NZ First minister Casey Costello is leading the Government's smoking regulation reform. Photo / Mike Scott
The Auditor-General will not investigate the Government’s decision to cut excise tax on heated tobacco products, declining Labour health spokeswoman Dr Ayesha Verrall’s request.
In a letter released today, Deputy Controller and Auditor-General Andrew McConnell explained how his office could examine whether the Government had followed the appropriate process in making a decision, but couldn’t assess the merits of the decision.
“The decision by the Government to reduce the amount of excise tax on a particular product is a policy choice for the Government to make, and it is not within our mandate to question or examine it,” the letter read.
Earlier this year, Cabinet agreed to set aside a contingency of $216 million as Associate Health Minister Casey Costello, who is responsible for smoking regulation reform, sought to halve the excise tax on heated tobacco products (HTPs) in her attempt to encourage smokers to quit.
Verrall and some public health officials had been critical of the decision and questioned Costello’s claim HTPs were safer than cigarettes.
In October, Verrall wrote to the Office of the Auditor-General and called for an investigation into the policy she claimed “lacks a political or policy justification”.
She highlighted how tobacco company Philip Morris was the main HTP supplier in New Zealand’s market and alleged there were “several indications of tobacco industry influence and potential corruption that must be investigated to maintain trust in government”.
That claim largely rested on NZ First’s links to members of the tobacco industry. Costello is a NZ First MP.
McConnell outlined it was not the Auditor-General’s role to investigate corruption or a decision’s impact on a particular market, saying that was more within the domain of the Serious Fraud Office and the Commerce Commission respectively.
Verrall, following McConnell’s letter, called on Prime Minister Christopher Luxon to address whether any ministerial conflicts of interest were declared that related to the tobacco industry.
“The spotlight should remain on Associate Health Minister Casey Costello and why her policy so clearly mirrors that of a Philip Morris strategy document and gives them millions in tax breaks to encourage people to keep buying their harmful products,” she said.
In a statement responding to McConnell’s letter, Costello said she wasn’t surprised by the decision not to investigate.
“The reality is that I have no connections to the tobacco industry, and Labour has no evidence to the contrary. Dr Verrall and the Labour Party are playing very dirty politics here.
“The policies I’m putting in place are about helping people to stop smoking and reducing smoking rates and that’s what I’m going to continue to focus on.”
NZ First leader Winston Peters told the Herald it was “astonishing” how much attention Verrall had received for her claims, which he believed were “totally unmeritorious”.
In the days following Verrall’s request to the Auditor-General, Peters claimed in Parliament Verrall’s sister-in-law had been advising Costello on smoking regulation reform without her link to Verrall being appropriately declared.
Peters then alleged there were links between Verrall’s sister-in-law and leaks from Costello’s office.
On conflict declaration, Peters’ claim led to the Ministry of Health apologising to Costello for not declaring the obvious conflict. The ministry stated Verrall’s relative had not done anything wrong, accepting declaring the conflict was its responsibility.
In February, the Ministry of Health said a staffer was no longer in its employ following an incident in which a document was leaked from Costello’s office. The employee was not Verrall’s relative.
Earlier this week, Verrall denied she had ever been given leaked information by her sister-in-law: “Absolutely not, she is totally professional.”
On Peters, she said it was inappropriate for politicians to single out public servants who couldn’t defend themselves without any evidence of wrongdoing.
“I think it’s for Winston Peters to justify his comments.”
Since making his claim about two weeks ago, Peters has not provided any evidence.
When pressed on why he hadn’t proved his allegation, Peters said: “I’m just so busy ... but when I get back, I’ll deal with this matter. I’ll get there, you don’t worry about that.”
Peters claimed he had “the files” and would discuss them “before Christmas”. He later said he would address the issue after returning to New Zealand following Foreign Minister duties in late November.
Central to Peters’ suspicion was Labour leader Chris Hipkins’ description of Verrall’s sister-in-law as a “distant relative”. Hipkins later accepted he’d misspoken when describing the relationship between Verrall and her relative as distant.
Peters believed either Verrall had misrepresented how closely she was related to her sister-in-law or Hipkins had lied: “And I’ve never accused him of lying on it, have I,” Peters said.
Hipkins and Verrall did not respond to the Herald’s requests for comment.
Adam Pearse is a political reporter in the NZ Herald Press Gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the NZ Herald in Auckland, covering Covid-19 and crime.