So no evidence at all II

So the ‘evidence’ supporting the plain packaging policy disaster continues to unravel.

Recall this claim by the Fairfax media:

The federal Treasury has entered the debate over cigarette sales, publishing previously secret information that shows sales falling since the introduction of graphic health warnings and plain packaging.

We rubbished the claim at the time:

Read the article very carefully. Note what is missing.

No Treasury official named.
No Treasury official quoted.
No Treasury document cited.

Next thing the ABC picked up on the story but were very, very naughty.

To be fair to the ABC, unlike Fairfax, they approached BAT and PMI for comment. PM, however, then claims that both British American Tobacco and Philip Morris International “failed to respond by the time we went to air”. Curious. Even more curious is Mark Colvin’s ending – all of a sudden Philip Morris did respond and the response will be on the ABC website.

Yep – the ABC went through the motions of being balanced, but still managed to not report the other side of the argument. What was the counter-argument?

While we don’t know the full detail of Treasury’s tobacco clearances from their statement, from Philip Morris’ perspective, the final quarter of 2012 saw an artificially high rate of tobacco clearances due to our replacement of branded stock on retailers’ shelves with plain packaged stock. Whilst this was not double-counted from an industry sales perspective as it was replacement stock, it would have initially been double-counted from a 2012 tobacco clearances perspective as tax must be paid on every pack. Most claims for refunds of the excise paid on our recalled branded stock were not processed until the first quarter of 2013.

Okay – so the secret Treasury data could be explained away by double counting. But the ABC didn’t see the need to report that fact, or even follow up with Treasury.

Luckily LDP Senator David Leyonhjelm did follow up.

Senator LEYONHJELM: You may need to consult somebody, and I acknowledge that. If there is no-one here who can answer it, we will put it on notice. The question is: did the process where branded packs were destroyed and replaced by newly imported plain packs boost tobacco clearances in 2012?
Mr Heferen: I am not aware. We will have to take that one on notice.

Treasury has now answered the question:

It is not possible to infer the effect of plain packaging refunds on annual tobacco clearances. With the data available it is not possible to determine whether the tobacco clearances in 2012 were boosted by the destruction of branded tobacco products. While total clearance data is available for 2012 and 2013, it is not possible to disaggregate this data to ascertain the specific impact of destroyed products.
While there were tax refunds in 2012 and 2013, it is not possible to determine from the data when the tax related to these refunds was received. Further, while it is likely that the majority of refunds in 2012 and 2013 related to the destruction of tobacco products, it is not possible to precisely ascertain the value relating to branded tobacco products, as refunds can also be due to returned or unsold tobacco products.

What is the take-away message?

  1. Treasury doesn’t know the impact plain packaging had on tobacco clearances.
  2. There were tax refunds paid to tobacco companies – consistent with the PMI claim.
  3. Treasury concedes “it is likely that the majority of refunds in 2012 and 2013 related to the destruction of tobacco products”.

So were did the story story come from? Again David Leyonhjelm asked the question:

The Health Department website states that ‘The Treasury has advised that tobacco clearances (including excise and customs duty) fell by 3.4% in 2013 relative to 2012 when tobacco plain packaging was introduced’.
Further to other questions taken on notice on this issue:
a) What was the entirety of the Treasury advice?
b) Who requested the Treasury to provide the advice?
c) Was any Minister or party outside of Government involved in the request?
d) To whom (in addition to the Health Department) did Treasury provide the advice?

Treasury has replied:

a) The Department of Health asked Treasury whether Treasury had any data to support the release of Australian Bureau of Statistics data on tobacco consumption. Treasury advised that clearances of tobacco fell by 3.4 per cent in the 2013 calendar year relative to the 2012 calendar year. Treasury also advised that publication of more detailed data related to tobacco excise was limited by concerns regarding taxpayer confidentiality.
b) The advice was requested by the Population Health Division, Australian Government Department of Health.
c) To Treasury’s knowledge, no other Minister or party outside of Government was involved in the request.
d) To Treasury’s knowledge, the advice was provided only to the Population Health Division, Australian Government Department of Health.

Looks like Treasury has side-stepped the actual questions by providing lots of factual information that doesn’t go the nub of the questions. Nonetheless the bottom line is this:

A government agency managed to quote Treasury data as suggesting the plain packaging policy was successful when the TReasury data suggested no such thing. ALP-friendly media outlets ran with the fabrication as if it was news. Luckily they got caught out – I suspect, however, that we won’t be hearing any clarification. While I expect the Health department to be dishonest (at least they have an agenda to pursue), this episode also reflects poorly on Treasury.

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13 Responses to So no evidence at all II

  1. Lem

    Wrong day to post something about plain packaging. Just saying.

  2. Tel

    With the data available it is not possible to determine whether the tobacco clearances in 2012 were boosted by the destruction of branded tobacco products.

    No bookkeeping was done of the destruction process then? None at all…

    Hmmm, makes you wonder where those smokes did end up, but it does seem just a bit odd that governments usually keep quite close count of tobacco movements, only that day decided not to worry about it. A little unusual perhaps even a little implausible.

  3. Infidel Tiger

    Wrong day to post something about plain packaging. Just saying.

    Why’s that?

  4. Wal1957

    Take part of the information from a fact, and manipulate it until you get what suits your purpose.

    Why am I not surprised?

  5. mundi

    A friend of mine had to do a uni economics report on this… it was surprising the lack of information and selective studies everywhere. Elasticity of demand for addicted adults is quoted as anything from -0.04 to -0.6, depending on who funded the data gathering.

  6. Peter from SA

    OK … so we have a Treasury showing off it’s skills at avoiding questions. This will end well.

  7. JC

    Okay, so they’re saying it’s difficult to know what’s happened because the tax process is complex during the change over period or some such bullshit. Fine.

    So what were the number of cogs sold before and after the Fatty Von Roxon plain packaging nonsense. Surely the cig companies know their volumes.

    There doesn’t appear to me anything that would impede knowing this information and the reason all these complexities are being introduced is because it’s a total bust.

    In other words it’s going the same way as gerbil warming.

  8. Mayan

    Anecdotally, there has been a large increase in the unofficial (some would say black) market for tobacco. Is there any concrete data on this?

    It seems to me that such punitive taxes as we see now on tobacco (and I guess you could say that alcohol taxes are trending this way, too) increasingly amount to what could be seen as de facto prohibition.

  9. mareeS

    Didn’t governments get the message from Prohibition and how well that worked?

    More people pissed and Joseph Kennedy a millionaire, eventual US ambassador with a dynasty reaching to the White House on the illicit proceeds.

    My daughter is (unfortunately) a tobacco smoker, but she buys chop-chop and rolls her own with a little rolling apparatus and Tally-Ho papers and filters. Her colleagues in restaurant and hospitality all do the same, not smoking pot, but spending money in the tobacco black market because it is way cheaper than buying a packet of Nicola Roxon’s plain-package cigs over the counter.

    Last time I checked, there’s a $25,000 fine for growing a single tobacco plant in Australia, because the excise is so lucrative for the government.

    Pot for personal use attracts no fine, as it doesn’t attract excise.

    Strange days.

  10. Sinclair Davidson

    Tel – yes. I didn’t want to comment too extensively on the implausibility of government not knowing why they received money or issued a tax refund. 🙂

  11. Mark A

    @Mayan

    In my business I meet many ppl. (at their home) and I knowa lot who admit to using chop-chop.
    Every price rise creates more customers for the black market, it’s usually the older gen. who have plenty of time, and don’t mind rolling their own smokes.

  12. Mayan

    Over the past few years, I’ve met a few people with their own stills, and the excise on alcohol is less than for tobacco, so it’s not surprising that chop-chop is common.

    It might even become a bigger cash crop than marijuana.

  13. .

    Rolling your own or tamping down your own pipe is good for the soul. Cigarillos are less effort and I’m sure I’ve unknowing bought smuggled ones before with less onerous health warnings…

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