The ABS confirms tobacco consumption is falling

Fri, 20 Jun 2014  |  

I have spoken to the ABS on the issue of the consumption of tobacco and all of my work on this issue is correct, accurate and spot on. Whilst this was never in doubt, I feel the need to take issue with the erroneous material that continues to appear in The Australian.

To his credit, The Australian's Adam Creighton has tried to get to the bottom on the consumption of tobacco issue that has dominated his paper in recent weeks. Apparently he spoke to the Australian Bureau of Statistics and was able to include several quotes from them when crafting his recent column. In using what was enlightening information from the ABS, Creighton however made a fundamental error when he tried to interpret that news.

This, of course, lead him to the wrong conclusions.

In particular Creighton claims, rather ludicrously, that "The methodology underpinning the ABS's "chain volume measures" means consumption expenditure can fall at the same time as physical consumption rises if consumers switch quickly to cheaper products."

Um, no, it definitively cannot. The ABS methodology does not allow this to ever occur for tobacco or any other component which goes into the national accounts. As Creighton quotes the ABS saying, "This results in a chain volume measure where the price impacts have been removed to obtain the underlying consumption expenditure of Australian households."

Get it? "Price impacts removed" means that switching to cheaper tobacco is captured in the chain volume measure. You would think the word "volume" would be a dead give-away.

The ABS have confirmed that the chain volume measure DOES, I repeat DOES, I repeat DOES, include any shift in consumption patterns to cheaper product.

A stylised example which the ABS confirmed is accurate is reproduced below if or when there is a shift to cheaper items within a consumption category:

Period 1:
Consumption tobacco is 50 units of $10 a packet and 50 units of $20 a packet.
TOTAL CONSUMPTION 100 units.

Period 2:
Consumption of tobacco is 75 units of $10 a packet and 20 units of $20 a packet.
TOTAL CONSUMPTION: 95 Units.

Change in the volume of tobacco consumed: -5.0%

Now, let's look at the recent ABS data on the chain volume of cigarettes and tobacco consumed:

December quarter 2012: 3,483 units
March quarter 2014: 3,298 units

Change -5.3%

Note that the plain packaging laws took effect in December 2012 and there was an excise increase in December 2013. Over that period, the Department of Health estimate that perhaps 20,000 people died due to tobacco related illness, so there is a drop in demand for tobacco from this source too.

The other issue is that the misinformation and errors in the Creighton article are the basis for other articles written in The Australian on the topic. The writers in The Australian quote each other as the source for the next story. What a scam.

Cut & Paste today refers to the erroneous Creighton article as a source for its support as did the editorial yesterday.

How cute is that?

The end point is that the consumption of tobacco is falling, regardless of whether there has been any switch to lower price cigarettes, pipe tobacco, rollies or cigars.

comments powered by Disqus

THE LATEST FROM THE KOUK

CLIMBING THE COVID MOUNTAIN

Wed, 29 Jul 2020

TEN ECONOMIC STEPS THAT FORM A PATHWAY TO THE TOP

THEKOUK and EVERALDATLARGE OUTLINE A WAY FOR THE PEOPLE OF AUSTRALIA TO CREATE AND MAINTAIN SUSTAINED PROSPERITY

Covid19 has opened a door for Australians to positively accept significant changes that will lead to a shared good. This rare opportunity enables us to achieve sustainable economic and social goals that create a new ‘normal’ as our way of life.

These Ten Steps are presented as non-partisan recommendations to the Australian Parliament in the firm belief that, if they embrace them, the Australian economy and society will be greatly enhanced after the Covid19 pandemic has passed.

*A job for you if you want one.
A significant increase in part time and casual employment can be created that will enable you to enjoy a more creative and peaceful lifestyle and to live longer and better. The traditional age at which you would have been expected to retire will become obsolete as a result. An access age for pension and superannuation will become your choice. This will enable you to remain in paid work for as long as you want to, on a basis that you choose, while boosting the productivity and growth of Australia.

*You will get wage increases that will be greater than your cost of living.
A demand for enhanced innovative skills at all levels of employment will be created as the economy grows in strength, thereby enhancing your stature in the workforce and enabling executive salaries and bonuses to drop to levels that are accepted as justifiable by employees, shareholders and customers.

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

Tue, 07 Jan 2020

This article first appeared on the Yahoo Finance web site at this link: https://au.finance.yahoo.com/news/the-governments-test-in-2020-220310427.html   

---------------------------- 

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

For many people, the cost of the fires is immeasurable. 

Or irrelevant. 

They have lost loved ones, precious possessions, businesses and dreams and for these people, what lies ahead is bleak.

Life has changed forever.

As the fires continue to ravage through huge tracts of land, destroying yet more houses, more property, incinerating livestock herds, hundreds of millions of wildlife, birds and burning millions of hectares of forests, it is important to think about the plans for what lies ahead.

The rebuilding task will be huge.

Several thousands of houses, commercial buildings and infrastructure will require billions of dollars and thousands of workers to rebuild. Then there are the furniture and fittings for these buildings – carpets, fridges, washing machines, clothes, lounges, dining tables, TVs and the like will be purchased to restock.

Then there are the thousands of cars and other machinery and equipment that will need to be replaced.