The Australian Government will cut the cost of tobacco to the tune of $1 billion over four years to help cover a tobacco tax hike that it hopes will encourage people to quit smoking.
The move is likely to trigger a fierce backlash from tobacco producers, who have said it will cause more people to stop smoking.
“The Government will continue to provide support to Australia’s tobacco sector through the Government’s Tobacco Product Relief Fund,” Health Minister Jill Hennessy said in a statement on Friday.
“It will be a major and important part of our strategy to address the health and wellbeing of Australian families and communities.”
The Government has already cut tobacco prices to the costliest levels in recent years.
Tobacco tax hikes were set to begin on January 1 and have already cost $4.2 billion, according to the Australian Council for Health and Welfare.
“We know that if we don’t act now to protect the health of our nation, we’ll see millions more smokers start to quit and we’ll lose millions more Australians,” Health Secretary Jill Henning told the ABC’s AM program on Friday, adding the Government was not “going to be able to continue to support smokers as a result”.
“The cost of a tax hike is going to have a devastating impact on the health care system, on people who are already struggling to get by,” she said.
Tasmania will continue with the tobacco tax hikes.
The tobacco industry is not happy with the Government decision.
“This is a very poor decision,” National Tobacco Australia president Gary Kelly told the Australian Financial Review.
“I think they are going to be in for a nasty surprise.”
The Tasmanian Government is the only state in Australia to have yet to take a formal stance on the proposal.
“Tasmanian government has taken no position on the tobacco excise proposal but will continue providing support to the industry in the form of subsidies,” the Tasmanian Premier Daniel Andrews said in his State of the State speech last week.
“For Tasmanians who are struggling to make ends meet, this decision is not going to make any difference to their financial position, their family’s financial position or their overall financial position,” he said.
The Australian Medical Association has previously called on the Government to end its “policymaking” role in Australia’s healthcare system.
“If we are serious about improving Australia’s public health and our health system, then we need to stop making this decision in the first place,” the AMA said in its 2017 annual report.