restraint, qualification, obligation and the like on all aspects connected with the supply and use of tobacco products. These laws primarily cover:
• Advertising and promotion controls e.g. point of sale, incidental/accidental, electronic/internet, corporate advertising
• Manufacturing and packaging controls e.g. health warnings, labelling, size and colour requirements etc.
• Sale and display controls e.g. signage, point of sale display etc.
• Controls on consumption and purchasing
• Licensing controls
• Smoke-free areas
• Controls on tobacco vending machines
• Taxation/ excises and customs

Broken down by jurisdiction, the number of tobacco laws identified is as follows:
• Commonwealth: 259
• NSW: 77
• ACT: 110
• South Australia: 30
• Queensland: 91
• Northern Territory: 59
• Tasmania: 47
• Victoria: 104
• Western Australia: 134

Further, we have identified a total of 28 different Federal, state and territory agencies with responsibility for monitoring and administering the matrix of tobacco laws. We set out below our recommendation for addressing this problem.

As noted above, the current myriad of Commonwealth, state and territory laws generates an extreme amount of unnecessary and costly administrative burden for both businesses and governments alike. A comprehensive overhaul of Australia’s tobacco control laws, including the repeal of the current system to be replaced by a consolidated tobacco control law with one single regulator, such as the federal Department of Health is worthy of consideration.

There are very good reasons why consideration should be given to consolidating tobacco control laws presently in force into a single Federal suite of laws. These include:

(a) It will provide consistency in the laws that apply throughout the Commonwealth. There are numerous different laws that apply across the respective states and territories. There are, for example, 30 tobacco laws in South Australia covering the subjects mentioned above, compared with 134 in Western Australia.

(b) It will provide legal certainty for all persons operating across state borders, including suppliers, retailers, consumers, bureaucrats, health officials and enforcement agencies. It is perhaps instructive to compare the state laws governing the size of price tickets in retail outlets:
• NSW: not larger than 35cm²
• ACT: cannot be larger than 15 cm²
• South Australia: no larger than 80mm x 40mm
• Queensland: no more than 80 x 40mm in size
• Northern Territory: not permitted
• Tasmania: not exceeding 1 m²
• Victoria: not greater than the size of the largest immediate package of the tobacco product on display
• Western Australia: must not exceed 35cm² in area

(c) It will reduce red tape and provide significant costs efficiencies for government and business, including major retailers.

(d) It will provide significant operation efficiencies for all levels of government, freeing up valuable human resources to focus on other important public endeavours.

(e) It will provide jurisdictional certainty for Federal, state and territory enforcement agencies. In this regard, it is instructive to have regard to the Commonwealth Department of Health’s “Tobacco Plain Packaging Enforcement Policy” dated May 2018. In Chapter 7 under the heading, “Referral to Another Agency”, the policy states:

“The Department notes that some complaints are multi-jurisdictional and that at times, related offences are more appropriately dealt with by another Commonwealth or state /territory agency. Policy, resourcing, and complaints related to other cases may make it appropriate for another agency to take the lead where the situation involves a breach of more than one regulatory scheme (e.g. as with the import of illicit tobacco products, and appropriate involvement of law enforcement agencies). Cases may be referred to other agencies without notice to a person or entity.
Cases investigated by the Department may continue to be investigated in conjunction with another agency, or matters may be referred in their entirety.
Matters that do not fall within the jurisdiction of the Department (non-Plain Packaging offences) are likely to be referred to another agency with the appropriate jurisdiction.”

We refer to our response to questions 11 and 12 above.

It is internationally accepted that most of the harm associated with tobacco is caused by inhaling the smoke produced by the combustion of tobacco and not nicotine itself. It is also recognised that different tobacco and nicotine products can have vastly different risk profiles, and that potentially reduced risk products (PRRPs) such as vapour products or tobacco heating products (THPs) have an important role in reducing the projected harms of smoking.

The international experience is instructive. Data from the United States and the United Kingdom, where substantial regulatory freedoms exist, indicate that these nations have experienced vast reductions in smoking prevalence in comparison to jurisdictions that have adopted a more restrictive approach to regulating these products, such as Australia.
Australia risks falling behind other comparable countries in relation to best public policy practice for harm reduction in relation to tobacco use. New innovative products that are increasingly considered to have the potential to pose significantly reduced risks for existing smokers than conventional tobacco are illegal to buy in Australia. Rather, Australian tobacco control policy-makers are focused on punitive tobacco control, such as ‘quit or die’ strategies notably represented by tobacco plain packaging. This means that Australian smokers are denied the opportunity to choose alternatives to smoking such as snus and electronic cigarettes, which have been proven to work in other countries as part of a tobacco harm reduction strategy if appropriately regulated.
Additionally, PRRPs should not be subject to the same regulatory regime as combustible tobacco products. Appropriate regulations should be introduced, which reflect PRRPs’ comparative risk profiles and their potential for harm reduction. In this regard, there are regulatory options to help ensure that PRRPs meet appropriate criteria in relation to quality and safety, while making it available to adult consumers (e.g. quality / safety standards; labelling / packaging; and responsible marketing /communication).
In paragraphs 4.1 to 4.21 in the more fulsome submission which accompanies this response, we have set out in some detail the growing evidence base and increased momentum amongst the public health community for a shift to the introduction of more harm reduced alternatives to traditional combustible tobacco products. In summary:
• Tobacco harm reduction is an essential component of a rational and effective tobacco control policy, as recognized by, among others:
o the World Health Organisation (WHO) Framework Convention on Tobacco Control (FCTC), which has embedded the concept of tobacco harm reduction;
o a 2007 report of the UK Royal College of Physicians, which “make[s] the case for harm reduction strategies to protect smokers”;
o a September 2018 letter in which public health experts call on the WHO to reject prohibition and embrace tobacco harm reduction and risk-proportionate regulation of tobacco and nicotine products; and
o an October 2018 letter from a group of 72 independent specialists in nicotine science, policy and practice, which calls on the WHO to embrace technology innovation in the fight against diseases caused by smoking.
• There is increasing agreement amongst health experts that exclusive use of electronic nicotine delivery systems (ENDS) confers significantly reduced risks of harm as compared to smoking conventional cigarettes – as seen in reports by Public Health England, the National Academies of Sciences, Engineering, and Medicine (for the U.S. Food & Drug Administration), and others.
• The evidence suggests that ENDS and other smoke- and tobacco-free alternatives have contributed to reduced smoking prevalence in countries with a more flexible regulatory landscape, including the U.S. and the UK.