The latest on tobacco consumption

Wed, 03 Sep 2014  |  

The June quarter national accounts show that the volume of tobacco consumed in Australia rose 1.8 per cent in the June quarter. I am getting set for the shrill chorus of whackery from the tobacco extremists at The Australian tomorrow who could well use this rise as evidence or proof that the plain packaging laws which were introduced in December 2012 are not working.

If they do this, they will be miserably wrong. As every good economist knows, markets, economies and industries never move in a straight line up or down – there are always quirks and data lumps that can briefly deviate from a long run trend.

In Australia's 23 years without a recession, there have actually been three quarters where GDP has fallen – when the GST was introduced in 2000, when the GFC initially hit and when cycle Yasi closed down the coal mines for a few months. While some people were excited to call a recession, it never happened.

And so it is the case with the consumption of tobacco.

The 1.8 per cent rise in tobacco consumption in the June quarter follows a smashing 7.6 per cent fall in consumption in the March quarter. The ABS measure of trend consumption of tobacco fell to a record low in the June quarter.

The small rise in tobacco consumption in the June quarter might be a statistical quirk. Or maybe people were loading up on tobacco purchases ahead of the excise increase on 1 September? Who knows. And it matters little - the quarter by quarter swings in the data do not hide the fact that tobacco consumption is falling.

The slide in tobacco consumption has been evident for many decades and following excise increases and the introduction of plain packaging in December 2012, the falls have continued.

To get a few benchmarks on tobacco consumption:

Since December 2012, consumption of tobacco is down 3.5 per cent; since the end of 2000, the volume of tobacco consumed has fallen 27.8 per cent; since 1980, the volume of tobacco consumed has fallen by a stunning 55 per cent. Over all of this time, the population has increased by over 1 per cent per annum, which means that per capita consumption of tobacco has plummeted.

If tobacco was the only industry in the Australian economy, it would be in a Great Depression.

It is hard to see how the tobacco cranks and extremists from The Australian can continue their warped message that tobacco consumption may have risen since plain packaging was introduced. The campaign, which coincided with the release of the data for the March quarter, was extraordinary and it is to be hoped they all come clean in their follow up stories in the days and weeks ahead when they see just how much consumption of tobacco has fallen not only over the long run, but also since the plain packaging laws were introduced.

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