Michael Daly on behalf of IGA Supermarkets

Introduction

In April 2010 the Australian Government announced the Tobacco Packaging Bill 2010 and its intention that all tobacco products in Australia are to be sold in plain packaging by 1 July 2012. The Bill will introduce new restricted advertising standards to remove brands, trademarks, and logos from tobacco packaging.

A consultation period for the proposed Bill has included an opportunity for submissions to the Department from stakeholders and interested parties. The following submission is tendered for the Department’s consideration with espect to the Bill. We thank the Government for the opportunity to make this submission.
This submission is prepared on behalf of the National IGA Supermarket group. We represent over 1400 IGA retailers nationally, employing over 200,000 staff and servicing over 12 million customer transactions every week. We see ourselves as a significant stakeholder in any matters that impact on the operations of our sector.

In summation, it is our view that retailers and their staff are sick of government and bureaucracy buck passing political correctness and rules and compliance onto retailers.

The Bill that is the subject of this submission is yet another example of an attempt to propose social restrictions on consumers, compliance obligations on retailers and with little consideration of any cost/benefit analysis.

Executive Summary of Position

We reject this bill as it currently stands and do not endorse its introduction as law. The reasons are many and we have highlighted significant matters of concern to us:

As evidenced by media commentary in recent weeks, there are legitimate and significant concerns about this Bill and its impact on the illicit trade of tobacco products. Already we are seeing ‘illegal tobacco’ sales take effect even before ‘plain packaging’. We know this because sales of papers and filters have gone through the roof (but sales of pouch tobacco has not) and customers are openly talking about ‘chop chop’. If the Australian government proceeds down its current path, there must be significant budget implications for the Federal Government, if it appropriately funds law enforcement to minimise the impacts introduced by this Bill.

As retailers, we are convinced and concerned that staff will be abused, by irate customers, as they are held up trying to find the correct brand the customer has requested. This stress at the point of sale will impact on retailers and customers alike.

The Bill continues a contradiction on the sale of lawful products. We still have to deal with the stupidity of the act of selling tobacco to someone under the age of 18 being ‘illegal’ but it is not ‘illegal for a person under the age of 18 to actually smoke – how can we be breaking the law??? The failure for this to be addressed, given the supposed intent of this Bill is unforgivable.

Our productivity is severely affected through this Bill, making it more costly to run our POS sales areas. What compensation is being considered here for retailers already with tight margins ? If it takes twice as long, or three times as long for casual staff to find the product who pays for the lost time? Why should we as retailers be made to pay for this impact on our productivity?

The Bill itself seems ignorant of the already existing restrictions on point of sale display. If plain packaging comes in we need to be able to clearly see the names and prices of each and every product on the ‘outside’ of the closed doors so staff will at least know where to start looking for the product that has been asked for, to not do this is making product selection for the cashiers a straight out raffle or a guess.

The role of retailers as tax agents for Tobacco is an ongoing concern to us. Retailers are obligated to collect the tax for the government, we can then be fined if we don’t collect the tax correctly under the governments absurd and prohibitive and now we are being imposed with further more onerous obligations with respect to one product line ?

In terms of the proposed Bill, is it illegal for a 16 year old cashier to sell tobacco ? What are the rules with respect to this contradiction ?

The Retail sector must ask in the face of this Bill, what’s next, plain packaging and no advertising for liquor? Plain packaging and no advertising for junk food ? If the government of the day are so hell bent on the issue of smoking then the question needs to be asked “WHY DON’T THEY MAKE IT ILLEGAL?” What is now to stop any government of the day using a similar exercise in social control on other legal products ?

We believe that prohibition does not work and ‘part prohibition’ will not work either. Illegal ‘Chop Chop’ is alive and well and the growth in the sales of that ‘illegal’ product will now prosper under this Bill. The Government should not continue popularizing this issue whilst serious law enforcement consequences that will arise are being ignored.

A Retail Perspective on Tobacco

There is no evidence anywhere in the world that plain packaging reduces smoking.

The retail of tobacco products is a significant issue for the all of those we represent. In recent years there has been substantial changes to the point of Sale regulations in all States and Territories. In most jurisdictions these new requirements will remove tobacco products beyond the visual reach of consumers and added complexities to compliance and sales demands on operators.

It would seem that in the face of these changes the Commonwealth Parliament is playing catch up with reforms that have already been addressed and implemented. The sale of tobacco no longer has the visual marketing pportunities of other products in a way we believe has now made the proposed Bill a redundant objective.

It is important to remember that smoking tobacco is not illegal; yet, the debate around it has a hysteria that would suggest otherwise. As we know, adults make decisions, which may or may not affect them and have a right to do so in a democratic society.

In the context of advancing the health debate, we continually see the retail sector expected to cost bare the impacts of social regulations designed to enforce consumer behaviours. Often when a contradiction exists in the underpinning nature of the law.

It is not illegal to smoke tobacco if you are under 18 years of age but it is illegal for any retailer to sell tobacco to someone who is under the age of 18. At the point of Sale, why should retailers have a higher and more onerous obligation than the individual consumer for their life style choices?

Retailers are also expected to bear the responsibility as tax collectors for government. With tobacco being one of the most taxed consumer items available and debate around alcohol and food regulations increasing, this approach to change consumer behaviours through tax imposts unfairly impacts on our market place.

The Retail Sector supports responsible measures that impact on the communities health positively and measurably. We are concerned that the current nature of debate about tobacco regulation is moving beyond that to objectives will only increase criminal interests in its black market sales, increase costs for consumers and the compliance obligations on retailers and fail to reform consumer behaviours in a positive way.

It is disturbing that with the significant tax monies received by Government from tobacco, that greater emphasis is not placed on education strategies that will make a more direct impact on the consumer interest in this product. Anecdotally e understand than less than 1% of what is collected in tax from smokers is spent back on education based prevention strategies.

The justifications regularly fly from the health advocates against tobacco products that any criticisms of increased restrictions on the products are just “Big Tobacco” companies mounting scare campaigns.

This is not only untrue, but highly dismissiive of the many real legitimate interests in this debate who are opposed to the publicly funded health sector using their prejudices and scare mongering to add costs to our businesses. Until such a time as the monies collected from consumers in tobacco taxes are better spent on education and equitable prevention strategies, we must complain bitterly about the ongoing attacks on our marketplace.

In purely operational terms, many staff and consumers have trouble with existing and evolving restrictions of display in determining what customers want. Restriction and bans on displays have been implemented without any regulatory impact assessments or social impact reviews.

Differentiating brands allows ‘freedom of choice’ in an informed way for consumers, which unless our society has changed, is still available to every Australian. How do our staff differentiate between multiple brands when it is mpossible to distinguish between them? These are real problems our marketplace must handle with every new restrictive practice.

How can our operators who pride themselves on customer service, provide timely and efficient service when we have draconian rules “once again’ at thep oint of purchase that delay sales, confuse staff and consumers and have no seeming impact on consumer interest in the product?

Why should one legal consumer product have a different treatment from all others in this way without quantifiable community benefits?

It seems that advocates on greater restrictions of the products all but seek prohibition of tobacco and a restriction of supply that would only introduce a range of other negative social behaviours.

The Illegal Market – The Wolf at the Door

As the legitimate retail sector already competes in a number of areas with the organised criminal interests in the market place seeking advantage and pportunity at every turn, its disturbing that the near criminalisation of tobacco does not get considered in this context.

We have already seen an explosion on the availability of “Chop Chop” and illegal tobacco in recent years without a commensurate increase in enforcement funding specifically to address it. If Governments are to continue this trend there will need to be significant funding allocated to law enforcement to address the illegal trade in the product.

Retailers are very concerned that the health sector is in effect creating tobacco as the next new lucrative illegal product for black marketers. The debate about the harm minimisation strategies for illicit drugs seems almost completely at odds ith the obsessive debates around tobacco, which is a legal product. There is a disconnect in the debate.

Conclusion

There is no evidence anywhere in the world that plain packaging reduces smoking.

We also believe that the increasing costs imposed on retailers are unfair, unjust and it should be argued almost ‘unconstitutional’ when the activity involved is not illegal. People, that are consumers, retailers, and manufacturers, all have rights and we don’t believe these rights are being acknowledged in these debates. Academic and social theorists who support these ideas because they are are removed from the real world experience are overlooking reality in this debate.

We have already seen a huge increase in filter sales and roll your own paper ales. We believe this means just one thing consumers are turning to illegal alternatives for their tobacco needs.

We oppose this Bill and any further Taxation or Regulatory proposals that are designed to restrict social behaviour rather than educate consumers. All this will o is increase interests in the criminal market for illegal ‘chop chop’ and other products.

The Criminal interests in this area are set to expand if Governments continue to make the products too expensive or too hard to access. We believe that this means governments have got it wrong and are making things worse by attacking behaviours rather than educating to reform them. It is time to step back and look at this approach.

Parliament has the responsibility to ensure that any law can be applied fairly and in keeping with the common good that can be achieved from it. In this Bill we see no capacity for it to be fairly applied and it will have more negative consequences for the public than positive benefits. It is out of step ith the progress already made at the consumer level to achieve similar bjectives and should be rejected for these reasons.



Michael Daly
IGA National Board Chairman

Director Daly's IGA Supermarkets

6 June 2011