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Legislative Council - Fifty-Fourth Parliament, Second Session (54-2)
2021-11-17 Daily Xml
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Tobacco and E-Cigarette Products (Importing and Packing of Tobacco Products) Amendment Bill

Introduction and First Reading

The Hon. C. BONAROS (16:54): Obtained leave and introduced a bill for an act to amend the Tobacco and E-Cigarette Products Act 1997. Read first time.

Second Reading

The Hon. C. BONAROS (16:55): I move:

That this bill be now read a second time.

The bill intends to address the severely inadequate penalties for the importing and packing of illicit tobacco products in South Australia. While legal tobacco consumption in Australia is decreasing, illicit tobacco consumption is booming.

In its 2019 report on illicit tobacco in Australia, KPMG reported a massive 47.6 per cent increase in illicit tobacco consumption from the previous year. It amounted to 20 per cent of the total combined market. That is 3.1 million kilograms, representing $3.41 billion of missed federal excise duty. But it is not even the financial implications that we are most concerned about here. We are disturbed about the health ramifications of the consumption of unregulated products, products which have likely been manufactured overseas at low cost.

Just over half of the illicit tobacco consumption in Australia in 2019 was contraband, legitimately manufactured by the owner of the trademark but smuggled into Australia to avoid excise duty. Almost 45 per cent was unbranded tobacco, often sold as finely-cut loose-leaf tobacco, commonly known as chop-chop. It is anyone's guess what the chemical make-up of these products are. The widespread availability completely undermines the health initiatives of the last few decades.

The Australian tobacco market is one of the world's most regulated markets. Gone are the days when full-page ads littered glossy magazines, carefree images adorned billboards and buses, and cigarettes were handed out freely at nightclubs and events. Gone are the days of smoke-filled bars and restaurants. Smoking in outdoor food consumption areas has been banned in South Australia since 2016. Nationally, plain packaging and health warnings were introduced in 2012, the same year as tougher penalties for excise duty avoidance.

Excise duty has steadily been on the rise, and in 2018 a series of new commonwealth offences were introduced. The low penalties currently prescribed in the South Australian Tobacco and E-Cigarette Products Act 1997 for the importing and packaging of illegal tobacco products are almost laughable, completely inadequate and of very little deterrence. The current expiation fee sits at $500, the maximum penalty at $10,000. This bill is proposing an expiation fee of $1,250 and a maximum penalty of $50,000.

Given the opportunity for substantial profits coupled with low risk, it is little wonder how freely available illicit tobacco is in South Australia. You only have to walk down very well-known streets if you are a smoker—Hanson Road, Prospect Road—and walk into particular shops and ask for what is kept under the counter. If you consider a packet of legal cigarettes can cost you anywhere up to $50 these days, I think even a bit more, it is easy to see why demand for these cheaper, inferior products is high.

I did mention that a lot of this product is actually brought in from overseas, but what we do know from the expert reports that we have seen is that a lot of that dry-leaf tobacco is actually brought here, and in backyards somewhere across South Australia—I am imagining all over South Australia—it is being rolled into cigarettes and packaged in what, under our laws, is illegal packaging.

We do not know what hygiene practices are being practised by those who are doing this, let alone any potential for negative health impacts. We have been told that organised crime is a big player in this space. Why face a lengthy prison term for pushing illegal drugs when you can make big profits in the chop-chop trade?

Raising the maximum penalty to $50,000, which prosecutors may elect to pursue instead of issuing an expiation fee, is at least a start. Smoking rates in Australia have been on a downward trajectory, particularly in the past 30 years. Between 1991 and 2019, the proportion of Australians aged 14 and over who smoke daily has halved to 11 per cent; 63 per cent have never smoked at all.

This is all very positive news. I know that we have all had to tackle the issue of vaping and e-cigarettes most recently, and the impact that has had on those figures, but those figures are positive nonetheless. Ideally the rates will continue along this downward trend but, at the end of the day, some people will choose to smoke and that is their right, but for those people a regulated product has to be the lesser of two evils.

I appreciate that we are introducing this bill in the final days of sitting. Clearly, I do not expect that it is going to get through in the final days of this sitting, but I think it is an important matter to be placed on the agenda and the radars of political parties going into the election. Of course, as is typically the case with some of the bills that I introduce in here at least, I acknowledge that there may be room for further improvement and invite feedback and collaboration on this issue.

The Hon. R.A. Simms: The Liberals might even copy it.

The Hon. C. BONAROS: Or we could hand it over to the government of the day and allow them to do as the Hon. Robert Simms has just outlined. I think it is quite telling, and this will be canvassed in another report that will be covered by this parliament very soon, and the irony of this for me is that trying to smuggle illegal cigarettes into a prison, into a detention setting in South Australia, actually carries a significant criminal penalty, a penalty as high as a maximum of imprisonment for five years.

Yet, in this case, where we have organised crime and a black market that is absolutely booming and costing Australia billions of dollars a year, the maximum penalty in South Australia for selling cigarettes that do not comply with our laws is a $500 expiation fee, and if you are caught a few more times than once you might be prosecuted and face a $10,000 penalty.

If I try to smuggle a packet of cigarettes into a prison, the maximum penalty, aside from the monetary maximum penalty, is five years' imprisonment. I can see the inconsistency. I think other members—I hope—can see the inconsistencies in our laws. But, more importantly, I think it is important that we address the issue of illegal tobacco, the trade that that is providing in South Australia and elsewhere, the loss of excise to the federal government, the flow-on impacts of that to the state, particularly in terms of our health budget, but also the health risks that this illegal tobacco trade presents.

Lastly, I acknowledge those retailers who do sell cigarettes legitimately, and whether you agree with them selling cigarettes legitimately or not, they are, as the Hon. Tammy Franks was saying before, taking part in a legal trade but one that is extraordinarily heavily regulated. As I said, it is one of the most heavily regulated regimes in the world and they are bearing the brunt of that regime, and I imagine would be frustrated by the influx of cheap and nasty cigarettes, or chop-chop, which flies under the radar while they are required to meet the requirements under that very heavy regulatory regime. You cannot have both.

So this bill intends to at least put this issue on the agenda and hopefully act as a better deterrent than what we have now, because what we do know now is that the current laws act as no deterrent at all. If you are in the business of selling illegal tobacco for a living or for substantial monetary gain, a $500 fine or a $10,000 penalty is hardly going to deter you from continuing that practice.

I hope that all members will turn their minds to this issue, and I look forward to consulting with stakeholder and industry groups over the Christmas period and into the New Year.

Debate adjourned on motion of Hon. T.J. Stephens.

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