Henry Ergas is at it again! He follows the stable of extreme right commentators at The Australian (Judith Sloan, Sinclair Davidson, Christian Kerr, Adam Creighton) attacking the plain packaging legislation and providing support for big tobacco. The campaign seems timed to influence the adoption of plain packaging in the UK. It is of course exactly what the big tobacco companies seek. Interestingly Ergas links his critique to climate denialism! There is a link – Ergas has foolish views both on plain packaging and on climate policies.
Underlying all these claims is the view from a a tobacco industry (InfoView) sponsored data base that from calendar year 2012 to calendar year 2013 smoking volumes increased by 0.26% (that is slightly more than one quarter of 1%). Other industry sources (EuroMonitor) and the British American Tobacco report for 2012/2013 contradict this claim – both suggest volumes fell – the EuroMonitor data base suggests they fell significantly. BAT suggests higher Australian profits because higher prices offset the effects of reduced volumes. Yes, reduced volumes!
Given the events now unfolding at my university and the decidedly insecure basis of my continued employment I have problems responding to much at all these days but let me make three comments:
1. Suppose the strange claim by InfoView is correct. The increase in consumption of cigarettes at 0.26% was less than one-sixth of the population growth rate in that year. Per capita consumption of cigarettes apparently fell 1.5% on the basis of the data Ergas is relying on. There is no evidence at all that plain packaging is encouraging extra smoking as Ergas claims.
2. Why would you ever condemn a policy anyway on the basis of one years data (again assuming the data is correct and that the other two sources are wrong)? In 2010 there was a 25% increase in excise and a very striking reduction in consumption in the following year. In addition there were restocking effects and shortages prior to the introduction of plain packaging and smokers presumably increased their purchases in anticipation of the 2013 excise hike. In short lots of things were going on that might explain a moderation in the rate of decline in smoking in the particular year 2013. If I had to evaluate the impact of a tax cut by looking at unemployment effects in the year following the cut without accounting for other issues I would be ridiculed. Why the preposterous weight placed on a single negligible piece of evidence that does not show a per capita decline in smoking, is contradicted by other industry data and which does not reflect a lot of things going on in these markets?
3. The Ergas claim that there has been a major switch to cheaper brands which are consumed in greater volumes because of price falls is exaggerated. Market shares of the major brands have remained stable despite caprice increases that exceed the 2013 excise price hike. Cheaper brands have also increased in price.
The initial evidence – short-term and inadequate as it is suggests that plain packaging is helping to reduce smoking in Australians. I’ll try to find time over the coming weeks to set these views out more fully. In particular I’d like to sort out why this campaign in The Australian is being implemented. Is it a disinterested search for the truth and, if so, why the trash methodology?