New Zealand First has invoked the "Agree to Disagree" provisions of its Coalition agreement with the Labour Party for the first time, which will allow it to publicly oppose the announced 11.46 per cent increase in tobacco excise from January 1.

The increase will go ahead because it has been passed by regulation.

But New Zealand First leader and deputy Prime Minister Winston Peters said the increase "disproportionately gouges the poor", was placing unnecessary pressure on the New Zealand Customs Service and was a threat to the safety of dairy owners.

The policy had reached the limits of its effectiveness, said Peters.


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"Studies show that the automatic tobacco excise increases are having less effect on reducing smoking rates, most particularly amongst the target groups of Maori and Pasifika," Peters said in a statement today.

"A 1.3 per cent decrease in smoking prevalence for Maori, 1.8 percent for Pacific smokers and a decrease among smokers of only 0.7 percent overall between 201617 and 2017-18 reveals a policy that has reached the limit of its effectiveness."

New Zealand First did not seek to block the regulation when it was discussed at cabinet, but it did not support it.

Peter said the excise increase had had unintended consequences for Customs.

Customs interceptions of smuggled cigarettes at the border had increased by 352 per cent between 2015 and August 2019.

Interceptions in 2018 were 53 per cent higher than the preceding year.

"Clearly the price point has reached such a level that organised crime groups see economic opportunity. This places unnecessary pressure on our Customs service when it should be focusing resources on preventing the importation of illicit drugs," Peters said.


"Another unintended outcome of New Zealand having one of the world's highest retail prices for tobacco products – a typical pack in New Zealand retails for about NZ$31 compared to NZ $1.62 in Vietnam, $5.29 in China and NZ$6.07 in South Korea – is the threat to the safety of the country's dairy owners from violent burglary."

New Zealand First believed the 11.46 percent increase in the tobacco excise was punitive for the many poor New Zealanders who could least afford another price hike.

"The excise increase disproportionately gouges the poor and New Zealand First cannot support the policy."

Associate Health Minister Jenny Salesa said Labour respected New Zealand First's position on this issue.

"Tobacco excise increases have worked to get our smoking rates down, but it is important we focus on other ways of helping to support people to quit, such as new technologies.

"The Government remains committed to the Smoke-free 2025 goal."

Under the terms of the Coalition agreement negotiated in October 2017, it says the parties can agree to disagree, if agreed between party leaders.

"As provided for in the Cabinet Manual, the Parties will 'agree to disagree' where negotiated between party leaders, and in such circumstances the Parties will be free to express alternative views publicly, and in Parliament."

Associate Health Minister and Labour MP Jenny Salesa said New Zealand First had a long-standing position on the issue which "we respect."

But she sheeted the policy home to National.

"In 2016, the previous National Government legislated for four annual increases in tobacco excise of 10 percent each, with the last increase being scheduled for 1 January 2020."

"Tobacco excise increases have worked to get our smoking rates down, but it is important we focus on other ways of helping to support people to quit, such as new technologies."

The Government remained committed to the goal of a smokefree New Zealand by 2025.