Media release: The economic argument for our world-leading smokefree legislation – new research

Retaining our world-leading smokefree legislation would generate considerable growth in income for New Zealanders with a total gain of NZ$46 billion by 2050 according to new modelling just published in an international journal.

The study published in BMJ Tobacco Control looks at all the major potential long-term economic impacts of the smokefree measures that the new coalition Government has announced it will repeal.

University of Otago Professor Nick Wilson and co-authors summarise their research in the latest Briefing from the Public Health Communication Centre. The research looks at the growth in income for the NZ population as a result of the smokefree policies, and also ways of eliminating any financial shortfall for the government.

“In the study we looked at the gain for the population as a result of the smokefree legislation. We take into account increased income from fewer workers getting sick and dying prematurely plus the money saved on tobacco expenditure from lower levels of addiction. The modelling shows quite clearly that the economic benefits for New Zealanders are far greater than the negative impact on government revenue.

Professor Wilson says the pluses for government finances are savings in the health system from reduced treatment of tobacco-related disease, and increased income tax revenue. “But we have calculated increased superannuation payments and reduced tobacco excise tax revenue could result in a net revenue shortfall of NZ$17 billion by 2050. However, we lay out how this shortfall could be avoided with appropriate planning.”

“The new coalition government has set out its decision-making principles, which include their intention to make “decisions …based on data and evidence”. Therefore, we encourage the new government to look at the economic evidence in this new study, that are in addition to the very major health benefits,” says Professor Wilson.

In the Briefing the authors have listed various ways that a government can reduce its reliance on tobacco tax revenue. These options range from reducing tax exemptions (such as those given to landlords) and taxing unhealthy products (eg, a sugary drink tax to protect child health).

The published study, Economic effects for citizens and the government of a country-level tobacco endgame strategy: a modelling study, was a collaborative effort from researchers (epidemiologists and a professor of economics) at: University of Melbourne, University of Otago, University of Queensland and University of Oxford, UK.