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Health needs to share in tobacco excise revenue

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AMA President Dr Steve Hambleton has called on the Federal Government to ensure that “a significant proportion” of the funds raised by a hike in the tobacco excise are invested in health care.

Dr Hambleton said Australia’s reputation as a global leader in the fight against smoking had been enhanced by the excise increase, but the Government needed to use some of the extra revenue to help relieve funding pressure in the health system.

Treasurer Chris Bowen announced on 1 August that the tobacco excise would be increased 12.5 per cent over the next four years, adding an extra $5.25 to the cost of a packet of 20 cigarettes by the end of 2016 and netting the Commonwealth an additional $5.3 billion of revenue.

The rise follows a 25 per cent increase in 2010.

Mr Bowen said that lifting the excise was “the single most effective way” for the Government to reduce the premature death and disease caused by smoking.

“The increase in the excise serves several purposes – it will provide funds for cancer and stroke-related health services, it will deter young people from taking up smoking, and it will help return the Budget to surplus,” the Treasurer said.

The Government has jacked up the excise to help plug a huge hole in Commonwealth revenues, with Treasury estimates the shortfall could reach more than $20 billion over the next four years.

The tobacco industry has attacked the increase, claiming it will simply increase demand for illicit tobacco as smokers seek cheaper supplies.

But Dr Hambleton said evidence showed that raising the cost of cigarettes and other tobacco products helped convince existing smokers to give up the habit and discourage others, particularly young people, from ever starting.

Tobacco consumption tumbled 11 per cent following the 2010 excise hike, according to the Heart Foundation, and Cancer Council Australia estimates the latest increase will prompt around 210,000 smokers to quit and deter 40,000 teenagers from taking up the habit.

Higher prices are seen as contributing to the steady and sustained fall in rates of smoking in recent decades, from 34 per cent of adults in 1980 to 17 per cent in 2010.

Other factors encouraging people to quit or not take up the habit include stringent controls on the promotion and sale of tobacco products, bans on smoking in workplaces and many public areas, and increased awareness of the harmful effects of smoking.

Adding to the pressure on the tobacco industry, Australia last year became the first country in the world to introduce plain packaging laws for tobacco products after successfully fighting off a High Court challenge mounted by the major cigarette companies.

Dr Hambleton said the excise increase would confirm Australia’s position at the forefront of global efforts to curb smoking.

“Plain tobacco plain packaging legislation made Australia the world leader in the war against smoking,” the AMA President said. “The move to make tobacco products more expensive – which is a proven disincentive – will enhance that reputation.”

Dr Hambleton urged the Government to direct a significant share of the funds raised by the excise to health, especially given the heavy burden of disease created by smoking.

Mr Bowen said 750,000 hospital bed days each year were attributed to tobacco-related diseases, and smoking was estimated to annually cost the country more than $31 billion.

“Tobacco is the only legal drug that kills half its users when used as the manufacturer intended,” he said. “Thirty per cent of all cancers can be linked to tobacco. Smoking leads to respiratory diseases, cardiovascular diseases, stroke, emphysema, bronchitis, asthma, renal disease and eye disease.”

The World Health Organisation estimates tobacco causes the death of almost six million people a year.

Adrian Rollins