Thank you so much for inviting me to speak.
I'm a professor of economics at an Australian public university. I'm also associated with some free market think tanks, the Institute of Public Affairs and the Australian Taxpayers' Alliance.
As part of my overall research during my career, I have looked at various government policies, ranging from things such as insider trading, native title, and petrol pricing, and all sorts things along those lines. One of the public policies I have looked at is the plain-packaging policy that was introduced in Australia in December 2012.
I think we can all agree that smoking kills and that the rate of smoking in our society is probably a lot higher than what is socially desirable. The real question is what we ought to do about the fact that people choose to smoke. What I'm going to argue today is that if the Canadian government wishes to lower smoking rates they need to do the hard policy work on issues such as excise pricing, public education and information, and the provisional substitutes to smoking. Particularly, my argument is you should focus on actual results, not virtue signalling, and you should stay away from utopian public policy-making. The idea under utopian public policy-making is that there are free lunches, that people would be different, and that things could change for the better if only we all tried and worked harder.
It turns out that the Australian policy of plain-packaging failed. You don't have to believe me on this point. If we have a look at the latest Australian national drug strategy survey results, the decline in smoking prevalence in Australia stalled after the introduction of the plain-packaging policies. The government waste-water intelligence survey found that the amount of nicotine in Australian waste water actually increased during that time. The size of the contraband market has increased dramatically over time. The bottom line is that a policy experiment was attempted. The notion that by taking away the branding of packets you could emphasize the graphic health warnings was an experiment that was probably well worth trying. The Australian government did this experiment. They conducted a tracking survey to see how it would work. The fact of the matter is that the experiment failed. It turns out that taking away branding adds costs to the economy, which previous speakers have spoken about, but does not actually reduce the prevalence and instances of smoking. In fact, today in Australia there are more people smoking than there were five years ago when they introduced the policy.
What some of my colleagues and I have done is have a look at the government's own survey results, taking their own data and using their own techniques. What we found is that the graphic health warnings, as a form of public education, do have an effect on reducing smoking. What we also found, however, is that the size of that effect actually declined after the introduction of plain packaging. Graphic health warnings in Australia were introduced in 2006. You can see clearly that they do have an impact on people's smoking behaviour, but that taking away the branding, the notion that people would be more aware of the graphic health warnings if we took away the branding, did not work. There is no evidence, even in the government's own data, to suggest that a lack of branding reduces smoking. The other thing is, when you have a look at the packets themselves, the government's own research found that the appeal variables of the packets did not really have a big impact on the intention to quit and quitting behaviour.
Yes, it was probably a good idea that should have been tried. I can't say that it has succeeded, but more importantly, given that it can be very difficult for a government not to go ahead and do something along these lines, I would like to make some recommendations. First, if the Canadian government does go ahead with the S-5 bill, it should introduce a sunset clause so that after a period of five or ten years, say, the legislation could be reviewed and renewed if it has been successful. Second, a formal tracking study should be commissioned to measure the success or failure of the policy, and this tracking study should include a full assessment of the health, economic, and social costs associated with the policy, especially the impact on small business, on convenient stores, and on insurance costs, because we know crime will increase. Third, the tracking study should be conducted in an open and transparent manner by people who are not intimately associated with the policy themselves. Fourth, formal and transparent cost-benefit analysis should be conducted by credible external individuals. Fifth, all of this data should be made available on the Health Canada website for external verification and analysis.
I'd be happy to answer questions.
Thank you very much.