Editorial: Forget plain packaging, use price to deter smokers

Increased prices are a particular deterrent to youngsters, who represent the most worrying group among those who continue to smoke. Photo / APN

Opinion

Plain packaging of cigarettes will, according to Associate Health Minister Tariana Turia, "remove the last remaining vestige of glamour from these deadly products". In reality, any glamour associated with smoking vanished years ago.

A wave of regulations governing where cigarettes can be smoked, how they can be promoted and displayed, and dictating the placement of graphic health warnings on packets has left no doubt about the practice's standing. The success of many of these steps in reducing the rate of smoking is, however, very much open to question. Even more so is the impact of plain packaging.

There is no proof to suggest this will discourage smoking. New Zealand would become only the second country, after Australia, to introduce plain packs. Any claims that there will be a drop in smoking are necessarily based on guesswork, not evidence. Several other countries, including France, Sweden, the Netherlands and Denmark, have considered the idea and decided against it. Much of their thinking was determined not only by doubts about the effectiveness of plain packaging but by what would have to be sacrificed to accommodate it. The most pertinent of these relates to intellectual property rights.

In the normal course of events, all law-abiding businesses are able to promote their wares as best they can. Usually they go to great lengths to do this in an easily identifiable and unique manner. As such, branding is one of the most powerful weapons in the commercial arsenal. It is certainly property and any government that prevents its use is guilty of confiscating it. The International Chamber of Commerce, commenting on Australia's introduction of plain packaging last year, suggested that removing one industry's ability to use its intellectual property rights opened the door to extending this violation to other industries and other brand owners. It is difficult to disagree.

This dangerous precedent is being levelled at what remains a lawful industry, even if this is sometimes obscured by the stigma attached to smoking. Yet any doubt on the Government's part seems to lie not so much with intellectual property but with the country's trading obligations. Wisely enough, it has decided to wait until legal cases in Australia have been completed before introducing plain packaging here. The two cases outstanding include one before the World Trade Organisation brought by several tobacco-producing nations. This claims plain packs are a technical barrier to trade. Another, brought by Philip Morris, concerns the terms of an Australian trade agreement with Hong Kong.

These suits are most likely to fail. Even so, it is not difficult to find other factors, real and potential, that provide good reason to reject plain packaging. One is the possibility that the absence of brand competition, and the marketing budget required for this, will allow tobacco companies to reduce the price of cigarettes. That would represent a substantial own-goal, especially given that a wealth of research shows the best way to reduce the number of smokers lies in hiking the cost.

Increased prices are a particular deterrent to youngsters, who represent the most worrying group among those who continue to smoke. A 12 per cent excise increase in 2010 is reckoned to have lowered tobacco sales by 10 per cent over the following year. Yet this country has used this measure sparingly. Its excise and sales tax, as a percentage of the retail price of tobacco, is well below that of most comparable nations.

Price is a weapon that works. It is there that the Government's efforts should be concentrated, not on a step that will make little difference and involves the theft of property rights.