Health officials briefed Casey Costello about new research showing significant economic benefits from the smokefree reforms, but that information was never passed on to Cabinet when the minister proposed repealing the reforms.
Newly released Cabinet documents and briefings to Costello, the associate health minister charged with tobacco control, show the lengths officials went to to try to preserve at least some of the changes passed by the previous government.
While existing anti-smoking measures were important, they alone would only achieve the smokefree goal of a five percent smoking rate for all population groups in 2061, Costello was told. The deadline set by the National government in 2011 was for a smokefree New Zealand by 2025.
“The retail reduction, low nicotine, and smokefree generation legislative policies were developed as a comprehensive ‘endgame’ package to make a step-change in the broader environment so that smoked tobacco became progressively less accessible, appealing and addictive. Implementation of all three policies is modelled to result in a rapid reduction in smoking rates, with a reduction in mortality rates to follow,” officials wrote in a lengthy briefing on December 6, just a week after the Government had been sworn in.
By that stage, the Government’s 100-day plan had already been announced, including the repeal of the three smokefree policies implemented by Labour in 2022. Those policies were to reduce the number of permitted retailers of tobacco products, to require tobacco products to have 95 percent less nicotine than those currently on the market, and to create a “smokefree generation” of people who would never be legally permitted to buy cigarettes.
The briefing, which was leaked to RNZ in late February, has now been publicly released by the Ministry of Health. Unusually, it contains strong pushback to Costello’s plans to repeal the three smokefree changes wholesale, with officials warning of reputational and financial risks to New Zealand and offering compromises instead.
On the retailer reduction, officials proposed increasing the cap rather than disposing of it entirely or retaining some other form of regulation on who can sell tobacco products. For denicotinisation, officials suggested a higher level of nicotine could be permitted or the policy could be phased in over time. They also asked Costello to consider raising the purchase age for tobacco rather than axing the smokefree generation fully.
The paper Costello took to Cabinet in February ignored all of these proposals and the Government ultimately repealed all three policies in full.
“Repeatedly, Casey Costello took the most extreme repeal option and didn’t take any options that might have had some of the benefits of the smokefree legislation retained. It’s hugely disappointing but not surprising,” Labour’s health spokeswoman and former health minister Ayesha Verrall told Newsroom.
Costello told Newsroom the coalition agreements bound the Government to repealing the full three policies.
“We want to continue to drive down smoking rates, but we did not agree with the approach proposed by the previous Government, and the legislative changes we made did not remove any of the key tools that have seen so many New Zealanders quit smoking.”
In a section outlining the “financial implications” of repealing the reforms, Costello’s Cabinet paper only discussed the costs of reimbursing retailers who had applied for special permits under the old regime and the potential for $1.5 billion in additional revenue from tobacco excise over four years. However, the December 6 briefing contained more information about the economic benefits of the scheme in its own “financial implications” section.
Early estimates had suggested New Zealand might save $5.25b in health costs and $5.88b in increased productivity over the lifetime of the population alive in 2020, officials told Costello.
More recent independent analysis, published in November 2023, found a $17b loss to government out to 2050 from reduced excise revenue and increased superannuation costs from people living longer would be more than offset by a $46b economic benefit over the same period, the briefing said. “The new estimates find the smoked tobacco measures are likely to result in large economic benefits for the total population.”
Verrall said it was up to ministers on what they wanted to include in Cabinet papers. However, she said, Costello appeared to have withheld information from Cabinet that was unfavourable to her position.
“For Cabinet to make good decisions, all the evidence needs to be put in front of it.”
However, Costello said the ministry’s modelling was outdated.
“Much of the initial advice I received from the Ministry of Health – including the economic and financial figures you refer to – were based on out-of-date or incomplete information,” she said.
“It’s really important that people understand that New Zealand is having real success in reducing smoking rates. In the three years to last July, 229,000 people stopped smoking and more than a third of those who quit were Māori. Overall smoking rates (from the NZ Health Survey) reduced from 11.9 percent in 2019/2020 to 6.8 percent last year. That illustrates that we are doing something right, but those years are significant because all of the modelling for Labour’s proposals were based on the figures from 2019/20.”
The December 6 briefing also discussed tobacco industry tactics, saying one common ploy was to assert that cracking down on smoking would lead to the creation or growth of an illicit market.
“The assertion of an increased illicit market is used to oppose tobacco control measures such as excise tax increases. Independent investigation of industry-funded estimates of illicit trade document numerous problems with the data collection, analysis, and presentation, resulting in inflated estimates of illicit tobacco trade,” officials said.
Estimates from the University of Auckland suggested the illicit trade had declined over the past decade in New Zealand even as the tobacco excise was hiked 10 percent every year. The size of the black market for tobacco – around 8.4 percent of the total tobacco market in 2022 – was low by international standards while New Zealand’s tobacco prices were among the highest in the world due to the high excise.
An industry-funded study by KPMG also estimated the amount of illicit tobacco consumed in New Zealand had declined 10 percent between 2019 and 2022, officials told Costello when she asked for more information about the black market.
Despite this, Costello’s only reference in her Cabinet paper two months later was to say that she was still concerned the smokefree reforms would incentivise illicit trade.
“I am concerned that the reduction in the number of retail outlets and denicotinisation could have led to an increase in black market activity,” she wrote. She did not mention the ministry’s advice that this was a common tobacco industry talking point, or note that independent estimates suggested the black market had decreased in response to other tobacco control measures.
“This shows the minister, despite having the benefit of good advice, decided to pad her paper out with reasoning that supports the tobacco industry’s claims,” Verrall said.
Costello said the ministry’s figures here were also incomplete or out-of-date.
“I had received advice from Customs that the amount of illicit tobacco seized was increasing, and that organised crime groups are adding tobacco smuggling to their drug smuggling,” she said.
Consistent with the pattern that ministers in this government are their own experts. And ignore any indications or advice to the contrary to their own ‘expert’ view.
The arrogance and incompetence of this government appears to know no bounds.
In the interests of transparency let the Minister show us ALL the advice she received that countered the figures from the Health Ministry, the University study, the KPMG survey, etc. There’s a stench here that won’t go away without the benefit of sun shining on the whole process of the decision-making.
None of this mentions vaping – how does that affect things?
It seems a pretty big mistake to extrapolate from the cigarette smuggling that obtains under high excise but where cigarettes remain legal (along with vape), to the cigarette smuggling that obtains when cigarettes containing any appreciable amounts of nicotine are illegal (but vape remains legal).
Some proportion of current smokers who currently do not access the black market would flip to the black market when it is the only source of actual cigarettes. Others would shift to vape. And some might go cold turkey. Nobody knows the proportions. But a fairly extensive existing black market [go and look at the Customs annual reports if you want the numbers on seizures – hard to say what proportion of smuggled tobacco is seized, but there’s a lot seized.]
Work assuming that none flip to the black market will overstate the long term health benefits of the VLNC rules. For illicit cigarettes, you lose the excise revenue while maintaining the cost to the health system.
If our news media continues to be decimated how will examples of the duplicity outlined above ever be subject to public scrutiny?
If a senior figure in the corporate world withheld significant information from colleagues they would be fired. With the seething cauldron of our three-way coalition it’s pretty scary to find that ministers apparently have total impunity when the same thing happens in Cabinet.
Costello’s action highlights the expediency of the Luxon government. Because this was part of the coalition agreement and the target for the “first 100 days” the advice could not be released to Cabinet unless it weakened individual politicians’ resolve. Even worse, one of them could just have slipped what the officers had to say to the press. Costello’s answer: Fudge it. This is the start of real corruption rather than the small corruption we have always had. We live in the days of Trump and Putin, fellow readers, where anything goes if you can get away with it. Is New Zealand really going to accept such behaviour?
Judith,
This is The Post Truth Era where denial has reached mainstream. ‘Real’ corruptions are at the forefront of discussions today. As a result people know it is their duty to sacrifice their own best interests in order to feed the growth of the multi-billionaires.
Let’s hope not, but there seems little we can do for the next 2/3 years….
What’s not clear to me is where Costello got the information which caused her to reject what her officials told her.
So much for the Government’s stated commitment to evidence based decisions. Just rhetoric – the only winners are the power brokers.
Good point you’ve raised, Rosemary. Who are the actual winners here, and how?