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July 28th, 2015:

Tobacco giant sues Australia

More than $50 million of taxpayer money is expected to go up in smoke defending cigarette plain packaging in a secretive international tribunal in Singapore.

But costs will pile much higher if Australia loses on its first defence that Philip Morris indulged in cynical “venue shopping” by shifting its headquarters to Hong Kong to sue Australia.

The West Australian can reveal the Attorney-General’s Department, which is running the case in defence of plain packaging, called former Labor treasurer Wayne Swan as a witness before a special tribunal sitting in Singapore back in February.

Philip Morris, which is claiming the plain packaging regime harms its intellectual property in such famous brands as Marlboro, Peter Jackson and Longbeach, called its own high-profile witnesses, also at considerable cost.

Among Philip Morris’ witnesses have been former High Court judge Ian Callinan who gave evidence on administrative law.

If the tribunal finds unfavourably against Australia in a preliminary decision, expected in September, former health minister Nicola Roxon and her former departmental secretary Jane Halton are among those likely to be hauled before the tribunal later this year.

Australia argues that Philip Morris, in anticipation of Labor’s plain packaging legislation in 2011, restructured itself so that its Australian subsidiary became wholly owned by the Hong Kong-based Philip Morris Asia.

This allowed Philip Morris to sue Australia under so-called investor-state dispute settlement (ISDS) provisions of a 1993 bilateral agreement with Hong Kong that allowed compensation for “expropriation” of investments.

ISDS provisions have been criticised by the High Court Chief Justice Robert French and the Productivity Commission which warned they gave foreigners greater legal rights than Australian companies, exposed local business to potentially large liabilities and were red tape-heavy.

There are concerns similar provisions in the yet-to-be-concluded 12-nation Trans-Pacific Partnership agreement, it would constrain the listing and pricing of medicines under the Pharmaceutical Benefits Scheme.

Trade Minister Andrew Robb dismissed ISDS concerns, stressing Australia was party to ISDS provisions with 29 other countries over three decades, “and the sun has still come up”.

Labor, which formally discontinued inclusion of ISDS provisions in free trade agreements in 2011, said Australians were understandably concerned about foreign interference in healthcare, public services and environmental protection.

“The tobacco plain packaging case highlights the dangers of ISDS provisions,” shadow trade minister Penny Wong said.

“Mr Robb has still not explained why he agreed to the inclusion of an ISDS in the China FTA when the Howard Government successfully negotiated the US FTA without one.”

Mr Robb responded: “The only case that has ever been brought against Australia was in response to Labor’s cigarette plain packaging laws. Australia was defending this case and it was not yet resolved.”

He said ISDS provided protections for Australian investors abroad in countries which may not have reliable political or legal systems.

It is understood that under the China-Australia FTA, the scope, form and content of the future ISDS mechanism is yet to be negotiated.

A spokesman for Philip Morris said governments has the right to “experiment” with taxpayers’ money but should not be surprised when companies and countries asserted their rights.

“Philip Morris is seeking compensation from the Australian Government for its plain packaging experiment which deprives us of our brands and intellectual property, and for treating Philip Morris and its investments unfairly and inequitably through changing arbitrarily our legal and regulatory environment,” the spokesman said.

“Our claims address the unlawfulness of the expropriation of property and do not question the need for comprehensive regulation of tobacco products.”

How big tobacco gifted campaigns of misdirection and misinformation to the gun lobby

George Rennie – PhD Candidate at University of Melbourne

Disclosure statement

George Rennie does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.


The University of Melbourne provides funding as a founding partner of The Conversation AU.

The tobacco industry used advertising to sell – rather than convey – its message in its lobbying tactics. AAP/Joe Castro

In the late 1970s, the US tobacco industry was faced with a problem: it was no longer able to convincingly propagate the idea that cigarettes were good for you. It rightly supposed that this might lead to calls for anti-smoking legislation and, in anticipation, created an explicit doctrine: where a debate is unwinnable, change it.

The tobacco industry also recognised that if legislation led to even a 1% drop in annual revenues – self-calculated to be worth US$35 million in 1979 – then a “public information” campaign worth an unprecedented US$18 million was warranted if it might convince Congress not to legislate.

Such economics gave rise to a new wave of lobbying efforts. Corporations realised that traditional lobbying – useful as it was – was ineffective when governments proved stubborn, or even contrarian. The new lobbying no longer just targeted government, but was expanded to include the voting public.

Other industries took notice of tobacco’s efforts. These tactics still exist in lobbying today.

What the tobacco industry did

Tobacco industry groups began a series of “public information” campaigns. These took the form of paid “expert” testimony and opinion, sponsorship of “think-tanks”, the paradoxical “corporate social responsibility” (one of Milton Friedman’s greatest bugbears), and a little-understood phenomenon called “advocacy advertising”.

What made the late 1970s and 1980s different to previous decades was the shift in tone. Businesses once engaged in such campaigns in surprising ways – we would even consider them naïve today. Companies such as AT&T, Mobil Oil and General Motors ran earnest, overly long, paid op-eds in newspapers around the US that explained who they were, what was at issue (fairly accurately) and what their position was. To the general public, they were unreadable.

The tobacco industry – more than any other – changed this dramatically. It decided that it was far better to use advertising to sell, rather than convey, its message.

The tobacco industry’s campaigns were surprisingly successful. Despite a torrent of complaints about the dangers of smoking from the medical community, the public lobbying had shifted the grounds of the debate where typical, business-to-government lobbying could not.

No longer a health issue, smoking had become an individual rights one. The quickly building consensus against cigarette use was frustrated. It took a tremendous effort by anti-smoking groups to bring about gradual change, and even when the landmark Master Settlement Agreement of 1998 was signed, many critics saw the legislation as favouring the industry, and protecting it from future liability

Shifting focus on gun control

In the 1970s, the National Rifle Association (NRA) also shifted its strategic focus. Advertisements became decidedly more political.

In part, this shift was due to the increased influence of the gun industry, as distinct from individual members of the public. The industry had begun to significantly contribute to the NRA and exercised disproportionate say in who filled key leadership positions.

The rhetoric of the NRA’s ads changed. It had always been a “sportsman’s organisation”, but was once devoted more to information and training. Its tone changed in 1970, slightly at first, telling readers that hunters’ rights were under threat by:

… possibly well-intentioned, but ill-informed forces.

By the 1980s, having seen the success of campaigns that sought to distort rather than engage debates, the NRA further hardened its position. It decided that any attempt to limit gun rights was unacceptable. It has never again afforded gun-control advocates the dignity of being referred to as “well intentioned”. Post-1980 advertisements would portray such advocates as unpatriotic cowards who, if they succeeded in de-arming America, would lead to its demise.

Enter into the mix the NRA’s latest attempt to control the debate. In the wake of the Charleston church shootings, NRA magazine America’s 1st Freedom featured a story, Australia: There Will Be Blood.

The article rails against Australia’s gun laws, the most prominent of which were introduced following the 1996 Port Arthur massacre. Such articles play an important role in the wider misinformation campaign against gun control. In this case, it forms the basis for claims – often made in NRA ads – that stringent gun laws lead to a worsening of crime.

Referring to US President Barack Obama’s recent comments on Australia’s laws, the NRA magazine concludes:

[Australia’s] is the gun-control regime that our president applauds for its decisive resolve. It robbed Australians of their right to self-defence and empowered criminals, all without delivering the promised reduction in violent crime. Australia’s gun confiscation is indeed a lesson to America: it is a sign of what is to come if we hold our rights lightly.

There’s a lot to disagree with in this quote (and the article). But the article’s importance is in what it does not engage with – why Australia actually introduced the laws.

A recent NRA ad.
Muddying the waters

It is clear, in viewing the NRA’s public information strategy, that fear is a key tool. The other tool – one even more powerful – is misdirection. The lessons from big tobacco have been well heeded: alter the nature of the debate until it is winnable, or at least not loseable. In some instances stalemate will do. If new information arises that shows an existing position to be wrong, move on to another.

Similar “grassroots” organisations also use this tool for other issues like climate change. But the NRA does it particularly well, much to Obama’s obvious frustration.

The NRA refuses to substantively engage with Australia having changed its laws in response to a massacre. The laws were designed to ensure that angry, disillusioned or depressed people could not easily access a gun and kill, en masse, innocents.

The NRA lobbies in the hope that we forget that mass shootings are the work of disturbed individuals. They take place in schools and colleges, cinemas, tourist attractions, churches and workplaces. They can even take place in secure navy and army bases, illustrating the hollowness of the NRA adage that:

The only way to stop a bad guy with a gun is with a good guy with a gun.

The victims, lest we forget them, include an unbearable number of children, fathers, mothers, sisters, brothers and friends.

While there continues to be an endless bombardment of advertisements extolling how virtuous guns are, the absence of an equally well-resourced organisation in opposition to the NRA ensures that the message of victims dies at the end of a press cycle.

Who can name a single child from Sandy Hook Elementary? Who can recall their faces? Who knows what they’d say? They get lost, forgotten even, in a debate where money buys the carry of your voice.

Effects over time of tobacco tax increases in New Zealand

Ongoing tobacco tax increases predicted to improve health, reduce health system costs, and reduce health inequalities, but take years to have their maximum health impacts.

Annual 10% tobacco tax increases in New Zealand over the next 20 years should lead to health gains, net health system cost savings and modest reductions of about 2% to 3% in health inequalities between indigenous (Māori) and non-indigenous people, according to a study published by Tony Blakely and colleagues from the University of Otago, New Zealand, in this week’s PLOS Medicine.

The researchers estimated quality-adjusted life-years (QALYs; a measure of disease burden that includes both duration and quality of life) gained and net health system costs over the remaining life of New Zealand’s 2011 population exposed to annual 10% tobacco tax increases for 20 years. The model included 16 tobacco-related diseases in parallel using national data on all-cause mortality and morbidity (illness). In 2011 the smoking prevalence was 35% for Māori and 14% for non-Māori. Compared to the 2011 population simulated into the future with no tax increases, the researchers estimated that 260,000 QALYs would be gained if the population were exposed to the annual tax increases, with net health system cost savings of US$2550 million (due to prevention of tobacco-related diseases).

“This health gain of 260,000 QALYs is 17% of all health gain that we estimated would occur if all smokers in 2011 quit that year, and we followed or simulated the population into the future,” says Professor Blakely, lead-researcher.

The QALY gains per capita associated with annual tobacco tax increases were 3.7 fold higher for Māori (indigenous population) than for non-Māori because of higher smoking levels and likely greater price sensitivity among Māori.

Notably, the health gains and cost savings are not predicted to peak for several decades. This is because smoking is more common among younger age groups and the tobacco tax effect is greater among young people (who have limited disposable income). These young people do not benefit maximally from reduced rates of tobacco-related diseases for many decades to come, due to the long delay between smoking onset and the incidence of tobacco-related disease in individuals.

As with all modeling studies, the accuracy of these findings depends on the assumptions built into the model and the data fed into it.

Professor Blakely says: “This modeling work has suggested that ongoing tobacco tax increases deliver sizeable health gains and health sector cost savings, and are likely to reduce health inequalities. However, if policy makers are to also achieve more rapid reductions in the non-communicable diseases (NCD) burden and health inequalities, they need to complement tobacco tax increases with additional tobacco control interventions focused on cessation.”


Research Article

Funding: The authors are supported by the BODE3 Programme, which is studying the effectiveness and cost-effectiveness of various tobacco control strategies and receives funding support from the Health Research Council of New Zealand (Project number 10/248). The second author (LJC) was also supported by a National Health and Medical Research Council Sidney Sax Public Health Fellowship (#1036771). No funding bodies had any role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

Competing Interests: The authors have declared that no competing interests exist.

Citation: Blakely T, Cobiac LJ, Cleghorn CL, Pearson AL, van der Deen FS, Kvizhinadze G, et al. (2015) Health, Health Inequality, and Cost Impacts of Annual Increases in Tobacco Tax: Multistate Life Table Modeling in New Zealand. PLoS Med 12(7): e1001856. doi:10.1371/journal.pmed.1001856

Author Affiliations:

Burden of Disease Epidemiology, Equity and Cost Effectiveness Programme, Department of Public Health, University of Otago, Wellington, New Zealand British Heart Foundation Centre on Population Approaches to NCD Prevention, Nuffield Department of Population Health, University of Oxford, Oxford, United Kingdom