Cost-effectiveness Review of Tobacco Regulation
In pursuit of the Smokefree 2025 Goal, the recently legislated Smokefree Environments and Regulated Products (Smoked Tobacco) Amendment Act 2022 made three significant changes to tobacco regulation in New Zealand:
- decreasing the number of smoked tobacco retailers by over 90%;
- reducing the nicotine allowed in smoked tobacco products by around 95%; and
- prohibiting the sale to anyone born on or after January 1 2009.
Commissioned by British American Tobacco, Imperial Brands and Japan Tobacco International, TDB and Infometrics undertook a cost-effectiveness review of the Act. The report does not seek to question the Smokefree Goal or the health benefits of reducing smoking – rather it seeks to examine the extent to which the recently passed STA measures will be effective and efficient in achieving this goal.
While these goals are no doubt well intentioned, this report finds the STA is likely to impose substantial costs on New Zealanders’ wellbeing. The Act is likely to increase illicit market activity and associated crime; increase unemployment and cause financial stress to retail store owners; increase travel costs as users have to travel further to find tobacco products; and increase inefficiencies as the government needs to find alternative sources of tax revenue. The costs imposed on New Zealanders from the Act that are considered quantifiable are estimated to total around $1.3 billion in present value terms over the next ten years.
With NZ already well on track to achieve the smokefree goal and with the STA imposing substantial costs across society, this report questions the need for the Act. For those population groups that are unlikely to achieve the 5% target in the foreseeable future, a more targeted approach, rather than a blanket nation-wide ban, is likely to be more effective and impose a far lower cost on society. Find out the details in the full report.