Last Wednesday August 15, a majority of the High Court rejected a challenge to the Tobacco Plain Packaging Act. The challenge had been led by Japan Tobacco, with British American Tobacco and Philip Morris (among others) joining as parties. The challenge was based on a provision of the Commonwealth Constitution which requires just compensation (that is, fair compensation in the circumstances) to be paid in return for the Government compulsorily acquiring property.
Tobacco giants launched a two-pronged argument: first, that their trademarks and brand logos were their intellectual property, and second, that under the new law, the Government would be acquiring their intellectual property. They estimated their loss at $3 billion a year. The Government and the anti-smoking lobby are understandably pleased with the High Court decision. To be a policy innovator with regard to such a ‘wicked’ issue as reducing rates of smoking ought to be applauded. For its part, the Federal Opposition supports plain packaging, despite some initial hesitance in 2010 when the plan was first proposed.
The hope is to reduce the appeal of cigarettes over the long-term, and to give more prominence to the photographic health warnings adorning cigarette packets. The Health Minister, Tanya Plibersek, had suggested that the current design of cigarette packets was a “mobile billboard” for cigarette companies. The UK, India and New Zealand (all countries with a similar legal system to our own) are taking note. The World Health Organisation has voiced its approval.
The tobacco industry, unsurprisingly, is dissatisfied.
Tobacco company Philip Morris in Australia notes that it employs 700 workers at its Moorabbin factory in Victoria. The company website continues, voicing the company’s support for “comprehensive, [evidence-based] regulation of tobacco products based on the principle of harm reduction”. There is no explicit mention of the plain packaging legislation, but the inference is clear. The industry does not believe that the law will achieve a reduction in smoking rates in Australia from 15 per cent to 10 per cent, as envisaged by the Government.
British American Tobacco, for its part, has been more vocal. Its website warns that “serious unintended consequences start 1 December”. Prior to the High Court proceedings, it had also launched a website for the purposes of debate (www.plainpack.com) which asks for proof that plain packaging will work. The idea, then, is that cheaper brands will enter the market and, except on the fundamental criterion of price, be indistinguishable from the more expensive brands. Big tobacco’s profits could suffer. This conspiracy theory probably doesn’t hold for older smokers who are familiar with the different brands and who have their favourites. But for younger, first-time smokers (for whom cigarettes are already expensive anyway), the fear of big tobacco could well play out.
The Government will want to carefully monitor changes in the brands’ respective market shares over the coming years. The Attorney-General, Nicola Roxon, has ruled out increasing the tax on tobacco for the time being. But political considerations aside, this is – from a policy perspective – a logical next step.
Times are a’ changing, kids. And they are very interesting times indeed.