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2010
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
TOBACCO ADVERTISING PROHIBITION AMENDMENT BILL 2010
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Health and Ageing
the Hon Nicola Roxon, MP)
TOBACCO ADVERTISING PROHIBITION AMENDMENT BILL 2010
OUTLINE
Tobacco smoking remains one of the leading causes of preventable death
and disease among Australians, killing over 15,000 Australians every
year. The social costs of smoking (including health costs) are
estimated at $31.5 billion each year. Although the number of daily
smokers in Australia has fallen by more than half a million in the
last decade, approximately 3 million Australians still smoke.
The Government is committed to reaching the performance benchmarks set
under the COAG National Healthcare Agreement of reducing the national
smoking rate to 10 percent of the population by 2018 and halving the
Aboriginal and Torres Strait Islander smoking rate.
This Bill is the next step in the Government's anti-smoking action
which includes the 25 per cent excise increase announced in April
2010, record investment in anti-smoking social marketing campaigns,
and legislation to mandate plain packaging of tobacco products.
Messages and images promoting the use of tobacco products can
"normalise" tobacco use, increase uptake of smoking by youth and act
as disincentives to quit. Since 1992, most forms of tobacco
advertising have been banned under the Tobacco Advertising Prohibition
Act 1992 (the TAP Act). The object of the TAP Act is to improve
public health by limiting the broadcasting and publication of messages
and images promoting the use of tobacco products.
Since the 1990s there has been a rapid expansion of activity on the
internet including in the area of tobacco advertising and promotion.
Currently, ambiguity exists as to how the provisions of the TAP Act
may be applied to the advertising of tobacco products on the internet
and whether or not advertising of tobacco products over the internet
is permitted.
This Bill will make it an offence to advertise tobacco products on the
internet and in other electronic media such as mobile phones or
computers, unless the advertising complies with State/Territory
legislation or Commonwealth regulations. The offence provisions
contained in section 15A of the proposed amendments will apply to any
person who publishes in Australia a tobacco advertisement on the
internet or via any electronic means. The meaning of 'published in
Australia' has been extended in the Tobacco Advertising Prohibition
Amendment Act 2010 (the Amendment Act) to apply to circumstances where
the advertisement did not originate in Australia, or its origin cannot
be determined, and the advertiser has a significant Australian
connection. Such a connection would be where a publisher, who may or
may not be the defendant publisher, is:
. an Australian citizen;
. a permanent resident;
. an entity that was incorporated or formed in Australia;
. a foreign person in Australia; or
. a foreign entity or unincorporated body with its central management
and control in Australia.
The offence provision would therefore have, to some extent, extra-
territorial
operation. This is justified because the internet and other electronic
media are
potential means of publishing material that is accessible to the
public in Australia
that would be prohibited under the Amendment Act if other means of
publication were used. This extra-territorial operation of the
provisions is restricted by the fact that there must be an Australian
connection as explained above.
The maximum penalty for each offence under these amendments is 120
penalty units, which is $13,200. This is consistent with the penalty
units for other offences under the TAP Act and with penalties for
internet-related offences in other Acts, for example the Interactive
Gambling Act 2001.
Section 34 of the TAP Act allows the Governor-General to make
regulations prescribing matters required or permitted by this Act to
be prescribed, or necessary or convenient to be prescribed, for
carrying out or giving effect to this Act. The Amendment Act provides
for regulations to be made to prescribe specific requirements for
advertising of tobacco products over the internet or by other
electronic means. The regulations may prescribe requirements as to:
. the size, content, format and location of tobacco advertisements;
. the inclusion of health warnings, warnings about age restrictions
on the sale of tobacco products, information about any fees, taxes
and charges payable in relation to tobacco products; and
. age restricted access systems for access to tobacco advertisements.
This will bring restrictions on tobacco advertising and promotion on
the internet into line with restrictions in other media and at other
retail points of sale.
Financial Impact Statement
It is not expected that this will place any further financial burden
on the Australian Government over and above the current costs
associated with administration of the TAP Act.
Regulation Impact Statement
The Office of Best Practice Regulation has been consulted and approved
the Regulatory Impact Statement below. Detailed impact analysis and
consultation with affected stakeholders has been undertaken.
Introduction
Purpose of the report
The Department of Health and Ageing (DoHA) is exploring several
options for addressing tobacco product advertising on the Internet. It
has commissioned the Centre for International Economics (CIE) to
prepare a regulation impact statement (RIS) that analyses the
anticipated impacts associated with a range of options.
This report serves as the first stage of the RIS development process.
(Box 1.1 outlines the stages.) It acts as the consultation RIS,
documenting the options under consideration and detailing their
expected costs and benefits. The options span from 'do nothing' (that
is, maintain the current arrangements) to completely banning
advertising on the Internet (which would effectively inhibit the sale
of tobacco on the Internet).
|1.1 Stages of a regulation impact statement development |
|A regulation impact statement (RIS) under goes three |
|consultative phases. |
|The first step requires preparing a consultation RIS to be|
|circulated to key industry, government and public |
|stakeholders for comment. Before release, this draft must |
|be approved by the Office of Best Practice Regulation |
|(OBPR). |
|The second step involves consultation with key |
|stakeholders. |
|The third step involves preparing a final RIS based on the|
|consultation RIS and comments received during the |
|consultation process. The final RIS must be approved by |
|the OBPR. |
A RIS is mandatory where regulatory action will significantly impact
on businesses and competition. It is considered an important element
of good regulatory governance. This assessment is aimed at ensuring
that the action is 'warranted' and 'justified' (OBPR 2007). As such, a
RIS should present any available evidence on benefits and costs. The
process of developing a RIS is intended to enhance the transparency of
the regulatory process (and thereby promote public scrutiny and
debate) by providing comprehensive treatment of the anticipated
consequences of the proposed change.
In developing a RIS, Commonwealth Departments must comply with
adequacy criteria as set out by the Office of Best Practice Regulation
(OBPR). These requirements include outlining:
. the nature and size of the problem being addressed;
. the objectives, the proposed changes and any alternative options;
. the impacts on stakeholders and the costs and benefits to each;
. how the proposal will be implemented; and
. preliminary conclusions and recommendations.
CIE has prepared this RIS based on the direction and requirements of
the Department. As such, this report aims to provide a concise
discussion of each point listed above. Although the discussion around
the findings is largely qualitative, this report is based upon a
detailed and quantitative evaluation conducted by the CIE.
1 Background
1 Tobacco Advertising Prohibition Act 1992
A national ban on tobacco advertising - that is, direct cigarette
advertising on radio or television - first came into effect in 1973.
At that time, Australia also introduced mandatory health warnings on
cigarette packs. Over a decade later, the Smoking and Tobacco Products
Advertisements (Prohibition) Act 1989 nationally banned tobacco
advertising in newspaper and magazines. In 1992, the Commonwealth
introduced a more rigid ban with the passage of the Tobacco
Advertising Prohibition Act 1992 (the Act).
The Act serves as the primary vehicle governing advertising of tobacco
products in Australia. It makes it an offence to give publicity to or
promote tobacco advertising. Box 1.2 provides an overview of the Act's
stated objectives and definition of tobacco products. While much of
the emphasis is on cigarettes, the Act applies to all tobacco products
including cigars, pipes and pipe tobacco, loose tobacco, cigarette
papers, etc.
|1.2 Objective of the Tobacco Advertising Prohibition |
|Act 1992 |
|The Tobacco Advertising Prohibition Act 1992 (the Act) |
|took effect on 1 July 1993. It repealed the Smoking and|
|Tobacco Products Advertisements (Prohibition) Act 1989.|
| |
|The Act's stated objectives are (Section 3): |
|(1) This Act is intended to limit the exposure of the |
|public to messages and images that may persuade them: |
|(a) to start smoking, or to continue smoking; or |
|(b) to use, or to continue using, tobacco products. |
|(2) The object is to improve public health. |
|Section 8 of the Act defines tobacco and tobacco |
|products as: |
|(a) tobacco (in any form); or |
|(b) any product (for example, a cigar or cigarette): |
|(i) that contains tobacco as its main or a substantial |
|ingredient; |
|(ii) that is designed or intended for human consumption|
|or use; and |
|(iii) that is not included in the Australian Register |
|of Therapeutic Goods maintained under the Therapeutic |
|Goods Act 1989; or |
|(c) a cigarette paper, cigarette roller or pipe. |
As such, the definition of advertising captures a wide range of
activities that could be interpreted as promoting and/or giving
publicity to smoking and other tobacco-based activities (box 1.3).
Under the Act, advertisements include all writing, still or moving
pictures, signs, symbols, or other images or audible messages that
'promote smoking' - section 9(1). It effectively bans advertisements
via a number of platforms - including print (newspapers and magazines)
and electronic (for example, film, video, television, radio and
email).
Enforcement of the Act is largely reliant upon self-regulation.
Complaints and enquiries from the general public - as well as, State
and Territory governments, and nongovernmental organisations - tend to
be the primary impetus for conducting investigations into potential
breaches. Most investigations (of potential breaches) are resolved
without prosecution. DoHA notes that in most instances people are not
aware that they have acted in a manner that may be in breach of the
Act. When informed (generally via a letter), they take action on their
own accord to rectify the situation. Where continued non-compliance
has a strong likelihood of successful prosecution, DoHA may refer
cases to the Australian Federal Police for investigation and then to
the Department of Public Prosecutions. A breach of the Act attracts a
fine. The penalty units for individuals and corporations are 120 and
600, respectively. As at January 2007, one penalty unit is $110,
making fines for a breach of the Act $13 200 for individuals and
$660 000 for corporations.
The volume of complaints or queries handled in the past provides a
reasonable gauge for assessing the potential increase in
administration and enforcement costs. Since 2000, DoHA has handled 238
complaints or queries regarding the Act. The actual number on an
annual basis has varied substantially over this period. In 2000, DoHA
handled 95 complaints or queries. Since then, the volume of complaints
has fallen, averaging just under 20 complaints per year. Moreover,
since the Act's operation, there has been only one successful
prosecution, as a result of continued non compliance.
|1.3 Definitions of advertisement and publishing |
|Meaning of tobacco advertisement |
|The Tobacco Advertising Prohibition Act 1992 provides a |
|basic definition of a tobacco advertisement. Section 9 |
|states: |
|(1) Subject to this section, for the purposes of this |
|Act, a tobacco advertisement is any writing, still or |
|moving picture, sign, symbol or other visual image, or |
|any audible message, or any combination of 2 or more of |
|those things, that gives publicity to, or otherwise |
|promotes or is intended to promote: |
|(a) smoking; or |
|(b) the purchase or use of tobacco product or a |
|range of tobacco products; or |
|(c) the whole or a part of a trade mark that is |
|registered under the Trade Marks Act 1955 in respect of |
|goods that are or include tobacco products; or |
|(d) the whole or a part of a design that is registered |
|under the Designs Act 2003 in relation to products that |
|are or include tobacco products; or |
|(e) the whole or part of the name of a person: |
|(i) who is a manufacturer of tobacco products; and |
|(ii) whose name appears on, or on the packaging of, some |
|or all of those products; or |
|(f) any other words (for example the whole or part of a |
|brand name) or designs, or combination of words and |
|designs, that are closely associated with a tobacco |
|product or a range of tobacco products (whether also |
|closely associated with other kinds of products). |
|It allows a number of exceptions, such as for political |
|discourse and appearance on products, packaging and |
|business documents. (See the Act for more detail.) |
|Meaning of publishing a tobacco advertisement |
|Publishing a tobacco advertisement includes (Section 10):|
| |
|the advertisement in: (a) a document (including, for |
|example, a newspaper, magazine, program, leaflet or |
|ticket) that is available, or distributed, to the public |
|or a section of the public; or (b) a film, video, |
|television program or radio program that is, or intended |
|to be, seen or heard by the public or a section of the |
|public; |
|a person who: (a) sells, hires or supplies the |
|advertisement, or something containing the advertisement,|
|to the public or a section of the public; or (b) |
|displays, screens or plays the advertisement or something|
|that contains the advertisement, so that it can be seen |
|or heard in or from a public space or transport or a |
|workplace. |
2 State and Territory legislation
Each of the States and Territories has legislation that addresses
various aspects of tobacco and tobacco products. In addition to
addressing advertising, promotion and sales of tobacco and tobacco
products, they also often address public health issues, such as
smoking in public spaces (that is, environmental smoke).
Each jurisdiction has unique features relevant to the local context.
All jurisdictions prohibit sales of tobacco to minors, but penalties
vary as does the effort going into enforcement. The regulatory regimes
around the presentation and sale of tobacco products differ. Licensing
of tobacco retailers is not required in all states (for example, New
South Wales). Where licences are issued, the condition of sales
varies. The Australian Capital Territory, for example, allows only one
point of sale outlet per licence (which effectively precludes a
retailer from selling online and at a physical shop front under one
licence).
The standards and conditions governing tobacco product Point of Sale
(POS) tend to be quite prescriptive. These include specifying the
distance to a window, the number of products on display, how those
products are displayed, the size of permissible sales area (in square
metres), the distance to confectionary products, ticketing and
lighting. Recent changes in Tasmania signal increasing stringency of
restrictions. Tasmania now bans the display of tobacco products in
stores (that is, they must be placed under the counter).
The states and territories are also beginning to respond to the
challenges of Internet based sales and advertising. South Australia's
response has been to ban Internet sales. Rather than banning Internet
sales, Western Australia requires all tobacco products that are
shipped to be clearly labelled and with age verification upon
delivery. Other jurisdictions (such as the ACT and Tasmania) have not
passed specific amendments banning Internet sales, instead opting to
work within their licensing regimes (that is, approval of retail
licence applications for Internet based sales is required).
2 The essence of the problem: need for clarification in the Act
Since the passage of the Act in 1992, the use of the Internet as an
advertising medium has become an increasingly widespread. This trend
has presented a number of challenges about how to regulate and apply
legislation which has been designed for more conventional media
channels.
In particular, the advertising on the Internet:
. blurs the distinction between advertising and retailing;
. presents virtual sites that are able to be more easily and readily
accessed by a wider audience relative to physical sites (eg shop
fronts);
. a single site or advertisement can potentially saturate the 'market'
and/or effectively target specific audiences; and
. is more easily and frequently viewed by youths.
Importantly, these features of Internet advertising undermine the
effectiveness of the Act. The promotion and advertising of tobacco on
the Internet fosters the false perception that smoking is the norm. It
can undermine pricing policies aimed at deterring smoking. Lastly, the
Internet is increasingly accessed and used by youths - the
subpopulation most responsive to strategies given effect by the Act.
Moreover, retailers (and to a lesser extent manufacturers) suggest
that the same degree of guidance provided to advertising via more
conventional mediums is needed with respect to the internet. This has
led to a situation where:
. some advertising practices are undermining the intentions of the Act
through:
. the inappropriate use of website graphics;
. the use of enticing/inducing language in product descriptions;
. failing to display correct/appropriate health warnings; and
. the use of inter-site or network solicitation.
. there exists an increased risk for the sales of tobacco products to
minors (under 18 year olds); and
. there exists an increased opportunity to avoid payment of taxes and
duties levied on tobacco products.
Currently the magnitude of the problem of online advertising of
tobacco products is relatively unknown. However, trends overseas and
indicators domestically suggest that the magnitude of the problem is
highly likely to grow over time.
National and international efforts signal the level of concern
surrounding Internet tobacco advertising. Australia is a signatory to
the World Health Organization's Framework Convention on Tobacco
Control (WHO FCTC). Article 13 of the WHO FCTC has specifically
mentioned the Internet, as a medium for tobacco advertising, which
should be subject to a complete ban by its signatories (see box 1.4).
Guidelines for Article 13 were adopted by the Conference of the
Parties (COP) to the FCTC in November 2008. The Guidelines recommend
that, where a ban on Internet sales is not appropriate, restrictions
should be imposed, allowing only textual listing of products with
prices, with no pictures or promotion features.
In Australia, the Ministerial Council on Drug Strategy agreed to work
collaboratively to restrict both advertising and sale of tobacco
products on the Internet (see box 1.5). This focus is also echoed by
the National Preventative Health Taskforce in its recent discussion
paper. Announced by the Minister for Health and Ageing, the Hon Nicola
Roxon MP, on 9 April 2008, the Preventative Health Taskforce will
develop the National Preventative Health Strategy as a blueprint for
tackling the burden of chronic disease currently caused by obesity,
tobacco and excessive consumption of alcohol. The Taskforce released
its discussion paper, Australia: the healthiest country by 2020, on
10 October 2008 which is the first step in the development of the
Strategy. The discussion paper proposes that sales and promotion of
tobacco products on the Internet be banned.
|1.4 The WHO Framework Convention on Tobacco Control |
|The WHO Framework Convention on Tobacco Control (WHO |
|FCTC) is the first treaty negotiated under the auspices|
|of the World Health Organization. The WHO FCTC |
|represents a paradigm shift in developing a regulatory |
|strategy to address addictive substances; in contrast |
|to previous drug control treaties, the WHO FCTC asserts|
|the importance of demand reduction strategies as well |
|as supply issues (WHO 2008b). |
|The WHO FCTC was developed in response to the |
|globalization of the tobacco epidemic. The spread of |
|the tobacco epidemic is facilitated through a variety |
|of complex factors with cross-border effects, including|
|trade liberalization and direct foreign investment. |
|Other factors such as global marketing, transnational |
|tobacco advertising, promotion and sponsorship, and the|
|international movement of contraband and counterfeit |
|cigarettes have also contributed to the explosive |
|increase in tobacco use (WHO 2008b). |
|The WHO FCTC recognises the role of the Internet as a |
|vehicle to promote the consumption of tobacco products.|
|Article 13, Section 4e states, that as a minimum, and |
|in accordance with its constitution or constitutional |
|principles, each signatory shall: |
|(e) undertake a comprehensive ban or, in the case of a |
|Party that is not in a position to undertake a |
|comprehensive ban due to its constitution or |
|constitutional principles, restrict tobacco |
|advertising, promotion and sponsorship on radio, |
|television, print media and, as appropriate, other |
|media, such as the internet, within a period of five |
|years. |
| |
|1.5 Ministerial Council on Drug Strategy on tobacco |
|advertising and sales over the Internet |
|The Ministerial Council on Drug Strategy (MCDS) is the |
|peak national policy and decision making body for licit|
|and illicit drugs. The Council comprises the Australian|
|Government and State and Territory Health and Law |
|Enforcement Ministers, including Justice and Police |
|Ministers and the Australian Government Minister for |
|Education. The New Zealand Government is also |
|represented on the MCDS. |
|The MCDS Joint Communique (16 May 2007) addresses the |
|issue of Internet tobacco advertising and sales. The |
|Communique states: |
|Council members again discussed the complex issues |
|involved in stopping the advertising and sale of |
|tobacco products over the Internet and supported a move|
|by the Australian Government to seek to amend the |
|Tobacco Advertising Prohibition Act 1992 to broaden the|
|current definition of 'to publish an advertisement' to |
|include 'transmitting' the advertisement in electronic |
|form. |
|The MCDS agreed to work collaboratively towards |
|restricting the sale and advertising of tobacco |
|products over the Internet in the longer term. |
Scope and scale of the problem
1 Trends in smoking prevalence and tobacco consumption
1
2 Smoking prevalence
The most recent national figures on tobacco prevalence from the
Australian Institute of Health and Welfare 2007 National Drug Strategy
Household Survey Detailed Findings (AIHW, 2007) show that daily
smoking rates for smokers aged 14 years or older have fallen from
17.4 per cent in 2004 to 16.6 per cent in 2007. A further
25.1 per cent reported being ex-smokers, while 55.4 per cent reported
never having smoked.
The decline in smoking among both males and females reflects the
longer term trend. Quit Victoria compiled data on the prevalence of
smoking from 1945 to 1995 from a number of sources. The share of adult
male smokers has fallen from 72 per cent to 27 per cent over this
period. The trend among the female population is more complex. Among
female adults, the share of smokers has fallen slightly from
26 per cent in 1945 to 23 per cent in 1995. During this period,
smoking rates among women also rose, peaking at around 30 per cent in
the 1970s and early 1980s.
3 Cigarette consumption among adults
The multi-year survey conducted by the Social Research Centre (2006)
found that the average number of cigarettes smoked daily fell from
16.7 to 14.3 for regular smokers. Reflecting this trend, the
percentage of heavy smokers (that is, more than 24 cigarettes per day)
fell from 26 to 15 from 1997 to 2005. During the same period, the
share of light smokers (less than 15 cigarettes per day) increased
from 42 per cent to 52 per cent. Moderate smokers remained constant,
comprising around 33 per cent of daily smokers.
4 Youth trends
Achieving declines in youth smoking rates is an important public
health objective. Early uptake of smoking is associated with heavier
smoking and greater difficulty quitting.
A key source of data on the smoking behaviour of youth is the
nationally conducted study Smoking Behaviours of Australian Secondary
Students in 2005, led by The Cancer Council Victoria's Centre for
Behavioural Research in Cancer (CBRC). This study found that in 2005,
just over 140 000 Australian school students (ages 12 to 17) are
current smokers. This equates to around 7 per cent of 12 to 15 year
olds and 17 per cent of 16 to 17 year olds.
2 Australian tobacco industry
1 Wholesalers and retailers
Retail outlets selling tobacco products include: supermarkets and
grocers; tobacconists; petrol stations; mixed business and convenience
stores; news agents; hotels and clubs; and liquor stores. Chart 2.1
shows the relative shares of tobacco sales by retail outlet. It is
important to note that some major supermarkets also have online
shopping facilities.
2.1 Tobacco sales by retail outlet
|[pic] |
a Based on relative share of total sales revenue.
PwC (2005) estimates that approximately 35 per cent of retail outlets
(35 000 stores) carry cigarettes or other tobacco products.[1] This
share has been in decline since 1999. Supermarkets and grocery stores
now account for over half of all tobacco product sales. This share is
up several percentage points from 1999 estimates.
2 Retailers on the Internet
The extent to which retailers use the Internet to promote and sell
their products is not fully known. The two major supermarkets,
Woolworths and Coles, both offer Internet based shopping where
cigarettes and other tobacco products are available for purchase
(along with liquor and the full spectrum of goods stocked within their
stores). A handful of Australian-based tobacconists also operate on
the Internet.
3 Issues of concern
1 Presence and possible growth of online tobacco retailers
The Internet poses particular challenges given its ability to provide
retailers with a global or 'borderless' market. Studies from the US
show rapid growth of online tobacco retailers in a relatively short
period of time. Research by Ribisl et al. (2001) identified 88
'unique' US Internet cigarette sellers in 2000. By 2005, 266 US
Internet sites were identified (Ribisl et al. 2007).
In Australia, online retail of tobacco products is in its infancy.
Only a handful of retailers can be identified. They can be organised
around three broad categories:
. grocery stores offering home delivery of orders placed online;
. specialty tobacconists; and
. discount cigarette retailers.
1 Grocery stores
Grocery store retailers report that they have tried to comply with
what seems good practice. They list tobacco products generally in
plain text or use only a small graphic. Descriptions of the tobacco
products are factual, containing minimal descriptions (for example,
brand, size of pack and price). Upon accessing the webpage listing the
tobacco products, they include health warnings. Age verification is
obtained upon delivery of the product. They emphasise the need for
clear guidance and clarity regarding the standards that they should
apply to online advertising at POS.
2 Specialty tobacconists
Specialty tobacconists are distinguished from discounted cigarette
retailers by the nature of the tobacco products that they sell. This
category is largely comprised of premium cigar sellers which
represents a segment of the retail tobacco market that is not viewed
as a 'gateway' to tobacco use among youth. The high prices of their
stock coupled with minimum price orders tend to be effective
deterrents to youth.
3 Discount cigarette retailers
Preliminary consultations with stakeholders (state agencies and
interest groups) point to only two known Australian based retailers
that fall into the category of discount cigarette retailers. Their
websites contain emotive promotion of 'cheap' and discounted products.
Presentation of products typically involves graphics which do not
depict labels that are compliant with Australian requirements. This
category of online retailers is the most likely to attract youth.
2 Increased risk of sales to minors
The risk presented by the Internet is based on three premises:
. it is easier for minors to access tobacco products through online
purchases;
. the Internet poses greater exposure to advertising on retail sites
and other content; and
. prices may be cheaper on the Internet, affecting the uptake and
extent of smoking.
These last two points apply to adults as well as minors.
The absence of clarity of advertising standards coupled with
potentially easier purchase by minors and cheaper prices suggest that,
as the number of online retailers grow, the effectiveness of
antismoking campaigns is likely to be weakened.
3 Tax evasion
DoHA, as well as State and Territory governments, suggest that the
Internet sale of tobacco products is more prone to tax evasion.
Overseas and domestic online retailers are able to sell tobacco
products at discounted rates (relative to retailers with physical shop
fronts in Australia) because they can provide products that have not
been subject to duties and domestic taxes.
The importance of using price as a strategy to deter smoking is well
accepted. Empirical studies find that a 10 per cent increase in
tobacco prices can lead to a 5 per cent decrease in adult usage rates
and a 7 per cent decrease in consumption among youth under the age of
18 (Banthin et al. 2004).
Options under consideration
The options to be considered should be clearly defined (to limit their
potential to create unintended outcomes) while also ensuring that the
options fundamentally promote the Act's objectives to limit exposure
to tobacco product advertising - in all its forms - in an effort to
reduce uptake and prevalence and to improve public health.
This study considers four options. Presented in order of increasing
stringency, they are:
. Option 1: do nothing;
. Option 2: adopt a code of conduct;
. Option 3: an amendment to the Act clarifying online tobacco
advertising; and
. Option 4: ban advertising of tobacco on the Internet.
The Act currently considers a broad range of tobacco products,
including rolled cigarettes, loose tobacco, cigars, pipes and hookahs.
Under each of the options above, allowances for different tobacco
products could be made. That is, the option could apply uniformly to
all tobacco and tobacco products. Alternatively, the option could
differentiate in a manner similar to the Trade Practices (Consumer
Product Information Standards) (Tobacco) Regulations 2004. The
regulations distinguish between cigarettes, cigars and loose or pipe
tobacco.
Following on the Trade Practices (Consumer Product Information
Standards) (Tobacco) Regulations 2004, the options in this analysis
differentiate across tobacco products. Specifically, Option 2 and
Option 3 allow for more specific and restrictive standards to apply to
cigarettes and loose tobacco (as opposed to other tobacco products
such as pipes, cigars, etc.). Options 1 and 4 consider application
consistently across all tobacco products.
The rationale for differentiating among tobacco products is based on
the following:
. cigarettes represent the lion's share of the instances where
perceived and actual noncompliance with the spirit of the Act
currently exists;
. cigars and other tobacco products are not seen as 'gateway' products
to addiction, especially among established adult smokers; and
. the cost of cigars is a disincentive to minors.
1 Option 1: do nothing
One option is to take no action and allow the status quo to continue.
With no change to legislation, regulation or business conduct, this
option serves as baseline option for which the anticipated costs and
benefits of other options can be compared.
Under the 'do nothing' scenario, advertising at point of sale on the
Internet could be significantly out of line with standards applied to
physical shop fronts. For example, a web site might - and some
currently do - use any or all of the following:
. suggestive phrasing such as 'cheap', 'discount' and 'bargain;
. emotive and suggestive product presentation and description;
. graphics of products outside of packaging, including images of lit
products;
. graphics of product packaging without correct health warnings;
. facsimiles of product packaging with warning labels pasted on;
. nil, out of date or non-prominent health warnings on the website;
and
. promotion of smoking and general tobacco consumption.
. The growth of sales and advertising using an Internet platform is
expected to have public health impacts by increasing consumption of
tobacco products among adults and possibly increasing the rate of
uptake among minors.
. In the status quo situation, this suggests that individuals could
increasingly be able to obtain tobacco products (particularly
cigarettes) that did not involve:
. formal age verification at time of purchase (and/or delivery);
. payment of all appropriate and relevant duties or taxes; and
. health warnings on product packaging that complies with Australian
requirements.
. All of these points are key elements of Australian regulation aimed
at limiting tobacco advertisements and sales.
2 Option 2: code of conduct
Without amending the legislation, a second option would see the
introduction of an industry-led code of conduct. A code of conduct
represents a form of quasi-regulation that sits between self-
regulation and formal legislation (PC 1998). It involves a less formal
approach to regulation.
Effective codes can deliver increased consumer protection and reduce
the regulatory burden facing businesses. Caution must be used,
however, as ineffective (mandatory) codes may place compliance burdens
on business without necessarily achieving any realisable benefits
(ACCC 2005).
This option seeks to draft a Code of Conduct (the Code) to govern
advertising of tobacco products on the Internet as well as practices
around age verification for subsequent sales. The code of conduct
could be voluntary or mandatory under this option. As a voluntary code
of conduct, Internet retailers would choose to agree to a set of
principles regarding Internet advertising. As a mandatory code of
conduct, the agreement would need to be 'underwritten' by legislation
that made compliance obligatory.
An advantage of this option is that the Code can be tailored to meet
the goals of both government and industry as it is a negotiated
process reliant on industry-led compliance. The Code could be written
to any degree of restriction or liberty that recognises the differing
market dynamics and consumer profiles. The Code would be drafted in
consultation with industry and State, Territory and Commonwealth
health agencies.
To be relevant, it would develop standards that are specific to broad
categories of tobacco products. This breadth would most likely require
allowing for product differentiation - that is, treating cigarettes
and loose tobacco as different from cigars, pipes and other smoking
accessories (such as hookah). In doing so, this option would most
likely adopt definitions as employed in the Trade Practices (Consumer
Product Information Standards) (Tobacco) Regulation 2004, where:
. cigarette means a roll of cut tobacco for smoking, enclosed in
paper; and
. cigar means a roll of cut tobacco for smoking, enclosed in tobacco
leaf or the leaf of another plant.
. As a starting point, the Code could be modelled on an international
voluntary agreement that exists among the three largest tobacco
manufacturers. (See box 3.1 for details.) Indicatively, the Code may
require any or all of the following to cigarettes and loose tobacco:
. text only product listings;
. health warnings - specifying how, which and where warnings are
displayed (for example, use of frames);
. restrictions on use of text - size, colour, fonts, presentation;
. product descriptions to describe physical contents only;
. restrictions on use of inducing language such as 'cheap', 'bulk
savings' and 'discount';
. a ban on inter-site promotion and solicitation;
. a ban on network solicitation - for example, providing options such
as 'email this site to a friend';
. providing a blank 'home' page that, on first contact with the site,
provides:
. relevant health warnings;
. a deterrence for minors attempting to access the page; and
. site registration and/or membership and age verification via a
credit card.
. products to be couriered to their destination (or sent via
registered post) with age verification required on delivery; and
. all appropriate taxes and duties to be incurred during the
transaction.
|3.1 International Voluntary Marketing Standards for |
|tobacco manufacturers |
|At the production level, the world's three largest |
|tobacco companies agreed to a code of marketing |
|principles that came into effect by the end of 2002. |
|The International Voluntary Marketing Standards (the |
|Standards) set clear guidelines for how tobacco |
|products would be marketed around the globe. |
|This included: a ban on advertising aimed at or |
|appealing to youths; limiting radio, television and |
|print advertising to where an adult audience was either|
|likely or guaranteed; packaging restrictions; and a |
|general ban on Internet advertising (such as cross |
|product promotions). |
|The Standards' ban on Internet advertising is certainly|
|ahead of the legislation (at least in Australia). |
|Specifically, the Standards require that: |
|no advertising be placed by or on behalf of any of the |
|signatories (that is, British American Tobacco, Philip |
|Morris and Imperial Tobacco) on any website unless: |
|access to that advertising is restricted to verified |
|adults; and/or |
|access is restricted in countries where such |
|advertising is prohibited by law. |
|logins and passwords are to be used to enable access |
|beyond the initial home or login page of a website |
|containing advertising; |
|logins and passwords may only be issued to verified |
|adults; and |
|access to a web site containing advertising is to be |
|enabled by clicking on a box stating 'click here to |
|confirm you are an adult' or similar. |
| |
| |
| |
| |
|Notably, however, the Standards have drawn some |
|criticism (see Saloojee and Hammond 2001) and in many |
|cases they have just indicated a willingness to comply |
|with legislation already in place. More recently, |
|evidence suggests that the effectiveness of the |
|Standards is unravelling. Philip Morris has withdrawn |
|from the Standards as opportunities emerge in less |
|regulated markets. |
|In Australia, the Department of Health and Ageing |
|negotiated a Voluntary Agreement for the Disclosure of |
|the Ingredients of Cigarettes with the three tobacco |
|companies, Philip Morris Limited, British American |
|Tobacco Australia Limited and Imperial Tobacco |
|Australia Limited. The Voluntary Agreement was signed |
|by the tobacco companies and the former Minister for |
|Health and Aged Care, Dr Michael Wooldridge, in 2000. |
|Under the Agreement the companies provide annual |
|reports to the Government regarding the ingredients of |
|cigarettes. The data are posted unmodified on the |
|Departmental website, with current data replacing the |
|previous annual cigarette ingredient report. Seven |
|rounds of public disclosure of cigarette ingredients |
|have now occurred. |
Cigars, pipes and other tobacco accessories would be given
alternatives for some of these requirements. For example, 'text only
product listing' is not likely to be practical for some tobacco
products or accessories. This requirement would be modified to allow
graphics (that is, images of the product), but with strict limits,
such as restrictions regarding size of image, content (such as
packaging only, no sticks on display, no lit products) and number of
images per page.
Effective codes of conduct tend to involve firms that are motivated by
a common interest to reduce the problem. Alternatively, an
independent, self-regulatory authority (with widespread support by
industry) or the real threat of government action provide incentive
for compliance.
A code of conduct (be it voluntary or mandatory) for online tobacco
retailers is unlikely to encounter any of these conditions.
Identifying and promoting the code to industry participants will be
difficult. Online retailers -unlike retailers with a physical shop
front - face little (if any) barriers to entry. This feature enables
online retailers to be 'transient' - that is, able to close down and
start up new web addresses easily and with negligible cost.
Identifying all the players in this market is a difficult task. It
also suggests that collective action or a sense of shared common
interest within this industry is limited.
The enforcement will also be challenging. 'Sticks' for voluntary
compliance are likely to be weak. Codes of conduct are often used by
industry to avoid rigid legislative regulation or to signal
information about a firm's reputation. Unfortunately, in the Internet
tobacco market neither of these 'sticks' poses much of a threat. This
is especially true for smaller retailers, for whom moving a website
internationally is near costless and reputation plays a significantly
smaller role than price in commanding market share.
The Code would seek to formalise the preferred marketing practices of
the existing online cigarists and the major supermarkets, as a
template for other potential Internet retailers to follow. As such, it
would provide certainty for online retailers wishing to comply with
regulatory obligations. For less well-established retailers, it could
enhance customer perceptions regarding the legitimacy and quality of
products sold.
3 Option 3: amendments to the Act
A third option would build upon Option 2 and legislate what would have
been the Code of Practice. Amendments to the Act would be required.
The amendments would include minimum standards for advertising of
tobacco products on the Internet. Essentially, this option would
legislate the requirements outlined in Option 2. Similar to Option 2,
it would differentiate between cigarettes (and loose tobacco) and
other tobacco products such as cigars, hookahs and pipes. The
differentiation would involve a text only requirement for cigarettes
and loose tobacco, while all other tobacco products would face strict
specifications regarding permissible graphic presentation of products.
Other elements of the guidance on Internet advertising that would be
provided under this option include:
. conveyance of health warnings - specifying how, which and where
warnings are displayed;
. restrictions on use of text - size, colour, fonts and presentation
as well as product descriptions to describe physical contents only;
. restrictions on use of inducing language such as 'cheap', 'bulk
savings' and 'discount';
. a ban on inter-site promotion and solicitation and network
solicitation (for example, providing options such as 'email this
site to a friend'); and
. providing a blank 'home' page that on first contact with the site
provides:
. relevant health warnings;
. a deterrence for minors attempting to access the page; and
. site registration and/or membership and age verification via a
credit card.
. Option 2 also touched on two notable, but peripheral, issues
involved in Internet advertising of tobacco products. They are:
. putting in place greater safeguards against the sale or delivery of
tobacco products to minors; and
. the requirement that all appropriate taxes and duties be incurred
and reported during the transaction.
This option would look to include these requirements.
As outlined in Option 2, the industry is characterised by low barriers
to entry and exit. Should amendments be too stringent, many retailers
could shift their Australian sites offshore beyond the reach of
Australian regulation. Consequently, this option does not propose
developing a blanket set of requirements applying to all tobacco
products, nor does this option seek to ban Internet advertising of
tobacco products.
4 Option 4: ban on tobacco advertising on the Internet
Under this option, DoHA would explicitly prohibit any Internet
advertising of tobacco on the Internet. This ban would effectively
inhibit Internet tobacco sales. Under the current language of the Act,
legislating the Internet as an advertising medium is akin to a ban on
Internet tobacco sales. The Internet serves a dual purpose. On the one
hand, the Internet serves as a forum to advertise and promote tobacco
products. On the other, it serves as an avenue for exchange. This
makes the Internet quite distinct from other forms of media that
cannot facilitate the latter function.
Similar to Option 3, were it to develop blanket, text only,
requirements, this option has considerable risks with regard to
enforceability. It is nearly costless for Internet retailers to move
their websites offshore. This option would see some sites close down
while others move offshore. Most likely, supermarkets and some online
tobacconists would close down their online tobacco sale operations.
Specialty tobacconists, however, would most likely move offshore. It
is unknown how the sites that relocate will conduct their business
offshore. Once offshore, there is limited reason for them to comply
with Australian requirements. This may produce unintended and adverse
consequences by magnifying the current limitations of effectively
regulating online tobacco product advertising.
5 Summary of the options
Table 3.2 provides a summary of the options under consideration.
3.2 Summary of options
| |Option 1 |Option 2 |Option 3 |Option 4 |
| |Do nothing |Code of practice |Amendments to| |
| | | |the Act |Ban |
| | | | |Internet |
| | | | |advertisi|
| | | | |ng |
|Regulator|States and |Industry and |Commonwealth |Commonwea|
|y |territories |Commonwealth | |lth |
|responsib| | | | |
|ility | | | | |
|Prohibiti|Yes, in some|No |No |Not |
|on of |states | | |explicitl|
|Internet | | | |y, but |
|tobacco | | | |effective|
|sales? | | | |ly |
| | | | |blocked |
|Is |Jurisdiction|Depends upon |No |No |
|complianc|ally |voluntary or | | |
|e |dependent |mandatory approach | | |
|voluntary| |adopted for the code| | |
|? | |of conduct | | |
|How is |Commonwealth|Industry |Commonwealth |Commonwea|
|complianc|, State and |self-regulates |legislation |lth |
|e |Territory | | |legislati|
|enforced?|responsibili| | |on |
| |ty | | | |
|Guards |Industry |Industry |Regulations |N/A: |
|against |self-regulat|self-regulates: |require: |Sales |
|under age|es by |register post or |register post|permitted|
|purchases|default: |courier for all |or courier |over the |
| |some |deliveries |for all |Internet |
| |retailers |all websites to |deliveries |effective|
| |courier all |inform customers |all websites |ly |
| |deliveries |that under age |to inform |prohibite|
| |(or register|purchases is illegal|that under |d |
| |post) |- this is to be done|age purchases|However, |
| |some |upon entry to the |is illegal - |could |
| |retailers |website |this is to be|apply |
| |require |may require age |done upon |same |
| |purchase |verification (for |entry to the |requireme|
| |with credit |example, credit |website |nts as |
| |card only |card) or website |may require |option 2 |
| |some |membership |age |or 3 |
| |retailers | |verification |should it|
| |place | |(for example,|be |
| |warnings on | |credit card) |necessary|
| |website | |or website | |
| | | |membership | |
|Measures |Merchandise |Merchandise must be |Same as |N/A |
|to limit |must be sold|sold with |Option 2 |Advertisi|
|exposure |with |appropriate health | |ng and |
| |appropriate |warnings on | |POS |
| |health |packaging | |advertisi|
| |warnings on |All websites | |ng banned|
| |packaging |required to display | | |
| |Some |health warnings - | | |
| |industry |including upon entry| | |
| |self |to site | | |
| |regulation: |Text only for | | |
| |some sites |cigarettes, and | | |
| |use text |limits on display, | | |
| |listings |use and content of | | |
| |only |graphics and text | | |
| |some sites |for other tobacco | | |
| |display |products | | |
| |health | | | |
| |warnings on | | | |
| |website | | | |
|Ensuring |Legal |Industry |Regulations |N/A: No |
|payment |obligation |self-regulates: |require: |sales |
|of |exists, but |all websites |all websites |permitted|
|customs |is |required to clearly |required to |over the |
|duties |circumvented|outline a consumer's|clearly |Internet |
|and taxes|by some |tax and customs |outline tax | |
| |operators |obligations |and customs | |
| | | |obligations | |
Impact of options
The options under consideration all aspire to address the problems
arising from ambiguity over whether the Act governs Internet sales
advertising of tobacco products. They all are expected to impact on
the following stakeholders:
. government - at national and State and/or Territory levels;
. tobacco retailers, especially those online;
. tobacco consumers; and
. the public, largely due to public health implications.
Each option will impose varying degrees of costs and benefits across
these stakeholders. This chapter provides a qualitative discussion of
how the options could generate costs and benefits across the
stakeholders. The anticipated impacts reported in this chapter are
based upon a quantitative analysis of the affected industry's size and
reported costs that would be associated with meeting each option's
requirements.
1 Costs
The options will impose a number of costs across the stakeholders.
These include:
. administration and enforcement costs for the Commonwealth
Government; and
. compliance costs for Australian-based online tobacco retailers.
Each of these cost categories are detailed below. The magnitude of
these costs is dependent upon the level of stringency and prescription
adopted when implementing any of the options. Given the 'virtual' and
global nature of the Internet, the effectiveness of any option is also
a factor that can substantially impact on the scope and magnitude of
the costs (as well as benefits). In other words, when assessing the
options, consideration must be given to the risk of unintended
consequences.
1 Administration and enforcement
Under Option 1, changes in the level of administration and enforcement
activities are anticipated to be minor. It is likely that the number
of referrals and complaints received by DoHA will increase with the
number of online tobacco retailers. With this increase, DoHA (and
other relevant Commonwealth departments, such as the Australian
Federal Police, the Australian Customs Service) could anticipate
additional resource requirements to address Internet advertising of
tobacco products on the Internet.
The volume of inquiries handled by DoHA and the ACCC suggest that,
even with an increase in the number of retailers, any additional
amount should not necessarily require substantial resources.
DoHA would continue to rely upon current enforcement strategies - that
is, self-regulation with investigation of complaints and enquiries
from the general public, States and Territories or NGOs.
The costs of designing and implementing option 2, a code of conduct,
are often underestimated. Certainly, industry-based voluntary codes
are not costless. Experience with recent codes of conduct in other
industries suggests high upfront costs attributed to its development -
several years and at least one dedicated personnel. In-kind costs
contributions by industry are often not reflected in cost estimates.
Subsequent monitoring, administration and enforcement costs vary
depending upon the nature of the code, its regulatory backing and
penalties for non-compliance.
Some costs could be recovered through a registration fee paid by
industry participants (online tobacco retailers) subject to the code
of conduct under Option 2. However, such fees represent a cost to
industry participants. The subsequent section on compliance costs to
online retailers discusses these costs further.
We can still anticipate that the increase in administration costs of
Option 2 would be greater than Option 1. Table 4.1 summarises the
government costs of Option 2.
4.1 Government costs of Option 2 voluntary code of conduct
|Item |Estimated |Period |
| |cost | |
| |(per annum) | |
|Code of conduct development |$70 429 |2 years |
|(one FTE over two years)a | | |
|Administration and monitoring |$26 000 |Ongoing |
|b | | |
a Full time equivalent (FTE) estimate based on APS6 annual salary. b
Cost estimates based on the current number of online retailers.
Under Option 3, which would introduce minor amendments to the Act, key
features of government costs are as follows:
. We estimate that providing this role would require resources
equivalent of 0.2 full-time employee for administration and
enforcement at the APS 6 level. This additional resource equates to
an estimated annual, ongoing cost of $14 086.
. The increased costs do not include enforcement costs incurred by
associated Commonwealth Departments, such as the AFP, ACCC and DPP.
These costs are discussed later.
The estimates serve as an upper bound calculation that captures the
possible growth that online tobacco retail is anticipated to
experience over time.
Table 4.2 provides a comparison of the likely aggregate impact of the
administration and enforcement costs across the four options. While
the table summarises the relative magnitude of these costs imposts
based on calculations of estimated resourcing requirements.
4.2 Comparison of administration and enforcement costs
|Option 1 |Option 2 |Option 3 |Option 4 |
|Administration costs |
|Low |Medium |Low-medium |Low |
|Increased |Significant |DoHA would |Fewer |
|complaints and |upfront costs in|require |Australian-based |
|inquiries as |developing code |additional |online retailers |
|number of online|of conduct |resources to |affected by the |
|retailers grow |Some monitoring |administer its |Act as they shift|
| |costs, but |expanded role |to overseas |
| |likely to be | |Internet domains |
| |recovered | | |
| |through | | |
| |registration | | |
| |fees | | |
|Enforcement costs |
|Medium |Low |Low |Low |
|Increased |Clarity of |Clarity of |Increased |
|likelihood of |obligations and |obligations |likelihood of |
|'rogue' players |industry |likely to |'rogue' players |
| |self-policing |improve industry|moving websites |
|Greater |likely to |behaviour, |offshore limiting|
|complexity in |improve industry|leading to fewer|enforcement |
|determining |behaviour, |inquiries and | |
|relevant |leading to fewer|complaints | |
|jurisdiction |inquiries and | | |
|responsible for |complaints | | |
|enforcement |A body would | | |
|Increased need |need to be | | |
|for coordination|nominated to | | |
|across |adopt | | |
|jurisdictions |enforcement | | |
| |responsibilities| | |
| |(could be DoHA | | |
| |or NGO) | | |
1 Additional Commonwealth agency costs
In addition to the cost incurred by the DoHA under all options (except
Option 1), a host of other agencies may be required to devote
resources to this issue. Depending on the level of enforcement
applied, the commitment of auxiliary agencies will vary. Additional
resources may be required in the following agencies:
. Australian Customs Service.
. the Australian Federal Police.
. the Australian Competition and Consumer Commission.
. the Director of Public Prosecutions.
. the Office of Small Business.
. Australia Post.
. the Australian Tax Office.
2 Compliance costs for online tobacco retailers
Compliance costs are expected to increase with the stringency of each
option. To varying degrees, each option requires online retailers to
change their current practices with regard to Internet advertising of
tobacco products. These compliance costs reflect:
. one-off cosmetic alterations to their website's design to meet a
number of requirements;
. loss of sales; and
. possible registration fees.
The magnitude of these costs will relate to the nature of the retailed
tobacco products as well as the type of retail outlet. These
compliance costs are detailed below. Understanding the relative
magnitude of compliance costs has been drawn from figures and data
provided by some industry participants.
1 Cosmetic website changes
Currently, all of the online retailers would have to make some
cosmetic changes to their websites in order to comply with options 2
and 3. These changes would take the form of any or all of the
following:
. removing graphics of cigarette products from a website and
converting to a largely text-based;
. presenting tobacco products prices in a manner that does not feature
the discount or price markdown;
. the inclusion and updating of banners with health warnings;
. providing a 'clean' entry page that requires acknowledgement of
being at least 18 years of age;
. ensuring customers are aware of all duties and taxes associated with
their purchase;
. providing substantial and effective barriers to the purchase of
their merchandise by minors; and
. ceasing any solicitation to promote traffic to their site (currently
all online retailers appear to comply with this point).
Some of these changes would require one-off costs, while most of them
would be easily implemented within their current website maintenance
activities.
3 Unintended costs
Options 2 and 3 are not likely to greatly affect the majority of
business practices because they present the ways in which current
'good' practices can be formalised. The one notable exception is for
discount retailers. They currently promote discounts based on
avoidance of relevant taxes and duties.
Option 1 requires no change at all.
Option 4, however, has the effect of prohibiting online sales through
its ban on Internet advertising. Such an approach has the inherent
risk of losing industry cooperation. Many tobacco retailers would
simply move their website offshore rather than comply with the ban on
tobacco advertising on the Internet. Of note, both options 2 and 3
would also have a similar effect should Internet advertising
requirements become too restrictive (for example, text only for cigars
and tobacco accessories).
A total ban on tobacco advertising, or even the legislation of online
restrictions, will not necessarily produce full compliance. Numerous
international Internet sites already facilitate tobacco sales to
Australians - without complying with existing Australian laws and
regulations. Pursuing an option that is too restrictive and does not
have the support of tobacco retailers will most likely prove
ineffective as sites relocate.
Forcing sites offshore may produce two foreseeable consequences:
. At present most Australian based sites are presenting their content
in a responsible, or near responsible, manner. Without this
cooperation, sites could begin to solicit traffic and promote their
products in an undesirable way.
. Shifting firms offshore may see a loss of custom and taxation
revenues.
. Firstly, Government and non-government organisations have signalled
that the greatest concerns relate to the manner in which tobacco
products (especially cigarettes) are presented at the point of sale
on the Internet. Because of the Internet's fluidity, it is
relatively difficult to enforce options 2 through 4. Losing industry
cooperation increases the degree of enforcement difficulty. In fact,
measures that too stringently attempt to prevent the sale of tobacco
products on the Internet may have the adverse effect of losing
cooperation in:
. adopting safeguards against underage purchases;
. presenting Australian health warnings; and
. restraining from activities and actions that promote smoking.
Secondly, firms have identified the magnitude of Australian taxes and
customs as their biggest hurdle for being competitive with
international firms. The obligation to pay customs duties falls on the
consumer and little penalty is imposed if this obligation is not met.
Again, losing industry cooperation has the risk of pushing tax-
compliant online retailers offshore. This foregone tax revenue can be
significant. Online specialty tobacconists indicate that taxes (duties
plus GST) account for nearly 40 per cent of the sale price. This
figure suggests that tax revenue from their sales is around $5 million
per annum (the majority of which is duties).
Finally, reducing the presence of firms that use 'good practices' from
this industry will reduce competition to those firms that do not.
Without this competition, incentives for rogue operators to access
this market will strengthen.
2 Benefits
All of the options, with the exception of 'do nothing', should address
the current and future problems stemming from a lack of clarity over
regulations governing advertising on the Internet.
1 Public health benefits - real and potential
The anticipated public health benefits stem from strengthening
existing strategies aimed at discouraging tobacco usage. Options 2
through 4 seek to assist in protecting the initial intent of the Act.
That is, their goal is reduce exposure to tobacco advertising in order
to reduce the incidence of smoking and generate the subsequent
economic and health benefits. All the options (other than the status
quo) should contribute to public health benefits. Each option differs
in its effectiveness and enforceability. The less effective the
option, the weaker its potential ability to contribute to desired
public health outcomes.
While options 2 and 3 - that is, a voluntary or mandatory
specification of online tobacco sales advertising - would not
substantially alter current retailer behaviour, they would achieve the
following:
. tightened controls around compliance with minimum age requirements
for the purchase of tobacco products;
. reduced promotion (and possibly the availability) of 'cheap' and
'discounted' cigarettes that advertise being tax free;
. improved promotion and disclosure of health warnings that comply
with Australian labelling requirements;
. unambiguous enforcement mechanisms, namely application of the
penalties in the Act; and
. a vehicle for more effective and efficient responses to the
challenges of regulating tobacco advertising on the Internet.
All of these would contribute to better public health outcomes.
However, estimating the magnitude of the contribution these outcomes
would make to reduced rates of smoking and tobacco consumption among
Australians is difficult.
Achieving public heath benefits under any of the options depends on
the degree to which it achieves the cooperation of current and future
online retailers. To this end then, Option 2 and Option 3 appear to
pose the best opportunities to encourage this cooperation. In doing
so, the risks of losing industry participation and self-regulation are
minimised and effective changes can occur. This is clearly not the
case under Option 4.
1 Reduced exposure of minors to online tobacco sales advertising
The media platforms accessed by youth are evolving. If these trends
continue, the Internet will become a major vehicle by which youth can
be exposed to tobacco advertising. Moreover, youth purchasing
cigarettes on the Internet are using a source that provides greater
volume relative to a shopfront. (Minimum purchases online tend to be
at least a carton, while the minimum in a shopfront is a pack.)
Options 2 through 4 respond to the shifting importance of various
media platforms.
Options 2 and 3 recognise the limitations of effectively implementing
age restricted access regimes on the Internet. Consequently, these
options outline strategies that:
. minimise the possible promotion and attractiveness of tobacco
products online through text only presentation of cigarettes and
limited graphics for other tobacco products;
. strengthen the use of Australian-compliant health warnings by
inclusion of Australian health warning labels and other information;
and
. concentrate on reducing the likelihood of the Internet becoming a
viable supply of direct sales to minors (for example, requiring age
verification upon delivery).
Importantly, these features of options 2 and 3 are likely to gain high
levels of cooperation among current and future online tobacco
retailers in Australia. Option 4 would most likely receive the
cooperation of only the large supermarkets. The majority of current
and future online tobacco retailers are more likely to move their
website to an offshore host than comply with the regulation. The
results would be an erosion of current standards applied to tobacco
advertising online rather than reinforcement or enhancement.
Moreover, with the relocation of online retailers to offshore website
hosts, the use of taxes as a price signal to deter consumption would
be ineffective. These 'rogue' retailers would respond to competitive
pressures and most likely advertise prices that did not reflect all
the duties and taxes that the product would attract in Australia.
2 Deterring consumption among Australian adults
Online tobacco advertising has the potential to partially counteract
the effectiveness of anti-tobacco campaigns.
Little is known about the profile of tobacco (that is, cigarette)
consumers who purchase online. It may be reasonable to assume that
individuals purchasing online are more likely to reside in remote
areas. However, it is also probably reasonable to assume that online
purchasers are 'regular' smokers.
In addition, individuals purchasing online are probably less likely to
modify consumption in response to changes in price (rather, they look
to minimise expenses associated with maintaining a certain level of
consumption).
It is possible that, as the Internet becomes a stronger substitute for
physical retail shops (for goods and services more broadly), the
segment of adult smokers using the Internet for online purchases will
change. Online retailers may increasingly attract the interest of the
more 'marginal' smokers, (that is, smokers who have a greater
likelihood of quitting), the erosion of pricing and/or tax strategies
could materially impact on rates of smoking or consumption.
3 Other considerations
1 Supermarkets
Supermarkets are the dominant sellers of tobacco products. Through
their new web-based shopping facilities, they have also become online
retailers of tobacco products. Largely, the options (with the
exception of Option 4) will not change a supermarket's operations as
they relate to tobacco sales. We further anticipate that any loss of
business that does arise as a result of these regulatory measures will
be offset as customers substitute towards conventional outlets.
2 Impact on trade
We may see trade affected for three reasons. First, these regulations
cannot stop foreign sites from supplying (or attempting to supply)
Australians with foreign tobacco products. This already occurs to a
certain degree, and we can expect it to be amplified should Australian
sites become too restrictive or prohibited.
Second, the discount tobacco sites are mostly providing imported
products. If these regulations can be successfully enforced, then any
decrease in the sales made by the discount sellers will most likely
equate to a decrease in imports.
Finally, Australia's specialty cigar stores are also exporters. One
firm we consulted with indicated that upwards of 80 per cent of his
clientele base were international (R Ayala, Cigar Czar, Queensland,
personal communication, 21 November 2007). If the viability of these
firms is reduced, we may see a decline in our exports of connoisseur
tobacco products.
4 Net impact
The critically defining feature of the options is whether each option
helps to strengthen the premise and strategies currently used to deter
tobacco consumption or, instead, has perverse outcomes - that is, to
discourage the existing (and possibly future) online retailers from
complying with 'good' practice regarding tobacco sales advertising.
Table 4.3 summarises the anticipated impact of each option. As
indicated in the chapter, the summary draws upon data and information
available about the affected industry as well as figures provided
through stakeholder consultations. While the summary is qualitative,
indicating relative magnitudes, it is based on estimated resource
requirements and cost imposts.
4.3 Net impact assessment
|Option |Costs |Benefits |
|1: Do |Low |Neutral |
|nothing | | |
| |No change to compliance | |
| |costs | |
| |As the online retail | |
| |industry grows: | |
| |enforcement costs are likely| |
| |to increase given difficulty| |
| |of providing clear guidance | |
| |on the Act's application to | |
| |Internet advertising on the | |
| |Internet | |
| |Public health objectives | |
| |undermined as a result of | |
| |non-compliance with | |
| |labelling requirements, tax | |
| |obligations and potentially | |
| |greater risk of sales to | |
| |minors | |
|2: Code of |Medium |Low-medium |
|conduct | | |
|Clarity - |Extent of compliance costs |Clarity allows |
|section 16 |depend upon standards |enforcement mechanisms |
|exception |applied to Internet |to be more effectively |
|does not |retailers |utilised |
|apply to |Some of the compliance costs|Provides certainty to |
|Internet |would be partially offset by|online retailers that |
|advertising|gains from one national |they are complying |
|sales |standard (that is, |Prevents weakening of |
| |cross-jurisdictional |public health |
| |consistency) |protection provided by |
| |Low administration costs and|the Act - for example, |
| |higher compliance costs as |health warnings, taxes,|
| |reliant on industry |age restrictions for |
| |self-regulation |sale |
| |Significant upfront costs in| |
| |developing code of conduct | |
| |Greater risk that | |
| |competitive pressures could | |
| |result in retailers | |
| |withdrawing from the | |
| |agreement | |
|Age |Minimal compliance costs for|Reduces potential for |
|restriction|retailers (web changes |online retail as avenue|
|, |absorbed in routine |for purchase of tobacco|
|verificatio|maintenance) |products by minors |
|n and |Possible increased costs for| |
|notices |consumers as result of more | |
| |expensive shipping option | |
|3: Amend |Low-medium |Medium |
|the Act | | |
|Clarity - |Compliance costs - same as |Benefits generally same|
|section 16 |Option 2 |as Option 2, but: |
|exception |Relative to Option 2, |stronger enforcement |
|does not |greater efficiency gains as |mechanisms |
|apply to |a result of consistency and |less risk than Option 2|
|Internet |removing duplication in |because compliance is |
|advertising|oversight of online |mandatory rather than |
|sales |retailers by states and |voluntary - counteracts|
| |territories |'competitive market |
| | |pressures' |
| | |greater jurisdictional |
| | |consistency |
|Age |Same as Option 2 |Same as Option 2 |
|restriction| | |
|, | | |
|verificatio| | |
|n and | | |
|notices | | |
|4: BAN |High x |Low |
|Internet | | |
|sales | | |
| |Increased non-compliance as |Compliance low as |
| |Australian retailers move |website may shift to |
| |websites offshore |offshore |
| |Weakens public health | |
| |protection provided by the | |
| |Act. Offshore retailers | |
| |likely to sell products: | |
| |without Australian health | |
| |warnings | |
| |tax avoidance weakening | |
| |price signal to reduce | |
| |consumption | |
| |limited compliance with age | |
| |restrictions for sale | |
| |Eliminates avenue for supply| |
| |to 'home bound' and remote | |
| |communities | |
Recommended approach
Option 3 is the most preferable because:
. it is the option most likely to effectively achieve the goals of
government health agencies while maintaining industry cooperation;
. it requires the least resources to effectively address the problem
at hand; and
. it can be enforced by government agencies without unfavourably
restricting competition.
. Option 3 requires an amendment to the Tobacco Advertising
Prohibition Act 1992. This amendment will require online retailers
of tobacco products to ensure their websites include the following:
. conveyance of relevant and up to date health warnings;
. a text only format - no pictures;
. restrictions on use of inducing language such as 'cheap', 'bulk
savings' and 'discount';
. a ban on inter-site promotion and solicitation and network
solicitation (for example, providing options such as 'email this
site to a friend');
. putting in place greater safeguards against the sale or delivery of
tobacco products to minors - such as a deterrence for minors
attempting to access the page and site registration and/or
membership and age verification via a credit card; and
. the requirement that all appropriate taxes and duties be incurred
and reported during the transaction.
The amendments will result in clear and consistent restrictions that
will remove the current ambiguity and inconsistencies between States
and Territories. Monitoring and enforcement will be achieved by the
existing processes in place for the Tobacco Advertising Prohibition
Act 1992. It is intended that it will be the responsibility of online
retailers to ensure compliance with the amendments.
The language used in new legislation must also not be too broad such
that ambiguity remains or, worse, web based sales are banned
altogether. Prohibiting online advertising is considered to be anti-
competitive and also has the potential to disproportionately impact
the disabled (for example, homebound) and remote communities who rely
on online services to secure goods. A careful balance must be struck
to ensure that the advantages of this option are fully realised.
1 Consultation
The CIE conducted consultation with relevant stakeholders. The
consultation process began in mid November 2007. Each
agency/organisation contacted by the CIE received a copy of the issues
paper via email. Two days later, CIE followed up with phone calls in
an attempt to schedule a time to speak. Interviews were held between
the CIE and stakeholders either in phone or in person, and interviews
typically lasted between 30 mins and an hour. The consultation process
was completed by mid December 2007.
The results of the consultations are set out below:
States and Territories:
In general, the following themes emerged:
. States and Territories have been increasingly addressing internet
sales.
. uncertainties of where point of sale originates;
. limited resources to monitor for compliance (relative to other
priorities, such as smoking ban enforcement);
. view that enforcement is not feasible; and
. difficulty with translating 'shop front' POS requirements to
internet retail sites.
Additionally, the Northern Territory raised an issue about the sale of
tobacco products to those in very remote communities. For some
residents in of the Northern Territory's remote communities, the
internet offers the only practical option to purchase regular grocery
items which includes tobacco products.
Retailers:
. Supermarkets - Both Coles and Woolworth's were keen to see
implemented a common set of national guidelines. Largely they did
not feel that the current legislative environment was overly
burdensome or confusing - especially when compared to conventional
POS. Both supermarkets appeared largely unaware of state based
changes to legislation. They stressed the desire to see this "grey
area" cleared up, even if that means an outright ban. At the time of
the consultations, they were already attempting to market products
responsibly - that is, text only.
. Cigar specialty stores - (Cigar Czar and Cigar World) Argued they
are trying to comply with good practices - despite having no
guidelines to work towards. These stores: (i) do not solicit traffic
to their websites; (ii) take steps to ensure minors cannot purchase
from them; and (iii) make efforts to ensure that all duties are
paid. They sell a connoisseur product and generally have an informed
customer base. A large part of their business is based on internet
sales (up to 70 per cent). They face extensive competition from
overseas sites, where customers can generally avoid customs and
taxes. If regulatory requirements were too stringent, it would
likely lead to perverse outcomes such as relocating the website
offshore or closing down businesses.
Tobacco Industry:
Australia's three major manufactures of tobacco products (British
American Tobacco, Philip Morris and Imperial Tobacco) were all
contacted during the consultation phase. Their concerns are outlined
below:
British American Tobacco
. Where does this fit in with what the FCTC is attempting to do?
. How will this affect intra business sales? Much of this in done
electronically.
. Approve of the effort to ensure all pay appropriate taxes.
. Approve of measures that help to fight counterfeit products.
. Believe they have taken the right steps in this space already.
Philip Morris
. Enforcement will be an issue.
Imperial Tobacco
. No significant comments, does not disapprove or have any major
concerns about the policy.
Internet Service Providers:
CIE contacted the Internet Industry Association and the Australia
Information Industry Association. Key messages were:
. enforceability is limited;
. responsibility for compliance is with the retailers; and
. merit in clarifying that standards of shop front consistent for
internet.
Peak Organisations:
The National Heart Foundation, the Cancer Council Victoria and Action
on Smoking and Health were contacted during the consultation. These
organisations stressed their strong support behind tighter regulations
and especially any effort made to limit the sale of tobacco products
to minors.
Cooperation by all parties involved - that is, State and Territory
governments and industry - is likely to improve the success of the
approach. Our consultation process indicated that State and Territory
health agencies would find this line of action appropriate. Similarly,
industry bodies representing supermarkets and specialty tobacco and
cigar stores have indicated a general willingness to comply with any
Commonwealth Government guidelines. The position of discount online
sellers is not known. It would be expected that their compliance would
be limited given that many of their actions partially motivate
regulation intervention.
2 A cooperative approach
Cooperation from industry is vital to the effectiveness, efficiency
and enforcement of the regulation. Our consultations with industry and
government draw attention to the transient nature of the online
tobacco market. Online retailers are able to relocate away from the
reach of Australian jurisdictions at very little cost and, once out of
reach, retailers remain free to market their products without
constraint. Because of this, it is important that the option employed
remains sensitive to industry goals while pursuing the government's
own objectives.
It is clear to see why Option 4 largely fails on this front. A ban on
Internet advertising for tobacco products will effectively translate
as a ban on the Internet retail sale of tobacco products. For reasons
already discussed, such an approach is unlikely to be met with any
compliance by all retailers.
Option 3 builds on Option 2 by providing the legal consequences to
those who act outside acceptable practices, which overcomes a
significant shortcoming of Option 2. This option can have the same
scope as Option 2, but with appropriate controls and enforcement
mechanisms. Under option 3, it will remain legal for retailers to
still sell their products online, while at the same time the
Commonwealth can restrict advertising from tobacco websites.
3 Impact on competition
Importantly, it is not the intention of the Act to restrict tobacco
sales or reduce the overall tobacco market. Rather, the Act's goals
are to 'limit exposure of the public to message and images that may
persuade them' to start or continue using tobacco products.
The example of the cigar market highlights this point precisely. The
market for cigars is a niche market, with a small customer base of
well informed connoisseurs. Cigar retailers typically have physical
shopfronts, but conduct a high proportion of their trade through
Internet sales. Through the Internet, these stores are able to service
customers Australia-wide and overseas. Consultations indicated that
restricting their ability to trade via the Internet would severely
harm their operations, forcing them to move to an offshore domain.
This extends beyond the objectives of the Act.
4 Implementation and review
The preferred option would require an amendment be made to the Tobacco
Advertising Prohibition Act. It is proposed that the Act be amended
such that detailed, yet flexible, provisions are described to act as
guidelines for current and future Internet retailers.
As per Section 34A of the Act, the Minister will be required to
present an annual report to the Parliament on:
. the number and nature of any contraventions of the Act occurring in
the preceding 12 months; and
. action taken by the Minister or a Commonwealth agency in response to
each contravention.
In addition to this annual reporting, the Department could also
consider a review three years after implementation. This review should
focus on whether the recommended option is effective, achieving
sufficient compliance and leading to little, if any, perverse or
unintended outcomes.
TOBACCO ADVERTISING PROHIBITION AMENDMENT BILL 2010
NOTES ON CLAUSES
Clause 1 - Short Title
This clause provides that the Act may be cited as the Tobacco
Advertising Prohibition Amendment Act 2010.
Clause 2 - Commencement
This clause provides that sections 1-3 of the Act will commence the
day the Act receives Royal Assent. This clause also provides that
Schedule 1 to the Act commences on the earlier of a single day to be
fixed by proclamation or, the day after the end of a period of six
months beginning of the day the Act receives the Royal Assent. This
ensures that the latest possible commencement date for the Act will be
six months after Royal Assent
Clause 3 - Schedule(s)
This clause provides that each Act that is specified in a Schedule to
the Act is amended or repealed as set out in the applicable Schedule.
Any other item in a Schedule has effect according to its terms.
The effect of this provision is that amendments to the TAP Act are set
out in Part 1 of Schedule 1 of the Bill and the application provision
in Part 2 of Schedule 1 will operate according to its terms.
Schedule 1 - Tobacco Advertising Prohibition Act 1992
Part 1 - Amendments
Item 1
This item inserts a cross reference in subparagraph 6(3)(a)(i) to new
sections 16A and 16B. The effect of this amendment is to include the
two new exceptions established by sections 16A and 16B in the list of
conduct that, though permitted under the Act, may still be prosecuted
under a tobacco advertising law of a State or Territory if the conduct
constitutes an offence under the relevant State or Territory law.
Item 2
This item inserts a cross reference in section 7 to new sections 16A
and 16B. Section 7 provides that certain provisions in the Act that
permit tobacco advertising in limited circumstances only have effect
for the purposes of the Act. This amendment has the effect that the
two new exceptions established by new sections 16A and 16B are
included in the list of provisions covered by section 7.
Item 3
This item inserts a definition of electronically into the
interpretation provision of the Bill (section 8) to define that term
by referring to the meaning given to it in the new paragraph 10(1)(da)
to be inserted by item 5.
Item 4
This item substitutes 'publishes' for 'publishes' in subsection 10(1).
This is a technical change which aligns this provision with current
conventions for drafting definitions and does not alter the meaning of
the provision.
This item also notes that the heading to section 10 is altered by
substituting 'a tobacco advertisement' for 'a tobacco advertisement'.
Item 5
This item inserts a new paragraph (da) into subsection 10(1).
Subsection 10(1) lists the conduct that constitutes publishing a
tobacco advertisement for the purposes of the Act. There has been
previously been some confusion over whether online tobacco
advertisements fall within the scope of the Act. This amendment
ensures that the conduct of a person who brings a tobacco
advertisement to the notice of the public by electronic means,
including via the internet, or makes the advertisement remotely
accessible by a computer, mobile phone or any other electronic device
will satisfy the definition of publishing a tobacco advertisement,
unless it falls within one of the limited exceptions in subsections
10(3)-(5).
Item 6
This item inserts a note to existing subsection 13(1).
Subsection 13(1) makes it an offence for a person to broadcast a
tobacco advertisement in Australia or Norfolk Island, otherwise than
as permitted by section 14. Section 14 provides an exception to the
offence in subsection 13(1) for a person who broadcasts a tobacco
advertisement if that advertisement is accidental or incidental to the
broadcasting of other matter and the person does not receive any
direct or indirect benefit for broadcasting the tobacco advertisement.
The new note merely clarifies the burden of proof for this exception
by stating that a defendant has an evidential burden in relation to
the matters in section 14. The note explains that subsection 13.3(3)
of the Criminal Code would apply so as to impose the evidential burden
on the defendant. This means that the person who broadcasts the
tobacco advertisement must adduce evidence to suggest that there is a
reasonable possibility that the exception in section 14 applies. This
is because the matters in section 14 involve facts and circumstances
which would be peculiarly in the knowledge of the defendant and
particularly costly and difficult for the prosecution to prove beyond
reasonable doubt.
Once the defendant has adduced evidence showing that there is a
reasonable possibility that the exception in section 14 applies, the
exception must be negated by the prosecution beyond reasonable doubt.
Item 7
This item inserts a reference in paragraph 15(1)(a) to the new section
16B. Subsection 15(1) is an offence provision which has the effect
that a regulated corporation must not publish a tobacco advertisement,
or cause or authorise a tobacco advertisement to be published, unless
one or more of the exceptions listed in paragraph 15(1)(a) applies.
This amendment adds the new exception regarding conduct by certain
carriers, carriage service providers, internet service providers and
internet content hosts (created by the new section 16B) to the list of
exceptions to the offence in subsection 15(1).
Item 8
This item inserts a note to amended subsection 15(1).
Subsection 15(1) (as amended) makes it an offence for a regulated
corporation to publish, or cause or authorise to be published, a
tobacco advertisement in Australia, otherwise than as permitted by
section 16, 16B, 17, 18, 19 or 20. Sections 16, 16B, 17, 18, 19 and 20
provide exceptions to the offence in subsection 15(1) where:
. the tobacco advertisement is published where the tobacco product is
sold (section 16);
. the person who published the tobacco advertisement is a carrier,
carriage service provider, internet service provider or internet
content host and was acting solely in the person's capacity as a
carrier, carriage service provider, internet service provider or
internet content host (new section 16B);
. where the tobacco advertisement is published in a periodical
printed outside Australia that is not principally intended for
distribution or use in Australia (section 17);
. where the tobacco advertisement is published in connection with
specified sporting or cultural events held in Australia (section
18);
. where the tobacco advertisement is published as an accidental or
incidental accompaniment to the publication of other matter
(section 19); or
. where the tobacco advertisement is published by an individual
otherwise than in the course of the manufacture, distribution or
sale of tobacco products and the individual does not receive any
direct or indirect benefit for publishing the advertisement
(section 20).
The new note merely clarifies the burden of proof for this exception
by stating that a defendant has an evidential burden in relation to
the matters in sections 16, 16B, 17, 18, 19 and 20. The note explains
that subsection 13.3(3) of the Criminal Code would apply so as to
impose the evidential burden on the defendant. This means that the
person who publishes the tobacco advertisement must adduce evidence to
suggest that there is a reasonable possibility that one of these
exceptions applies. This is because the matters in section 16, 16B,
17, 18, 19 and 20 involve facts and circumstances which would be
peculiarly in the knowledge of the defendant and particularly costly
and difficult for the prosecution to prove beyond reasonable doubt.
Once the defendant has adduced evidence showing that there is a
reasonable possibility that at least one of the exceptions in sections
16, 16B, 17, 18, 19 or 20 applies, the exception must be negated by
the prosecution beyond reasonable doubt.
Item 9
This item inserts a reference in subsection 15(2) to the new section
16B. Subsection 15(2) is an offence provision which has the effect
that a person must not publish a tobacco advertisement in the course
of, or for the purposes of, regulated trade or commerce, unless one or
more of the listed exceptions applies.
This amendment adds the new exception regarding conduct by certain
carriers, carriage service providers, internet service providers and
internet content hosts (created by the new section 16B) to the list of
exceptions to the offence in subsection 15(2).
Item 10
Subsection 15(2) (as amended) makes it an offence for a person to
publish a tobacco advertisement in Australia in the course of, or for
the purposes of, regulated trade or commerce, otherwise than as
permitted by section 16, 16B, 17, 18, 19 or 20. Sections 16, 16B, 17,
17, 19 and 20 provide exceptions to the offence in subsection 15(2).
The explanation for item 8 includes a list of these exceptions.
The new note merely clarifies the burden of proof for this exception
by stating that a defendant has an evidential burden in relation to
the matters in sections 16, 16B, 17, 18, 19 and 20. The note explains
that subsection 13.3(3) of the Criminal Code would apply so as to
impose the evidential burden on the defendant. This means that the
person who publishes the tobacco advertisement must adduce evidence to
suggest that there is a reasonable possibility that one of these
exceptions applies. This is because the matters in section 16, 16B,
17, 18, 19 and 20 involve facts and circumstances which would be
peculiarly in the knowledge of the defendant and particularly costly
and difficult for the prosecution to prove beyond reasonable doubt.
Once the defendant has adduced evidence showing that there is a
reasonable possibility that at least one of the exceptions in sections
16, 16B, 17, 18, 19 or 20 applies, the exception must be negated by
the prosecution beyond reasonable doubt.
Item 11
This item inserts a reference in subsection 15(3) to the new section
16B. Subsection 15(3) is an offence provision which has the effect
that a person must not publish a tobacco advertisement in a Territory,
other than the Australian Capital Territory, the Northern Territory or
Norfolk Island, unless one or more of the listed exceptions applies.
This amendment adds the new exception regarding conduct by certain
carriers, carriage service providers, internet service providers and
internet content hosts (created by the new section 16B) to the list of
exceptions to the offence in subsection 15(3).
Item 12
This item inserts a note to amended subsection 15(3).
Subsection 15(3) (as amended) makes it an offence for a person to
publish a tobacco advertisement in a Territory, other than the
Australian Capital Territory, the Northern Territory or Norfolk
Island, otherwise than as permitted by section 16, 16B, 17, 18, 19 or
20. Sections 16, 16B, 17, 19 and 20 provide exceptions to the offence
in subsection 15(2). The explanation for item 8 includes a list of
these exceptions.
The new note merely clarifies the burden of proof for this exception
by stating that a defendant has an evidential burden in relation to
the matters in sections 16, 16B, 17, 18, 19 and 20. The note explains
that subsection 13.3(3) of the Criminal Code would apply so as to
impose the evidential burden on the defendant. This means that the
person who publishes the tobacco advertisement must adduce evidence to
suggest that there is a reasonable possibility that one of these
exceptions applies. This is because the matters in section 16, 16B,
17, 18, 19 and 20 involve facts and circumstances which would be
peculiarly in the knowledge of the defendant and particularly costly
and difficult for the prosecution to prove beyond reasonable doubt.
Once the defendant has adduced evidence showing that there is a
reasonable possibility that at least one of the exceptions in sections
16, 16B, 17, 18, 19 or 20 applies, the exception must be negated by
the prosecution beyond reasonable doubt.
Item 13
This item inserts a new section 15A which is a new offence provision.
Subsection 15A(1) makes it an offence for a person to publish
electronically in Australia anything that meets the definition of a
tobacco advertisement. It is also an offence under subsection 15A(1)
for a person to cause or authorise such a thing to be published
electronically in Australia. It is possible to have more than one
publisher in relation to an electronic tobacco advertisement. The
advertisement may have an "Australian link" within the meaning of
subsection 15A(5) even if the defendant publisher (who is being
prosecuted) is not the basis for that link, as long as there is
another publisher who provides the Australian link. However, the
defendant publisher, or the act of publication that constitutes the
offence, must have the connection with Australia that is provided by
the geographical jurisdiction (category B) under section 15.2 of the
Criminal Code.
Consequently, if the publication constituting the offence (such as the
uploading of the advertisement onto the internet) occurs outside
Australia, the defendant publisher must be an Australian citizen or
resident, or a body corporate incorporated in Australia. However, if
the publication occurs within Australia, such a requirement does not
apply to the defendant publisher. This is intended to ensure that the
offence in section 15A covers the maximum number of persons
advertising tobacco products electronically to the Australian public.
Subsection 15A(2) provides that the offence under subsection 15A(1)
does not apply if any of sections 16A to 20 apply. Section 16A
provides an exception for tobacco advertisements published on the
internet where the tobacco product is sold, provided that the
publishing of the tobacco advertisement is not an offence under the
relevant State or Territory law. Sections 16B, 17, 19 and 20 provide
further exceptions. The explanation for item 15 provides a list of
these exceptions.
The note to subsection 15A(2) clarifies that the defendant has an
evidential burden of proof in relation to the exceptions specified in
sections 16A - 20. This burden is imposed by operation of subsection
13.3(3) of the Criminal Code. This is the same evidential burden that
a defendant has in relation to exceptions to the offences in sections
13 and 15. A person who publishes a tobacco advertisement
electronically in Australia or causes or authorises a tobacco
advertisement to be published electronically in Australia must adduce
evidence to suggest that there is a reasonable possibility that one of
the exceptions in sections 16A - 20 applies. This is because the
matters in sections 16A - 20 involve facts and circumstances which
would be peculiarly in the knowledge of the defendant and particularly
costly and difficult for the prosecution to prove beyond reasonable
doubt. Once the defendant has adduced evidence showing that there is a
reasonable possibility that at least one of the exceptions in sections
16A - 20 applies, the exception must be negated by the prosecution
beyond reasonable doubt.
Subsection 15A(3) provides that section 15.2 of the Criminal Code
applies to an offence committed under subsection 15A(1). Section 15.2
of the Criminal code extends the geographical jurisdiction of the
offence. This is necessary because some of the conduct or the
circumstances in relation to an alleged offence may not occur, or
exist, in Australia in such a way as to make it appropriate for the
standard geographical jurisdiction of Division 14 of the Criminal Code
to apply.
Subsection 15A(4) defines what published in Australia means for the
purposes of section 15A. A tobacco advertisement published
electronically is published in Australia if the advertisement
originates in Australia, or, if the advertisement has an Australian
link and is, or is intended to be, accessible by the Australian public
or a section of the Australian public.
Section 15A(5) defines the term Australian link. A tobacco
advertisement has an Australian link if, at the time that it is
published, the entity (including an individual) who published the
advertisement satisfies certain preconditions, as set out in the
subsection, that link the entity to Australia.
It is possible to have more than one publisher in relation to a
particular tobacco advertisement. Only one of these publishers needs
to have an Australian link for the tobacco advertisement to be covered
by section 15A and for one or all of the publishers to be prosecuted
in relation to that particular tobacco advertisement. This could mean
that a person could be liable even if they have no link to Australia
at all, subject the geographic jurisdiction that applies by operation
of the Criminal Code. This result was intended to ensure that the
offence in subsection 15A covers the maximum number of persons who are
advertising tobacco products electronically to the Australian public.
Item 14
This item inserts the term 'format' after 'content' in paragraph
16(2)(b). Section 16 provides an exception to the prohibition of
tobacco advertising for advertisements that are displayed at or on a
place where tobacco products are sold to the public (i.e. at the point
of sale). It was considered that it would be more relevant to an
internet context to provide for the prescription of requirements in
relation to the 'format' of a tobacco advertisement on a website
through which tobacco products may be purchased.
Existing paragraph 16(2)(b) requires such advertisements to comply
with all applicable requirements that are set out in the regulations
regarding the size, content and location of the advertisement. This
amendment adds an additional requirement that such advertisements also
comply with all applicable requirements in the regulations regarding
the format of the advertisement.
Item 15
This item inserts new sections 16A and 16B.
Section 16A
New section 16A creates an additional exception to the new offence
established by section 15A. Section 15A makes it an offence to
publish, or cause or authorise to be published, a tobacco
advertisement electronically in Australia.
Subsection 16A(1) provides an exception for online point of sale
advertisements, similar to the exception provided by section 16 for
non-online point of sale advertisements. The effect is that a person
may publish a tobacco advertisement on the internet so that it is
publicly accessible in a State or Territory only if the advertisement
provides a facility for a person accessing the advertisement to
purchase a tobacco product (i.e. if it is displayed at an online point
of sale), and provided that the publishing of such an advertisement is
not an offence under the relevant State or Territory law.
Subsection 16A(2) has the effect that if there is no relevant State or
Territory law that regulates the advertising of tobacco products on
the internet, the advertisement must also comply with all applicable
requirements set out in the regulations made for the purposes of
subsection 16A(2).
Subsection 16A(3) provides that, for the purposes of section 16A, a
tobacco advertisement provides a facility for a person who accesses
the advertisement to purchase a tobacco product if it is published in
conjunction with the facility or otherwise includes or provides the
facility.
Subsection 16A(4) sets out the relevant requirements that regulations
made for the purposes of subsection 16A(2) may prescribe.
Section 16B
New section 16B creates a new exception to the offence provisions in
sections 13,15 and new 15A for publishing a tobacco advertisement in
circumstances where the person who publishes the advertisement is a
carrier, a carriage service provider, an internet service provider or
an internet content host and, in publishing the tobacco advertisement
the person is acting solely within their capacity as a carrier,
carriage service provider, internet service provider or internet
content host respectively. It was considered inappropriate to subject
persons in these categories to potential liability in relation to the
publication of internet content over which they may have no practical
means of control.
Subsection 16B(2) provides definitions for the terms carrier, carriage
service provider, internet service provider and internet content host.
These definitions are cross referenced to the Telecommunications Act
1997 (carrier and carriage service provider) and the Broadcasting
Services Act 1992 (internet service provider and internet content
host).
Part 2 - Transitional
Item 16
This item is an application provision.
Subitem (1) provides that this item applies to tobacco advertisements
that were published electronically before the commencement of Part 1
of this Act.
Subitem (2) provides that the amendments made by Part 1 of this Act
apply in relation to the publication of a tobacco advertisement if
that tobacco advertisement is accessible by the public, or a section
of the public, at or after the commencement of Part 1 of this Act.
This means that if a tobacco advertisement is published prior to
commencement of Part 1 of this Act, but is still accessible to the
public, or a section of the public, at or after the time that the
amendments in Part 1 commence, the publication of that advertisement
will be subject to these amendments.
This application provision reflects the fact that at or after the time
that Part 1 of this Act commences, online tobacco advertisements that
are accessible to the Australian public, or a section of the public,
may have already been published. The new offence in section 15A will
be applied retrospectively to the publication of such tobacco
advertisements.
The retrospective application of new section 15A is necessary to avoid
the objects of the offence provision being undermined by permitting
the continued display on the internet of tobacco advertisements that
were published prior to the commencement of the Bill.
However, the practical effect of this retrospective application on a
potential defendant is substantially diminished by the fact that the
period between enactment of the Bill and its date of commencement will
provide an opportunity for previously published tobacco advertisements
to be removed from websites. It is intended that the Bill will
commence automatically after Royal Assent, rather than by early
proclamation.
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[1] This estimate is largely in line with other studies. Allens
Consulting Group (2002) estimates around 39 000 outlets nationally retail
tobacco products.