Hello and welcome to the Advance Australia Where conference. Today I have been invited to discuss the microeconomic reform of plain packaging tobacco products. Smoking is a huge problem in Australia, killing 19 000 Australians per year, which is more than 52 deaths each day . Australia is the first country to introduce this reform and it commenced on the 1st of December 2012. It requires smoking health warnings to cover at least 75% of the front of most tobacco packaging, 95% of the back of cigarette packaging and 75% of most other tobacco products . Evidence shows that plain packaging cigarettes successfully decreases smoking rates, particularly in younger people leading to less disease and disability which in result creates a larger work force, less expenditure on smoking-related health care and increased productivity and higher living standards.
Even though tobacco smoke has been proven to be a cancer causing substance and increases risk of heart attack and stroke , a 2013 study showed that 26.7% of Australia still continued to smoke . This is because the demand for tobacco products is inelastic. As you can see in this demand-supply curve, no matter how much the price rises through government tax, the demand
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The spokesman for the Smokers’ Rights Party, Clinton Mead, reported that the health costs acquired through smoking are covered by the tax revenue . The overall economic and health benefits outweigh these costs as can be seen in this table. Plain packaging has effectively decreased smoking rates, especially in younger people. Smoking in people aged 14 years and older decreased from 16.6% in 2007 to 12.8% in 2013 . Also in 2013, tobacco clearances fell 3.4% and 2014’s estimated expenditure on smoking decreased from $3.508 billion to $3.405 billion . In April 2013, a CEO of a major smoking company