Page 1016 - Week 04 - Thursday, 18 June 1992
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Tobacco Product Prices
MR LAMONT: My question is addressed to the Minister for consumer affairs. Can the Minister inform the Assembly about the sudden increase in the cost of tobacco products in the ACT?
MR CONNOLLY: I thank Mr Lamont for his question. The increases in the prices of the noxious weed are perhaps something that some of us would think is not such a bad thing, but when they are unjustified they are a problem. The behaviour of the market in relation to cigarette prices in the last 24 hours has really been something that would make even the oil companies blush. The New South Wales Government indicated that it would immediately increase its franchise fee from 50 per cent to 75 per cent, meaning a 55c per packet increase at the retail level for cigarettes.
Although the ACT Government has made it clear that no decision has been made about the future of tobacco tax in the ACT - and obviously it is a budgetary matter - and although clearly there has been no tax increase in the ACT, magically the price of cigarettes started to rise 55c, or more in some cases, around the ACT. Yesterday I issued a media statement condemning this practice, and the ACT Revenue Office urgently faxed all tobacco wholesalers, making it abundantly clear that the ACT had not raised the tax and there was no justification for their raising their prices.
We got some interesting responses from major wholesalers. Coles informed us that they inadvertently raised the ACT price when notifying the New South Wales stores; but, fortunately, now that they have had their attention drawn to it, they have reduced the price again, and people at the retail level are paying what they were paying 24 hours ago.
Mr Kaine: Have they refunded the excess?
MR CONNOLLY: They will indeed refund if customers approach them, we are told. The other major distributors in the ACT are Davids Holdings and Campbells Cash and Carry. Their head offices advised us that they raised the wholesale prices to be in line with New South Wales in order to avoid difficulties or disadvantages in the tax collection process, which is an interesting answer. They have had their attention rapidly drawn to the fact that that is unacceptable; and they have advised that, in light of the gentle reminder from the ACT Government, they will be revising their structures and will be resuming their wholesale price. They have said that, at the wholesale level, they will reimburse retailers who purchased the cigarettes at a higher price. Of course it will be up to the retailers to reimburse customers. But we did see yesterday a fairly unacceptable passing on of a non-existent tax rise to ACT consumers. The Government jumped in, and we seem to have nipped the problem in the bud.
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