Reference: 20100381

THE TREASURY
26 January 2010
Kaitohutohu Kaupapa Rawa
Eric Crampton
University of Canterbury
Private Bag 4800
Christchurch 8140
Dear Eric Crampton
Thank you for your Official Information Act request, received on 15 December 2010.
You requested the following:
1. All advice that Treasury has received from the Ministry of Health concerning
the effect on retailer profits of a ban on the retail display of tobacco products.
In particular, but without limiting the request, I wish to know whether the
Ministry of Health advanced the view that retailer projects could be increased
by such a ban.
2. All correspondence between the Ministry of Health and Treasury, and all
internal documents produced by Treasury, regarding the Ministry of Health's
estimate of a $1.9 billion Vote Health cost of smoking. Has Treasury
conducted any independent assessment of the soundness of that figure? Has
Treasury any plans of reviewing the figure?
Information 8eingReleased
Please find enclosed the following documents:
Item Date Document Description
1. 19 July and 27 July Email from the Ministry of Health
2010 (MoH) to the Treasury and reply
2. 19 July 2010 Preliminary Impact and Risk
Assessment
3. 1 September 2010 Draft Cabinet paper
4. 6 September 2010 Retail displays ball park figures - draft
for discussion
5. 6 September 2010 Draft regulatory impact statement
6. 9 September and 10 Email from MoH to various and reply
September 201 0 from the Treasury
7. 9 September 2010 Draft Cabinet paper
8. 28 September 2010 Email from MoH to various, follow up
email, and reply from the Treasury
9. 29 September 201 0 Draft Cabinet paper
10. 29 September 2010 Draft Regulatory Impact Statement
Decision
Release, with the exception of
the names of junior staff and
all contact details under
section 9(2)(a) and s9(2)(g)(i).
As above
As above
As above
As above
As above
As above
As above
As above
As above
1 The Terrace
PO Box 3724
Wellington 6140
New Zealand
tel. 64-4-472 2733
fax. 64-4-473 0982
www.treasury.govLnz
I have decided to release the relevant parts of the documents listed above, subject to
information being withheld under one or more of the following sections of the Official
Information Act, as applicable:
• personal contact details of officials, under section 9(2)(a) - to protect the privacy
of natural persons, including deceased people; and
• names and contact details of junior officials and certain sensitive advice, under
section 9(2)(g)(i) - to maintain the effective conduct of public affairs through the
free and frank expressions of opinion.
Regarding the second part of your request, the Treasury holds no correspondence or
internal documents on the Ministry of Health's recent estimate of the cost of smoking to
the health system. We have not, and do not currently intend to conduct, any formal
review of this estimate. Accordingly, I have refused this part of your request for
information under section 18(e) - that the information requested does not exist or
cannot be found.
I note, however, that Treasury officials have discussed the estimate with health officials
while working on recent Cabinet papers. We noted that the $1.9 billion figure cited is
significantly higher than previous estimates we are aware of, and noted we would be
interested in better understanding the data and methodology.
We have also discussed with the Ministry of Health that an updated and robust analysis
of the overall fiscal and social costs of smoking (extending beyond direct health sector
costs) would be desirable. This would include broader fiscal impacts (e.g.: offsetting
savings in superannuation costs due to reduced life expectancy, and the distribution of
this), broader health impacts (e.g.: passive smoking impacts) and social impacts (e.g.:
the impacts of smokers' illnesses on their families and communities). The last detailed
work in this area commissioned by Treasury was undertaken by Des O'Dea in 2001,
and it appears from your blog posts that you have already read this work.
Information Publicly Available
The following information is also covered by your request and is publicly available on
the Ministry of Health's website:
Item Date Document Description Website Address
1. 26 October 2010 Better Controls on Tobacco htt[!:/Iwww.moh.govt.nzlmoh.nsfl
Retailing Cabinet Paper and indexmh/better-controls-
Regulatory Impact Statement tobacco-retailing
Accordingly, I have refused your request for the documents listed in the above table
under section 18(d) of the Official Information Act - the information requested is or will
soon be publicly available.
This fully covers the information you requested.
You have the right to ask the Ombudsman to investigate and review my decision.
Yours sincerely
/)
//
//
__
\
Manager, Healt
for Secretary to the Treasury
From:
Sent:
To:
Cc:
[Withheld under s9(2)(g)(i)]
Tuesday, 27 July 2010 11 :54 a.m.
[Withheld under s9(2)(a)]
John MacCormick;
Jackson; Camilla Lundbak; [Withheld unders9(2)(a)] «/) "-
Subject: RE: PIRA - tobacco displays &
Hi 11"(2)!iJJ(1)} ©
Thank you for sending this through. The PIRA sets out the problem definition 0
lIterature. '
However, in order to determine whether the policy is significant or no£'ith e aper is not
exempt from the regime) I need to have a better sense of the You t t e costs will vary
according to the options available. Are you able to quantify a) ho 1 0 be affected by this
policy and b) the size of the impact (I.e. the estimated c c s. I unde n u will have this information
to hand as a result of the consultation process? As you me I n, t size of t . act . I be different depending
on'which option is chosen. So can you either def, ine e, 0 'ust qL ,'fY the most costly of the
feasible options. V
Also, just one other minor point. In the Ions equirements' section, you have put
'not sure' next to the minor impact that . p t of the different options will vary. For the
purposes of determining exemptions (a . nificance), ys the feasible option that has the largest
impact (i.e. all of the feasible options e minor for 1e(120' to be exempt). Regardless, in this particular
instance, I believe even the will nough to qualify for this exemption. Hence, I agree
with your assessment that this
Happy to discuss.
:::,::::::: '1
I)}
rial to the Tre,isury, intended only for the and (my also be legally privileged, If you are not an intended
Hi [Withheld under s9(2)(g)(i)]
Attached, as discussed, is a draft PIRA on tobacco displays. The document contains some background on how things currently
stand.
We would appreciate your comments / thoughts before finalising the PIRA but would also like to meet to discuss the next steps
and how we might approach the issue.
1
Cheers
[s9(2)(g)(i)J
[Withheld under s9(2)(g)(i)J
Policy Analyst
Sector Capability and Implementation Directorate ©
Ministry of Health
[Withheld under s9(2)(a)J
http://www.moh.govt.nz '"
,[Withheld under s9(2)(a)J V '\) .
... **** ***** ..
attachments may contain information that is 11 to ((y'
legal privilege. 0
If you are not the intended recipient, do not read, use,
distribute or copy this message or attachments. V





2
Preliminary impact and risk
assessment /(
A preliminary impact and risk assessment (PIRA) is Intended to:
Help agencies determine whether Cabinet's Regulatory
requirements apply to a policy initiative for which they are .... V -
• HeIP ..·.agen.Gies ide.nt.i.fy the potential r.ange ..Ofim ... .8 that lll.i9ht ...e ed
.. ... ...... ' .. .. .. •
• ...o ..r ... ..i.S .. .. 01 : •• ent .•. t ..h. ey
Help Treasury confirm of . and risks
warrant RIAT .in.volvement in provi ass. u ... a·the quality of the
regulatory impact state.ment (RIS 11 mto/ms osals,
It should be started as In should be provided to your
Treasury policy team a. s s. as. t .... e a
g
. ... t.h. '.1 . s '(fial e. nough .information to helP. T.rea. sury
make a call about e
U
of th frrttiat. I ' til e. his may not require definitive answers
to all questions, 0; U . .
. .. .
olicy or proposal:
!?/) of tobacco products from public view in retail outlets
It of the main ,<Ict and/or Regulations that could be amended or created:
V' Environments Act 1990 .
t? Agency contact name and phone number:
[Withheld under s9(2)(g)(i)]
©
Date completed:
19 July 2010 (draft)
, . _' .. ' 'C",' ,. .' _ _. -.
Do .
Is this policy initiative expected to lead to a Cabinet paper? Yes
Will this policy initiative consider oPtiO. ns th. at involve creating, ame ..ndin
g
""
or repealing either primary legislation, or delegated legislation that is a (\
regulation for the purposes of the Regulations (Disallowance) Act 0
If you can answer Uno" to either of these two questions, the RIA re I apply.
T ... here is no need to complete a PIRA (though tha questions might still pr I a \)'
prompffi).
• TeChnical. u.revision. s" or consolid ... at.iO s. M S .... b .... an. tial.IY. . ..... t t ..he.. No
current law in order to improve c a n .
(including .the fixing of errors, if ira .. o .... no.f.t.... . •... g.. •.. 9is.·lative
intent, and the reconciliation of .
• Suitable for Amend eOt>. 'f not already No

No
No
• Would repeal 0 0 provisions.
legis
• t cm e cent of existing legislation or
ed e ppropriation Bill, an Imprest Supply Bill, No
Su rdinate onfirmation and Validation Bill.

ements ?0. settlemen. tfor Treaty of W .. aitangi claims, other

. an amend or affectexisting regulatory
arrange . .'. . .
• i··') (.. minimumnec.es.s. ar
y
.) in orde .• r to comply W./th existing
'J obligations that ara binding on New Zealand.

0 or only minor impacts on businesses, individuals or not-for-
') entities (such as might be the case for certain changes to the

internal administrative or governance arrangements of the
New Zealand government, like the transfer of responsibilities, staff or
No
No
Not sure - the impact
of different options will
vary.
rcy. assets between government agencies). .
o If all the legislative options associated with this policy initiative qualify for one of these
exemptions, then the RIA requirements do not apply.
If claiming a full exemption, please confirm this assessment with your Treasury policy team.
You do not need to submit a PIRA for this purpose, but you will need to provide information in
support of this claim.
If some aspects of the legislative options for this initiative can stand independently from the
rest, and qualify for one of these exemptions, then the RIA requirements do not apply to those
aspects. Since a PIRA will still need to be completed and submitted to your Treasury policy
any .important aspects 01 the Initiative for which an. .•..... ........M
What is the intended scope of the policy initiative? ©
Brief description: \f. -
The policy initiative relates to the removal of tobacco products from disR retail ou ets. Two of tobacco
policy, preventing smoking initiation and promoting smoking cess at' dressed throug I isliiti0P, information
campaigns, price and, of course, smoking cessation programmes. he ro os to legisl 0 e obacco products
from public view in retail outlets is consistent with both r RS re importa helps to 'denormalise'
the product and make it more difficult for young people to 91al.Q.' !f6j ct which ong-term users is not a
normal product, yet it often has pride of place in retail 0 a mstorted . significance to society and
its desirability.
underlying po:y to initiative is responding?
Tobacco use accounts for about 5000 premat e p r year in New Zealand. Smoking prevalence is
falling, not fast enough. Althou advertising i n J.arg banned, the prominent display of tobacco products
available for sale in retail out s ubv rt this ban. Rese rc in ie tes that prominent tobacco displays normalise tobacco,
which prematurely fig term nsumer product, encourages youth smoking uptake, and
undermines attempts tim g.
What is t magnit hese policy issues/problems?
Brief d sw';;;;;i!)
rm d 0 by tobacco is well documented. The removal of tobacco products from view
II u Ie will, the contribute to a decline in smoking uptake and also assist smokers to quit or stay
qu of its impact is difficult to measure. The policy has been adopted by several jurisdictions but most
es have been e either they are still to be implemented or have not been in place for a detailed evaluation.

evidenc os ·tfrisdictions where a ban has been in place for some time is disputed by vested interests. It
seems Ii Iy tli posal will have a positive impact over time as fewer young people take up smoking and more quit
"th" 'd "ddeo drop i",mokiog p""'eo,, ""","mpli,, ..
(( nature of the evidence supporting the problem definition?
((/) Principally academic and other research. For example, recent research has concluded that:
rcy · :: b:I:::::d more "','y Ih,y 10 h'" lri,d
'0 that tobacco displays act as cues to smoke, even among those not intending to buy cigarettes, or who are
actively trying to avoid smoking ... tobacco displays increase the likelihood that children and young people will
start to smoke, and trigger 'impulse buys' in those individuals who are attempting to quit or have quit.
unplanned cigarette purchases were made by 22 percent of the smokers interviewed leaving tobacco retail
outlets. Forty-nine percent supported a ban on point-of-sale tobacco displays versus 12 percent who were
opposed. Twenty-eight percent agreed that a ban would make it easier to quit.
Two-fifths of quit attempters surveyed as part of the New Zealand Tobacco Use Survey 2008 agreed that
..
If the range of policy options to be considered is already constrained by existing legislation or
prevIous Cabinet decisions, what are those constraints?
Brief description:
There are no such constraints. However, it should be noted that following a Cabinet meeting in early March 2009 to consider
the Government's response to two submissions seeking the removal of tobacco products from public view in retail outlets the
Government publicly advised of its decision not to proceed with further regulation of tobacco displays at this time. It noted its
intention to monitor international research in the area and did not rule out future regulation, if necessary.
Brief description: .'"
Any change is likely to involve delegated legislation. Before this can happen Enviro ments
need amending to provide regulation-making powers to implement this I.
Which groups are likely to be noticeably affected (either t u efits 0(O]S :bit
options being considered? r\
Individuals, families and/or households? Consumers? Em of it organisations
(including charities, voluntary organisations and ld'so live in particular regions?
Users of resources eg, recreational fishers, bers of roups of the population (eg,
ethnicities, genders, age groups etc) al gov nment? Other?
Brief description: -
Groups likely to benefit from the proposa r ou g people wh d tobacco use and those who successfully quit
because they are not enticed by tobacco disp 0 make i p Is es and return to smoking. This will contribute to a
reduction, over time, in and in pre s suiting from tobacco use.
The costs are likely indust@ reduced ability to advertise its products and on tobacco retailers
or those who view and replacing them with compliant alternatives. The costs
will vary plions ava' ab removing products from public view and possibly by type of retailer if groups
such as s nists or dut st e have their own particular provisions.
\)
',h' b, y di",,' imp''''' '" m"II,m, porn "mpll,"" ",,, ,"d 'odim,' 'ff"" '''h''
' ......... '.' .
options that may be considered, potentially:
War impair existing private property rights?

No, except for any
physical shopfitting
changes to retail
premises needed to
comply.
• Affect the structure or openness of a particular market or industry?
For example, assist or hinder businesses to provide a good or service;
establish or remove a licence, permit or authorisation process; create or
remove barriers for businesses to enter or exit an industry?
No sure - some
impact on competitive
marketing?
• Impact on the environment, such as regulations that affect the use and No.
management of natural resources?
, -'"

• Have any significant distributional or equity effects? Not sure. It should
"\:,


For example, where significant costs are imposed or significant benefits
conferred on different sectors of the population?
<) . .. Ju rovided
!?;; ') comment
• Have an. yother sign .. ificant costs or .•....••.. .. jn .. ·.es, .. ... Compliance costs
or not-f.or.-p.rofit organisations? . .. mentioned above.
For example impose additional . in oduce or
government cost recovery s;' Jliiacr n New ala.
international capital flows or trad .. '. Clu . i j flOW ..• ·. S. 5 .. ,.·.·.se ....
investment and ideas to and from land; imp t centives to
work or the mObl.lity or to invest I.n . or 'Is; impact on
re,ource .lIoe.tlon, '0 V e'tment? 'V
FO. r the m .•. aio
r
typrf.o'Sts Y4:(.;: please .proyide brief informa. tionabout the
dimensions seem most usetul .nd
Not sure (points for
debate).
Not sure (points for
n ertain? debate)

Is the success of any of the options likely to be dependent on other policy No, though other
initiatives or legislative changes? policy options might
©
enhance the
effectiveness of the
proposed policy
Are any of the legislative options likely to have flow-on implications for the No
future form or effectiveness of related legislation?
Are any of the legislative options likely to be novel, or unprecederited? Not internationally.
Yes/No/Not sure
, Are any of the legislative options likely to be inconsistent with No
fundamental common law principles?
Are any of the legislative options likely to be inconsistent with aafusUCh cs:!)
New Zealand's international obligations, or New Zealand's
c nsideration.
toward a single economic market with Australia?
nd
Teesj;ve

Are any of the legislative options likely to include a n 0 to delegated
delegated legislation, or grant a. broad to a .. '" will be
body? required.
Are any .. of the le.gislative options Iik.e .. I.Y .. ... ... r,o. .. ... PJ .ft No.
from ex. isting legisla. tive norms fO. . . orr. s.itua.ti .. "V ... , . -.
Are there other issues with the 0 s of· No, not with the
particular issue, but
the same time? . g'
., . () Committee is currently

. " . . . considering tobacco
issues and may
.. .... for
V- . change in tobacco
policy.
Agency's .prelil11inaryassessrnel1t
Do the RIA requirements apply to this policy process or proposal?
Yes.
Yes?
Most jurisdictions have
allowed time for the
changes to be
implemented.
No.
Trea§ufycoOfirrriaUo n.
s . '1·' . . '
. •.. ..... .. ' .. .
Would an ,'" + requi y resulting regulator ' ' " .< '" .
re RIAT involvement? y proposal be likely to h .... ..
No ave a slgn'f' ." .JOIl
, IIcant 1m " , pact or risk and th '
, erelore


,

M



Early DRAFT/OUTLINE 1 September 2010
In Confidence
OFFICE OF THE ASSOCIATE MINISTER 0 F HEALTH Turia)
Cabinet ©
BETTER CONTROLS ON RETAIL SUPPLY OF TOBACCO
Proposal ()
with a focus on removing tobacco products fro r . di y and e lorin ossible
future alignment with Australian proposals for' ging G-- ducts.
Executive Summary N.. "'0
levels of smoking in New Zealand. rates are I to concerted
Government policies and progra e, t are and not falling fast enough.
3. Recent measures have inclu ig i icantly 0 prices through increases in
tobacco excise passed into law I il. ir 'Qi tt r help for smokers to quit is one
of the ity targets fo tftEl) sector. This health target is driving
clinicians to system a . and a [l1{sS1l:ie smoking status of hospital patients.
The approach tendeGh rimary care sector, and is supported by
government-fu tf R' g cess a ins r ices such as Quitline and subsidised
nicotine e rmaceuticals.
4. Social ve largel s· against smoking and continue to harden. Surveys
'ority of s er e now aware of the damage it is causing their
healt erally re t ey became addicted and express support for stronger
i-s . g '\
n is current controls on the commercial marketing and retail
of look increasingly inadequate and are undermining the effectiveness of
Initiatives h tobacco excise increases and the health target.

media campaigns, such as the Health Sponsorship Council's
r Future campaign targeted at preventing young people from taking up

'Ie effective, are pitching against decades of concerted commercial
() e i ctivity by tobacco companies. The impact and cost-effectiveness of anti-
s ok n programmes can be enhanced by taking other measures to counter the

ing efforts of the tobacco industry.
'1 Government considers smoking to be dangerous and undesirable it follows that

cigarettes and tobacco are not "normal" consumer products. Therefore they should not
continue to enjoy normal access to active consumer marketing tools, including retail
©
displays. It would be helpful to clarify this underlying principle for tobacco control policy.
8. This paper proposes a number of regulatory amendments that build on existing controls
on tobacco advertising and retail supply. These measures are needed to bring greater
consistency and certainty to the treatment of the marketing and retail supply of tobacco
products under the law, in order to improve the overall impact of the Government's wider
tobacco control policies.
9. more to come?
... '
..
Early DRAFT/OUTLINE 1 September 2010
Background
10. Smoking is the leading cause of preventable death and imposes a on
health, particularly for Maori whose smoking prevalence is double the re QJJJ. ©
population. .
11. Over the last 25 years successive Governments have taken a nu asures
bring down smoking rates. While these have been effective in i tly reducing
smoking prevalence, about 20% of adult New Zealanders - e 50, 0 people - s
smoke on a daily basis. Amongst Maori the rate is . These nu rs ignific
improvement on the peak of the smoking epidemic
1
, still too high.
12. Further detail to support paras 1-6 of the Executive -k!j' . Ioo-a co is
dangerous, highly addictive etc, but legal and I ea. Not ef.JUfa.!i.
commensurately with its harm or risk. Govern rp Ii i are more is
needed. Need to continue to build a cohere n 6c r. , etc.
13. NZ is party to the FCTC which defines re i dis I ys as at tol) co advertising.
14. Current legislation (Smoke-free Enviro n t) vertising, and while
retail displays potentially come with t e eral defini . in the Act,
specific provisions allow for t n er of restrictions. The
current requirements were int(b( uc b amen Act in 2003 resulting in
greater restrictions on the size of . ys.
15. These include the estrictions:
• At each e acco I it d to a maximum of 100 cigarette
packets and 4 !\
block di
• Each to§bO 's I ay 'maxl urn of two packets of the same variant (no
• Tob cco '9.cI s may n 's layed within one metre of 'children's products' such as
co I '0 er.-and ft drinks and products that are marketed primarily lor
. of sale or not.
y) tobacco two of a point of sale, a sign .stating

V 'SMO be dlsplayEid In clear view of the customer at the pOint of sale
I plies free signage).

16'ie etas been considering options for tightening the restrictions on retail
some time. Proposals to remove the right of retailers to openly display

ac were consulted on in 2007, with submissions closing early in 2008. Retail

s were also the subject of two petitions to Parliament's Health Committee in
08.

17.ln October 2008 Cabinet agreed two preferred options for more detailed work to report
back in February 2009. In February 2009 the new Government dealt with the matter
and issued its response to the Health Committee report. At the time the Government
©
did not consider there was sufficient evidence that a ban on visible tobacco displays in
retail outlets would be the most effective strategy to reduce smoking rates and tobacco
consumption. The proposals were put on hold, pending monitoring of international
experience with display bans and emerging evidence on their effectiveness.
1 World Health Organisation terminology
2
Early DRAFT/OUTLINE 1 September 2010
18. Late in 2009 I (Mrs Turia) raised the matter again in consultation with other Ministers,
and in March 2010 Cabinet agreed a further round of consultation detailed
views on options for regulating the display of tobacco products in retail
19. This paper responds to Cabinets invitation for a "report back to SOC ttl me of
the consultation process and with proposals on whether or not to R c WI Va ban on (? !\
the display of tobacco products in retail outlets." [CAB Min (10) r Ie 0
Comment '\.)
Tobacco products, primarily cigarettes, are usually di in large, wa e ,
20. There are approximately 10,000 retail outlets selling co products in
shelving units.
cigarettes and 40 cartons, per point of sale '. i chec t =, particularly
21. Although the Act limits the size of these displa um of 1 pac ts of
superettes and larger service stations, Ing uni to create a
visually larger display, sometimes etas 'power .
22. Point of sale advertising, such as r . . a of a p omotional tool used to
generate awareness of products 0 . te info ma 'lOp? . ulate trial and
encourage repurchase.
23. Tobacco companies maintain t e purpose plays is not to recruit new
maintain that the rem etail e negative economic
consequences d c ng sale a c n en' nce stores and other outlets. These
arguments di or and a b elf serving. What evidence there is on
brand-switch in r sugg t okers are extraordinarily brand loyal.
24. Currently, of tObi
p
s at the point of sale means that they are highly
visible to chl:(ui . vulnerable consumers such as children, young
peop -s rs an. s ring to quit.
25. u nternafo a' 's' tions have implemented or are considering

bans 0 displays in retail outlets and there is emerging evidence
S R ring the of such bans.

gorical the impact of retail display bans on smoking initiation and

evalen some years to emerge, and is complicated by interactions with
other pol ures. But the rationale for moving now to remove tobacco products
tall display does not depend solely on categorical evidence that removing

significantly lowers smoking prevalence.
27. inc t e widespread removal of tobacco advertising and sponsorship, increasing

e has emerged about the role that retail tobacco displays continue to play in

ormalising' tobacco. Research indicates the presence of retail displays increases the
elihood that children and young people will start smoking, and prompts impulse

purchases among ex-smokers and smokers trying to quit.
28. Recent surveys show strong public support in New Zealand for a ban on tobacco
©
displays, the most recent survey finding 67% of people supporting a complete ban,
including 59% of smokers. The level of support was similar for different age, gender,
. income and occupational groups, and for both Maori and non-Maori.
29. The current statutory restrictions on retail displays are only partly effective. They are
complex to understand. The accompanying compliance guidelines make up a 30 page
document. Most retailers rely on shop furniture supplied by the main tobacco
companies and support from tobacco industry sales representatives to comply.
Enforcement and compliance are difficult.
3
Early DRAFT/OUTLINE 1- September 2010
30. Amending the SFEA to better deal with retail displays also provides an opportunity to
improve a number of other enforcement and compliance difficulties te xisting
legislation.
Report back on consultation (? (\
31.ln response to a consultation letter Proposal to ban retail . Z Y I New
Zealand 1 002 responses were received. Many submissions r co I erd but aro
850 were duplicates of various template letters promoted by e groups on both
sides of the debate.
32. The responses to this second round of consultation ely similar to h
consultation process undertaken in 2007/08. ¥so new al
information on the perceived strengths and wea es the more proposals
set out this time, and some further insights into 0 and cific
elements and options. if:
33. Views were polarised with the s, some . s an public submitters
in favour of removing retail dis s the in ry and most retailer
Interests opposed. V
34. Opponents of removing u from dis I fo ssed on:
• compliance costs with estim t to $12, iler were provided
(The Ministry of Healt ommis' ed an . e assessment which indicates that in
practice average c Id be much Ie, i r nge from $330-$3,300.)
• business viabili th e n h bacco makes up a surprisingly high
proportion of I c enien. c n ver - especially convenience stores &
petrol ns V
• claims f e closur robberies and security problems resulting from
a substantiated with supporting evidence).
• inc y with al overnment approach on business regulatory policy
o ssertions th' ts on smoking and health benefits from removing displays
10)11 e negligible (in ding challenges to studies and the evidence used by

if r'l di roposal is progressed, a strong preference for flexible requirements
, "> V allowi displays to be modified rather than prescriptively forcing retailers to put
der the counter" and

f alternative measures such as tighter enforcement of existing retail instructions
an 'n articular the ban on sales to people under 18,
&: ters of removing retail displays focussed on:
New research adding to the evidence that tobacco displays encourage youth smoking

uptake and undermine quit attempts
• The need to set the costs to retailers, which are likely to be exaggerated, against the cost
©
to the country of tobacco harm
() • The strong public support for the proposal, including among smokers who have recently
quit or intend quitting
• The need to send a consistent message that tobacco is not a normal product, but
dangerous and different from other consumer goods
• International precedents and successes which support removal of retail displays and
4
Early DRAFT/OUTLINE 1 September 2010
• The experience of retailers who have removed displays and say it did not cost much or
display for higher margin products.
harm sales and had other business benefits, for example, improved nd space to
36. Officials conclude that removing tobacco displays will help reduce pe i
tobacco as a 'normal' consumer good and contribute to reducing t h r c ed by
smoking. No sudden or dramatic drop in smoking prevalence is' ,u' would,
conjunction with other policies, contribute to reducing tobacco ake r time, V
particularly among young people, and also support smokers I. There will be cos s
particularly for retailers. These will vary according to the options de
removing displays from sight.
37. A more detailed report on the outcomes of dix.
Key elements of a more effective regulatory re .
Retail Displays
38. In light of new research and moves ictions to e tobacco displays
from public view, it is proposed to ents Act to provide
during the process of supplyin a t r.
39. Flexible transitional arrangem propose, I rly for small retailers (criteria
that tobacco products must b v i he pub ic a only be exposed briefly
to be determined by max'mum fl only one point of sale) to provide
that low-cost modific existing ca obacco display units would be
acceptable, ie, ija. r tions co IJ VOl ed for a period of 2-3 years.
40. All larger super ,01 statio ience stores and larger private individually
owned small s e s as wml or substantially remodelled or redecorated
retail pre e req'r 'thl say 6 months to install tobacco storage units,
cabinetry e hich prevent any member of the public from viewing
toba roduct while R c product is being selected for supply to another
custo
S I' t acconists
41. tob cco retail outlets could be permitted to display individual cigars and one

Kat'of eac an ariant of tobacco product stocked by that retail outlet. The

finitio sP' liSt tObacc. onist would need to be tightened to avoid businesses
within shops" or running significant sidelines.
:;© in ames to avoid tobacco advertisin
val of 'normal' trade discounts
43. Section 28 of the Smoke-free Environments Act 1990 prohibits free distribution and
rewards, and places restrictions upon the offer of rebates by manufacturers, retailers
and others with regard to tobacco products. In summary, the Act states that:
• no manufacturer, distributor, importer, or retailer of tobacco products may distribute or
supply any tobacco product free of charge or at a reduced charge
• a reduced charge includes providing tobacco with another product that is free or reduced.
A reduced charge excludes a normal trade discount or normal trade rebate
• no person may offer a cash rebate to a retailer, including as an inducement in relation to
purchasing, selling, advertising or locating tobacco within the retailer's business.
5
Early DRAFT/OUTLINE 1 September 2010
44. It is apparent that rebate schemes operated by tobacco companies for retailers are
commonplace. The rebates are linked to the volume of tobacco sales. The inistry of
Health has investigated these schemes and has questioned the legality 0
practices. ©
45. The Ministry has written to each of the three main tobacco compal),iE s e'n t where
the companies' rebate practices might be in breach and 'b a i s to
their rebate schemes comply with the law. Responses from I rial acco and QWW
indicated that they consider their rebate arrangement 0 awful, normal tra e
discounts.
46. Further progress has been constrained by the 'lity to requir 0 co
companies to disclose details of the schemes. in lifstry d a' he
terms of their agreements are subject to confid .. p isions, a tha isclosure
would put them in breach of contract.
47. Clarifying the law to prohibit any trade retail would
avoid the current regulatory r nstitutes 0 ai' trade discounts.
This would also be consistent with tel 'de malising' tobacco
retail. V
48.
49.
50. The Minis alth responsible for the administration and enforcement
for th tment 0 e f nt officers to enforce its provisions through
of ,s';4.,0t 1990. The Smoke-free Environments Act provides
. esti a on of d the collection of evidence. These officers are employed
II Health are part of the DHBs.

0 efree e rcement officers not only respond to complaints of alleged breaches of
legislation, I 0 undertake proactive work such as controlled purchase
d/) peratio r young volunteer under the age of 18 attempts to purchase tobacco.
Cu," tly',,)6, ecutions under the SFEA are cumbersome and ineffective
'-% "V notices, instant fines etc.

amendments

54. ego removing the ability for tobacco sponsored yachts to enter NZ ports as of right
(rather than requiring Ministerial approval as required for other tobacco-sponsored
competitors in international events)
O
55. firming up the restrictions on misleading terms such as 'light' or 'mild', in line with
o Commerce Commission rulings
Implementation issues
56.
6
Early DRAFT/OUTLINE 1 September 2010
Alignment with Australian moves on 'plain packaging'
57. Retail displays are regulated in Australia at state level, and retail display as
proposed for New Zealand are already in place. In May 2010, the federal
Government announced its intention to legislate to force tobacco to be sg,lc;l y<!.9/ptain ©
packaging" from 2012. In addition to option it is also proposed to conside1) luctnvegulating
the packaging of tobacco products in conjunction with Australia, with
trans-Tasman requirements for plain packaging. Officials . or progress I V
Australia on the 'plain packaging' proposal, explore the potentia(f<> gula ryalignment,
and report back to Cabinet in2011. £
Consultallon 'V
implications 1i;
Legislative implications
61. A Smoke-free Environ -6- s Act mend ill the 2010 legislative programme
with priority level 5, i instructio I ued in 2010. This Bill is the
appropriate -x.'e.QJi1 p' Sl roposals outlined in this paper. It is now
proposed to co Ie draftin ir12tN' s that the Bill can be introduced to the
House and hav I i liament rises for the Christmas recess.
Regulatory
62. A t a een prepared, and is attached to this paper. The
<i
UI t . act . s on the central plank of the measures proposed in this
r, mely the re 0 a tobacco products from retail display. The regulatory
a . plications of a ove to harmonise with Australian plain packaging
proceed will need to be addressed in future Cabinet
') W orting. V
perspective

P:'bIiCity
66. It is proposed that this policy be announced once finally agreed by Cabinet, including
proactive release of the Cabinet paper and publication of the Regulatory Impact
Statement.
67. The announcement should make appropriate reference to the Parliament's Maori Affairs
Select Committee Inquiry into the tobacco industry in Aotearoa and the consequences
of tobacco use for Maori. The Committee is on the point of reporting. The
7
Early DRAFT/OUTLINE 1 September 2010
overwhelming weight of submissions has been in favour of reducing smoking rates
effectively to zero by removing commercial tobacco supply altogether. the A .
Committee reports the Government has 90 days to respond. :;
Recommendations (\
6B.lt is recommended that the Committee: V . V '0
1. Note
2. Agree






8
Early DRAFT/OUTLINE 1 September 2010
Appendix: Report on Consultation
1. On 22 March 2010 Cabinet approved the release of the consultation letter ban _
tobacco retail displays in New Zealand and sought a report back on the 0 e ©
consultation process and proposals on whether or not to proceed with th
tobacco displays in retail outlets.
2. Public consultation took place between 31 March and 21 May 000
submissions were received. Many were substantial although a 0 w re form or
template letters promoted by interested parties.
3. About 85 percent of submitters supported the proposal ivvvii<i,duals, 753 s).
Supporters included all the health sector 'r' i s op e, the
majority of submissions from the general public an ig . I propo ipilO\ e etailers
who submitted as individuals - about a quarter of r i ers. V
4. Opponents comprised 28 individual form I e tobacco
industry submissions opposed the propos ng ith the m' 't from
retailers and retail organizations, a Q.rri from the gene ublic and one
submission from an overseas (UK) ch
5. The consultation primarily sought e t rom aft dis on options for removing
displays and their costs. New' or 'on n the e f i ce was welcome, but this
evidence had been considered' e i us cons t bmitters were told previous
repeat as well as UPdSf3 e 'ous informa' 0
6. Views were ng r doth for and against the proposal.
Ultimately, the i m own to'u n over what weight should be given to the
health issues ve Rlpt in les by and costs to tobacco retailers. Retailer
overwhel i suppor roe proposal argue the benefits are potentially
and r ue the fi s are minimal or non-existent and the costs
consi rable costs I'm r irrelevant.
7. The f e eVIC@generalcommentseitherinsupportoforinoppositionto

ai, rather t ring the specific questions set out in the Ministry's letter.
. conflicting vie resented, conclusions are not easily drawn from the analysis of
they 0 help to identify the areas of difference. These issues, include:

he role t CCQ 'splays play in advertising tobacco products,

the' nc I e literature for the effect of retail tobacco displays and for
beha nange resulting from the removal of retail displays,

• around the impact the removal of displays would have had on smoking
() e ce, smoking behaviour and on retailers in other jurisdictions, for example,
I a 0, Saskatchewan, Ontario, and Ireland,

costs to retailers of placing tobacco out of sight,
public acceptance of removing tobacco retail displays.

• e special circumstances of specialist (cigar) tobacconists and duty-free stores,
if obacco displays and their impact - the research evidence

8. Supporters of removing tobacco displays from public view contend that tobacco displays
()
function as a highly effective advertising and marketing tool in the absence of other
means of advertising. New Zealand research shows a link between tobacco displays
and the likelihood that a young person does or will smoke. Australian research also
demonstrates a relationship between displays and the urge to smoke experienced by
former smokers and those attempting to quit.
9
Early DRAFT/OUTLINE 1 September 2010
9. Opponents argue that other factors are responsible for youth uptake, for example, peer
pressure, or 'forbidden fruit'. One submitter (the UK policy think tank the Democracy
Institute) extensively disputed the validity and conclusions of the rch, in
particular the reliance of many studies on self-reporting of smoking intentio r an ©
measured behaviour.
Comment
10. The existence of a link between tobacco displays and youth smo . r from the V
research, although the strength of the relationship varies. T of r ail displays i
undermining smokers' quit attempts by prompting a relapse is les 'dely but
research to date is consistent with current knowledge at influences I quit
attempts. (Unlike the Democracy Institute submissi appears to be n a
similar submission to UK consultation on the u f t e disPGe r h has
been peer-reviewed and published in reputable 'fic' rature - n ludl by a
leading New Zealand author who e claims).
The impact of removing retail tobacco dl
11. Opponents of the proposal argued th t ttl v, of overseas, for
example, in Iceland and Saskatchew, II Ie or no oking prevalence.
displays had reduced smoking ev ce, espec' II oung people.
Supporters of the proposal, CI . the sam urce's'/concluded that removing
Comment
12. Further work to try of e possible, but it is unlikely that they
can be conclusively r< S5iVed. It seems c Mti moving tobacco displays as part of
an ongoing 0 con§ s will contribute to a reduction in
smoking preval r' e by ma ing bacco's presence at retail outlets less
. Iy thaiY' bacco products from sight will have an
immediate impact okl g prevalence.
13. It is dif 'cult Q e the '6 0 er influences such as price changes, education
initiat v . campamn the effect of removing tobacco displays. The
c ul tl act of is likely to be greatest on young people as tobacco
alised'. This' e e will feed into prevalence figures over time, by contributing
e oing decline in king uptake by young people.
anomie on retailers of removing tobacco displays

representatives pointed to overseas evidence, principally from
'stQ closures and a loss of profits. New Zealand retailer organisations
r taile 'business is from tobacco.

'65 a cern about the financial effect the policy will have on their members. They
V substantiated estimates that 36 to 60 percent of convenience store and other

rsely, several New Zealand retailers, mainly small retailers, who sell tobacco but store
o of sight, indicated that the change had had little impact on tobacco sales. Current

smokers "knew what they wanted".
6. One major retailer organisation stated that the additional costs of the proposed policy cannot
©
be estimated at this stage, for example a predicted loss in sales for smaller retailers through
()
customers purchasing elsewhere and potential stock shrinkage.
Comment
17. The claims in relation to Canada's experience are generally unconvincing. Other factors
such as the global recession and illicit trade, the latter particularly in Ontario and
Quebec provinces, appear to have been influential.
10
Early DRAFT/OUTLINE 1 September 2010
18. The financial impact indicated by retailer organisations seems to suggest implicitly that the
policy would be effective in reducing tobacco sales. There is a problem with the internal
consistency of some of the industry and retailer arguments about the of
removing retail displays and potential impacts on their financial viability. If t e ©
be ineffective at reducing tobacco consumption then it would not impact a €ZMJAcl vice
versa. V
19. The policy proposed is likely to have some impact on revenue fro sa es for
retailers and may impact on the financial viability of some retail owe r, other facto s
seem likely to more influential both on revenue and financial viability
displays per se. Retailers have adequately adapted re umber
of cigarettes sold between 1970 to now and with the en n e market of e
stores as an adjunct to service stations without a 'fi f
Options for removing products from display
stored under the counter within a set time- e a on other . s fo utting tobacco
20. The consultation document invited q' products to be
products out of sight. The tobacco r . sand t eir org I ations strongly
opposed placing tobacco products 0 nter, so ettiJ:t supporters of the proposal
generally argued for. "'0 . \ V
Comment
21. Compliance costs would be sig ., Iy reduc iler opposition ameliorated to
comply with a requir. n t tobacco not be displayed.
of with the costs to retailers of refitting their
premises t fr . and large the information provided in
d. enting the proposed option is less detailed than had
23. T e of refitl$'!'l l varied considerably. Figures of around $3,000 to
, 0 ere estimate (pJ$cing tobacco products under the counter, though one retailer
e uses a $10 curta' . .

T inistry ed an interior design company to provide independent advice on the
W
ts of a e.[ing' 0 retail premises to comply with any legislation placing tobacco
roducts "Eleven retailers, including four dairies, a convenience store, three
tl three supermarkets were visited. In the draft report the costs of
i e estimated to be between $300 and $3,300. The sample was small but it
'% 'V n objective indication of where the compliance costs for most retailers might lie.
new counters, not an easy option at some of the stores visited, would be more

and duty-free sellers who submitted argued they would face very high costs to comply
6. The other major costs mentioned were the possibility of increased time required for training

with the proposed removal on retail tobacco displays.
©
staff, managing stock and retrieving tobacco products for customers from drawers or closed
()
cabinets. Some retailers submit this could impact on the viability of the business trading in
other goods and services. Transaction efficiency and speed of service are seen as key to
successful convenience retailing.
Comment
27. This situation may not arise or even diminish if retailers who have removed displays
from public view find they can meet current purchasers' needs with a reduced product
range.
11
Early DRAFT/OUTLINE 1 September 2010
Effective date for any changes
28. Opinions varied considerably. Tobacco companies and retailers consideredd 24
months to be reasonable for modifications to existing cabinetry and oppose .
introduction of under the counter displays. Those supporting the fa e
'immediately to 12 months for modifications and 9 months to 3 years for' cco ()
products under the counter. -Y
Comment \)
29. Being flexible with the time required to get to an ultimate en 0 t 0 seems
reasonable approach.
Specialist tobacconists ()
tobacconist retailer' or whether they should be su' 0 'fferent r$tl . igar
retailers felt that they were different from r i their clientele,
who are generally not young, a wider rang a d pipe. ons rs visit these
stores with the express purpose of i 'tQj;ts co, and a e "ely to be influenced by
product displays.
31. Health submitters generally felt s ia' 0 cconis shoM ubject to the same
provisions as other tobacco re 'Ier
Comment
number if different p applied. S . Ions to prevent this and possibly an
age restriction t 't:.('flQ) ch pre i l5e considered.
33. There was a mi to the s that smoke-free officers should have their
powers e whether a retailer is specialist or not.
Duty free sto ""
3<i4. t to the same tobacco display restrictions as other
3 .' r retailer a 0 argued for special consideration on the basis of the
. . nce t eir viability and the convenience of visitors. They noted that

had made an exception or different provisions for duty-free
>

36. This' e I require further consideration, principally to find out more about how other
() ave applied their removal of retail displays in duty-free stores.

ere was little enthusiasm from any quarter for the idea that retailers should have a list of
roducts for sale which would be available to customers who asked to see it. Health

submitters suggested it would be a form of advertising and retailers were concerned about
the time involved maintaining it.
rcy
Comment
o 38. It could be an option with provisions to prevent it becoming a form of advertising.
Surveys
39. Supporters of the proposal noted the high levels of public and smoker support for the
proposed changes. Wellington Medical School reported that the proportion of smokers
supporting a complete removal of the display of cigarettes in shops (those replying
12
Early DRAFT/OUTLINE 1 September 2010
"somewhat" or "a lot", increased from 62 to 68 percent between 2006/07 to 2008/09. Recent
UMR surveys conducted in April and July 2010 have shown 76% support complete
removal of tobacco displays, an increase from 68% in May 2008.
40. A survey for a retailer's organisation found some agreement that removin to a m
display would have health benefits. The survey for the New Zealand Ass
Convenience Store survey found that 27 percent of 1 000 a
display ban would stop teenage smoking while 70 percent tho it d not. Thir
eight percent thought a ban would reduce teenage smoking, cent did not.
Other issues raised.
41 . Opponents of removing tobacco displays promoted alt a ch as i
the minimum age of purchase and government w r i r h he ail industry.
42. Several retailers and many health . u . h e licensing of
retailers to educate retailers about the legi a on, d 0 stren en ement.
43. Retailers raised concerns about rity increase in illicit
trade following any removal of tobac . The is not strong. Some
retailers who have put tobacco pr c t sight e do'r{e s to increase security. Any
link between removing tobacco isp ous. Illicit trade may be an
issue in Canada, which is usua 'te s an ex it merits monitoring in New
Zealand, it is not currently a signifl proble.
44. Retailers were stock b a ile being dispensed or during
restocking. SStJ9 s m I:i any legislation provides some flexibility,
for example, pe r ers to t ea onable steps to minimise the exposure of
tobacco produc 0 be difficult. Overseas precedents can be
examined e II.





13
Retail displays ball park figures - annual Draft for discussion
Tobacco excise + GST: $1.3 billion
This is 70% of total tobacco turnover: $1.9 billion /(
Divided by say 10,000 outlets: $190,000 average turnover !?/> A
(dominated by approx 350 supermarkets and say 500 petrol (( !\
Average retail margin@8-9%:$16,000peroullet /(" 0
(Median might be more like $10,000 or less) .
Impact on sales from retail display ban? ()
5% of $1.9 billion is $95 million (market
5% of $190,000 is $9,500 less
5% of $16,000 lost margin is -
Remember the main target is new t oung people and avoiding
removal of displays, at I in e short ter
So a more rea)9l!> of impacts on tobacco sales would
probably be less than this:
0.5% is wide)
is $950 per outlet
is $80 peroullet
Q this in economy-wide terms?
tt\ to note the industry submissions are somewhat inconsistent in arguing:

removing retail displays would be ineffective at reducing consumption (because
they say the only purpose of the displays is to compete for brand market share)
!?; 2) removing retail displays would seriously impact on retailers' turnover and
© businesses through reduced sales
Outline Regulatory Impact Statement: Better Retail Controls On
Tobacco
®
This document was developed following a meeting between Health and Tsy/RIAT officials
(Everett [s9(2)(g)(i)] Pickens 6 September) /(
It outlines possible contents of the RIS picking up points from that a view
• establishing the significance of the proposal (in RIAT terms) and 0
• progressing the RIS (which is under time pressure, and is 0 e
needed to produce a quality Cab paper and proposal for \?
Section 1:
This section needs to do two jobs
It needs to set the wider context of smoking anec policy issue
addressed by a number of initiatives of whic t sal is ju part - this is
important for the benefit side of the rationale, I fj sts con ution that the proposal
can make to support the general directio a cliveness co control policies
It also needs to set out the rrow is t heart of the proposal, ie
moving from the current regime wh es r ts retai . tobacco to certain limits, to a
regime where retail displays are bein logether. It is suggested this
narrow scope and the al/ size of (6Q It ce costs involved means this is not a
"significant" regulatory pro lilA T terms, ugh tobacco control in general and
addressing the harm is a ue
Section 1A: control policy
Point 1 : es alar $ Obn) health, social and economic burden on New
Zealand.
The u I able an:$r Iy negative consequences on human health and mortality
from acco are we t blished. Half of all long-term smokers die of a smoking
relate losin=n avera e of 15 years of life. Tobacco smoking is the leading

cause e in New Zealand. An estimated 5000 New Zealanders die each

to dir:el or exposure to second-hand smoke, and around 1500 of these
e t s age (35-69 years).

90 per cent of lung cancers, which are the leading cause of cancer death in
V New Z an is linked to many other types of cancer. It is a major cause of heart attacks,
0 e ardiovascular diseases, blindness, infertility, and respiratory diseases such as
i
e, bronchitis, and asthma.
r116kin is also a major contributor to health inequalities in New Zealand. Maori women are

",/be as likE?ly to be current smokers as women in the total population. Maori men and Pacific
me are 50 per cent more likely to be current smokers than men in the total population.
Point 2: Tobacco is not regulated commensurately with the costs and harm it imposes.
Nicotine is a highly addictive substance, but unlike most similarly addictive dangerous
drugs, smoking is a legal and socially entrenched behaviour. This is in large part due to
decades of concerted commercial marketing by tobacco companies. '
Current tobacco regulation and control measures are modest when compared with the control of
other harmful products in New Zealand, and when considered alongside the very high level of
harm and the high and disproportionate burden suffered by certain groups, particularly Maori.
If it were not already in widespread use it would be captured by hazardous substances and
misuse of drugs regimes
Early DRAFT 6 September 2010
Point 3: Existing policy settings have increasingly taken a comprehensive approach to
tackling tobacco smoking, particularly under the Smoke-free Environments Act (1990).
....
Raising the price of tobacco through excise tax has been an important policy tool. Most
recently in April this year the e, xcise was increased by 10% on and
25.4% on loose 'roll your own' tobacco. The excise will increase by at Ie er 1
(depending on any additional inflation indexing) on all tobacco product I ' Y 2011 C
15% on 1 October 2010) comprising about 70% of the retail c et es, thes 'sf9
and again in January 2012. With excise tax and GST (which is als ., 0 to
increases have a significant impact on price. Each 10% rise rice is unde s 00
to lead to a 5% decline in demand, including prompting 2% of currer,Vsmoker quit.
Providing better help for smokers to quit is one of the six pn i r ts for
the health sector. This health target is driving clini;;,i s atE'c and
address the smoking status of hospital patients. T h is no ein xtended into
the primary care sector, and is supported by gover - nded ssation
services such as Quitline and subsidised nicg0la nd other
pharmaceuticalsCabinet approved ing for t co trol initiatives in the
2007 and 2008 budgets. Much of this sorting i ease cess to cessation
support for smokers to increase quittin. V
Government also funds media cam ai Stith as th I Sponsorship Council's
Smoking Not Our Future campaig t d at pr v . oung people from taking up
of concerted commercial g activity 0 companies.
Point 4: These e beg' ,but only partly so.
Progress is being ma . r smoking rates are now the lowest since
smoking repo i h 6 census. Twenty percent of the adult
population are n nt smo r und 650,000 people. Youth smoking rates are also
declining ea ar.
Recent w d surv s at most smokers want to quit and 44% of smokers have
quit a e okers.
ese cumulatively attempt to 'denormalise' tobacco and smoking

are not seen as a legitimate part of life in New Zealand
'al declining.
oint 6: displays run counter to this by presenting tobacco products as 'normal'
'V g ds and undermining the statutory ban on other forms of tobacco advertising.
in and relapse among those who are trying to quit.

al triggers, particularly product exposure, can prompt initiation, continuation of

. lays are seen to contradict the otherwise clear message that children and young people
receive about the dangers of smoking and act as a prompt for impulse purchases by recent
O
quitters and smokers attempting to quit.
'\:::::j) Sequential surveys over the last few years have shown majority public support for removing
displays, although it is opposed by tobacco manufacturers and groups representing some
tobacco retailers who cite a lack of compelling evidence for effectiveness and the potential
for unintended consequences.
Section 1 B: Specific issues with tobacco advertising & retail displays
The Smoke-free Environments Act 1990 ('the Act') introduced a number of provisions that
banned the promotion and advertising of tobacco products. From 1990, tobacco products
2
Early DRAFT 6 September 2010
were prohibited from being advertised in all media. Retailers were also banned from
advertising the sale of tobacco products (though this ban did not come into force until
1995). Tobacco products were able to be displayed in retail stores but only if they were not
visible from outside the retail premises. /)
The Act was amended in 2003. It now contains a number of provisions
limit the promotion and advertising of tobacco products. Part Two
restrictions on how tobacco products may be displayed in retail pre' , c as d 'ries,
supermarkets and service stations. /( '" V
Sections 23A and 238 of the Act outline a number of restrictions co pro ts
can be displayed. These include the following restrictions'
• At each point of sale, the tobacco display is limited ackets
and 40 cartons. (\
• display may include a of ariant (no block
• Tobacco products may not be metre of chi n's products' such as
confectionery and ice cream, soft __ J dUcts eted primarily for
• products may not be " suriace, whether at a
point of sale or not. v
• If tobacco products areg p d within a point of sale, a sign stating
'SMOKING t d' the customer at the point of sale (the
Ministry supplies f n .
As a sUPPleme5h . nts in the Act, the Ministry published the
'Tobacco Displ . Ii es', W I updated and re-released in December 2006. The
purpose of 0 Disgla UI ines' is to help large retail organisations and
toba?c? ma ers e understand the details of the tobacco display
restnc J s.
The a ms with existin bacco displays are :
and are still regularly exposed (in around 10,000 retail outlets) to a

tha commodity' but a highly addictive and harmful SUbstance

• me an environment consistent with all other efforts to support smokers who
Q or who have successfully quit
.!' ys u dermine health warnings about smoking, which since February 2008 have

raphic pictorial warnings showing the health consequences of smoking
ob co displays are an exception to what is otherwise a comprehensive ban on tobacco

dvertising in New Zealand. As the main residual form of advertising open to them, tobacco
companies invest considerable resources into designing and furnishing the displays
©
There is increasing evidence about the role that retail tobacco displays play in 'normalising'
tobacco, increasing the likelihood that children and young people will start smoking, and
prompting impulse purchases among ex-smokers and smokers trying to quit. There is also
increasing public concern about retail tobacco displays, which are now an anomaly in New
Zealand's otherwise strong tobacco control programme.
A number of international jurisdictions have implemented or are considering implementing bans
on tobacco displays in retail outlets and there is emerging evidence supporting the effectiveness
of such bans. . .
3
Early DRAFT 6 September 2010
Section 2: Objectives
The objective is to counter the impact of retail displays of tobacco which:
• Increase the susceptibility of young people to start smoking A
• Trigger relapses among smokers attempting to quit
• Provide a means for tobacco companies to effectively advertise ,despite
international agreements and New Zealand law to ban
Regulatory Impact Analysis
A. The proposed option is to extend the currewt G tr , promotion of
tobacco products by prohibiting visual disp I . .
The other feasible options considered ""V
B. Do nothing
C. No regulatory change, but itional fi into countering
commercial marketing of t anti-smoking advertising.
D. A combination of minor ;=ry change I g additional fiscal resources to
improve compliance the controls
Analysis of ©

er on enforcement) v BENEFITS (uptake level changes -
ie nu n't take up quitters not relapsing)

- needing to quit (and not relapse) v Value of a life / QAL Y (swine flu

sis Discussed by O'Dea Tobacco Taxation. ... Appendix Cpp21-36.
o . Ion cost - y lives saved?
ban in NZ and overseas.

of COSTS (turnover, profitability,) only option A could be expected to have a
o impact. If this reached as much as a 0.5% reduction in sales compared to BAU these costs

Idbe:
O. Yo of $1.9 billion is $9.5 million (market wide)
rCY
0.5% of $190,000 is $950 turrnover per outlet .
o 0.5% of $16,000 lost margin is $80 per outlet
At least some of this would be compensated by turnover in other convenience retail products
purchased from the disposable income saved through not buying cigarettes. (For example
critics of the tobacco excise rises were concerned that low income families would substitute
from bread and milk to tobacco - presumably this works in reverse)
4
Analysis of costs, benefits and risks
Option
A. Prohibit
retail tobacco
displays
B. Do nothing
C.
D. Improved
enforcement
and
compliance
Costs
One-off costs for
retailers to modify
shopfitting <$50million
over 3-5 years - say
$12m per annum
Reduced cost-
effectiveness of exi
policies such as tob
excise increases and

in e i
camp ,s s
Smok 0 ur Fut

>$5 million per annum to
assess, support & if
needed to fully enforce
compliance at 10,000
outlets
Benefits
This is the only option
that comprehensively
addresses the problems
caused by retail tobacco
displays, because it
removes them.
Minimal
This would not avoid the
impact of the retail
displays but would
provide a countervailing
anti-smoking message.
(Retails displays
maximise their impact
by being eye height and
at point of sale - this
positioning is not
available to other
advertisers)
Minimal, as breaches to
current display
restrictions tend to be
minor infringements
Risks
reaction venience
Likely adverse
I ps
(who . e Ing links
i comp
V
Continued lobbying by
health groups etc. who
advocate removing retail
displays
Reputational risk to NZ
in light of FCTC
expectations & removal
of displays by
comparable countries
such as Australia,
United Kingdom and
Canada
Public exposure to
widespread Government
advertising might
generate criticism
Increased bureaucracy
Based on pricing rates per m
2
for static billboards in shopping centres
http://www.oab.co.nz/i ndex .php?page=shopping-centres-b
Early DRAFT 6 September 2010
~ ~ © ~
§ : } ) ~ ~ ~ ©
~ ~ ~
~ ~ ~
~ ~ ~ ~
~ ~ ©
© ~
6 i
From:
[Withheld under s9(2)(g)(i)J
Sent: Friday, 10 September 20105:33 p.m.
To:
[Withheld under s9'2)(a)J z'
Chris Bunny Cc:
Subject:
RE: Tobacco Retail Displays Cabinet Paper Draft for consultati!?/> A
Hi Matthew, ©
Apologies in advance if any of my points are unclear, as I have prepared this
deadline. My feedback is as follows: V '\.) .
fill In 2008, the current Government decided that, at that stage, to support a
ban on retail displays - if we accept that this decision II' , for this
paper is the research/evidence that has emerged since t . u tion thr stu' in your paper all of
which post date 2008, however they seem to be primaril e surve
Y
$ I opinion rather than
likely effectiveness. Has there been any research or 0 eted si 2 n the effectiveness of
tobacco display bans on tobacco ra e /quittin ? Wi out providing such
research I think the statement in paragraph 10 t to a 0 diSPI!tre" better understood to be a
powerful tool that encourages and e n 1/ may be h fend. What evidence is this
statement based on?
III> Also, what is the balance of evidence es he pape a r tly mentions a few studies which all
appear to support a ban. Given the Gove t's 20 d I' n I assume there is also literature/studies
suggesting there is no or . act - are yo t in de reference to these studies to give a sense
of the evidence on i cur ently hard to t se e of whether these three studies are reflective
of the literature as a wh . @
III> The paper mentions a n r d to remove displays themselves - how many retailers?
Is it a large
III> The paper mentio t e os f smoking are estimated $1.9 billion. Is this figure gross or net? I
ask because 1ere is t uggest smoking is cost positive to the health system due to
avoided sts e. Obviously this doesn't mean we shouldn't be attempting to
reduc s in tes, but it d s that the 'reducing smoking will save the health sector/Crown
mone' (U nt doesn't hold.
III> ragrap - you e tion at early signs suggest tobacco sales have fallen as a result of the excise

hat I this based on? I query because I understand some statistics have shown a
r du 'on in the cigarettes available for sale, but that this is just a result of a rush to push product
r ugh oid the excise.

mention that as restrictions of tobacco advertising have tightened, this has resulted in
an iner sed liance on tobacco displays. Have you done any work on what the tobacco companies may
absence of tobacco displays - i.e. is there a risk that we will see an increase in tobacco

via you tube advertising or product placements in movies?

e the compliance cost estimates taken into account the fact that tobacco companies are likely to stop
a I ting retailers with their displays/shop fits outs? You note that tobacco companies have absorbed the
cost in the past, but I assume their incentive to do so will cease when they no longer benefit from
©
advertising in retail outlets.
III> In paragraph 48 you mention that the evidence from Iceland suggests it has been effective - however this is
in direct conflict with a statement in the 2008 paper that said "evidence from Iceland is unable to link
decreased smoking rates with the ban on tobacco displays, and recent bans in Thailand and Canada have not
yet shown positive results in smoking rates". The paper also notes that bans in other jurisdictions are too
recent to see an effect, but I assume that you would hope to see an impact within 10 years, which is the
period of time since Ice.land implemented their ban ..
<11/ As I've raised previously, I think the argument made in paragraph 69 that retailers may be able to replace
displays with more profitable items is inconsistent with the actions of retailers currently (Le. if it was
profitable to do so, why haven't they already removed displays in Significant numbers?)
1
* You refer to a proposal to increase the powers of search and discovery in paragraph 88 - what powers are
you suggesting?
o The paper emphasises the importance of how the proposal is implemented- yet the paper asks Ministers to
make a decision on displays without any information on this. Perhaps a better alternative would be to ask
for an in-principle decision, to be confirmed by Ministers informed by an implementation plan.
o I see the section on tobacco sponsorship is incomplete (para 95), however, if you are going down the
of completely banning tobacco-sponsored competitions in international events then may have some
concerns or at least want to know the likely impact on the viability of sporting eve s ©-
o The financial implications section is currently blank - however this is yu u s ibe the
economic cost to retailers and industry of this proposal. The financial implic' ti is intende
encompass more than just the fiscal implications for the Crown. /( '"
In terms of "major issues" - my primary concerns at this point are: V \f -
1& The lack of information in the paper regarding the cost of the al. Currently t . I a reference
to the compliance cost per retailer. However there is no discu fQf{ . e . ely
compliance cost overall or the revenue implications. (\ .
1& The lack of evidence to suggest the gain in terms of sma 'I s (I.e. ctiveness) will
outweigh the compliance costs. =
o The timing of this paper given the Maori affairs se ittee is :t repo back, and the analysis on
plain packaging yet to be done. Ideally these is SttiMfft all be onsider 'n conjunction.
obviously this will depend on how the final ve s· n s a e up an n e the recommendations.
As always, I'm happy to talk my
Kind regards, ((/> 'V
[WIthheld under s9(2)(g)(iJ] 0
€ information in
addressee:
il. pit","" in m 'diately C '?t. ;.e this "mail a 'J . tify Treasury by rEturn email ()r telephone (64 4 472 273:3);
b, """, dL '" "w, ", """'"'''''''''''' ",,' m" h' "",,w''',
a,m, Alison Handley; WARD, Shannon (LGL/TLU); Alison Cossar;
SiakimQfu.; , i Moke; Susan Wauchop; MARSHALL Kirsty
Cc: s
Subj Retail Displays Cabinet Paper Draft for Consultation

Qe as promised here is the the draft Cabinet paper for departmental consultation.
It is just a draft, and still has one or two gaps and some obvious failings like being too long.
However we are still under instruction to get this to SOC on 22 September (possibly as a late paper, or to CBC on 27 September)
So it looks like it will go through OSOC in some form next Tues 14th
So could we please have some comment by close of play on Friday - ie. as much feedback as possible by the weekend, including
2
any and all major issues.
There will be another version early next week for fine tuning.
Many thanks in advance for your input, and your forbearance with the compressed timetable
Please don't hesitate to call at any time to discuss any issues at all
cheers
Matthew
Matthew Everett
Principal Policy Analyst
Sector Capability and Implementation Directorate
Ministry of Health
[Withheld under 89(2)(a)J

attachments may contain infonnation that i - NFIDE u ject to
legal privilege.
If you are not the intended read, use, . a e,
distribute or copy this message
< ****<*
.•




3
DRAFT 9 September 2010
In Confidence
OFFICE OF THE ASSOCIATE MINISTER OF HEALTH (Hon Tariana Turia)
BETTER CONTROLS ON TOBACCO RETAILING '"
Proposal v \f .
1. This paper seeks a decision to remove tobacco pro om retail di I n
packaging of tobacco products in 2012. ()
Executive Summary
2. Further measures are needed to ificant H r used by continued high
levels of smoking in New Zealand. I es d to concerted
Government policies and re stil too not falling fast enough.
3. Smoking kills around 5000 a a S>the leading cause of
premature death, killing more han all a entable causes of death
combined. The dd' ional from smoking related disease is
estimated at $1.9 billi . A essing sm . . ritical to reduce the future burden on
the health care
4. Recent measures e' . Iy raising tobacco prices through increases in
tobacco 'nto la' th-- roviding better help for smokers to quit is one
of the Gover 'six priQtit.y' a ets for the health sector. This health target is driving
clinicia nd address the smoking status of hospital patients.
pp now =fh ded into the primary care sector, and is supported by
go '57 -funded sm' ssation services such as Quitline and subsidised
n 011 e lacement ther and other pharmaceuticals.

. pinion shifted against smoking and social attitudes continue to

n. S that a solid majority of smokers are now aware of the damage it
i causing t Ith, regret that they became addicted and express support for

oking measures.
() 6. the current controls on the commercial marketing and retail
obacco look increasingly inadequate and are undermining the effectiveness of

. . tives such as tobacco excise increases and the health target.
. overnment-funded media campaigns, such as the Health Sponsorship Council's

moking Not Our Future campaign targeted at preventing young people from taking up
smoking, while effective, are pitching against decades of concerted commercial
©
marketing activity by tobacco companies. The impact and cost-effectiveness of anti-
smoking programmes can be enhanced by taking other measures to counter the
marketing efforts of the tobacco industry.
8. New Zealand has ratified the World Health Organisation's Framework Convention on
Tobacco Control. This requires participating countries to prohibit all forms of tobacco
advertising, including retail displays. Comparable countries such as Australia, the
United Kingdom, Canada, Ireland, Iceland and Norway have all taken steps to remove
retail tobacco displays. Youth smoking rates have declined in Canada and Iceland.
DRAFT 9 September 201'0'
9. Current regulation of tobacco retailing under the Smoke-free Environments Act 1990
restricts retail displays to some extent, but still enables tobacco companies to display
their product prominently in some 10,000 dairies, supermarkets and petrol stations.
10. The current law recognises tobacco companies' assertion of a right . lay tobacco A
products in order to compete with each other like suppliers of other co I'
However, this everyday presence of tobacco products in the nders,
particularly young people who are susceptible to experiment wit nd addict
smokers who are trying to quit, is now better understood rf tool
encourages and promote smoking. Allowing retail tobacco ys dermines t JV,
Government's policies and significant expenditure aimed at red g expo re an
addiction to what is clearly a highly dangerous and! product
11. This paper proposes amending the Act§F to acco
products being displayed in everyday retail envi e and tak th p ortunity to
tighten and improve related controls on tobacc e' ing ply. Tobacco
products will still be able to be legally 0 del'.
12. Consultation on the proposal to lays ha undertaken. As was
evident from previous consultation i5! ,Parli tary 'etition in 2008, and
submissions to the current @I mi t uiry into the tobacco
industry in Aotearoa and the cOQ.seQ,tls s of to for Maori, there is strong
public and health group propos I upermarkets and a number of
retailers have moved to reduce or-r I mselves, and some of these
retailers submitted in the prop h tobacco industry and most retail
interests, is ions r g airies and small convenience stores,
are in general oPR a oncern e osts the changes would impose on these
businesses. V
13. Minimising ce co been an important consideration in developing the
proposal in' fhi2r er. It d to legislate for the removal of retail displays, and
then pro a ge of tlons and timeframes for compliance through more
d r a Ions, y education and guidance. This would allow officials to
w r h ail business' 9rests on the detail of how the changes should be
im ed, In their submissions. Costs are very sensitive to this detail.
also n at Australia has announced its intention to introduce plain

, products in 2012, and proposes exploring the possibility that New
JMJ duce similar measures in due course in alignment with Australia.

I remove displays addresses the impact of Cigarette and tobacco
V pa In I ass form in the retail environment. Plain packaging would address the
obacco branding and marketing in other everyday settings.

costs and harm of smokin
15. The direct, unavoidable and seriously negative consequences on human health and
mortality from smoking tobacco are well established. Half of all long-term smokers die
of a smoking related illness losing an average of 15 years of life. Tobacco smoking is
the leading preventable cause of death in New Zealand. An estimated 5000 New
Zealanders die each year due to direct smoking or exposure to second-hand smoke,
and around 1500 of these deaths occur in middle-age (35-69 years).
16. Smoking causes about 85% per cent of lung cancers, which are the leading cause of
cancer death in New Zealand, and is linked to many other types of cancer. It is a major
cause of heart attacks, stroke, other cardiovascular diseases, blindness, infertility, and
respiratory diseases such as emphysema, bronchitis, and asthma.
2
DRAFT 9 September 2010
17. Smoking is also a major contributor to health inequalities in New Zealand. Maori women
are twice as likely to be current smokers as women in the total population. Maori men
and Pacific men are 50 per cent more likely to be current smokers than men in the total
population.
18. Smoking causes an estimated 62,800 life years lost to . ©J
deaths, and 19,000 quality adjusted life-years lost to tobacco-relat'II . e ann I
cost of smoking to the health system is difficult to calculate prec' I, I currently
estimated by the Ministry of Health to be at least $1.9 e t al
Budget of around $12 billion. \ V
Current tobacco control initiatives
19. New Zealand has a comprehensive tobacco that in e e core
range of measures recommended by the
• broad tobacco control and smoke-free env s
• increasing the price of tobacco -«.
• health promotion and quit 'n uptake, and
• smoking cessation ntl it
20. The Smoke-free Environment ct and I n 2007 aim to reduce the
disease and death caused by to fjJi. Some elements of these pieces of
legislation include: $
• protecting s
• prohibiting th co to people under 18
• advert'· , r otion and sponsorship, and:
• requ' r' s to be displayed on tobacco products.
21. The ov t has . roviding better help for smokers to quit" as one of the
si I it ealth targe (11)e health sector. The Ministry of Health and District Health
B Bs) are coordl ting activities to ensure that the target is met. DHBs are

to the tobacco health target and all have a regional tobacco

I plan
April on tobacco products was substantially increased to lift the tax

on roll to an equivalent level to cigarettes, and then raise the excise
Q products by 10%. Two further 10% rises will come into effect in January
20 an anuary 2012. The early signs are that tobacco sales have fallen in line with
. ns and demand for quit services and nicotine replacement have definitely
following these excise increases.

rnational obli ations
23. The WHO's Framework Convention on Tobacco Control (FCTC) was the first
©
international public health treaty. It was adopted by the World Health Assembly in May
2003 and entered into force in February 2005. Over 160 countries plus the European
Union are Parties to the Treaty. New Zealand has ratified.
24. The FCTC's objective is to establish a global agenda for tobacco regulation, with the
purpose of reducing initiation of tobacco use and encouraging cessation. Tobacco
advertising and the packaging and labeling of tobacco products are key concerns.
25. Article 13 of the FCTC requires Parties to comprehensively ban all forms of tobacco
advertising, promotion and sponsorship. Retail displays are covered by the definition of
advertising and the implementation guidelines recently elaborated by the parties state
3
DRAFT 9 September 2010
clearly that a ban on tobacco displays should form part of parties' comprehensive bans.
While the FCTC does not impose binding treaty obligations, there are strong
expectations that parties will abide by the articles and guidelines they have negotiated.
The Ministry of Health is required to report regularly to the World rganization on
New Zealand's compliance with the Treaty, its obligations and its guid
Regulation of tobacco retail displays (? ('\
26. Current legislation (Smoke-free Environments Act) bans ¢f'1 'ng,
retail displays potentially come within the general definition ve )sing in the P\v
specific provisions allow for retail displays that meet anum E0Q'kestrictions. Th
current requirements were introduced by amendments to the Actin I
greater restrictions on the number and size of retail
27. These include the following restrictions: 'J
• At each point of sale, the tobacco display is li'f
• Each tobacco display may include a XI two pa the same variant (no
packets and 40 cartons. \)
block displays).
• Tobacco products may not la e i hin 0 children's products' such as
confectionery and ice cream ft r' k and pr t t are marketed primarily for
children.
• Tobacco products e r top or similar surface, whether at a
point of sale or not.
• If tobacco layed etres of a point of sale, a sign stating
'SMOKING KILL:: bel d's view of the customer at the point of sale
(the II ree si ..
cigarett carton . of sale (Le. per till or checkout, retailers with more
28. Although he t Its 0 se displays to a maximum of 100 packets of
tha ne OO,H t of sale t shelving units side by side to create a visually larger
d' s etimes as a 'power wall'. These prominent tobacco displays are
a r r larger convenience stores and petrol stations, where they sit
alon . e displ of ack foods, confectionary and other impulse purchase items.
s cons ,,'Q f ro osal to remove tobacco retail dis la s

. Govern t s been considering options for tightening the restrictions on retail
« e time. Proposals to prevent retailers from openly displaying tobacco
we co ul ed on in 2007, with submissions closing early in 2008. Retail displays were
ubject of two petitions to Parliament's Health Committee in 2008.

2008 Cabinet agreed two preferred options for more detailed work to report

back in February 2009. In February 2009 the new Government dealt with the matter
nd issued its response to the Health Committee report. At the time the Government
©
did not consider there was sufficient evidence that a ban on visible tobacco displays in
retail outlets would be the most effective strategy to reduce smoking rates and tobacco
consumption. The proposals were put on hold, pending monitoring of international
experience with display bans and emerging evidence on their effectiveness.
31. In September 2009 the Maori Affairs Select Committee launched an inquiry into the
tobacco industry in Aotearoa and the consequences of tobacco use for Maori, with
public submissions closing in late January 2010. Calls for removal of retail displays is a
feature of many submissions: . .
4
DRAFT 9 September 2010
32. Late in 2009 I (Mrs Turia) raised the matter again in consultation with other Ministers,
and in March 2010 Cabinet agreed a further round of consultation seeking more detailed
views on options for regulating the display of tobacco products in retail outlets
33. This paper responds to Cabinets invitation for a "report back to SOC outcome of
the consultation process and with proposals on whether or not to pro 't a ban
the display of tobacco products in retail outlets." [CAB Min (1 0)
Comment /'( V
Support for further Government action to address smoking v \f .
34. Over the last 25 years successive Governme. nts have en a number to
bring down smoking rates. While these have been f@i in significa
smoke on a daily basis. Amongst Maori the ra' . hese nu er re a significant
smoking prevalence, about 20% of adult New e - ome - still
improvement on the peak of the smoking eRi' .
35. Tobacco is not regulated commensuratel £iti1't e costs larriNt imposes. Current
tobacco regulation and control stringent wh ompared with the
control of other harmful products in 9vh I d, alongside the
very high level of harm and a I ropo' na Clen suffered by certain
groups, particularly Maori.
36. Nicotine is a highly addictive sub e, bu . sf similarly addictive and
part due to decades of c r ed "c d commercial marketing by tobacco
companies.
37. Survey Q est attitudes towards smoking continue to
harden, inclu' =mo we as the general public. Surveys conducted by
the Wellingto . e i al rt of the International Tobacco Control Survey has
shown ort 0 tobacco control measures among the public
q",ong is includes support for removing point of sale
38. of ealth's comprehensive survey data shows that:
ou f fiv r. nt smokers had tried to quit smoking in the past five years, a third
') t for at least 24 hours in the past 12 months and a fifth had
succ fu UI for a week before starting to smoke again.
am.

ximately one-third of current and previous smokers had quit for more than 24 hours
; hlhe past 12 months. There were no significant differences by gender or

neighbourhood deprivation.
• Three-quarters of smokers who had tried to quit in the past 12 months said one of the
rcy
reasons was for their own health, while a third had tried to quit because of the cost of
o smoking. There were no significant differences by gender or ethnic group.
The case for tighter controls on retail of tobacco products
39. There are in the order of 10,000 retail outlets selling tobacco products in New Zealand.
These include supermarkets, petrol stations, dairies and other convenience stores, and
also bars and restaurants. The number of tobacco outlets has continued to grow,
1 World Health Organisation terminology
5
DRAFT 9 September 2010
particularly with the entry of petrol stations into the market, even as smoking rates have
fallen and total cigarette consumption has dropped.
40. Point of sale advertising, such as retail displays of tobacco, is a promotional tool used to
generate awareness of products, communicate information, and
encourage repurchase. Tobacco products, primarily cigarettes, are u u 'Vdi
large, wall-mounted, shelving units.
41. Although the Smoke-free Environments Act limits the size of t . s to a
maximum of 100 packets of cigarettes and 40 cartons, per i t of (Le. per .il\9t:
units side by side to create a visually larger display, so etimes r erred to a 'po er
wall'. ()
42. After the Smoke-free Environments Act 0 e eral cco
advertising and sponsorship in 1990, the abilit t . a od ts that are for
sale inside a retailer's premises and the dmig (ti ae 0 pack itself
became the main vehicles for promoting .pt duct e t cco industry's
response was to pay greater displays became more elaborate
and prominent and displayed a wid 0 The level of
investment in these displays e . Icant, ug . the industry finds them an
effective advertising method.
43. Tobacco companies maintain th purpo e . aisplays is not to recruit new
maintain that the rem 0 tail display ave negative economic
consequences r . g nience stores and other outlets. These
arguments are c 'c and p ar t be self serving. What evidence there is on
brand-switchi 19j>e '. r sug t okers are highly brand loyal and know
exactly whic tt s or t I:j c product they intend to purchase.
to i vulnerable consumers such as children, young
pe ,e mokers an rs trying to quit.
45. Th t restri tions on retail displays are only partly effective. They are

to und The accompanying compliance guidelines make up a 30 page

ment. ,tWrers rely on shop furniture supplied by the main tobacco
u port from tobacco industry sales representatives to comply.

Enforce t d compliance are difficult.
() 46. Ae' SFEA to better deal with retail displays also provides an opportunity to
number of other enforcement and compliance difficulties with the existing

4 . celand was the first country to ban retail displays of tobacco products, banning all

rnauonalex erience
©
displays of tobacco in 2001. Thailand has prohibited the display of tobacco products
O
since September 2005. Norway introduced a ban on visible display of tobacco products
at points of sale in Norway with effect from 1 January 2010.
48. Following the lead of Saskatchewan in 2002 prohibiting any advertising, promotion or
display of tobacco products in places where people under 18 years of age might see
them, all provinces and territories in Canada have now enacted their own legislation
requiring tobacco products to be out of public view.
49. The Australian Capital Territory, New South Wales, Tasmania, Victoria and Western
Australia have now all passed legislation requiring tobacco products to be out of sight at
6
DRAFT 9 September 2010
general retail outlets. They have varying requirements for specialist tobacconists. The
policies are either already in effect, (ACT, NSW, Tasmania, Western Australia) or soon
to come into Northern Territory, Queensland and South Australia h.ave all
commencement dates before January 2012.
announced their intention of banning point of sale advertising with d
50. In Britain, both Houses of Parliament have passed legislation .. obacc« (\
displays at the point of sale in England, Wales and Northern -"0
implementation scheduled to commence from October 2011. nation on
regulations setting out the details has been undertaken in e
new Government on advancing this is yet to be clarified.
passed legislation in 2010, which makes it an isplay ts or
smoking related products. Consultation on propos 'ons cau 0 July
2010.
. 51. In order to sell tobacco in Ireland a person mus gistere seller, an
approach adopted in several other L that registered
tobacco sellers must keep tobacco u d out of' 'n a closed container or
dispenser that is not visible or acces ib t n the retailer'. The
legislation came into force from 1 9 V
Evidence of effectiveness and u 'c
52. Since the widespread removal 0 cco a e I·n. d sponsorship, increasing
evidence has role tha j;etj3. to cco displays continue to play in
'normalising'tobacco, se ch indicate.th.e sence of retail displays increases the
likelihood that a ng tart smoking, and prompts impulse
53. For example' 2009 n' Paynter, ASH, NZ, and Richard Edwards,
purchases amon - rSi!n ok r trying to quit.
University lished an article in the international journal Nicotine
& ' g the evidence from 12 frequently referenced peer-
revie eSWfHes, the that, given the addictiveness of tobacco, the
se lOt e health h dsvposed by smoking, the evidence that tobacco promotion
e s children to st smoking, and the consistency of the evidence that point of

r otion children's smoking, ample justification exists for banning point
4- asse s t of pOint of sale cigarette displays on unplanned purchases,

of smoked tobacco products.
Au as they left retail outlets after purchasing tobacco. Unplanned
Owen r al. (BMJ Journal of Tobacco Control 24 March 2009) interviewed 206
'V ig ette urchases were made by 22 percent of participants. Forty-nine percent
a ban on point of sale tobacco displays versus 12 percent who opposed.
«j ty-eight percent agreed that such a ban would make it easier to quit.

results align with Ministry of Health Tobacco Use Surveys which found two-fifths
of recent quit attempters agreed that cigarette and tobacco displays in dairies, petrol
©
stations, supermarkets and convenience stores make it more difficult for smokers to quit
() smoking or stay quit.
56. Surveys conducted by UMR for the Cancer Society have shown strong and steadily
increasing public support found for the complete removal of tobacco displays, rising
from 68% in 2008 to 76% in 2010. The level of support is almost as high among
smokers and also growing. A survey undertaken by the Wellington Medical School
found smokers' support for complete bans on displays of cigarettes inside shops had
increased from 62% to 68%between 2006/07 to 2008/09. The smokers most likely to
support a ban were suffering financial stress, were planning to quit in the next month or had
quit recently.
7
DRAFT 9 September 2010
57. The New Zealand Association of Convenience Stores has reported a survey it
conducted found 38% thought a tobacco display ban would reduce teenage smoking
while 57% thought it would not.
58. It is too early to comprehensively assess the removal of retail displays
countries, and the impact on quit rates and youth smoking uptake (\
separated from other supporting measures to address smoking 0
59. However, there is emerging evidence from Iceland and Can a 0 e I act
display bans have had on smoking prevalence among you opl . A Western
Australian Parliamentary Committee accepted that in Saska ch n the d line in
prevalence rates in 15 to 19-year-olds has accelerate, lIing by almos 0 uarter
since the ban was implemented in 2002. In additio , . d that the i f oint of
sale b. ans also appears to be positive in e e valence
rate among 15-year-olds has increased since
Report back on consultation .
60. In response to a consultation letter P/I an retail displays in New
Zealand 1 002 responses were rece' . n submi I were thoughtful and
groups on both sides of the d teo .
61. The responses to this second ro QE . e largely similar to the
information on the per e trengths an a esses of the more detailed proposals
conSUltation process en in 20071 .)it e was some new and additional
set out this time, her i the costs and benefits of specific
elements and 0p(lQl
62. Views were Ith se or, NGOs, some retailers and public submitters
in fa f e displays and the tobacco industry and most retailer
.
63. 0 products from display focussed on:
· nce costs up to $12,000 per retailer were provided

commissioned an independent assessment which indicates that in

ctice would be much lower, in a range from $330-$3,300.)
• were assertions that tobacco makes up a surprisingly high
convenience retail turnover - especially convenience stores &
'V f large scale closures of retailers, robberies and security problems resulting from

'SS oposed change (generally not substantiated with supporting evidence).
inconsistency with the general Government approach on business regulatory policy
strong assertions that impacts on smoking and health benefits from removing displays

would be negligible (including challenges to studies and the evidence used by
() supporters)
• if the retail display proposal is progressed, a strong preference for flexible requirements
allowing existing displays to be modified rather than prescriptively forcing retailers to put
all tobacco "under the counter" and
• support for alternative measures such as tighter enforcement of existing retail instructions
and in particular the ban on sales to people under 18.
64. Supporters of removing retail displays focussed on:
8
DRAFT 9 September 2010
• New research adding to the evidence that tobacco displays encourage youth smoking
uptake and undermine quit attempts
• The need to set the costs to retailers, which are likely to be exaggerated, against the cost /(
to the country of tobacco harm
• The strong public support for the proposal, including among recenvP 1\
quit or intend quitting 0
• The need to send a consistent message that tobacco is r tluct, bU?
dangerous and different from other consumer goods
• International precedents and successes which support emoval 0 san
• The experience of retailers who have removed dis a@, say it did n uch or
harm sales and had other business benefits, a ;:lie, i space to
display for higher margin products. V V
65. A more detailed report on the outcomes as Appendix.
Key conclusions _ V
66. In 2009 the Government's decide isplay proposals pending
new evidence from the internatio hi ould be the most effective
strategy to reduce smoking ra an obacco t n. Categorical evidence of
the impact of retail display bans, i . nd prevalence rates will take
some years to . complicat e ctions with other policy measures.
But what e NE s portS§h c 0 e removal of retail displays.
67. But the ration. ale vi ow to e(nlOy to acco products from visible retail display
does not S1 e -t'hatA moving retail displays significantly lowers
smoking pre rs T i Irmly of the view that removing tobacco displays
will help redu r eptii1n t cco as a 'normal' consumer good and will contribute
to rm ca oking. No sudden or dramatic drop in smoking
prey '!il<ely a e of this measure. But it will, in conjunction with other
p I I ,c tribute to re i tobacco uptake over time, particularly among young
pe d also support s okers to quit.
proposal is that there will be costs for retailers as they adjust

• shop - particularly for small retailers, such as the typical corner
airy. lSt-swill vary according to the options and timeframes made available for

re50'n 's I ys from sight, and may well be absorbed by the tobacco companies as
V th v he past.
ilers have already made their own commercial decision to remove tobacco

ys, and with retail margins on tobacco beginning to decline as our excise

'ncr ases start to bite, there is potential for retailers to replace tobacco displays with
helf space for more profitable items. I note The Royal Australasian College of
Physicians and Cardiac Society of Australia and New Zealand have recommended to
©
the Maori Affairs Select Committee that subsidised nicotine replacement products be
sold everywhere that tobacco is sold. This would enable people to choose between an
expensive product that harms them, and an inexpensive product that helps them quit,
and could provide convenience stores with a new line of business to replace tobacco.
70.ln order to deal responsibly with the compliance cost issue and the impacts on small
business I propose to move in two steps: firstly to introduce amended legislation to
clearly establish the new policies on removing retail displays and related matters, and
then secondly to develop detailed regulations and guidelines in consultation with retail
interests. These regulations and guidelines would lead to flexible solutions to comply
with the law and reasonable transition criteria and timeframes to minimise the downside
9
DRAFT 9 September 2010
impact on business, particularly vulnerable small businesses. The process would also
provide an opportunity to further educate retailers and explore business opportunities
from being 'part of the solution', ego selling nicotine replacement products to help
smokrs quit. «/) ."
Key elements of a more effective regulatory regime for retail rF ()
Retail Displavs
71. In light of new research and moves by other jurisdictions to ove acco diSP!f.
from· public view, it is proposed to amend the Smoke-free VI ents Act to pro i e
that tobacco products must not be displayed in a is rea' p lic.
72. Subsequent regulations would be developed to . Ie
arrangements, particularly for small retailers e floor
area and/or having only one point of sale) to pr I t a odi' ations to
existing cabinetry and tobacco display QU b ,., or
modifications could be avoided for anum 0 a S.
73. The regulations would likely have i [mes less xibility for larger
businesses such as supermarkets a d c 'sed petro stores, as
well as any new or substantially r 0 or t d retail premises. These
would be required to install to co r ge y or other mechanism(s)
which prevent any member of tli ic from . bacco products while the
tobacco product is for er customer.
74. The regulations I matters such as requirements for
kills" or " Ie under 1rSS\s' ge and also the provision of price lists for
prospective custo. V
S ecialist tobac '51
pack to /::l:brand - acco product stocked by that retail outlet. The
de' . i n f a specialis onist would need to be tightened to avoid businesses
e .. "shops within ops" or running significant sidelines.

s generally defined a "specialist tobacconist" as a business

8<.(Percent of its income from the sale of tobacco, or derives more than
Yo of its i from tobacco products other than standard cigarettes or roll your

own process would be required to "approve" applications to become a
Q co retailer.
77. could also introduce new requirements for duty free stores.
t' radin names to avoid tobacco advertisin
ading names that essentially advertise the availability of tobacco products to the

Retailers a re currently permitted to the word "tobacconist" or use other terms in their
©
general public. Some trade under the name of "discount tobacconist" thereby also
() giving the impression that they sell tobacco at sale prices.
79. The Act could be amended to enable certain terms in trading names to be prohibited by
regulation, with reasonable timeframes.
Removal of 'normal' trade discounts
80. Section 28 of the Smoke-free Environments Act 1990 prohibits free distribution and
rewards, and places restrictions upon the offer of rebates by manufacturers, retailers
and others with regard to tobacco products. In summary, the Act states that:
10
DRAFT 9 September 2010
• no manufacturer, distributor, importer, or retailer of tobacco products may distribute or
supply any tobacco product free of charge or at a reduced charge
• a reduced charge includes providing tobacco with another product that is free or reduced. /Z
A reduced charge excludes a normal trade discount or normal trade
• no person may offer a cash rebate to a retailer, including as an e i lation (\
purchasing, selling, advertising or locating tobacco within the ret u' ss. "0
81. It is apparent that rebate schemes operated by tobacco r r tailers
commonplace. The rebates are linked to the volume of tob ale . The
Health has investigated these schemes and written to each of t toba
companies setting out where the companies' appear t . reach of
the law. Responses from Imperial Tobacco and Ph' . a . bate
arrangements are lawful, normal trade (\
82. Further progress has been constrained by the : [ e tobacco
companies to disclose details of the I ers claim the
terms of their agreements are t id iality pr .. s, d that disclosure
tobacco companies to disclose he la' f their r e hemes so that a decision
would put them in breach of contract.
83. There are two options to deal h . The w e amended to require
could be made whether these e I in the u ms of "normal" trade discounts.
normal trade discount fQiloB ceo retail Tal: ents. This would be consistent with
84. A stronger measure wo d-b to clarify rovisions of the law to prohibit
the regulatory princ' o't'\te'v ormali lOCO retail.
85.???
wers of Smoke-free officers
ealth $, e cy responsible for the administration and enforcement
{s'e-free Envir e ts Act 1990. The Smoke-free Environments Act provides
for ointment of enfo cement officers to enforce its provisions through
ation and the collection of evidence. These officers are employed

are part of the DHBs.
7. officers not only respond to complaints of alleged breaches of
Q op r 0 , here a young volunteer under the age of 18 attempts to purchase tobacco.

hey also undertake proactive work such as controlled purchase
rosecutions under the SFEA are cumbersome and ineffective, and could be
by stronger powers of search and discovery.

'n ement offence scheme for offences relatin to sale of tobacco roducts to under-18s
89. Anyone who supplies tobacco or herbal smoking products to a person under the age of
rCY
18 years commits an offence under the Act punishable by a fine up to $2,000. The
"0 offence is one of strict liability.
90. Smoke-free Enforcement Officers appointed by the Ministry enforce the prohibition by
conducting controlled purchase operations for tobacco products with the help of a
volunteer under the age of 18. Prosecutions of this offence are cumbersome and costly,
with $67,000 spent in the 2009-2010 financial year on Crown Solicitor fees alone. The
average penalty imposed by the Court is $300. As well, in a number of cases involving
young defendants or first-time offenders Courts have discharged the defendant without
conviction.
11
DRAFT 9 September 2010
91. I propose changes to the Act to enable Smoke-free Enforcement Officers to issue
infringement notices to first-time offenders. An infringement notice is a proportionate
response to first time offending. It would administratively be a more efficient and cost-
effective method of encouraging compliance with the Act by
penalty, while holding the defendant accountable for their action, and I the
formality of court proceedings.
92. It is proposed that an amendment to the Act establish the infrin 0 ence
a set penalty, and the power to make regulations to enable d lie s
fees and forms. Formal operational guidelines would need eve{oped to ensuYe
that enforcement officers act in a consistent manner when issuin not es
and con.sidering whether an alternative action al or written
appropriate. V
93. Provisions of the Summary Proceedings Act used Court to
review or enforce an infringement notice. s e to
prosecution involving the full range of pen v . ble u
Registration N
94. Several elements of this package' retail co ould be easier and more
contact details of their busines d me bas' . 'on about their tobacco retailing
activity.
Other minor amendments C\
95. ego removing the a .. acco to enter NZ ports as of right
competitors . al eve - _. it that too? Could breach a mandatory
provision of t Polif I was the face-saving provision when the Act was not
may s· e e sensitivity?
96. firmi u t ading terms such as 'light' or 'mild', in line with
. C c ommissio i I think we would need regulation making powers. The
C e Commission h by and large achieved our goals - but not all companies
I ed % understanding

wit moves on 'plain packaging'

etai! dl y re regulated in Australia at state level, and retail display bans such as
Q pr05 r w Zealand are already in place. However, packaging and labelling
requ em ts such as health warnings come under federal jurisdiction.

10, the Australian Government announced its intention to legislate to force
to be sold only in "plain packaging" from 2012. In addition to option it is also
ith Australia, with a view to harmonising trans-Tasman requirements for plain packaging.

roposed to consider further regulating the packaging of tobacco products in conjunction
©
99. Now the outcome of the Australian general election is clear it appears this proposal will be
progressed. Officials propose to monitor progress in Australia on the 'plain packaging'
proposal, explore the potential for regulatory alignment, and report back to Cabinet in 2011.
Consultation
100. There has been extensive public consultation on the proposal to remove retail
displays of tobacco products, as described in paras above and in the Appendix. This
paper was prepared by the Ministry of Health in consultation with the Ministries of
Economic Development, Consumer Affairs, Justice, Pacific Island Affairs, Youth
Development, Foreign Affairs and Trade, and Social Development, and the Treasury,
12
DRAFT 9 September 2010
the NZ Customs Service, Te Puni Kokiri and the Department of the Prime Minister and
Cabinet.
Financial implications
101. None
Bill of Rights Act 1990 ("Bill of Rights Act"), and the Human 199 .
protections of freedom of expression in s14 of the Bill includ
expression and advertising. While prohibiting retail of a produc i m facie a
limit on freedom of expression, this type of expre i I at of the
right, any limits placed on it are more readily ju Ie. e publi ea grounds
behind the proposal should be sufficient to justl I advertising
already has limits placed on its freedomg o' in required health
warnings and photos of harmful effectsii f he prod . he roposals in this
paper seek to alter the limitation by req . . hi n from view. While it
may be argued that this is a limitation an an extension of the
current limitations in place, . io I no less justifiable than the
previous limitations put in same r .
Legislative
103. A Smoke-free Ei' s en Bill is on the 2010 legislative
programme with It" . I 5, ie d qffih9'n uctions to be issued in 2010. This Bill is
the appropriate leg' i vehm'cl 0 ssing proposals outlined in this paper. It is
now te leg ti'n 2010 so that the Bill can be introduced to the
. fore Parliament rises for the Christmas recess, which
I 4.
104 .• re a ready e regulation-making powers under the Smoke-free
Ere s Act, but tli ay need amendment to ensure they enable the
reg I . s ement these proposals.
has been prepared, and [will be] attached to this

impact analysiS focuses on the central plank of the measures
V. pr se i is paper, namely the removal of tobacco products from retail display. The

to '/; impact implications of any move to harmonise with Australian plain packaging

I.' ents should these proceed will need to be addressed in future Cabinet
p mg.
t? der implications
None
o Disability perspective
107. N/A
Publicity
108. It is proposed that this policy be announced once agreed by Cabinet, including
proactive release of the Cabinet paper and publication of the Regulatory Impact
Statement.
13
DRAFT 9 Septem ber 201 0
109. The announcement should make appropriate reference to the Parliament's Maori
Affairs Select Committee Inquiry into the tobacco industry in Aotearoa and the
consequences of tobacco use for Maori. The Committee is on the point of reporting.
The overwhelming weight of submissions has been in favour of reduciwoking rates
effectively to zero by removing commercial tobacco supply altogether. the ©
Committee reports the Government has 90 days to respond. -
Recommendations [Outline] "
110. It is recommended that the Committee: v \J .
1. Agree to remove retail displays
2. Agree to other improvements
3. Agree to the use of regulation-making etail of the
proposals and to allow for flexibility of com . t tions in order to
reduce the compliance costs and I ses
4. Agree to amend the ts I to give effect to the
decisions in sub paras 1-3 abov
5. Note the Smoke-free men n . I is in the 2010 legislation
programme with priority y (in tr the Parliamentary Counsel
Office to be provided in the
6.
201 0 r e to 4 0 be referred to a select committee in
the year)
7. Agree . Smoke-free Environments Amendment Bill
2010 be or the . entary Counsel Office by the Ministry of Health [no
.;
ac on their bu . s
8'<ie rk etc on options to minimise compliance costs and
9. . he Associate MI ister of Health (Mrs Turia) to direct the Ministry of Health to

for further regulations under the Smoke-free Environments
O. M ciate Minister of Health (Mrs Turia) to direct the Ministry of Health to

§. 0 gress by Australia on its proposal to legislate for plain packaging of
a products and explore the possibility of New Zealand harmonising or
ise aligning with Australia, with a view to reporting back to Cabinet as
'-$ priate when developments warrant it.

14
DRAFT 9 September 2010
Appendix: Report on Consultation
1. On 22 March 2010 Cabinet approved the release of the consultation letter Proposal to ban
tobacco retail displays in New Zealand and sought a report back on the outcome of the
consultation process and proposals on whether or not to proceed with of
tobacco displays in retail outlets.
2. Public consultation took place between 31 March and 21 May 1
submissions were received. Many were substantial although t form
template letters promoted by interested parties. V
3. About 85 percent of submitters supported the proposal (112 indivi s, miette
Supporters included all the health sector submissions, s from y ople, the
majority of submissions from the general public and a t proportio r taHers
who submitted as individuals - about a quarter e t ile.
4. Opponents comprised 28 individual submissions f rm tobacco
industry submissions opposed the 't e . 0 s Issions from
retailers and retail organizations, a small pr fr m the er.a blic and one
submission from an overseas (UK) institute.
5. The consultation primarily sought options for removing
displays and their costs. New e i nce was welcome, but this
evidence had been considered itl'Prev« us consu t mitters were told previous
submissions would be taken into 'a2'eoo t, but m . ters still took the opportunity to
repeat as well as update 'ous in n
6. Views were polarised views ex asse oth for and against the proposal.
Ultimately, the n to J d ever what weight should be given to the
health issues vers r y rieti in les by and costs to tobacco retailers. Retailer
and industry the he' s are minimal or non-existent and the costs
s proposal argue the benefits are potentially
consider e costs m' a irrelevant.
7. bmitt= id general comments either in support of or in opposition to
th 0 0 rather than sing the specific questions set out in the Ministry's letter.
G [)hfr): nflicting views sented, conclusions are not easily drawn from the analysis of

do help to identify the areas of difference. These issues, include:
• e I lays play in advertising tobacco products,

the evi . e literature for the effect of retail tobacco displays and for
r c ange resulting from the removal of retail displays,

• . e around the impact the removal of displays would have had on smoking
rev e e, smoking behaviour and on retailers in other jurisdictions, for example,
N
tI, Saskatchewan, Ontario, and Ireland,

he costs to retailers of placing tobacco out of sight,
• public acceptance of removing tobacco retail displays.

• e special circumstances of specialist (cigar) tobacconists and duty-free stores,
©
Tobacco displays and their impact - the research evidence
() 8. Supporters of removing tobacco displays from public view contend that tobacco displays
function as a highly effective advertising and marketing tool in the absence of other
means of advertising. New Zealand research shows a link between tobacco displays
and the likelihood that a young person does or will smoke. Australian research also
demonstrates a relationship between displays and the urge to smoke experienced by
former smokers and those attempting to quit.
15
DRAFT 9 September 2010
9. Opponents argue that other factors are responsible for youth uptake, for example, peer
pressure, or 'forbidden fruit'. One submitter (the UK policy think tank the Democracy
Institute) extensively disputed the validity and conclusions of the academic research, in
particular the reliance of many studies on self-reporting of smoking rather than /(
measured behaviour.
of a link between tobacco displays and youth r· m the ©
research, although the strength of the relationship varies. r il
undermining smokers' quit attempts by prompting a relaps' ss· ely studie
research to date is consistent. with current knowledge of what in nces s cessf uit
attempts. (Unlike the Democracy Institute submission ich appears t sed on a
similar submission to UK consultation on the topic, c the dispute a h has
been peer-reviewed and published . i lit raturea by a
leading New Zealand author who refutes many ocracy claims).
The impact of removing retail tobacco
11. Opponents of the proposal argued that t of overseas, for
example, in Iceland and Saskatchew, . t or no smoking prevalence.
Supporters of the proposal, c· . h sam ou :M, oncluded that removing
displays had reduced smoking v c espec'al 0 young people.
Comment
can be conclusively re ve It seems c removing tobacco displays as part of
an ongoing t 0 cone es will contribute to a reduction in
smoking prevale e I ing bacco's presence at retail outlets less
prominent, . y tha . bacco products from sight will have an
immediate 0 e oking prevalence.
13. It is diffi the i-a er influences such as price changes, education
initiat'ves\ n n the effect of removing tobacco displays. The
cu iv i pact of re 'n isplays is likely to be greatest on young people as tobacco
is ' r Ised'. This infl ce will feed into prevalence figures over time, particularly by
. g to decline in smoking uptake by young people.

retailers of removing tobacco displays

1 r and their representatives pointed to overseas evidence, principally from
() 0 closures and a loss of profits. New Zealand retailer organisations
ex r ss c ncern about the financial effect the policy will have on their members. They
nsubstantiated estimates that 36 to 60 percent of convenience store and other

business is from tobacco.

Conversely, several New Zealand retailers, mainly small retailers, who sell tobacco but store
out of sight, indicated that the change had had little impact on tobacco sales. Current
smokers "knew what they wanted".
res
16. One major retailer organisation stated that the additional costs of the proposed policy cannot
be estimated at this stage, for example a predicted loss in sales for smaller retailers through
customers purchasing elsewhere and potential stock shrinkage.
Comment
17. The claims in relation to Canada's experience are generally unconvincing. Other factors
such as the global recession and illicit trade, the latter particularly in Ontario and
Quebec provinces, appear to have been influentiaL
16
DRAFT 9 September 2010
18. The financial impact indicated by retailer organisations seems to suggest implicitly that the
policy would be effective in reducing tobacco sales. There is a problem with the internal
consistency of some of the industry and retailer arguments about the effectiveness of
removing retail displays and potential impacts on their financial viability. policy would
be ineffective at reducing tobacco consumption then it would not impact 0 I s, and vice
versa. (? 1\
retailers and may impact on the financial viability of some other
seem likely to more influential both on revenue and financial vi i to
19. The policy proposed is likely to have some impact on revenue from b s s for
displays per se. Retailers have adequately adapted to a signi a duction i the n er
of cigarettes sold between 1970 to now and with the . to the m rket of c enien e
stores as an adjunct to service stations without a signif ss of busine .
Options for removing products from display h
20. The consultation document invited comment 0 - . ent f to be
stored under the counter within a set d other putting tobacco
products out of sight. The tobacco , sand th . nisations strongly
opposed placing tobacco products un r c er, s porters of the proposal
generally argued for. V
Comment
21. Compliance costs would be sig . I Y reduc ailer opposition ameliorated to
comply with a require eN tobacco not be displayed.
some extent if at Ie ecide themselves how best to
Costs
22. Much of the . with the costs to retailers of refitting their
premises to r cco fro . lay. By and large the information provided in
s 0 oi ting the proposed option is less detailed than had
been ho
23. Th 'm t s of refittin . s varied considerably. Figures of around $3,000 to
e tobacco products under the counter, though one retailer
curtain.

4§ en d an interior design company to provide independent advice on the
alte i mOb co retail premises to comply with any legislation placing tobacco

1.. Eleven retailers, including four dairies, a convenience store, three
Q
d three supermarkets were visited. In the draft report the costs of
co yin e estimated to be between $300 and $3,300. The sample was small but it
!f
·v n objective indication of where the compliance costs for most retailers might lie.
p ive.

it i new counters, not an easy option at some of the stores visited, would be more

igar and duty-free sellers who submitted argued they would face very high costs to comply
with the proposed removal on retail tobacco displays.
rcy
26. The other major costs mentioned were the possibility of increased time required for training
o staff, managing stock and retrieving tobacco products for customers from drawers or closed
cabinets. Some retailers submit this could impact on the viability of the business trading in
other goods and services. Transaction efficiency and speed of service are seen as key to
successful convenience retailing.
Comment
27. This situation may not arise or even diminish if retailers who have removed displays
from public view find they can meet current purchasers' needs with a reduced product
range.
17
DRAFT 9 September 2010
Effective date for any changes
28. Opinions varied considerably. Tobacco companies and retailers considered 18 to 24
months to be reasonable for modifications to existing cabinetry and opposed any
introduction of under the counter displays. Those supporting the oured
'immediately to 12 months for modifications and 9 months to 3 years for I tobacco
products under the counter.
Comment
29. Being flexible with the time required to get to an ultimate visibility
reasonable approach. \f '
Specialist tobacconists
30. Supporters and opponents of the proposal had ge n how fl· 'specialist
tobacconist retailer' or whether they should be s 0 i erent re LiIat1otl. igar
retailers felt that they were different from other re s they their clientele,
who are generally not young, a wider a C umers visit these
stores with the express purpose of purcha' to cco, and nlik to be influenced by
product displays. ,
31. Health submitters generally felt spa subject to the same
provisions as other tobacco retaile " V ,,\f
Comment
number if different pro '0 pplied. S isions to prevent this and possibly an
age restriction s h d e considered.
33. There was a mixe ti 0 u esti that smoke-free officers should have their
powers e the e . e whether a retailer is specialist or not.
Duty free s re0
34. Duty-fre are . ct to the same tobacco display restrictions as other
Ilers.
35. retailers al argued for special consideration on the basis of the

of their viability and the convenience of visitors. They noted that

oYrG had made an exception or different provisions for duty-free
tdres. V

\ .
() 6. require further consideration, principally to find out more about how other
have applied their removal of retail displays in duty-free stores.

. There was little enthusiasm from any quarter for the idea that retailers should have a list of
roducts for sale which would be available to customers who asked to see it. Health
©
submitters suggested it would be a form of advertising and retailers were concerned about
() the time involved maintaining it.
Comment
38. It could be an option with provisions to prevent it becoming a form of advertising.
Surveys
39. Supporters of the proposal noted the high levels of public and smoker support for the
proposed changes. Wellington Medical School reported that the proportion of smokers
supporting a complete removal of the display of cigarettes in shops (those replying
18
DRAFT 9 September 2010
"somewhat" or "a lot", increased from 62 to 68 percent between 2006/07 to 2008/09. Recent
UMR surveys conducted in April and July 2010 have shown 76% support for the complete
removal of tobacco displays, an increase from 68% in May 2008.
40. A survey for a retailer's organisation found some agreement that removineacco from /(
display would have health benefits. The survey for the New Zealand As I n of
Convenience Store survey found that 27 percent of 1 000 0 a tobap(c? (\
display ban would stop teenage smoking while 70 percent thoug it I ot.
eight percent thought a ban would reduce teenage 0 n id not.
Other issues raised. \f
41. Opponents of removing tobacco displays promoted such as
enforcement of the existing law and greater anads r, aising
the minimum age of purchase and government wo . closely . 11 ail industry.
42. Several retailers and many health submitters ':'i plays e licensing of
retailers to educate retailers about the
43. Retailers raised concerns about rity prob m d an increase in illicit
trade following any removal of tobacc' . he e fo is is not strong. Some
retailers who have put tobacco pro c sight hav 0 to increase security. Any
link between removing tobacco is tr 's e uous. Illicit trade may be an
issue in Canada, which is usual cite s an ex "hile it merits monitoring in New
Zealand, it is not currently a signiflCan
44. Retailers were concer a ut stock b while being dispensed or during
restocking. legislation provides some flexibility,
for example, per .. to tea e sonable steps to minimise the exposure of
tobac?o . be difficult. Overseas precedents can be
examined In

d/)V



19
®
From: [Withheld under 89(2)(g)(i)]
Sent: Thursday, 30 September 201 04:53 p.m.
To: [Withheld under 89(2)(a)J
Cc: Chris Bunny /'Z
Subject: Tobacco Retail Displays Cabinet Paper Oral! lor Consultation ('(/) A rr::"
Hi Matthew, 0
Thank you for sending through a revised version of the cabinet paper and RIS. to i a
Treasury comment as the arguments for banning tobacco displays appear to bot e whole, valid. Ho e er, as
outlined below, we still think the paper could do more to fully inform Ministers of the matio . I
understand that RIAT is intending on doing a QAjindependent in Decem er - . . particular
paper ends up being included then the following points may 'V (R\
.. Evidence of effectiveness:
o The paper and RIS are lacking g 0 argument Le. no pieces of
literature are discussed which suggest to ceo displ . I no e effective at reducing
smoking t a he gov ment cluded that there was
insufficient evidence to justify a ban' ,nd no liter arding effectiveness has emerged
since that time other than self-re e veys, SOila, in the paper may be over stated (such
as "increasing evidence has e e e " I growing research evidence", "the
evidence for these issues is well Ished"
o The paper notes the governm Qf9 . I d that there wasn't sufficient evidence that
banning displays "wo I be e most effec tr egy" - however, the original paper actually
stated that icient 'ustifya ban. So the wording used in the paper may
be slightly stro . \J .
o t ther e e ' evidence from Iceland that the ban has had an impact on
smoking r t s' . 't statement made in the 2008 paper that "evidence from Iceland
is ecreas s in ates with the ban on tobacco displays". Has evidence emerged
4'> renced,
or' no discussion ofthe potential adverse impacts regarding how and where tobacco
anies se-focus their efforts in the absence of displays, such you tube or product
t adv .. .
"> arg a e in paragraph 37 that retailers may be able to replace displays with more
proaEble isis inconsistent with the actions of retailers currently (i.e. if it was profitable to do

a n't they already removed displays in significant numbers?) and inconsistent with the
"', oin a e elsewhere in the paper that the number of retailers selling tobacco is increasing. When

er mentions "some retailers" have already removed displays, there is no quantification as to

ow widespread this is.
o em tation:

. The paper is stHllacking a lot of implementation detail such as whether displays will have to be
under counter, or just behind doors etc. Some of these details will have a significant impact on
©
compliance cost.
o The timing of the paper is not ideal given the Maori affairs select committee is yet to report back,
and the analysis on plain packaging yet to be done. From a policy perspective, these issues should all
be considered in conjunction and as part of a comprehensive tobacco control strategy. These issues
should, at a minimum, be discussed in the paper,
.. Financial implications:
o The financial implications section does not include costs in addition to the one-off fit out costs (such
as sales revenue implications) and seems to be based on some large assumptions and a small
sample size. The figure given is also less than half of what was originally quoted in early meetings,
and a quarter of what retailers quoted. These caveats should be included in the paper.
"
o There is insufficient information regarding what the administrative and implementation costs will be
e RIS:
to the Crown and how this will be funded Le. what will be reprioritised or given up to fund this
work?
o There is minimal analysis (other than the table on page 19) regarding the relative impact of the
status quo vs. alternative options.
o The problem definition and objectives should not be defined in a way the
[Withheld under s9(2)(g)(i)J
cor'''O''''''HY NOTl(£ 1\
I he in thl" <'mail 1<; confldelltlal to till' fre8sury, ilitend"ej (lIIIV for the add res e', 'Id "lV 2150 be '.lIy It YOli are not in,enci0d
,l(ldrbS€I=, '"
,. pi"" lemo"',," d,I,,, "" em,eI ",,' """" ," ,,'"'"" by"",," ec",,1 '" C e'" 472 V
To: Alison Cassar; Alison Handley; Benesia under s9
Siakimotu; MARSHALL Kirsty; Te Rina Moke; s9(2)(g) J a on (LGL/TLU); Susan Wauchop
CC: [Withheld under s9(2)(a)J
Subject: Re: Tobacco Retail Draft
Fo"he> to my ,-moo dmft ltrc:»

Jon
2) the RlS foc comment
of Hellith intemal Cabinet pap" appmval 0' RlS adequacy ,,,,,,ment pmoe""

Policy Analyst
S c or Capability and Implementation Directorate
, istry of Health
[Withheld under s9(2)(a)J
Matthew Everett/MOH To [Withheld under s9(2)(a)J
"Alison Handley"
2
[VVithhe/d under 89(2)(a)J
28/09/201014:12
cc
Subject Re: Tobacco Retail Displays Cabinet Paper Draft for
""liatkmLink
rul by emllil on 15 Septembe<, and ,orne of you m,y have been OfJ!r ©
Apologies that I was not in a position to circulate the new draft of the Cabinet RIl y, s I had intended.
There have been a few twi,t, of Me to cootend with, including ruch '"chedule, pnliti,,"
consideration of the member's Bill, some internal MoH learning
Howeve<, the up,",ot i, th" we are ,till expected to to go Octob"', " pmio",ly advi"d,
Uofortunately I cannot c"cuble aooth" d"ft the ac until ","uod midday tomorrow, But
that is intended to be a (nearly) final draft.
vel internal cabinet paper committee and final RIS The process from there is that it will be by
QA process this Friday 1 October. 'V
Fmm there it will go to Mi.i"", IDt, "d a@soc committee fo' cO",ide"tion on Tu"day 5 Octobe"
And then it can be fi",li"d Thu"day 7 Octobe<,
The next "eS,;;;o< ow will a bit in ,tructme "d tightened up on the det,,;l, but the elemen" of
the pmpo,ru" 'all ",me" in
M"h of , that now coven,d in the RIS, leaving a ,",o<te<, rome foc",,,d Cabi"t pape,

'ired all t;ssee Y. on the previous version, and endeavoured to deal appropriately with it all. There does not at
. a disagreements or obstacles to the proposal proceeding to Cabinet. But I am sure Treasury and
ill be ke 0 se 0 your issues have been handled, and Justice and MFAT also have one or two important interests to
ch ove<, au who have expre,,'" unquruified "ppmt fa, the pmpo"l, m",y thank"
thi, e-m,,;l i, to give you rul the h"d, up thut we "e getting to the bu,ine" end of the pmee", and unfo"un,tely
for further input has had to be constrained.
you this detail now to asist you in planning your time and any internal steps you may need, depending of course
degree of priority and risk you may see in the further progress of this proposal based on what you have seen so far.
There are two avenues for further comment and input.
For significant substantive issues, please alert me to these by phone as soon as you are able to after considering the drafts you
receive tomorrow. I will take this feedback (by phone/meeting if preferred) any time up until late Thursday afternoon, so that it
can be incorporated and considered by our sign-out commitee on Friday morning, probably by tabling a new version of the papers
produced over night. My hope and expectation is that we can identify and resolve any issues by this point. However, if any major
issues emerge and have not been satisfactorily resolved on Friday, there will be further opportunity through to late Monday to
deal with these before the OSOC meeting on Tuesday. Also of course we may receive further instructions from Minister Turia
3
next week. So the paper will be essentially live, if needed as a last resort, until late Wednesday next week when the final version
goes up for signing to Cab Office.
For minor issues, drafting suggestions etc. the earlier the better, but I can guarantee to consider these for inclusion at any stage
until midday Monday at least. After that, and you'll be taking your chances. But potentially right through to the paper being
finally signed out next Wednesday.
I 'pp,oci,te thi, i, pmb,bly not id,o!, bot I run doiog my b"t to ,",bl, th, b"t po,"ibk given fr:>
""om,"",,,, PI,,,, don't h",,,,, to g,t in toooh - indoding by ""de< ,'(2!1,)}
M.uy th,nkdnodvon", V V \5 -
& kind regards
Matthew
Matthew Everett
Principal Policy Analyst
Sector Capability and Implementation DIrectorate
Ministry of Health
[Withheld under 89(2)(a)J


legal privilege. \?
If you are no (it int d read, use, disseminate,
distribute or . essage or
If you have ree . his m sage in error, please notify the sender
immedi a elete this s .
t and Vi s F te' g Gateway
. - -, -, - -- - -


4
DRAFT 29 September 2010
In Confidence
OFFICE OF THE ASSOCIATE MINISTER OF HEALTH (Hon Tariana Turia)
Cabinet Social Policy Committee
Proposal
1. This paper proposes changes to the controls on tobacco re . un er the Smo - ee
Executive Summary
2. Current controls on the commercial marketing I ok
increasingly inadequate and are undermining t to reduce
smoking, such as tobacco excise t ' nority health target
to provide Better Help for Smokers to u N
3. The Smoke-free Environments Act 1 9 s' s reta' iSQlay some extent, but still
enables tobacco companies Relr roduct pr 'iWiJ Iy in some 10,000 dairies,
supermarkets and petrol stations. 's ryday r en of tobacco products
increases the susceptibility of g p ople t e . t with smoking and can trigger
relapses by addicted smokers w e tryi 0 't
4.
agreed a further r f sultati in more detailed views on options for
in both r: i ses since 2007. In March 2010 Cabinet
restricting 0 0 ::Ibctsi . retail outlets.
5. Since the wi eS emova acco advertising and sponsorship, increasing
ed e e that retail tobacco displays play in 'normalising'
tobacco. indi t resence of retail displays increases the likelihood that
C$h'l n i'oung s art smoking, and prompts impulse purchases among
e - and smoker t i g to quit. Continuing to allow the displays undermines
oth cco p$iicies and ompromises the value for money of programmes aimed at

. g the ha by smoking. Removing displays is an appropriate regulatory
nse with tobacco's known addictive and dangerous properties.
sudden 'i\?k;lmatic drop in smoking prevalence is likely solely because of this

measu. t will play an important role in helping reduce tobacco uptake over time,
() ong young people, and it will also support smokers to quit.
6. = ai ownside to the proposal is that there will be costs for retailers as they modify

fittings to comply. These costs will vary according to the options and
'm ames made available for removing displays from sight. Minimising the compliance

costs has been an important consideration in developing the proposals in this paper.
7. t is proposed to legislate for the removal of retail displays, and then provide a range of
©
flexible options and timeframes for compliance through more detailed regulations,
supported by education and guidance. This would allow officials to work with retail
business interests on the detail of how the changes should be implemented, as
requested in their submissions. Costs are very sensitive to this detail.
8. This paper also takes the opportunity to tighten and improve related controls on tobacco
retailing, including stronger powers for smoke-free compliance officers to discover
information and to enforce compliance with the prohibition on sales to people under 18.
DRAFT 29 September 2010"
9. The paper also notes that Australia has announced its intention to introduce plain
packaging of tobacco products in 2012, and proposes exploring the possibility that New
Zealand might introduce similar measures in due course in alignment with Australia.
Background
10. Government has been considering options for tightening the ;:
displays for some time. Proposals to prevent retailers from . p'
were first consulted on in 2007, with submissions closing early in O. II displa
were also the subject of two petitions to Parliament's Healt=C . e' 2008.
11. In October 2008 Cabinet agreed two preferred options for eta d work to r
back in February 2009. In February 2009 the new Government It matt r
and issued its response to the Health Committee t the time th ment
did not consider there was sufficient evidence that a visible toba ays in
retail outlets would be the most effective e tobacco
consumption. The proposals were put on hold, n f in ernational
experience with display bans and emerging' n t ss.
12. In September 2009 the Maori Affairs Sele t 0 it ee la d a nquiry into the
tobacco industry in Aotearoa and the c e es of obacc e for Maori, with
13. Late in 2009 the matter was a r' d in co . ith other Ministers, and in
a feature of many
March 2010 Cabinet agreed a fu tJj I ion seeking more detailed views'
on options for of r cts in retail outlets.
14. This paper 0 bi 1's n 0 a eport back to SOC on the outcome of
the consultation pI: ith pr whether or not to proceed with a ban on
the display of toba c e IilQVt ts." [CAB Min (10) 10/12 refers]
International
15. New a ramework Convention on Tobacco Control (FCTC).
P41'1 0 r ducing initi I n tobacco use and encouraging cessation. It entered into
hjective a sh a global agenda for tobacco regulation, with the
foro' 5 and currently 0 countries and the European Union are Parties to the

he ad9')esses tobacco advertising and the packaging and labeling of

paoco pro its core concerns.
. der he FCTC, Parties have agreed to comprehensively ban all forms of

obacco e ring, promotion and sponsorship. Implementation guidelines adopted by
J e clarified that retail displays are a form of advertising and that tobacco
dis I ys ould be prohibited as part of Parties' comprehensive bans. The FCTC is not
ding, but compliance is closely monitored by the World Health Organization.
of Health reports regularly on New Zealand's compliance with the Treaty.
regulation of tobacco retail displays
The Smoke-free Environments Act 1990 bans tobacco advertising, and while retail
')\ displays potentially come within the general definition of advertising in the Act, specific
!) provisions allow for retail displays that meet a number of restrictions, including:
• at each point of sale, the tobacco display is limited to a maximum of 100 cigarette
packets and 40 cartons
• each tobacco display may include a maximum of two packets of the same variant (no
block displays)
• tobacco products may not be displayed within one metre of products that are marketed
primarily for children, such as confectionery, ice cream, and soft drinks
2
DRAFT 29 September 2010
• tobacco products may not be displayed on a counter top or similar surface, whether at a
point of sale or not
• if tobacco products are displayed within two metres of a point of sale, a sign stating
'SMOKING KILLS' must be displayed in clear view of the customer at the point of sale
(the Ministry supplies free signage).
International experience with removing retail displays (? (\
18. Iceland was the first country to ban retail displays of tobacco 1.
has prohibited the display of tobacco products since .
July 2009 tobacco may only be sold by registered tobacco w must keep, V
tobacco products stored out of view. Norway introduced a . lay 0
tobacco products at points of sale with effect from 1 2010.
19. In Australia packaging and labelling requirements m under
federal jurisdiction, but retail displays are t e evel. s lian Capital
Territory, New South Wales, Tasmania, Victori tern ve now all
passed legislation requiring tobacco prodm:s-t e I retail out. lets,
and apart from Victoria the policies are al adY1 ef ect. ern rritory,
Queensland and South Australia have ced their Int of banning point of
sale advertising with proposed dates 2012.
20. Following the lead of 02 all pro . c no territories in Canada have
now enacted their own legislat' re 'ri g tob G ts to be out of public view.
The United Kingdom has also pa egisla io c rohibits tobacco displays at the
point of sale in England,)At:tI s and North tn;I la ,with implementation scheduled to
commence from . Consulta' mA ;egulations setting out the details has
been undertaken i Mol he PI' a e new Government on advancing this is
an offence to cco p moking related products. Consultation on
proposed on=IU e .0 July 2010.
The case "Ohib1ti'n
g
re ays of tobacco products
21. In th d not to proceed with retail display proposals pending
n '0 e from the irlt$ational experience that this would be the most effective
stra 0 rates and tobacco consumption.

is . nce from Iceland and Canada of the impact tobacco display
ElP--9 oking prevalence among young people. In Saskatchewan the

eeline rates in 15 to 19-year-olds has accelerated, falling by almost one
/J e ban was implemented in 2002. The impact of point of sale bans also
V ap ars b positive in Iceland, where the decline in the prevalence rate among 15-
as increased since the ban was enacted in 2001.

too early to comprehensively assess the removal of retail displays in other

ountries, and the impact on quit rates and youth smoking uptake cannot be confidently
eparated from other supporting measures to address smoking and tobacco control.
However, the case for removing retail displays presented in this paper does not depend
O
solely on the evidence that removing retail displays will lower smoking prevalence.
24. There are in the order of 10,000 retail outlets selling tobacco products in New Zealand.
These include supermarkets, petrol stations, dairies and other convenience stores, and
also bars and restaurants. The number of outlets has continued to grow, particularly
with the entry of petrol stations and franchise convenience stores into the tobacco
market, even as smoking rates have fallen and total cigarette consumption has dropped.
25. Point of sale advertising, such as retail displays of tobacco, is a promotional tool used to
generate awareness of products, promote interest, stimulate trial and encourage
repurchase. Tobacco products, primarily cigarettes, are usually displayed in large, wall-
3
DRAFT 29 September 2010
mounted, shelving units. Even at the minimum one metre distance, they are still often
visually connected in plain line of sight to displays of snack foods, confectionary,
magazines, and other 'impulse' purchase items.
26. Although the size of the displays is limited to a maximum of 100 packets of cigarettes
and 40 cartons, per point of sale (i.e. per till or checkout) retailers, rly
superettes and larger service stations, often put shelving units side by create
much larger display, sometimes referred to as a 'power wall'. C
27. After the Smoke-free Environments Act prohibited more general t acco
advertising and sponsorship in 1990, the ability to display du ts that
sale inside a retailer's premises and the design of the cigar tol] cco pack it
became the main vehicles for promoting tobacco products. The stry's
response was to pay greater attention to in-store disp which becam - elaborate
and prominent and displayed a wider range of toba cts.
investment in these displays has been ug e ting the i s them an
effective advertising method. V
28. Tobacco companies maintain that the . 0 recruit new
smokers, but rather to compete for the br cli ce of ex' i Yet they also
maintain that the removal of retail have egati conomic
conseque. nces through reducing nd other outlets. These
arguments are contradictory be sel rv . hat evidence there is on
brand-switching behaviour sug sts at smok i Iy brand loyal and know
exactly which cigarettes or tobac t: duct the 0 purchase.
29. Currently, the location . t of sale means that they are highly
visible to all customers . cI ing vulneraSlIM umers such as children, young
people, ers '.
30. The weight of evi (lQ m udies indicates that exposure in everyday
retail displ . re es the susceptibility of children to experiment
with as'c Similarly there is growing research evidence of the
way ers who are attempting to quit, providing a
psyc 010 I H:rigger oking in a setting where the product is readily
av f such an imp e urchase.
31. Be f thes effects, r tail displays undermine the impact of other Government
initia I s such t b 0 excise tax, graphic health warnings on tobacco products,

·tlised acement therapy and anti-smoking medicines, and promotion of
oking through media campaigns and the Government's priority
ealth are all designed to encourage smokers to quit.
'% 'V and public support

journal article
1
reviewed the evidence from 12 frequently
peer-reviewed studies and concluded that, given the addictiveness of

obacco, the severity of the health hazards posed by smoking, the evidence that tobacco
romotion encourages children to start smoking, and the consistency of the evidence
©
that point of sale promotion influences children's smoking, ample justification exists for
()
banning point of sale displays of smoked tobacco products in New Zealand.
33. There is also new evidence on the influence of point of sale cigarette displays on
unplanned purchases. An Australian stud/ which interviewed 206 smokers as they left
retail outlets after purchasing tobacco found 22 percent of participants made unplanned
cigarette purchases. Forty-nine percent supported a ban on point of sale tobacco
displays versus 12 percent who opposed. Twenty-eight percent agreed that such a ban
1 January 2009 Drs Janine Paynter, ASH, NZ, and Richard Edwards, University of Otago, Wellington, in
Nicotine & Tobacco Research - correct reference required
2 , Owen Carter et al. (BMJ Journal of Tobacco Control 24 March 2009)
4
DRAFT 29 September 2010
would make it easier to quit. These results align with Ministry of Health Tobacco Use
Surveys which found two-fifths of recent quit attempters agreed that cigarette and
tobacco displays in dairies, petrol stations, supermarkets and convenience stores make
it more difficult for smokers to quit smoking or stay quit.
34. Surveys conducted by UMR for the Cancer Society have shown strong an /(
increasing public support found for the complete removal of tobacco di ;;
from 68% in 2008 to 76% in 2010. The level of support is almost g (\
smokers and also growing. A survey undertaken by the chool 0
increased from 62% to 68% between 2006/07 to 2008/09. '[ mo s most like
found smokers' support for complete bans on displays of cigar I si shops
support a ban were suffering financial stress, were planning 0 in t mon or
had quit recently. The New Zealand Association of tores a ported a
survey it conducted found 38% thought a tobacco di n would re e age
smoking while 57% thought it would not.
Compliance costs and impacts on business
35. Prohibiting retail displays involves comPliat and ts on retail
businesses which sell tobacco. Thee"f C ould be e f costs of modifying
shop-fittings to remove displays. Ba issio reta er interests and an
likely amount to around $1,500- ,0 etailer, ro d $15-20million in total,
independent assessment carriget mer 'al consultant, these would
spread over the time period allo j tb)come i 0 nce, say 2-3 years. The flip
side to these costs for tobacco ret kfs . ulus to the shop-fitting industry.
36. Other compliance on t tailers are considered to be relatively
minor. The t s-on il displays are complex to understand
and existing com ca Itself b s. This would be simplified. The current
compliance e ocument. Most retailers rely on shop
furniture sup main 0 companies and support from tobacco industry
sales represe to acco companies may continue to supply compliant
if the A, t e standardised nature of the displays they currently
sUriP m m e to remove and replace.
37. S r t . rs have their own commercial decision to remove tobacco
disp , nd wi retail margins on tobacco beginning to decline as excise increases
<;t\!a'r09 ite, ther I Ii to be further potential for other retailers to replace tobacco
') wit f ce for other possibly more profitable items.
. order d aYr onsibly with the compliance cost issue and the impacts on small
cle r e . h the new policies on removing retail displays and related matters, and
=
dly to develop detailed regulations and guidelines in consultation with retail
itM e law and reasonable transition criteria and timeframes to minimise the downside

s. These regulations and guidelines would lead to flexible solutions to comply

. pact on business, particularly vulnerable small businesses.
39. he process would also provide an opportunity to further educate retailers and explore
©
business opportunities from being 'part of the solution', ego selling nicotine replacement
patches, lozenges and gum to help smokers quit. This would enable people to choose
between an expensive product that harms them, and an inexpensive product that helps
them quit, and could provide convenience stores with a new line of business to replace
tobacco.
Other enforcement and compliance issues
40. Amending the Smoke-free Environments Act to better deal with retail displays also
provides an opportunity to improve a number of other enforcement and compliance
difficulties with the existing legislation.
5
DRAFT 29 September 2010
Related issues with current regulatory controls on advertising
41. The legislation currently provides another exemption from the general prohibition on
tobacco advertising by expressly allowing retailers to use trading names including words
or phrases that effectively advertise the availability of tobacco and to display these
names on the exterior of their premises.
42. A relatively small number of businesses have made use of this i . ,
although there have been some concerns, particularly with . rms s
as "discount tobacconist" to imply sale prices on tobacco produc r ',g tobacc
for sale at temporarily reduced or discount prices is not E
43. Smoke-free enforcement officers have been reporting a rec i rea e in the nu 1\It)-€ r
of businesses trading under names suggesting cheap tobacco a hOldii?'n emse s
out as specialist tobacconists. This trend is by . ating the
prohibition of tobacco displays from regular retail ou Efts;' he re would
be different regulations for specialist "s' numbe s s
jurisdictions that have removed tobacco displa. IS cr e in the use
of names suggesting discounted . e e excise
increase in April 2010. It was expected t GaM 0 the i Y Id respond to the
excise increase rise by absorbing increase aggressively
marketing to lower income and pric s 't e higher rates of
smoking than the general pOP;$lar.
44. The Smoke-free Environment t rtising of smoking
accessories (which could provid enue 0 marketing imagery suggestive
of smoking), display and' ge require 0 tomatic vending machines, rules
for Smoking Kills sign, ic I ts etc. W . urrently problematic of themselves,
with any amendm t regil ti n on r tail displays
Enforcement of les to n - 8s
45. Anyone k p' r bal smoking products to a person under the age of
18 years an off c r the Act punishable by a fine up to $2,000. The
46. S r appointed by the Ministry enforce the prohibition by
is ec>f strict .
con I g congled purchase operations for tobacco products with the help of a

er under of 18. Prosecutions of this offence are cumbersome and costly,
') Wmore 0 spent in 2009 on Crown Solicitor fees alone, at an average of
3,000 e average penalty imposed by the Court is $300, and total fines

am?iu e s than $5000. In a number of cases involving young defendants or first-
Q Courts have discharged the defendant without conviction. The Ministry
90es not take prosecutions against anyone under the age of 17

misuse of 'normal' trade discount and rebate provisions

ection 28 of the Smoke-free Environments Act 1990 prohibits promotional techniques
ch as reward schemes and sale or distribution of tobacco for free or at a reduced
charge. However, section 36 (4A) provides a defence for discounts and rebates if the
O
person charged proves these are 'normal' trade discounts or rebates.
o 48. It is apparent that rebate schemes operated by tobacco companies for retailers are
commonplace. The rebates are linked to the volume of tobacco sales. The Ministry of
Health has investigated these schemes and suspects the companies' rebate practices
are in breach of the law.
49. Progress towards potential prosecutions has been constrained by the Ministry's inability
to require tobacco companies to disclose details of the schemes. Tobacco companies
have asserted that their rebate arrangements are lawful, normal trade discounts. The
6
DRAFT 29 September 2010
industry and retailers claim the terms of their agreements are subject to confidentiality
provisions, and that disclosure would put them in breach of contract.
Key elements of a more effective regulatory regime for retail tobacco supply
Retail displays /(
50. The central proposal in this package is to extend the current controls a
and promotion of tobacco products by prohibiting visual display for e. .
51. This would be implemented by a combination of amendments to e-free
Environments Act and subsequent regulations. It is r these up
active input from retailers and enforcement offi en ure effectiv
workable solutions that achieve the policy goal but minimise as as e the
. regulatory impacts and compliance costs, relative to='ze of the )sSe ffected.
This will require amending the current regulation-m rn,g'A ers u
g
. t ke-free
Environments Act to ensure resulting i . Ity to
provide options for different types of business , and r adequate
lead-in times for compliance in each
52. Regulations would also be used to deal w' u ber of m ters such as
display of smoking accessories, displa d I age r irem {) s for automatic
vending machines, rules for Smokin s ns, . The Act would also be
reasonable timeframes.
Infringement notices for Ie of to cco P5t der-18s
53. It is further proposed t ((nabJ smoke-fre· f ment officers to issue infringement
notices to Td'e.rs'. An notice is a proportionate response to first
time offending. It b more e f cie t nd cost-effective method of encouraging
compliance y imp . inancial penalty, while holding the defendant
accountable tion, a ids the formality of court proceedings.
penalty, ble re=f t cover detailed provisions such as fees and forms.
I op tional gui' ould need to be developed to ensure that enforcement
o a consisten anner when issuing infringement notices and considering

alte ative action such as an oral or written warning is more appropriate.

0 the ary Proceedings Act 1957 may be used for the District Court to
r 'ew or e f'qf-9 Infringement notice. Subsequent breaches could lead to
fI;l\fx: vlng the full range of penalties available under the Act.
owergibi)hVnformatiOn
'V P ed to give enforcement officers the power to require a person to furnish any

'on or records reasonably suspected to be in their possession and which may
e evant to the operation or enforcement or the investigation of a suspected breach of

he Act. Failing to furnish the information required without reasonable cause would
ecome an offence.
©
57. It is further proposed that for the purposes of the Act, an enforcement officer may at all
reasonable times enter any premises where it is known or reasonably suspected that
records are kept relating to the sale or manufacture of tobacco products in breach of the
Act, and may search for and examine, take possession or make copies of those records.
Contracts void
58. It is proposed that any contract, agreement, undertaking or understanding, whether or
not legally binding, which offers a sponsorship, gift, rebate, prize or reward in exchange
for the promotion or sale of tobacco products is void to the extent to which it is
inconsistent with the Act.
7
DRAFT 29 September 2010
Removal of 'normal' trade discounts
59. The proposed enhanced powers of discovery, entry, search, and seizure combined with
the ability to void any contract that provides for rebate schemes would enable the
current law to be properly investigated and enforced. The question remains whether the
Act should also be amended to remove the current exemption for trade
discount and rebate schemes. Further analysis is required to determi ther this is
warranted over and above the additional investigative and 0 r. lined ©
above. It is proposed that this issue is best resolved during the 9 oc s 0 gal draftl
(but before any legislation is introduced to the House). '"
Alignment with Australian moves on 'plain packaging' v . \)
60. It is proposed to begin exploratory work to consider ing of
tobacco products in conjunction with Australia, with trans-Tas
requirements for plain packaging to be if i P '6ves e.
61.ln May 2010, the Australian Government anno i I te to force
Australian general election is clear, it app s t I propos . I be ogressed. Officials
tobacco to be sold only in "plain . e of the
propose to monitor progress in I lain pacKagl 'proposal, explore the
potential for regulatory alignment, ack to in 011.
62. Exploring the possibility that i d c similar measures in due
course in alignment with Austr . is nsisten't oposals in this paper.
Removing retail displays add res e tte and tobacco packaging in
mass form in the retail Plai pay I.gi{Tg would address the impact of
tobacco branding and in other iJe(rN settings.
Consultation !?/) ra
63. There has on the proposal to remove retail displays
of tobacco p y.e-tj>. Most in March-May 2010, in response to the consultation
letter tQjJl n c displays in New Zealand, 1002 submissions were
received. d 850 re duplicates of various template letters promoted by
ps on botli the debate.
64. Til s ses to this sec d round of consultation were largely similar to the

ion u dertaken in 2007/08. There was some new and additional

f ived strengths and weaknesses of the more detailed proposals
out this i ., ' some further insights into the costs and benefits of specific
tions.

. arised with the health sector, NGOs, public submitters and some retailers
str Iy 'n favour of removing retail displays. The tobacco industry and most retailer
ere opposed.

was prepared by the Ministry of Health in consultation with the Ministries of

Economic Development, Consumer Affairs, Justice, Pacific Island Affairs, Youth
evelopment, Foreign Affairs and Trade, and Social Development, and the Treasury,
the NZ Customs Service, Te Puni K5kiri and the Department of the Prime Minister and
Q Cabinet.
Financial implications
67. The main financial implication of the proposal fall on the retail businesses required to
modify their shop fittings to comply. This could amount to as much as $15-20 million
across the entire convenience retail sector, spread across 2-3 years.
68. There will also be administrative and implementation costs for Government. Existing
resources for tobacco control policy and smoke-free enforcement and compliance would
8
DRAFT 29 September 2010
be reassigned to the new work, and any additional resourcing requirements would need
to be met as an additional pressure through reprioritisation within existing baselines.
Human rights
69. The proposals contained in this paper have been assessed as capableJieing enacted /<.
in a manner consistent with the New Zealand Bill of Rights Act 1990 ae Human :
Rights Act 1993. Tobacco advertising controls already place 11 n edom
expression, including the requirement for graphic pictorial health a 1)11 • he
proposals in this paper seek to extend the controls by c 0 be
from view. V
70. The Attorney-General recently reported on a Member'S Bill prop . g
tobacco displays, and found some specific aspects rei i to a blanketS the
display of smoking accessories such as pipes and 0 be more onably
necessary. As a result the Member's Bill as ce as found p-B' sistent
with Bill of Rights Act. However, the body of t -Gene al t clarifies the
general point that to further limit freedom r . tobacco
displays can be justified as this would stil a e wen the ectrum of freedom
of expression compared to the of tobac the impact of retail
displays in promoting its use.
Legislative implications A
71. A Smoke-free Environments . . e 2010 legislative programme
with priority level 5, ie drt+A ed in 201 O. Bill is the
appropriate legislative or progres' h¢proposals outlined in this paper. It is
now proposed to I 0 so that the Bill can be introduced to the
House and have ing bef
0
iament rises for the Christmas recess.
Regulalory
72. A full re tatQry<1lJ'lpact to this paper. The regulatory impact
analy is proposed in this paper, focussing on the
re 0 t bacco pro retail display. The regulatory impact statement was
in Iy reviewed . 'n the Ministry of Health and the analysis was assessed as
[me the criteria.

Disability perspective
here a o' nificant implications form a gender or disability perspective. The
elp address high smoking rates among target groups such as Maori and
Smoking rates are also higher among people with disabilities.

t is proposed that this policy be announced once agreed by Cabinet, including
roactive release of the Cabinet paper and] publication of the Regulatory Impact
Statement.
O
75. The announcement could also make appropriate reference to the Parliament's Maori
Affairs Select Committee Inquiry into the tobacco industry in Aotearoa and the
consequences of tobacco use for Maori. The Committee is on the point of reporting.
The overwhelming weight of submissions has been in favour of reducing smoking rates
effectively to zero by removing commercial tobacco supply altogether. Once the
Committee reports the Government has 90 days to respond.
Recommendations
76. It is recommended that the Committee:
9
DRAFT 29 September 2010
1. Agree to a package of new and improved controls on the retailing of tobacco
products, including:
1.1 prohibiting the display of tobacco products for sale;
1.2 tightening controls on the display of trading names that include erms signifying /<.
the availability or price of tobacco for sale;
1.3 taking a consistent approach to the regulation of a ch as
retail display of smoking accessories, display and si a e irements .
automatic vending machines, requirements for r in and "!!i'bk'
Kills" signs, and display of tobacco product price Ii . , V
1.4 providing smoke-free enforcement officers with strong infor tion
discovery, search and seizure to aid i ation of co . with the
controls on tobacco retailing;
1.5 providing smoke-free enforcement h tice powers to
issue instant fines to first 0 people under
18 of age during controlled purc e Ions;
2. Agree the package described in aboiwou est be implemented by
a combination of amending ry leg namely the Smoke-free
Environments Act 1990, and ve a In furth e tld1'1s under this Act;
3. Note the combination of en d legis' developing further regulations
unnecessary and i 0 mall retail businesses;
4. Invite the ASS=' t .. er Ofe s uria) to direct the Ministry of Health to
work with a smok - ree n orcement officers on effective options to
p on small retail businesses;
5. Invite th a1¥e t Health (Mrs Turia) to direct the Ministry of Health to
SOC WI r sals for further regulations under the Smoke-free
Envi ts 2011;
e Associate Health (Mrs Turia) to direct the Ministry of Health to
JAiftJr progress by stralia on its proposal to legislate for plain packaging of

2lCco p cts and explore the possibility of New Zealand harmonising or
develo iIten"1&-: arrant it [or] by 30 June 2011 ;

herwi with Australia, and report back to Cabinet as appropriate when
Q in paragraphs 1.1-1.5 above, including any necessary changes to
gu tion-making powers;

. end the Smoke-free Environments Amendment Act 1990 to give effect

e the Smoke-free Environments Amendment Bill is in the 2010 legislation
5' with priority Category 5 (instructions to the Parliamentary Counsel

Office to be provided in the year);
9. Agree that drafting instructions for the Smoke-free Environments Amendment Bill
Q 2010 be issued to the Parliamentary Counsel Office by the Ministry of Health.
10
DRAFT Regulatory Impact Statement
Better Retail Controls on Tobacco
Agency disclosure statement
This Regulatory Impact Statement has been prepared by the Ministry of
It provides an analysis of options to deal with the problems to
tobacco displays in retail outlets. Some related problems with the cur n r u ry contro s
for tobacco retail are also considered. A
The preferred option Is a package of amendments to the Smok"", nments
• prohibit the retail display of tobacco products
• prevent the use of trading names in a way that adver s cco produc

aid their investigation of compliance with the reg r ontrols c retailing
• provide smoke-free enforcement officers ment to issue instant
fines to retailers who sell tobacco prod
The analysis assesses these propos s .. wider co .
economic burden it causes
• the Government, 's i duce a coherent set of policies to
address the harm ca IJ smoking, i In a comprehensive ban on all forms of
tobacco f91
• the role a !ppor' g the effectiveness and value for money of
other meas taken 0 r ce smoking initiation by young people and also
encourage a ort r
• the onsultati Ken on the proposal to prohibit retail tobacco displays
st a detailed consultation letter issued in March 2010.
, Wit' 's er context, and type of analysis undertaken on the specific issue of
co dis s is commensurate with the implications of taking this additional step at
1 . ti . The wei 'bmissions and evidence received in response to the consultation

Ie r research evidence, overseas experience and indications of public
. i 'nion, analytical support to warrant progressing with the proposal.

I ory impact of the proposal arises from the costs that removing existing
! toba 0 di I s in retail outlets would impose on those businesses, primarily the need to
I -fittings in o.rder. to comply. Representative costs have been assessed and

or a range of situations.

ey aspect of the proposal is to further assess and minimise these costs by working with
i ilers to identify workable solutions and allow for flexibility over compliant methods and
, timeframes for implementation. These refinements to the proposal would be introduced
(Q)
I" through subsequent regulations to be promulgated under the amended Act. This process
i will ensure that any gaps or uncertainties in the assessment of business impacts and
I compliance costs are addressed before the final regulatory details are confirmed.
[Name and designation of person responsible for preparing the RIS]
[Signature of person] [Date]
DRAFT 29 September 2010
Introduction and context
1. The specific issue addressed by this regulatory impact statement is the adequacy of
current regulatory controls on the marketing and retail supply of tobacco, and in /Z
particular the restrictions on the display of tobacco products at point
2. To provide the necessary context to properly understand and analy t's , this (\
section first summarises the significant health, social and econo'c e at the 0
current levels of smoking place on New Zealand, and n g
development and implementation of a comprehensive and ent licy respo
this wider problem.
3. Reducing smoking rates is a clear Government ative
consequences on human health and mortality from .
established. Tobacco smoking is the single ntable c Iy death in
New Zealand, killing more people than all othe Ie th combined.
Half of all long-term smokers die of a s· a verage of 15
years of life. An estimated 5000 New Z n s aie ea ar to direct smoking
or exposure to second-hand smoke, aths occur in middle-
age (35-69 years) representing a sin pr i capacity.
4. Smoking causes around 85% ca c , Ich are the leading cause of
cancer death in New Zealand, <lind is II ked to types of cancer. It is a major
cause of heart attacks, strokes, ardio s iseases, major respiratory
diseases such as emPh;ebronchitis t a, and also a range of other
conditions es nd infertili Ii additional health system cost that can
be attributed to sm' d dise§]. c ently estimated at $1.9 billion per
annum
1
. V
5. Smoking is ealth inequalities in New Zealand. Maori women
are twice as IW: be kers as women in the total population. Maori men
and .. n e 50 e: t e likely to be current smokers than men in the total
pop tio lYJ ps are over-represented in the statistics for smoking
re e t and have reduced life expectancy.
rngly take prehensive approach to addressing the harm caused by
6. Sm I ates been falling since the 1970s as successive Governments have

ough the Smoke-free Environments Act 1990 and subsequent


. Rai5'lJ!Pt r e of tobacco through excise tax has been an important policy tool. Most
rec tly,' pril 2010 the excise was increased by 10% on manufactured cigarettes and

oose 'roll your own' tobacco (to equalise the level of excise by weight of

co content). The excise will increase twice more by at least a further 10%
tlep nding on any additional inflation indexing) on all tobacco products in each of

anuary 2011 and January 2012. With excise tax and GST comprising about 70% of
he retail price of cigarettes, these excise increases have a significant impact on price.
O
Price elasticity studies indicate that each 10% rise in tobacco price leads to a 5%
o decline in demand, including prompting 2% of current smokers to quit.
8. Significant new funding for tobacco control initiatives was provided in the 2007 and 2008
Budgets. Much of this funding is directed at increasing access to cessation support for
smokers to increase quitting. In 2009, Providing Better Help for Smokers to Quit
became one of the Government's six priority targets for the health sector. This health
target is driving clinicians to systematically assess and address the smoking stc;ttus of
hospital patients. The approach is now being extended into the primary care sector, and
1 Ministry of Health (detail to come)
2
DRAFT 29 September 2010
is supported by government-funded smoking cessation services such as Quitline and
subsidised nicotine replacement therapy (gums, lozenges and patches) and other
pharmaceuticals.
9. The Government also funds media campaigns, such as the Health SPiErshiP
Council's Smoking Not Our Future campaign targeted at preventing y e pie
taking up smoking and the Face the Facts campaign aimed to ers to
quit, particularly among target populations such as Maori and pr 0 en
10. Despite all these measures, about 650,000 New o'ri I every
over the age of 15, continue to put their health and lives at risk by o-n
a daily basis.
11. Nicotine is a highly addictive substance, but unlike ilarly addicf an erous
substances, tobacco is a legal product and ci Iy haviour.
This is in large part due to decades of concert tl 0 om ercial
marketing by tobacco companies. =
12. However, public opinion as measured b IQ and m' nte analysis has
demonstrably shifted against smoking attituicon' e to harden. The
2010 tobacco excise increases wer p e by an ov i!ing Parliamentary majority
of 118-4. Surveys also show s rs are increasingly aware of
the damage it is causing their e ret th me addicted and express
support for stronger sures. survey, 44% of smokers
reported having tried 'n the last
13. New Zealand's cUilr t ettin
5
g
s he objectives, principles and key elements
of the World Heal a 's ion's 0 Convention on Tobacco Control (FCTC),
which New Zeala r came into force in 2005. Amongst other
FCTe, . Ipating countries including New Zealand have
agreed to co advertising. Subsequent non-binding guidelines
. n to assist in implementation have clarified that retail
of ertising that should be prohibited under the FCTC.
definition
Act 1990 and its subsequent amendments and

i a number of provisions restricting the promotion of tobacco and
pr .. i vertising of tobacco products in all media, including both inside and
=
. e ail outlets.

ever, tobacco products available for sale may still be displayed in retail premises,
ub ct to a number of restrictions, including:
Tobacco products must not be visible from public places outside the retail premises

· At each point of sale, the tobacco display is limited to a maximum of 100 cigarette
o packets and 40 cartons.
• Each tobacco display may include a maximum of two packets of the same variant
• Tobacco products may not be displayed within one metre of certain products such as
confectionery and ice cream, soft drinks and products that are marketed primarily for
children.
• Tobacco products may not be displayed on a counter top or similar surface.
2 MoH TUS 2006 (detail to come)
3
DRAFT 29 September 2010
• If tobacco products are displayed within two metres of a point of sale, a sign stating
'SMOKING KILLS' must be displayed in clear view of the customer at the point of
sale (the Ministry of Health supplies free signage).
16. At issue is the continued adequacy and effectiveness of these on
retail displays in achieving the Government's policy goal to reduce sm Of©
both:
• how the industry has responded over time, and
• new understandings of the role of retail tobacco display mo ng SmOking\?
undermining other elements of the Government's tobacco co I inii:,iar s.
17. Retail tobacco displays are a common feature in dairies, er kets
and petrol stations. The number of outlets 0 s . g even as
the average cigarette consumption per adult N la er has ing.
3
18. With the prohibition of other forms of . . g an tobacco
companies have responded by channelli <their arketin maximising the
impact 01 the allowable retail . the visibl ity"ah prominence of their
product.
19. In many retail settings the spatial a 'on of 0 e rom children's products still
allows a visual impression of ' a't 'along . s of snack foods,
confectionary, magazines and ot -call ,s purchase items. Retailers with
more than one point put she ide by side to create a visually
larger display, someti re e red to as a ' all'. These prominent tobacco
displays are a of lar v . nce stores and petrol stations.
20. Tobacco diSriP e to the prod\.lct of a sophisticated marketing
approach de aximi re ss of the existence and ready availability of
tobacco Rrod
21. There s'ng evid 0 t the role that retail tobacco displays play in
'nor. lisi 'to acco, g the likelihood that children and young people will start
s . d prompting lnWu se purchases among ex-smokers and smokers trying to
quit. e is a 0 increasing public concern about retail tobacco displays, widely seen
nomaly i ealand's otherwise comprehensive tobacco control programme,
w,
"> the sibility they afford tobacco products in the retail setting. Displays
re see=o tra£lict the otherwise clear message that children and young people
V and smokers attempting to quit.

receive ute dangers of smoking and act as a prompt for impulse purchases by
of evidence from a number of studies indicates that exposure in everyday

. settings to tobacco displays increases the susceptibility of children to experiment

itli moking and become addicted. Similarly there is growing research evidence of the
ay tobacco displays influence smokers who are attempting to quit, providing a
psychological trigger to resume smoking in a setting where the product is readily
©
available for an impulse purchase. This undermines the impact of other Government
() initiatives such as tobacco excise tax, graphic health warnings on tobacco products,
subsidised nicotine replacement therapy and anti-smoking medicines, and promotion of
smoking cessation services through media campaigns and the Government's priority
health target, which are all designed to encourage smokers to quit.
3 detail to come
4 The number of brand variants available for sale in New Zealand increased from 152 in 2002 to 184 in
2006. The 2003 amendments restricted displays to 2 of each brand variant at each point of sale.
5 detail to come
4
DRAFT 29 September 2010
23, In summary, the key problems with existing tobacco displays are:
• children and young people are regularly exposed (in around 10,000 retail outlets) to
prominent commercial display of a product that is not an ordinary consumer good, but /"(
a highly addictive and harmful substance
• smokers who are trying to quit or who have successfully quit i(a(/y gularly((=> (\
exposed to the prominent visual cue of tobacco displays, ring
• displays present tobacco products in a way that the
effectiveness of the graphic pictorial warnings required cco packaging t ow
the variety of dangerous health consequences of smoking
• tobacco displays are an exception to what is comprehen" on
tobacco advertising in New Zealand, As d I forsm t ing open to
them, tobacco companies have invested co' b esourc into esigning,
placing and furnishing the displays in a w imise otional impact.
24, The evidence for these issues is well est 'sh ,as set I below:

a maximum of 100 packets ttes and 4.' . rt9 ,per point of sale (Le, per till or checkout).
However, retailers oftei]ns units 'de to create a visually larger display, sometimes
referred to as a 'power , G _
Point of sale advi!i' , g, as f tobacco, is a promotional tool used to
awareness of pro , unicat i ation, stimulate trial and encourage repurchase.
Currently, th QQ.?tio a t the point of sale means that they are highly visible to all
customers - N:reJikf 9 vulner I n umers such as children, young people, ex-smokers and
smoker yin ifuqult.
Point plays as 'the industry's most important sphere of influence'?
othe ue$ f. r6m()tinganOqdvertisipg
display.. V: .... ecomeiik:rea.singlyiillpprtant·tq is
i. ••.· ..
tqbaccco cqnipanies to releile,s as tob"cW pete,over the· .
of $10,000 to stobkcertain brands of cigarettes.
lO
.•••. •...••........ .

' •. d •. ... dr. aN. ..e.- .... ..
..... " cco companies have argued thClt .. are ." t8 of, the
. pro ucts available to thern and to promote brand research has found that
smokers are actually highly brand loyal and generally 'do not switch brands, each year only about 7%
6 McCarville, R. & Bee, C. 1999. Point of purchase techniques and their influence on tobacco consumption: A review of literature in private sector Journals.
Report prepared for Centre of Behavioural Research and Program Evaluation, University of Waterloo, Ontario.
7 C-Store: The route trade and oil channel magazine. 2006. Putting a squeeze on cigarettes. 8(2): 6.
8 Lavack, A & Toth, G. 2006. Tobacco point-of-purchase promotion: examining tobacco Industry documents. Tobacco Control Online. 2006; 15:377-384. 001:
10.1136/tc.2005.014639.
9 Rook, C, Cheeseman, H, Dockrell et all. 2010. Tobacco Point of Sale (PoS) Displays in England; A Snapshot Survey of Current Practices. Tobacco Control
On-line May 14, 2010.
10 Forbes, S. 2005. Big cash for smoke-sellers. Article In Central Leader newspaper. Published 10/5/2005
5
DRAFT 29 September 2010
of smokers switch brands.
11
One Australian study has shown that l.ess than 1% ofs,mokersuse
tobacco displays to inform their brand choice.
12
This suggests that tobacco qisplays are actually an
ineffective means of encouraging brand switching. .. '"
A number of international jurisdictions have implemc:mted or are considering impl
tobacco, displays in retail outlets and there is e)1Jf3rglng evi,d(3rice supporting .
such bans. . ". ." ....
Qomparable countries as Australia, the United Kin9dOrh, Gaha.darlrn J..la d ,andNo .
have all taken steps to remove retail tobaccgdisplays.,Voul!1§rno· ',. t ,s., ve
declined' in . Iceland (2001)13 and r' . ctio,t() rem,ove ,'tOJ?aCG6
The average 'age of In
· .•
A study by the Welling . '.' .... I iC'nQ?S:sed fn Octob€)r2006,foUlld that E;tore.sin
.. ...•... ta ".S' 1 ... o. uth ....•. i, ... ' ....•••. l.j ... .. G ...a •••....••.•• o. p.,.,:.U.1 ...,.a.t .•.••.iO. :.n ...••...... '.w.: ..•,.e .••..r ...• e.,.,.t ..h •...•.e ....•" m .. o ... s.t. n.;eIY. ' ....to.:,; ..•.b. e." ..•.••....•.i.n .. la. t ..• iO ... n ..,' .. Of.,'
especially tb children,
sploking 's .. .. ;.Be§e!3-fc,h.· .... · ..• lfoIith .. ',.\
li,%w
C
.. .
generglated, t yare more >';' ' , .....•.... ;.'
. . .
smoke whih to uit
•. ,6t, .... Ifout'findit •..
Ine tobacco products." The NewZealand'Tooacco Use Survey ,20013 s.howedlhat·,

41., f . Bee, C. 1999. Point of purchase techniques and their influence on tobacco consumption: A review of literature In private sector journals.
e ort for the Centre for BehaVioural Research and Program Evaluation, University of Waterloo. Ontario.

akefield, M, Morely, C, Horan, J, & Cummings, C. 2004. public opinion about point of sale tobacco displays in Victoria. Report for the Centre for Behaviourat
earch in Cancer. The Cancer Council of Victoria
©
13 detail to come
()
14 Ministry of Health. 2007. New Zealand Tobacco Use Survey 2006. Wellington: Ministry of Health.
15 Lovato, C, Linn, G, Stead, LF & Best, A. 2003. Impact of tobacco advertising and promotion on Increasing adolescent smoking behaviours. The Cochrane
Database of Systematic Reviews. Issue 3. Art. NO.:CD003439. DOl: 10.1002/14651858.CD003439
16 Paynter J, Edwards R, Schulter P, McDuff I. 2009. Point of Sale Tobacco Displays and Smoking among 14-15 Year Olds in New Zealand: A Cross Sectional
Study; Tobacco Control 2009; 18; 268-274
17 Cigarettes and Candy - A Study of Retailer Compliance with the Point of Sale Tobacco Display Regulations in the 2003 Smoke-free Environments
Amendment Act. Department of Public Health, Wellington School of Medicine and Health Sciences, 2006.
18 U.S Department of Health and Human Services. 1994. Preventing tobacco use among young people: A report of the surgeon general. Atlanta,
Georgia: U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control and Prevention, National Center for Chronic
Disease Prevention and Health Promotion, Office on Smoking and Health.
6
DRAFT 29 September 2010
around 65% of smokers had tried to quit in the last five years, and that approximately 45% of
smokers had made a quit attempt lasting at least a week in the last year19 .
Research has found that point of sale stimuli, in particular bright visual asthose on
cigarette packages in tobacco displays) encourage unplanned purchases.
2
2122 3 Retail tobacco
displays have a particular impact on vulnerable consumers, Ell1ch as peop '/experiencin
nicotine withdrawal sYmptoms, and can prompt impulse purchases. 2425
Related issues with current regulatory controls on advertising V
tobacco advertising by allowing a retailer'S trading n9-=be displaye xterior
of the business regardless of whether the 101 s I Y
advertise the availability of tobacco, so long as c c mpany, a d brand
names and trade marks are not involved,
26, A relatively small number of businesses se as intended,
although there have been concerns larly wi IJ 'esses using terms
such as "discount tobacconist" to im 'es on cco oducts, Promoting
tobacco for sale at temporarily t permitted, There has
been a clear recent upsurge in he of bus' e rading under names
suggesting cheap tobacco an di thems specialist tobacconists, This
upsurge has been linked to to displays from retail outlets.
A number of jurisdictio ave remo have provided different
regulations for f sale display limits do not apply to
"tobacconists"" It lin obacco excise increase in April 2010,
This indicates ad' attem t l r the intended effect of a price rise by
absorbing co osts a r' ely marketing to lower income and price
sensitive sm 0 hav i rates of smoking than the general population.
s 've f smoking), ' I Y and signage requirements for automatic vending
ma ' ,rules or Smokin Kills signs, price lists etc. While not currently problematic
oms kin c could provide an avenue for general marketing imagery
<::Rf selves, e visions would need to be kept relevant and internally consistent

amendment to the regulations on retail displays
D rceme n):? mpliance issues
8. Health is the agency responsible for the administration and enforcement
'V S ke-free Environments Act 1990. The Act provides for the appointment of
- I' e Enforcement Officers to enforce its provisions through investigation of

ip lry 01 Health. 2007. New Zealand Tobacco Use Survey 2006. Wellington: Ministry of Health.
©
20 Carter, 0, Mills, B, and Donovan, R, 200B; The effect of retail cigarette displays on unplanned purchases: results from immediate post purchase interviews,
()
Tobacco Control, June 2009; lB: 21B-221
21 McCarville, R & Bee, C. 1999. Point of purchase techniques and their influence on tobacco consumption: A review of literature In private sector journals.
Report prepared for the Centre for Behavioural Research and Program Evaluation, University of Waterloo, Ontario.
22 Wakefield, M, Germain 0, and Hendriksen L, 2008. The effect of retail cigarette displays on impulse purchase, Addiction, Vol 10. 103 Issue 2 pp322-32B
23 Hoek, J, Gifford, H, Pirikahu, G. Thomson, G. Edwards, R. 2010. How do tobacco retail displays affect cessation attempts? Findings
from a qualitative study. Tobacco Control 2010;19:334-337.
24 New Zealand Tobacco Use Survey 200B:Quitling Results, Ministry of Health, November 2009, pp 48-50
25 Lavack, A & Toth, G. 2006. Tobacco point-of-purchase promotion: examining tobacco industry documents. Tobacco Control Online. 2006; 15:377-384. 001:
10.1136itc.2005.014639.
7
DRAFT 29 September 2010
complaints and the collection of evidence. These officers are employed by the Public
Health Units of the District Health Boards.
29. Smoke-free enforcement officers respond to complaints of alleged breaches of the
legislation, and also undertake proactive enforcement and such as
controlled purchase operations, where a young volunteer under the a e<6f::,f8
to purchase tobacco.
30. Anyone who supplies tobacco or herbal smoking products er
18 years commits an offence under the Act punishable by a'n up a 2,000. T V
offence is one of strict liability.
31. Smoke-free enforcement officers appointed by the by
conducting controlled purchase operations for toba (pt cts with the a
volunteer under the age of 18. Prosecutions 0 ce are and costly,
with approximately $67,000 spent in 2009 on r itor The average
penalty imposed by the Court is $300, an $5000. In
a number of cases involving young defen nts fl sHim en Courts have
discharged the defendant without Ministr 0 Ith will not take a
prosecution against anyone under
32. There is some evidence that I la ovisions in the Act are not
being followed. A 2006 study th Medicine found that 64% of
retail outlets were not fully comp .
compliance than f . the §1' r rc by the Wellington School of Medicine,
however, non-co e s high r(ff1at:l\d irable. Overall, 39% premises visited
were . ial rther checks by Ministry of Health officials
found that 2 r ses w r n- pliant on the first visit, subsequent follow-up
found that on remis f premises initially visited) was still non-compliant.
34. these c . n checks suggests that issues of non-compliance are
the d lack of clarity about what is meant by some of the
d' sions, deliberate non-compliance.
trade discount and rebate provisions

28 free distribution and reward schemes, and places
e offer of rebates by manufacturers, retailers and others with regard
() • m u cturer, distributor, importer, or retailer of tobacco products may distribute or

to c r ucts. In summary, the Act states that:
ny tobacco product free of charge or at a reduced charge
charge includes providing tobacco with another product that is free or reduced.

A reduced charge excludes a normal trade discount or normal trade rebate
• no person may offer a cash rebate to a retailer, including as an inducement in relation to
©
purchasing, selling, advertising or locating tobacco within the retailer's business.
, 36. It is apparent that rebate schemes operated by tobacco companies for retailers are
commonplace. The rebates are linked to the volume of tobacco sales. The Ministry of
Health has investigated these schemes and written to each of the three main tobacco
companies setting out where the companies' rebate practices appear to be in breach of
the law. Responses from Imperial Tobacco and Philip Morris assert that their rebate
arrangements are lawful, normal trade discounts.
26 Cigarettes and Candy - A Study of Retailer Compliance with the Point of Sale Tobacco Display Regulations in the 2003 Smoke-free Environments
Amendment Act. Department of Public Health. Wellington School of Medicine and Health Sciences. 2006.
8
DRAFT 29 September 2010
37. While the Ministry believes that the rebates breach the law, progress has been
constrained by the Ministry's inability to require tobacco companies to disclose details of
the schemes. The industry and retailers claim the terms of their agreements are subject
to confidentiality provisions, and that disclosure would put them in contract
Objectives (? (\
1. The over-arching policy objective is to ensure that the regulat r on
commercial marketing and retail supply of tobacco support ov ment's ov :cw
policy goal of reducing smoking, are consistent with New Zeala ' intern ional
tobacco excise increases, health warnings, media c R s and the nt's
priority health target (Better Help for Smokers
2. In a specific objective is to counter of tobacco
the susceptibility of young
• can trigger relapses among to
• provide a means for -to c el dvertise their product, despite
international agreements a e ealand tobacco advertising
• contribute to of toba co r r even desirable consumer good,
undermining the eft v· ss of heal I s to inform the public of the risks of
smoking and gns j discourage It
Regulatory
Options
A

implement a comprehensive package of improvements to the
W
u t for the retail supply of tobacco products.
e include a combination of amendments to the Smoke-free

Environ t ct, and subsequent regulations to be promulgated under the amended
<)
the display of tobacco products in everyday retail settings
trading names with terms like "discount tobacconist" from being displayed in

a manner akin to advertising (eg. on signs or hoardings)
• New powers to improve enforcement and compliance with existing regulatory controls
O
on tobacco retailing, including:
o - Instant fines (infringement notice powers) for sale of tobacco to under-18s
- Requirement for retailers to provide enforcement officers with information or records,
including enhanced powers of entry, search, and seizure to discover information and
records
- Resolution of the "normal trade discount/rebate" issue:
9
DRAFT 29 September 2010
Retail displays
40. The central proposal in this package is to extend the current controls on the advertising
and promotion of tobacco products by prohibiting visual display for sale.
41. This be implemented by a combination of amendments to the
regulations. (\
42. It is proposed to work the subsequent regulations up in consulta . 't r ailers
smoke-free enforcement officers to ensure effective and uti ns
the policy goal but minimise as far as possible the regulatm' act nd compli
costs, relative to the size of the businesses affected.
43. This will require amending the current 0 ensure
resulting regulations can provide appropriate flexi ill i'e{)j J-bthli s or
different types of business, and also allow for a t d-in ti m liance.
(Note: regulation making powers may need to ces s of some kind
to implement exemptions and flexible . ,eg. for specialist
tobacconists who may have r v
Restrict trading names to avoid tobacco a v . i
44. The Act would be amended to n ain ter . names to be prohibited by
regulation, with reasonable tim m.
of smoking accessorie could oth' vide an avenue for tobacco
companies to ry suggestive of smoking), display and
signage require r omatic I machines, rules for Smoking Kills signs,
price lists
Infringement fr to sale of tobacco products to under-18s
46. It is amend enable Smoke-free Enforcement Officers to issue
em notices e offenders. An infringement notice is a proportionate
ret first time It would be a more efficient and cost-effective method of
enc ng with the Act by imposing a set financial penalty, while holding
for their action, and avoids the formality of court

'\ amendment to the Act establish the infringement offence scheme,
Q power to make regulations to enable detailed provisions such as
fe s an Me) s. Formal operational guidelines would need to be developed to ensure
S1
r. ement officers act in a consistent manner when issuing infringement notices

co sidering whether an alternative action such as oral or written warning is more
pp priate.

rovisions of the Summary Pro'ceedings Act 1957 may be used for the District Court to
review or enforce an infringement notice. Subsequent breaches could lead to
o prosecution involving the full range of penalties available under the Act.
Power to obtain information
49. It is proposed that where an Enforcement Officer has reasonable cause to suspect that
any person has information or records in their possession which may be relevant to the
operation or enforcement of the Act, or the investigation of a suspected breach of the
Act, the Enforcement Officer may require that person to furnish any information or
records in their possession.
10
DRAFT 29 September 2010
50. Any person who without reasonable cause fails to furnish the information required would
commit an offence.
Power of entry, search, and seizure· /(
51. It is proposed that for the purposes of the Act, an Enforcement ©:
reasonable times enter any premises where he or she knows or re n spects
that records are kept relating to the sale or manufacture of toba r u s in
contravention of the Act, and in any premises entered by ITE r, se ch for
examine, take possession or make copies of records. \) -
Contracts void
52. It is proposed that any contract, agreement, undert nderst J:l i, her or
for the promotion or sale of tobacco products i I t e 'c it is
inconsistent with the Act. /(,
Removal of 'normal' trade discounts V
53. There are a number of options to . g using the new powers
proposed above to obtain , t rovide that any contract that
provides for rebate schemes i(VQio, n enh . s of entry, search, and seizure
if a Smoke-free Enforcement offiCe ason p ts that records being kept in any
premises relate to the s manufactur 0 products in contravention of the
Act. S)
this is warra e dab a ional investigative and remedial powers
trade discount an sChi' r r analysis is required to determine whether
outlined abo f this issue is best resolved during the process of legal
I introduced to the House).
OthepfP))o?Jf -

retail tobacco displays has been under consideration for some time,
. c mg two for nds of Government consultation (in 2007/08 and 2010) and also

lament's Health select committee in response to Parliamentary
'. he issue has also been addressed by several submissions currently
/J und 'd tions by the present Maori Affairs Select Committee inquiry into the
V to co . try in Aotearoa and the consequences of tobacco use for Maori.
. ct statement were:

A. Take no further action at this time
B. No regulatory change, but rather invest additional fiscal resources into countering
©
commercial marketing of tobacco with government-funded anti-smoking advertising
() C. A combination of minor regulatory change and investing additional fiscal resources to
improve compliance and enforcing the current display controls
Analysis of costs, benefits and risks
57. The Ministry engaged an independent consultancy specialising in retail interiors and
construction to assess the likely changes need to comply with the proposal to remove
tobacco displays from sight, and the costs involved.
11
DRAFT 29 September 2010
58. A detailed assessment was undertaken of 11 sites. The sites were assessed for current
levels of compliance, ease of altering existing displays, limiting factors in
accommodating the changes, and likely impact on the business from the act of carrying
out these changes. While too small a sample to be considered fully entative, the
11 sites were a careful selection of typical retail outlets of different siz
configurations * (? (\
59. Of the 11 sites surveyed it was found the vast majority of tobacc
to make changes to comply with the proposed display incur .
doing this.
60. Across the sites, the following points were
• Average cost of implementing a solution to comp ,520.0 i an
upper quartile of $2,130.00 + GST
their business in the process on imple t' nges.
• Stores that had custom joinery face e' st comphan osts
• Stores that had existing tobacc I'>ao display found that often the best
• Stores with large tobacco dis r high t product would require more
extensive after sure minimisation of impact on
business operation . ontributed . premium to the cost of
implementing
• The cheapest . st Q atisfactory solution was to modify existing
under s whe i to suit the storage and sale of tobacco.
Unfortuna . w ften not appropriate or available on the site due to
the d' 's Itly terin I rn out existing joinery to suit. Replacing full
count hat attracts a higher than average cost.
ounter draw have the added benefit that shop staff would not need
way from the cu tomers, helping reduce opportunist shoplifting.
e 11 only one currently complied with the proposed changes.
/?/> this is not representative of the market.

0 It rved that tobacco product displays often took up all of the available wall
Q d the service desks
a bserved that a greater sample size would allow more accurate conclusions
etter estimates to be made.

of cost implications
61. Although the analysis was constrained by the small sample size, enough information
rcy
was gained to be able to comment on the likely upper quartile limits that the respective
tobacco retailer types, and tobacco retailers as a sector, are likely to face.
12
DRAFT 29 September 2010
Sample no. Estimated Cost Average Upper Quartile
Dairy 466.00
2 2,100.00 1,283.00 1,691.50
Large Dairy 1,650.00
2 1,650.00 1,650.00 1,650.00
Supermarket 2,785.00
2
3 - 1,328.33
Service Station 1,050.00
2 2,200.00
3 300.00
Conv' Store 3,300.00 3,300.
Avera es $1,520.00
62. The average price for implem.f' with the proposed
changes was estimated to be all retailers surveyed, with an
upper quartile of $2, :I- GST.(excl f@lsherecostisnil)
63. By type, ith las' are likely to face the greatest costs in
gaining complian 0 tf by su rma ets (excluding those that already comply),
average.
large . les ice stations facing the lowest costs on
64. The over 9it "d 2,130.00 + GST is thought to be over
repr se s represent a far smaller proportion of the tobacco
re that is repr by this sample.
65. As pe of the report as limited to commenting on the sampled sites,
extr atibn averages across the size of the market that each retail

type not strictly valid. However, with accurate numbers on the type of
e ch retaile W . Zealand, it should be possible to gain an indication of the likely

costs d by retailers.
() 66. Thg?n.ts concluded the upper qUartile. values shown fairly represent the.likel
Y

i ation each type of retailer will face in complying with the proposed changes,

as each retailer employs a reasonable quality at a reasonable cost approach to
e' olution.

otential exists for retailers to employ low cost, poor quality solutions that will comply
with the proposed changes such as keeping stock loose in a drawer or cupboard, or
rcy
providing a curtain across existing displays.
o 68. In sites that have the tobacco on display as part of a custom built unit, or where tobacco
company displays have been incorporated into other joinery, there could be higher costs
in altering the joinery to provide compliance. This is due to two major factors on these
sites, being that providing a custom solution would attract a premium, and that the work
generally has to be done outside of normal contractor work hours.
69. Sites that have tobacco company display units as stand alone display generally will .
have lower costs to face to replace them with appropriate joinery, or alter other existing
joinery to allow use for tobacco sales.
13
DRAFT 29 September 2010
70. All sites could be modified to accept under counter secure tobacco storage, but this is
generally at a premium to the solutions detailed within the report. The expected cost to
each retailer should they chose this option to comply with the proposed changes would
to be in the region of $1,700.00 - 2,300.00 + GST for smaller retailers an $2,800.00-
4,500.00 + GST for convenience stores and other retailers with higher r er or
premises. Modifying or replacing this joinery in this way would e rater
disruption to the business' normal operations than the other soluf n ed in thi
document.
71. These estimates included an allowance for all cleaning, h04 se
management and contractors margin, as well as other
to working on a particular site. This may include work
extensive dust control measures, callout fees and t . . ::\:0
72. On sites where it appears that it would be nduct normal
hours without adversely affecting business 0 er r costs
were based on work occurring during busi 0 ours night when the
business would ,,--V
implementing changes to i - nly r' ct on normal business
operations and should not adv se f s normal daily trade.
74. It noted that prior planning of wo e don se of skilled and experienced
contractors in live would c ving hassle free alterations, and
that the use of trades WI ut the exp OOJ c f working in these more demanding
sites might ion tog' ss than is strictly necessary.
75. Manufacturing as u anYif§[ ution for a site 'offsite' and then installing as
required eping io 0 a minimum. This is especially true where
units as supp' he tob 0 pany Imperial Tobacco are to be replaced with new
units, as J ing refitting the push forward display units is required.
t its controlled environment also ensures that the
qu' f t final produ t high against the costs incurred. Adding doors to
ex' is was investig d as a possible solution, but owing to the fact that all of the

rveye=re sing either Imperial Tobacco or British American Tobacco
. 'cultyof ese alterations and the cost of the result relative to providing a new

rd dis lays re not easily adopted to take doors, it was concluded that the

nit up. It was also realised that the disruption to business would be more
Q . t 9 units were altered, as more noise, dust and debris would be created,
as mg longer on site.
Ifi# analysis of issues raised in submissions
«/)%cco displays and their impact - the research evidence

Supporters of removing tobacco displays from public view contend that tobacco displays
()
function as a highly effective advertising and marketing tool in the absence of other
means of advertising. New Zealand research shows a link between tobacco displays
and the likelihood that a young person does or will smoke. Australian research also
demonstrates a relationship between displays and the urge to smoke experienced by
former smokers and those attempting to quit.
77. Opponents argue that other factors are responsible for youth uptake, for example, peer
pressure, or 'forbidden fruit'. One submitter (the UK policy think tank the Democracy
Institute) extensively disputed the validity and conclusions of the academic research, in
14
DRAFT 29 September 2010
particular the reliance of many studies on self-reporting of smoking intentions rather
than measured behaviour.
Comment
78. The existence of a link between tobacco displays and youth smoking from the
research, although the strength of the relationship varies. The ,Jeii1 d' lays
undermining smokers' quit attempts by prompting a relapse is les . I died, bu
research to date is consistent with current knowledge of i e
attempts. (Unlike the Democracy Institute submission, whic p'e to be
been peer-reviewed and published in reputable scientif literatur - includ y a '
similar submission to UK consultation on the topic, much of e . uted ,
leading New Zealand author
27
who refutes many of ocracy c ims).
The impact of removing retail tobacco displays on lence
79. Opponents of the proposal argued that the r for'
example, in Iceland and Saskatchewan, € eff ton 'king prevalence.
Supporters of,the proposal, me sou e onc uded that removing
had reduced ng people.
80. Further work to try and clarify e f these but it is unlikely that they
can be conclusively resolved. It sile ving tobacco displays as part of
an ongoing package control s "WIll contribute to a reduction in
smoking tim by ;)l')acc s presence at retail outlets less
prominent, but it is t rem lJatco products from sight will have an
immediate or dec I revalence.
81.1t is difficult e impa t1her Influences such as price changes, education
initiatives e effect of removing tobacco displays. The
cumulat'v of . pays is likely to be greatest on young people as
i r I a. This influence will feed into prevalence figures over
ti , rti larly by g to the ongoing decline in smoking uptake by young ,
pe I.

i of removing tobacco displays
d their representatives pointed to overseas evidence, principally from

Canada, s e closures and a loss of profits. New Zealand retailer organisations
() cern about the financial effect the policy will have on their members.

r v ded (unsubstantiated) estimates that 36 to 60 percent of convenience store
e retailers' business is from tobacco.
ersely, several New Zealand retailers, mainly small retailers, who sell tobacco but

it out of sight, indicated that the change had had little impact on tobacco sales to
existing smokers. Current smokers "knew what they wanted".
©
84. One major retailer organisation stated that the additional costs of the proposed policy
cannot be estimated at this stage, for example a predicted loss in sales for smaller
retailers through customers purchasing elsewhere and potential stock shrinkage.
Comment
85. The claims in relation to Canada's experience are generally unconvincing. Other factors
such as the global recession and illicit trade, the latter particularly in Ontario and
Quebec provinces, appear to have been particularly influential.
27 Professor Richard Edwards detail to come
15
DRAFT 29 September 201 0
86. The financial impact indicated by retailer organisations seems to suggest implicitly that
the policy would be effective in reducing tobacco sales. There is a problem with the
internal consistency of some of the industry and retailer arguments about the
effectiveness of removing retail displays and potential impacts on viability. /'(
If the policy would be ineffective at reducing tobacco consumption the ry uld not :
impact on sales, and vice versa. (? !\
87. The policy proposed is likely to have some impact on revenue fr c for0
some retailers and may impact on the financial viability Of= sre rs. Howe ,
other factors seem likely to be more influential both on rev nd . ancial viab i
than removing tobacco displays per se. Over the two decades een 1 00,
retailers adapted successfully to a significant reductio the number tes sold
into the market of convenience stores as an vice sta g that
- from around 3000 cigarettes per adult to around 1 I h entry
period, the number of tobacco retailers
Options for removing products from display /'(
88. The consultation document invited n tobacco products to
be stored under the counter within s - rame er options for putting
strongly opposed placing toba puts un ter, something supporters of
tobacco products out of sight. 0 re rs and their organisations
the proposal generally argued fo
Comment ()
89. Compliance xtent if retailers were, at least initially,
able to decide th e ow best with a requirement that tobacco products
must not be !? .
Costs
90. Much e t was concerned with the costs to retailers of refitting
re i es to remo 0 co from display. By and large the information provided in
s . i on the costs implementing the proposed option is less detailed than had
bee . ed. .... /)

premises provided by manufacturers and retailer organisations
cons' I . Figures of around $3,000 to $12,000 were estimated for placing
s under the counter, though one retailer currently uses a $10 curtain.
2. gaged a shop fit-out specialist company to provide independent advice
=e c ts of altering tobacco retail premises to comply with any legislation placing
t three petrol stations and three supermarkets were visited. In the draft report the

en.- roducts out of sight.. Eleven retailers, including four dairies, a convenience

costs of complying were estimated to be between $300 and $3,300. This sample of
ifferent types of retailers gives an objective indication of the likely compliance costs for
most retailers. A refit with new counters, not an easy option at some of the stores
visited, would be more expensive.
o 93. Cigar and duty-free sellers who submitted argued they would face very high costs to
comply with the proposed remqval on retail tobacco displays.
94. The other major costs mentioned were the possibility of increased time required for
training staff, managing stock and retrieving tobacco products for customers from
drawers or closed cabinets. Some retailers submit this could impact on the viability of
the business trading in other goods and services. Transaction efficiency and speed of
service are seen as key to successful convenience retailing.
16
DRAFT 29 September 2010
Comment
95. This situation may not arise or even diminish if retailers who have removed displays
from public view find they can meet current purchasers' needs with a reduced product
range. The experience of retailers who already don't display tobacco seems to
bear this out. & (\
Effective date for any changes A. >;; \::::j)
96. Opinions varied considerably. Tobacco companies and reta· 18 t
months to be reasonable for modifications to existing cabin r d opposed any
'immediately to 12 months for modifications and 9 m 0 3 years fo tl obacco
Comment !?/) ()
products under the counter.
97. Some flexibility with the time required to 0 visibility
seems a reasonable approach, notwithst ·ng t at this been mooted and
consulted on since 2007.
Specialist tobacconists
98. Supporters and opponents of r sal ha lK. \fews on how to define a
Cigar retailers felt re differen (,ory, til retailers as they need to show their
clientele, who are gen y t young, a 1((91 ge of cigars and pipes. Consumers
visit these e ess urchasing tobacco, and are unlikely to be
influenced by pro I ays. V
99. ally IS tobacconists should be subject to the same
provIsions
Comment ------..:
1 00. has hat the 'specialist tobacconist' category could grow
q. i umber if applied. Some provisions to prevent this and

an on entering such premises could be considered.
ere to the suggestion that smoke-free officers should have
ir .. ed to enable them to determine whether a retailer is specialist or not.
t stores are currently subject to the same tobacco display restrictions as

retailers.
. Irport duty-free retailers also argued for special consideration on the basis of the

. portance of tobacco to their viability and the convenience of visitors. They noted that
some overseas regulators had made an exception or different provisions for duty-free
O
stores.
o Comment
104. This issue will require further consideration, principally to find out more about how
other jurisdictions have applied their removal of retail displays in duty-free stores.
However, practice in New Zealand to date is that duty-free stores are subject to the
same provisions as other retailers.
17
DRAFT 29 September 2010
List of products
105. There was little enthusiasm from any quarter for the idea that retailers should have a
list of products for sale which would be available to customers who asked to see it.
Health submitters suggested it would be a form of advertising and
about the time involved maintaining it. A ©
106. It could be an option with provisions to prevent it
Surveys V '\0 \)-
107. Supporters of the proposal noted the high and rt for the
proposed changes. Wellington Medical School re t the t 0 mokers
supporting a complete removal of the display in shop plying
"somewhat" or "a lot", increased from 62 to 68 etwee$Y6@02008/09.
Recent UMR surveys conducted in April a h§V 0 support for the
complete removal of tobacco displays, a i re e rom o· 2008.
108. A survey for a retailer's organisa' n n ome hat removing tobacco
from display would have health b '. Ij survey f ew Zealand Association of
display ban would stop teenag 0 I g whil thought it would not. Thirty-
eight percent thought a ban wou oking, 57 percent did not.
Other issues raised. ()
109. Opponents baccoe'sp s romoted alternatives such as improved
enforcement of he I education of retailers and consumers,
raising the m' i of pu a government working more closely with the
retail industr . '"
e f r. .
110. . ers th submitters linked the displays issue with the
A13tailers retailers about the legislation, and to strengthen

. ers co cerns about robberies and security problems and an increase in

i' ade f lowl removal of tobacco displays. There is no identifiable evidence
suppor P\ili; cern. Some retailers who have put tobacco products out of sight
ave d s'b'tQ i crease security. Any link between removing tobacco displays and

illici I t uous. Illicit trade may be an issue in Canada, which is usually cited as
an a e, given it shares a long border with the USA where tobacco is cheaper.
R
hile illicit trade merits (and receives) monitoring and appropriate response in

aland, it is not currently a significant problem and more likely to be price driven.

. etailers were concerned about stock being seen while being dispensed or during
stocking. These issues seem manageable if any legislation provides some flexibility,
©
for example, permitting retailers to take all reasonable steps to minimise the exposure of
()
tobacco products, though enforcement may be difficult. Overseas precedents can be
examined in more detail.
18
DRAFT 29 September 2010
Summary comparison of costs, benefits and risks between options:
Option: Costs Benefits Risks
Preferred One-off costs for This is the only option
Option: retailers to modify that comprehensively
Prohibit retail
shopfitting <$50million addresses the problems
tobacco
over 3-5 years - say caused by retail tobacco
displays
$12m per annum displays, because it
maximum removes them.

Expected to
costs and lives' <t5S
e
quit rates rs
Id

relap, i e
10 e t oung

- n ) V
Alternative A: Reduced cost- Continued advocacy by
Take no
effectiveness of exist health groups etc. who
further action
poliCies S"gacco
advocate removing retail
at this time
excise incr d
displays, with high level

of public support
anti-s . m la
Reputational risk to NZ
has
S iA Our F
in light of FCTC

expectations & removal
of displays by
comparable countries
such as Australia,
United Kingdom and
Canada
xpenditure Minimal Public exposure to
i liar reach to a
This would not avoid the
widespread Government
a ent average 2-
impact of the retail
advertising might
()
display in 10,000
displays but would
generate criticism
ail outlets with
presentation and
provide a countervailing Ongoing presence of
effectiveness monitored
anti-smoking message. tobacco displays viewed
and maintained by a (Retails displays
by the public as
inconsistent with other
team of dedicated maximise their impact
tobacco control
tobacco company sales by being eye height and
measures eg recent tax
reps would cost >$100 at point of sale - this
million per annum
28
positioning is not
increase.
available to other
advertisers)
Alternative C: >$5 million per annum to Minimal, as breaches to Runs essentially the
Improved
assess, support & if current display same risks as
enforcement
needed to fully enforce restrictions tend to be Alternative A above
and
compliance at 10,000 minor infringements
Would also be perceived
28 Based on pricing rales per m2 for sIalic billboards in shopping cenlres hHp:llwww.aab.ca.nz/lndex.php?page=shopping·cenlres·b
19
DRAFT 29 September 2010
Option: Costs Benefits Risks
outlets and criticised as merely
increasing bureaucracy
without a ately
address oblem. ?
compliance

Consultation
113. Government has been considering options for tightenin est Ictions on re
displays for some time. Proposals to prevent retailers from open toba 0
were consulted on in 2007, with submissions 2008. were
114. In September 2009 the Maori Affairs Selec it launch an i quiry into the
also the subject of two petitions to
tobacco industry in Aotearoa and the e aori, with
public submissions closing in late Januar . s for retail displays is a
feature of many submissions.
115. On 22 March 2010 Cabinet appro 11 lease onsultation letter Proposal
of the consultation process an ro a on w e ot to proceed with the removal
to ban tobacco retail displays a d u hD port back on the outcome
of tobacco displays in retail outl .
116. Public and 21 May 2010. Over 1000
template letters pr 0 e 'nteres tl .
submissions . d. any s a al although about 850 were form or
117. About t s mot d the proposal (112 individuals, 753 form
letters). Sup r uded I hea h sector submissions, submissions from young
people, the jemw of i from the general public and a significant proportion
of the sub a in ividuals - about a quarter of these retailers.
t . stry opposed the proposal along with the majority of
ts dividual submissions and 107 form letters. All the

1 • ns and retail organizations, a small proportion from the general
ub . nd one from an overseas (UK) private research institute.
«/PI The primarily sought comment from affected parties on options for
and their costs. New information on the health evidence was

wef5j' is evidence had generally been considered in previous consultation.
Su itt ere told previous submissions would be taken into account, but most
r. still took the opportunity to repeat as well as update previous information.

might be expected, views were polarised with strong views expressed both for
gulatory initiatives to reduce smoking, notably the 2003 introduction of fully smokefree

and against the proposal. This polarity of opinion was characteristic of previous
©
indoor public and workplace environments. Ultimately, the issue comes down to a
()
judgment over what weight should be given to the Government's health policy goal
versus the likely reduction in sales by and costs to tobacco retailers. Retailer and
industry groups argue the health benefits are minimal or non-existent and the costs
overwhelming, while supporters of the proposal argue the benefits are potentially
considerable and the costs minimal or irrelevant in comparison with the health and
social costs from smoking.
121. Opponents of removing tobacco products from display focussed on:
20
DRAFT 29 September 2010
• compliance costs with estimates up to $12,000 per retailer were provided
(The Ministry of Health commissioned an independent assessment which indicates that in
practice average costs would be much lower, in a range from $330-$3,300.)
• business viability (there were assertions that tobacco makes up a Iy high
proportion of general convenience retail turnover - especially conveni s &
petrol stations) (7; ()
• claims of large scale closures of retailers, robberies and securi e
the proposed change (generally not substantiated with sUPR rf g e' nce).
• inconsistency with the general Government approach on busine
supporters) ('\
• strong assertions that impacts on smoking and from re v I lays
would be negligible (including challenges to studi s M
• if the retail display proposal is progressed, tr r feren 0 requirements
all tobacco "under the counter" and .
• support for alternative measures . h er existing retail instructions
and in particular the ban on sal under \?
122. Supporters of removing re I is I ys focu
uptake and undermi ttempts
• The need to set e likely to be exaggerated, against the cost
to the country c arm V
• The ort ai, including among smokers who have recently
quit or
• The a co i t essage that tobacco is not a normal product, but
• nal successes which support removal of retail displays and

a d frq 0 her consumer goods

who have removed displays and say it did not cost much or

m business benefits, for example, improved security and space to
tlisplay fo margin products.
. ry find. ings from the analysis of submissions are detailed in the earlier
v se I 'S_ary analysis of issues raised in submissions above.

and recommendations
r. hl2009 the Government's decided not to proceed with retail display proposals
effective strategy to reduce smoking rates and tobacco consumption. Categorical

ending new evidence from the international experience that this would be the most
©
evidence of the impact of retail display bans on smoking initiation and prevalence rates
will take some years to emerge, and is complicated by interactions with other policy
measures. But what evidence there is supports the case for the removal of retail
displays.
125. However the rationale for moving now to remove tobacco products from visible retail
display does not depend solely on evidence that removing retail displays significantly
lowers smoking prevalence. Removing tobacco displays will help reduce perceptions of
tobacco as a 'normal' consumer good and will contribute to reducing the harm caused
by smoking. No sudden or dramatic drop in smoking prevalence is likely solely because
of this measure. But it will, in conjunction with other policies, contribute to reducing
21
DRAFT 29 September 2010
tobacco uptake over time, particularly among young people, and also support smokers
to quit.
126. The main downside to the proposal is that there will be costs for retailers as they
adjust their shop fittings to comply - particularly for small retailers, typical
corner dairy. These costs will vary according to the options and timef de . ©
available for removing displays from sight, and may well be y obacco
companies as they have in the past.
127. It is therefore recommended that the Government kage of
improved controls on the retailing of tobacco products, - ,\:)0_-
1.1 prohibiting the display of tobacco e;
1.2 tightening controls on the display of trid' e hat
the availability or price of tobacco for .
1.3 taking a consistent approach e ers such as the
retail display of smoking acce rie, dl play. siNe requirements for
automatic vending ents for ea arnings and "Smoking
Kills" signs, and display of duct p ts;
1.4 providing e nt tronger powers of information
discovery, search an ei 0 igation of compliance with the
controls on tobacco ret . I ;
1.5 providing I s with infringement notice powers to
issue first OaR e h sell tobacco products to people under
18 of ag . g trolled rc s operations.
128. It would b5' e by a combination of amending the primary
legislation, n e smiie- nvironments Act 1990, and developing further
further r . s would I fa f exibility over options and timeframes for compliance
reAct. c ination of amended legislation and developing
in m oia ompliance costs and impacts on small retail businesses.
an;;)(sks

nstructive input from retailers in developing detailed regulations
b¥id 'be a i fa tation risk. However if retailers are not sufficiently motivated to
olutions it suggests the costs of compliance have in fact been

ot such a big issue.
130. isk round enforcement and compliance and the resources and systems required
this are essentially unchanged as the proposal modifies and if anything

an existing regulatory regime, rather than introducing major new roles for

enforcement and compliance. The main implementation issue relating to enforcement
nd compliance will be implications for the training of Smoke-free Enforcement Officers
relating to the use of their statutory powers, for example, issuing of infringement notices.
r(J
131. Ensuring that all retailers are complying with the proposed amendments will also be
o resource intensive given the large number of retailers that sell tobacco.
Arrangements for monitoring, evaluation and review
132. Established Ministry processes for monitoring will be used to evaluate and review
these proposals. The Ministry of Health has in place good surveillance systems that
monitor smoking prevalence at both an adult and youth (Year 10) level. There are also
monitors such as the Health Sponsorship Council "lifestyle" survey which could help with
measuring the denormalisation or people's attitudes towards tobacco.
22
DRAFT 29 September 2010
133. Questions that would help measure behaviour change could also be included in the
Year 10 Survey and possibly through question in the New Zealand health survey.
134. New Zealand is also part of the International Tobacco Control (ITC) Policy
Evaluation Survey. The ITC project is a mUlti-country study that
Zealand arm.
135. The International Tobacco Control Policy Evaluation Project Ject) is a
international collaboration of tobacco control researchers I 10 's to
the psychosocial and behavioral effects of national-level tob co I policies
throughout the world. The ITC Project consists of parallel a n urveys eing
conducted in 20 countries, inhabited by over 50% p pulat' n, % of the
world's smokers, and 70% of the world's tobacco us : ada, Unite s United
Kingdom, Australia, Ireland, Thailand, or ,Chi9' Uruguay,
New Zealand, France, Germany, Netherlands, . B gladesh au i ius, Bhutan
and India. Additional ITC Surveys are ad' . II ITC Surveys
are designed from the same conceptual fr. r nd me ds, d the survey
are designed to ti allyequi in rder to allow strong
compansons across countnes.
136. The ITC Project is evaluating owth ra Convention on Tobacco
Control (FCTC)-the first ever whic e ratified by over
160 countries. The extensive I u ys incl easures of each of the demand
reduction policies of
• More labels
• Removal ild", descriptors and brand imagery
• advertising, promotion, and sponsorship
• displays).

too tobacco smoke pollution (also known as secondhand
e or tobacco smoke)
Jt ITC Project are to:
"V evaluation of FCTC policies at the level of the individual
rstand the causal mechanisms responsible for policy impact-to
'V U erstand how and why a policy had its impact

0 actively disseminate research findings not only to researchers, but especially
') to policymakers, advocates, and the tobacco control community more widely in
order to promote strong, evidence-based implementation of the FCTC.
©
23

Sign up to vote on this title
UsefulNot useful