Tobacco consumption crashes after plain packaging

Thu, 08 Sep 2016  |  

Hidden away in the quarterly national accounts are data on the volume of tobacco consumed in Australia.

The excellent news is that in the June quarter 2016, the volume of tobacco consumed fell 2.3 per cent to be at the lowest level ever recorded in the national accounts, which has data going all the way back to 1959.

More remarkable is the five-fold increase in the population over this time which means the fall in per capita smoking levels are even more acute.

The plain packaging laws for cigarette packets were introduced in December 2012, even though the Liberal and National Parties voted again them (sort of cute in the current debate to note the donations to the Coalition parties from tobacco companies, but that is another matter).

The shadow Health Minister at the time the legislation introducing plain packaging went through the Parliament, Peter Dutton, was doubtful weather the laws would work, when in 2011 he called on the government to prove that plain packaging would cut smoking levels. He said “We would like to see the evidence the government in replying on.”

Well, in the less than four years that the plain packaging laws have been in place, the volume of tobacco consumed in Australia has fallen a staggering 25 per cent. It is a great depression in tobacco consumption, driven in part by the plain packaging laws.

Also important, no doubt, are the impact of the excise hike, the death of more than 50,000 people since the end of 2012 from smoking related illness (they aren’t buying many smokes there days) and the lagged effects of advertising bans, health warnings and community understanding of the risks from tobacco consumption.

It is amazing, staggering and unbelievable that in the early 1960s, 20 per cent of household consumption (in volume terms) was on tobacco. 

Now it is down to 1.3 per cent and declining rapidly.

It just goes to show that a well targeted, well framed mix of targeted public policy can achieve desirable aims.

Anyone for a sugar tax and banning of junk food advertising to deal with the obesity epidemic?

comments powered by Disqus


My house price bet with Tony Locantro - an update

Mon, 01 Apr 2019

This article first appeared on the Yahoo Finance web page at this link: 


My house price bet – I’m very happy and getting ready to collect

I recently made a bet with Tony Locantro, Investment Manager with Alto Capital in Perth on the extent to which house prices would fall over the next three years.

Just to reiterate, the bet centred on Locantro’s view that prices would drop 35 per cent or more by the end of 2021 from the peak levels in 2017, a forecast that looked absurdly pessimistic given the raft of factors that influence house prices over the course of years.

For Mr Locantro to win the bet, house prices measured by the Australian Bureau of Statistics on a quarterly basis in either Sydney, Melbourne or for the average of the eight capital cities would need to fall by 35 per cent or more from the peak levels by the time the December quarter 2021 data are released. The ABS released the latest residential property price data last week which presents an opportunity to see how the bet is unfolding, admittedly with three years to go until it is settled.

As everyone knows, house prices are falling in most cities, reversing part of the boom over several decades.

Get ready for a cash rate cut in April

Mon, 25 Mar 2019

This article first appeared on the Yahoo Finance website at this link:


Get ready for a cash rate cut in April

The data is in and it is compelling.

The Australian economy is faltering and the risk is that it will weaken further if nothing is done to address this decline.Not only has there been recent confirmation of a per capita GDP recession – that is, on a per person basis the economy has been shrinking for two straight quarters – but inflation is embedded below 2 per cent, wages growth is floundering just above 2 per cent, house prices are dropping at 1 per cent per month and dwelling construction is in free fall.

Add to this cocktail of economic woe an unambiguous slide in global economic conditions, general pessimism for both consumers and business alike and a worrying slide in the number of job advertisements all of which spells economic trouble.Blind Freddie can see that there is an urgent need for some policy action. And the sooner the better.For the Reserve Bank of Australia, there is no need to wait for yet more information on the economy.

It has been hopelessly wrong in its judgment about the economy over the past year, always expecting a growth pick up “soon”. Instead, GDP has all but stalled meaning that inflation, which is already well below the RBA’s target, is likely to fall further.In short, no. It is not like a 25 basis point interest rate cut on 2 April and another 25 in, say, May or June will reignite inflation and pump air into a house price bubble.

Such a claim would be laughable if there are any commentators left suggesting this.