The Australian's claim on tobacco goes up in smoke

Fri, 06 Jun 2014  |  

The Australian is at it again. It is running another fact-less story with the express intent of undermining a key policy of the previous Labor government and what is disconcerting this time, is that it is pushing the line of the tobacco industry.

Today there is a Page One story by Christian Kerr which makes the sensational claim that "Labor's nanny state push to kill off the country's addiction to cigarettes with plain packaging has backfired, with new sales figures showing tobacco consumption growing during the first full year of the new laws".

The "exclusive" story based on "new data obtained by The Australian" claims that "tobacco sales volumes increased by 59 million 'sticks' ... last year". The source of this shock finding is "industry monitor" InfoView which is "backed up by retailers, consumer marketers and the industry". Only Philip Morris and the Australasian Associates of Convenience Stores are cited.

Fortunately, the story is wrong.

Consumption of tobacco and cigarettes is falling and has fallen sharply since the plain packaging rules were implemented in December 2012.

Just this week, the Australian Bureau of Statistics released the national accounts and buried in those accounts is a measure of the volume of household consumption of cigarettes and tobacco.

The figures from the ABS show that total consumption of tobacco and cigarettes in the March quarter 2014 is the lowest ever recorded – and this with the series starting in 1959. This is extraordinary. It is a Great Depression for tobacco sales.

Making this record low consumption of tobacco all the more fantastic is that the fact that the consumption numbers are not adjusted for population growth which, by definition, means per capita consumption of tobacco and cigarettes is also at a record low.

Making a mockery of The Australian's story is the fact that, in seasonally adjusted volume terms, consumption of tobacco is 5.3 per cent lower in the March quarter 2014 than in the December quarter 2012 when the plain packaging laws were introduced.

It seems like The Australian is pushing, in a high profile front page story, baseless information fed to it from pressure groups with a vested interest to sell more tobacco and cigarettes. With sales cascading, there are looking for any pressure to change the rules that are obviously working to reduce tobacco consumption.

And just to round out a few more facts on the wonderful success of the anti-smoking campaign over the past few decades, the overall consumption of cigarettes has fallen 51 per cent since the mid 1980s, a time when Australia's population has risen by just under 50 per cent. Wow! 

This is good news indeed, despite the tripe and flotsam dished up, yet again, in the Australian.

comments powered by Disqus

THE LATEST FROM THE KOUK

My 2016 forecasts: A stocktake on how they are going

Sun, 24 Jul 2016

A little over six months into the year, I am doing what almost no other economist does and present a scorecard on my forecasts for 2016. The record is mixed – some big wins, some big errors.

On 1 January 2016, I had my Top 11 tips for the year for economics, politics and markets. Those forecasts are reproduced below, with my assessment of how those forecasts are travelling in bold.

1. Real GDP growth in Australia will accelerate to around 3.25 per cent, driven by strong exports, solid growth in household spending, a further lift in dwelling construction and a meaty contribution from public sector demand. Business investment will remain horribly weak, but even that might find a base during the course of the year. There seems precious little chance that GDP growth will slip below 2 per cent at any stage in 2016. [This forecast is looking quite good although there are some headwinds for GDP in the second half of the year. A reasonably good forecast.]

Infrastructure spending should be based on need, not cheap money

Sun, 24 Jul 2016

This article first appeared on The Guardian web site at this address: https://www.theguardian.com/australia-news/2016/jul/22/infrastructure-spending-should-be-based-on-need-not-cheap-money?CMP=share_btn_tw 

--------------------------------------------------------

Infrastructure spending should be based on need, not cheap money

As Australian government bond yields fall to record lows, debate is hotting up over whether the government should take advantage of these low borrowing costs to increase infrastructure spending.

Such ideas are based on a nice sentiment, but fall short of sound criteria for big spending. If infrastructure is needed, if it is an essential element for aiding productivity and equity, then it should be done based on a proper cost-benefit analysis regardless of the borrowing costs.

It would be absurd to think that infrastructure spending on power generation, roads, rail and ports would not occur simply because interest rates were high. It is a similar story with low interest rates. Why borrow and build infrastructure that may not do much to boost productivity, efficiency and equity just because 10-year government bond yields are at 2%?

To see how infrastructure spending driven by low interest rates can go badly wrong, one only has to look at the experience in Japan.