Latika Bourke, 11 November 2015

Bill Shorten says smoking is “disastrous” and has confirmed the federal opposition is considering increasing the price of cigarettes to more than $40 a packet if it gets back in government.

Fairfax Media this week revealed Labor is considering a further three increases in the tobacco excise, reaping $40 billion over ten years.  This would make the cost of cigarettes in Australia among the world’s highest.

The major leak from inside the opposition surprised many on Labor’s frontbench who were not even aware of the proposal, as it has not yet been to shadow cabinet for approval.

On Wednesday, Mr Shorten told reporters at Parliament House that he regards smoking tobaccos as “disastrous”.

“In terms of options for funding in the future, for us we are looking at different measures but we haven’t arrived at any final landing,” he said.

“For myself I think smoking’s disastrous, it has terrible health consequences and previous governments of all political persuasions have seen good public policy for raising excise there but as I said we haven’t made a final decision.”

Mr Shorten’s confirmation that the increase is under consideration is in contrast to his deputy leader Tanya Plibersek who was insisting Labor had “no plans” to raise the tobacco excise any further.

“It should be looked at but there is no plan at the moment,” Ms Plibersek said on Tuesday when asked about the leak.

The tobacco excise has been increasing by 12.5 per cent each year since 2013.  Under Mr Shorten’s proposal, it would continue to increase by another 12.5 per cent up until 2019. This would be on top of twice yearly indexation.

Under former prime minister John Howard tobacco taxes remained stable between 1999 and 2010.  Before that, the last increase in tobacco excise was a 10 per cent rise in 1995-1996 under Paul Keating.

As opposition leader in 2009, Malcolm Turnbull used his budget reply speech to propose a 12.5 per cent increase in the tobacco excise to pay for private health rebates for the wealthy.

But it was former prime minister Kevin Rudd who began the first in a series of major increases in 2010 when he announced a 25 per cent hike in the excise, worth $5.5 billion dollars.

When he was reinstated in the top job in 2013, he announced a further 12.5 per cent excise increases over four years, worth another $5.3 billion.  This is set to push the cost of cigarettes up by as much as one dollar per stick.

Philip Morris managing director Nikitas Theophilopoulos claimed the 106 per cent increase in the cost of cigarettes since 2010 has caused the black market to grow and cost the government revenue.

“Any additional increases in tobacco tax will fuel the growth of the tobacco black market, hurt consumers and honest retailers, and further deteriorate the government’s tobacco excise revenue,” Mr Theophilopoulos told Fairfax Media.

Extracted in full from the Sydney Morning Herald.