HAVE YOUR SAY - dhhs.tas.gov.au Web viewElectronic Cigarette, Tobacco Supply and Licensing Laws – Regulatory Impact StatementDepartment of Health and Human Services. 3. Electronic

HAVE YOUR SAYProposed New Laws for

Personal Vaporisers (Electronic Cigarettes),Tobacco Licensing, and Smoking Bans

A Regulatory Impact Statement

An initiative of the Government’sHealthy Tasmania – Five Year Strategic Plan

The proposed laws primarily relate to electronic cigarette users, retailers, and suppliers;

tobacco retailers; and occupiers of smoke-free areas

January 2017

Depar tment o f Hea l th and Human Serv ices

Table of Contents

1. Purpose of this paper.............................................................................3

2. Objectives – why new laws are needed..................................................4

3. Proposed laws......................................................................................10

4. The impact of proposed laws on business and competition.................15

5. Costs and benefits...............................................................................18

6. Alternative Options..............................................................................23

7. Greatest net benefit / least net cost....................................................25

8. Consultation process............................................................................27

Date: January 2017

Version: 1.0

Disclaimer: Any representation, statement, opinion or advice, expressed or implied in this publication is made in good faith but on the basis that the Department of Health and Human Services, its agents and employees are not liable (whether by reason of negligence, lack of care or otherwise) to any person for any damage or loss whatsoever which has occurred or may occur in relation to that person taking or not taking (as the case may be) action in respect of any representation or advice referred to herein

Electronic Cigarette and Tobacco Licensing Laws – Regulatory Impact StatementDepartment of Health and Human Services2

Purpose of this paper

In July 2016, the Government released Healthy Tasmania – Five Year Strategic Plan (‘Healthy Tasmania’) to support the goal of making Tasmania the healthiest population in Australia by 2025.

The plan includes a number of actions to target smoking behaviour in Tasmania – including new laws for the sale, supply, advertising, display, reporting on volume of sales, and use of electronic cigarettes.

This position was informed by public consultation on the draft Healthy Tasmania plan, released in December 20151, which identified electronic cigarettes as an important consideration for the final Healthy Tasmania plan. This followed the release of a detailed discussion paper in June 2015, covering the nature of electronic cigarettes, consumer safety, health effects, exposure to nicotine, and public health concerns. It noted electronic cigarette laws across Australia and invited comment on options for Tasmania. 56 submissions were received from a range of stakeholders including electronic cigarette users, manufacturers and retailers; health and advocacy groups; government departments; and researchers.

Other changes for the Public Health Act 1997 are also proposed - changes to smoking bans (ensuring all forms of smoking are banned in existing smoke-free areas) and tobacco licensing (fit and proper test; reporting sales volumes).

This paper

As for all new legislation, the Department of Treasury and Finance has assessed the proposed changes under the Government’s Legislation Review Program. It has determined that a Regulatory Impact Statement (‘a RIS’) is required.

This RIS has been prepared by the Department of Health and Human Services, being the department responsible to the Minister for Health for administering the Public Health Act 1997.

The RIS sets out:

the reason why new laws are needed what the proposed changes to the Public Health Act 1997 are the anticipated impact of the proposed laws on competition and business the costs and benefits of the proposed laws other options for change or no change; and which option offers the greatest benefit (or least cost).

1 http://www.dhhs.tas.gov.au/publichealth/tobacco_control/electronic-cigarettes

Electronic Cigarette, Tobacco Supply and Licensing Laws – Regulatory Impact StatementDepartment of Health and Human Services

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http://www.dhhs.tas.gov.au/publichealth/tobacco_control/electronic-cigarettes

Public comment on the RIS is welcome – see page 27 for details. Feedback will be considered as a Bill is prepared for Government to consider introducing into Parliament.

Electronic Cigarette and Tobacco Licensing Laws – Regulatory Impact StatementDepartment of Health and Human Services4

Objectives – why new laws are neededTobacco smoking kills more than 500 Tasmanians each year and imposes a significant burden on individuals, families, communities, businesses and governments.

While smoking levels by adults in Tasmania are at the lowest level recorded at 18.9 per cent, this still remains significantly higher than the Australian average of 16 per cent.

The Australian Secondary Schools Alcohol and Drug Survey was conducted amongst 2,066 Tasmanian school students from June to December 2014, with survey results released in 2016. In 2014, six per cent of Tasmanian secondary students aged between 12 and 17 years were current smokers, smoking an average of 22 cigarettes a week. From the age of 18 to 24, smoking levels increase rapidly, and in 2014-15 almost a quarter (24.5 per cent) of this age group were current smokers.

This shows there is room to strengthen efforts to reduce tobacco smoking for important health, social and economic reasons.

Preventing young Tasmanians from ever taking up smoking is also an important priority. If young people are not smoking by their early 20’s then it is unlikely they will ever start2.

To that end, new or changed laws are proposed for electronic cigarettes, smoking bans, and tobacco licensing. The reasons for changes to these laws are explained further below. The details of the proposed laws are set out on page 9 under the ‘Proposed Laws’ heading.

At the time of preparing this RIS and the Department of Health and Human Services projections, there were over 700 licensed tobacco sellers in Tasmania, of which an estimated 36 sell e-cigarettes, and a further 4 retailers sell e-cigarettes but not tobacco products.

Electronic cigarettes

An electronic cigarette is typically a battery operated device that heats liquid to produce a vapour that is inhaled by the user. The act of using an e-cigarette substantially mimics the act of using a tobacco cigarette. Electronic cigarettes are known by many names - such as e-cigarettes, personal vaporisers, hookah pens, mods, and tanks. This RIS uses the term ‘e-cigarettes’ to refer to all types of e-cigarettes and their components.

The proposed e-cigarette laws will apply to all e-cigarettes, whether they contain nicotine or not. The existing ban will remain on the sale or possession of nicotine for use in e-cigarettes

2 WHO ENDS, Electronic Nicotine Delivery Systems and Electronic Non-Nicotine Delivery Systems (ENDS/ ENNDS) Agenda item 5.5.2 Seventh Session of the Conference of the Parties to the WHO FCTC 2016, 7-12 November 2016, Delhi, India.


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without authority. The nicotine ban is applied across Australia. In Tasmania, nicotine in such forms is currently restricted as a Schedule 7 Dangerous Poisons substance under the Poisons Act 1971.

In August 2014, the World Health Organisation released a report advising that to minimise the risk that e-cigarettes may ultimately contribute to the tobacco epidemic, and to maintain and extend the achievements of public health strategies to reduce tobacco related harm, efforts are needed to appropriately regulate the increasing growth and use of e-cigarettes.3

In March 2015, the National Health and Medical Research Council released a statement advising there is currently insufficient evidence to conclude whether e-cigarettes can benefit smokers in quitting or about the extent of their potential harms. The statement also recommended that health authorities act to minimise harm until evidence of safety, quality and efficacy can be produced.4

In Australia, all jurisdictions except Tasmania and the Northern Territory already have a range of regulatory controls on e-cigarettes. In summary:

Use of e-cigarettes in smoke-free areas: prohibited in the Australian Capital Territory, New South Wales (motor cars with children present), Queensland and Victoria. Similar proposals have been announced by South Australia.

Sales to children :o sale of e-cigarettes to children are prohibited in Victoria (from 1 August 2017), New

South Wales, Queensland, and the Australian Capital Territory. Similar proposals have been announced by South Australia,

sale of products to any person that resemble tobacco products is prohibited in South Australia and Western Australia, so e-cigarettes fitting that description cannot be sold at all. In the Northern Territory e-cigarettes that resemble tobacco products cannot be sold to children.

Display:o The displays of e-cigarettes are prohibited in Queensland, New South Wales, and

Australian Capital Territory. Advertising, marketing and promotion:

o Australian Capital Territory, New South Wales, Victoria (from 1 August 2017), and Queensland have introduced laws restricting advertising, promotion and display of all e-cigarettes at retail outlets. Similar proposals have been announced by South Australia.

o The Commonwealth prohibits advertisements that have the effect of promoting smoking, which may include e-cigarette advertisements.

Commercial importation of non-nicotine e-cigarettes:o This is regulated by the Commonwealth, and importation of e-cigarettes marketed

with therapeutic claims is unlawful across Australia unless the product is registered by the Therapeutic Goods Administration. There are currently no such registrations.

3 World Health Organisation, Framework Convention on Tobacco Control. Electronic nicotine delivery systems: Report by WHO, 21 July 20144 NHMRC, https://www.nhmrc.gov.au/health-topics/electronic-cigarettes

Electronic Cigarette and Tobacco Licensing Laws – Regulatory Impact StatementDepartment of Health and Human Services

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Surveys prior to introduction of e-cigarette controls in New South Wales by the Cancer Council found that there was strong public support, with 73% of adults agreeing that similar restrictions to cigarettes and tobacco products should be applied to e-cigarettes.5

Summarising the public discussion paper released in June 2015, the reason for introducing laws in Tasmania for electronic cigarettes is to:

1. prevent uptake of electronic cigarettes by young people, and discourage uptake by adult non-smokers and ex-smokers;

2. prevent re-normalising smoking behaviour; and

3. protect from possible harms from exposure to second hand vapour from e-cigarettes.

These are discussed further below.

1. Prevent uptake of e-cigarettes by young people, and discourage uptake by adult non-smokers and ex-smokers

Currently in Tasmania, a person of any age – including a child - can purchase e-cigarettes.6 There are no restrictions on the display, promotion or marketing of e-cigarettes, which is often targeted at young people.

A recent report of the World Health Organisation notes that studies indicate that minors using e-cigarettes who have never smoked at least double their chance of starting to smoke tobacco.7

Whilst the market for e-cigarettes in Tasmania is relatively small, if left unregulated it has the potential to grow, as it has done in other countries.

A survey conducted in 2014 found four per cent of Tasmanians used e-cigarettes regularly (an increase from 2 per cent in 2013) and 33 per cent of those people had never tried a cigarette.8 Between 2013 and 2014, there was a significant increase in awareness of e-cigarettes from 67 per cent to 86 per cent of respondents. A 2015 survey indicates awareness has significantly increased again for 18 to 29 year olds, to 96.4 per cent.9

5 Walsberger S, Havill M. NSW community behaviours, beliefs & attitudes towards e-cigarettes: results of an online survey. Sydney; 20156 Other than electronic cigarettes containing nicotine (as nicotine is restricted under Tasmanian poisons legislation)7 WHO ENDS, Electronic Nicotine Delivery Systems and Electronic Non-Nicotine Delivery Systems (ENDS/ ENNDS) Agenda item 5.5.2 Seventh Session of the Conference of the Parties to the WHO FCTC 2016, 7-12 November 2016, Delhi, India.8 Cancer Council Tasmania, Tasmanian Smoking and Health Surveys 2013 and 20149 Trainer, E. & Smith, A. (2016). The Tasmanian smoking and health survey: findings from the 2015 population survey. Unpublished report, Quit Tasmania, Cancer Council Tasmania, Hobart. Note, responses to the survey were sought by contacting mobile telephones, not fixed-line telephones as occurred in the 2013-2014 survey


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The World Health Organisation states that conclusive evidence about the association of e-cigarettes with diseases of interest (such as cancer) will not be available for years, even decades.10

This is particularly relevant to the regulation of e-cigarettes to protect non-smokers, ex-smokers and young people who are not smokers of tobacco from these unknown health risks. E-cigarettes contain toxicants11 that have known health effects; metals at concentrations equal or greater than traditional cigarettes (such as lead, chromium, nickel, and formaldehyde); and come in almost 8 000 unique flavours, whose health effects have not been well studied.

Unlike nicotine replacement therapy products, which have been rigorously assessed for efficacy and safety, no model of e-cigarette has been approved by the Australian Therapeutic Goods Administration as a smoking cessation aid.

The World Health Organisation12 notes that the scientific evidence regarding the effectiveness of e-cigarettes as an aid to quitting smoking is scant and of low certainty, making it difficult to draw credible inferences. Given this, it cannot yet be determined whether e-cigarettes may help most smokers to quit or prevent them from doing so.

2. Prevent re-normalising smoking behaviour

The World Health Organisation13 report states trans-national tobacco companies (TTCs) are rapidly increasing their share of the e-cigarette market, and their engagement in the marketing of electronic cigarettes is a “major threat to tobacco control”. The report noted concerns that TTCs are marketing e-cigarettes in order to:

minimize the threat to tobacco sales by promoting e-cigarettes as a complement rather than an alternative to tobacco, or controlling technological innovations that would prevent improvements in their efficacy as an aid to cessation

promote smoking through e-cigarette advertising, and promotion to adults and children

assert potential benefits of e-cigarettes as an excuse to engage with and influence policymakers, scientists and advocates in tobacco control with a view to undermining the WHO Framework Convention on Tobacco Control.

The unregulated sale and supply of e-cigarettes is therefore a significant public health concern. It has the potential to undermine tobacco control efforts to date that have helped to de-normalise smoking behaviour (for example by establishing and expanding

10 World Health Organisation, Framework Convention on Tobacco Control. Electronic nicotine delivery systems: Report by WHO, 21 July 201411 For example, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4018182/12 WHO ENDS report, ibid page 713 WHO ENDS report, ibid page 5


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smoke-free areas, and advertising and display bans). This could cause an increase in smoking prevalence in Tasmania.

An increase in smoking rates would mean an increase in the health, social, and economic costs for all Tasmanians. In 2013-14, smoking cost the Tasmanian economy an estimated $468.8 million in health and medical costs, reduced labour and household productivity, absenteeism and fires.14

3. Protect from possible harms from second-hand (or passive) vapour

There is currently no restriction on the places where an e-cigarette can be used (often called vaping). This means people in a public place can be exposed to second hand vapour exhaled by e-cigarette users.

Evidence of the long term health effects of second hand exposure to emitted or exhaled vapour is currently inconclusive. Some research evidence indicates there are short term risks relating to exposure to propylene glycol such as eye and respiratory irritation.15

There are also concerns that propylene glycol may form toxic or cancer-causing compounds when heated and vaporised and that e-cigarette products with nicotine may passively expose non-users to nicotine and other potentially harmful constituents. This risk includes flavoured chemicals which may be safe when ingested but not necessarily safe when inhaled.16

Whilst the magnitude of the health risks are as yet unknown, the World Health Organisation notes3 it is reasonable to assume the increased concentration of toxicants in second hand vapour poses an increased risk for the health of all bystanders. Some metals such as nickel and chromium can be in higher concentration in second hand vapour than second hand tobacco smoke.

Smoking bans – smoke-free areasThe current law prohibits smoking in smoke-free areas. Smoke-free areas include, for example, in cars with children or work colleagues, enclosed public places or workplaces, outdoor dining areas, playgrounds, sporting events, swimming pools, certain public events, areas declared

14 P. Bennett Consulting (2015) Analysis of the Economic and social costs of smoking in Tasmania 2013-14 15 Grana R et al. E-cigarettes: A scientific Review. Journal of the American Heart Association, 201416 Tierney PA et al. Flavour chemicals in electronic cigarette fluids. Tobacco Control published online first, 15 April 2015

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smoke-free by occupiers, bus shelters and pedestrian and bus malls in the Public Health (Smoke-free Areas) Regulations 2014.

To preserve the intent of smoke-free areas (such as limiting passive smoking of substances of known and unknown health impacts, and exposing children to smoking behaviour), the objective is to expand these restrictions to use of e-cigarettes, and to clarify that the existing references include smoking non-tobacco products such as herbal cigarettes. The first objective is important to protect bystanders from the harms of exposure to e-cigarette vapours (described above). The second objective is to remove some ambiguity about the legality of using non-tobacco cigarettes in smoke-free areas. These cigarettes can, despite their marketing, contain nicotine, and have known and unknown health impacts. Clarifying the meaning of smoke-free restrictions in this way will remove ambiguity for users and facilitate consistent enforcement against smoking behavior in smoke free areas.

Tobacco (and e-cigarette) licensing – fit and proper test It is important that the holder of a licence to sell tobacco (or e-cigarettes) complies with the requirements in the Public Health Act 1997. At present, the Director of Public Health needs to be satisfied a person is likely to comply with the Act before issuing a tobacco sellers licence. This would also be the case for a licence to sell e-cigarettes. However, there is a lack of clarity on what this means in practice and the enquiries or checks the Director of Public Health may do in order to reach that view. The ‘fit and proper’ checks for licence applicants or holders that the Director may apply under the proposals are described under Section 3 below, and include, for example, a criminal history check. Clarifying the provisions of the Act in this way will provide greater certainty in the licensing process.

Tobacco (and e-cigarette) licensing - reporting sales data Apart from population surveys conducted at three year intervals, there is limited routinely reported information available to help us understand if tobacco control actions (or e-cigarette actions) are achieving their objectives. Routinely reported information would help target interventions to improve the health of Tasmanians, particularly at a local level. Some level of reporting is already required to the Australian Taxation Office and the Department’s reporting system will be designed to minimise administrative requirements on retailers.


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Proposed lawsA number of changes to the Public Health Act 1997 are proposed to address the objectives described above. They relate to e-cigarettes, smoking bans, tobacco licensing, and other supporting changes. Some changes do not require analysis in this RIS as they are not expected to significantly affect business or competition. They are included below to show the complete set of changes planned for the Bill.

A licence to sell e-cigarettes The tobacco licensing process is proposed to be amended so that the Director can also

issue licences permitting the sale of e-cigarettes.

A person who wants to sell e-cigarettes will need to apply to the Director of Public Health for a licence once a year. In time, this may be done via a new online licensing system.

If the person holds a licence to sell tobacco products they will not need to pay an extra licence fee to sell e-cigarettes. This approach recognises there are some crossovers of retailer requirements and enforcement activities for tobacco and e-cigarette retailers. It also recognises that tobacco seller’s licence fees have increased to $730 in 2017 and to $1095 in 2018, closer to cost recovery levels.

If the person only wants a licence to sell e-cigarettes, the fee will be approximately $365 for applications received from 1 July – 31 December 2017, and approximately $550 for applications received on and from 1 January 2018.

The meaning of ‘sell’ in the Public Health Act 1997 will stay the same – which means a licence will be required to: dispose of by any method for valuable consideration; barter or exchange; dispose to an agent for sale on consignment; offer or expose for sale; possess for sale; agree to sell; send, forward, or deliver for sale; dispose of by way of raffle, lottery, or other game of chance.

The Director of Public Health may do a ‘fit and proper’ check for licence applicants or licence holders. This may involve a criminal history check, making enquiries with police, and/or other government agencies across Australia. If, for example, a person has failed to follow licence conditions or laws for retailers in another state (perhaps by selling e-cigarettes with nicotine in them or by selling tobacco to a child), they may not be considered a fit and proper person to hold an e-cigarette licence in Tasmania.

The existing model for specialist tobacconists will remain unchanged. A specialist tobacconist is a retailer that only sells tobacco, tobacco ancillary products (eg. devices only used for tobacco), matches, and cigarette or pipe lighters. E-cigarettes are not tobacco products, nor are they ancillary tobacco products.

No tobacco retailer can display tobacco or tobacco products. However, a specialist tobacconist can display ‘ancillary tobacco products’ – such as pipes, cases, tobacco filters, and cigarette papers. Specialist tobacconists cannot currently sell e-cigarettes,


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and will not be able to sell e-cigarettes under the proposed e-cigarette framework unless the store reverts to being a general, not a specialist, retailer. This is the same approach in place now if a specialist tobacconist decided to sell any other non-tobacco products – such as bread and milk. The ‘specialist tobacconist’ model is deliberately designed for consumers whose sole reason for visiting such a retailer is to buy a tobacco (and therefore nicotine-containing) product or related accessory. Maintaining the restriction of specialist tobacconists to selling tobacco products aims to prevent non-smokers and ex-smokers uptake or relapse of tobacco smoking though exposure to a retail outlet whose entire purpose is the sale and consumption of tobacco. There are over 750 tobacco retailers who will be able to apply for a licence sell e-cigarettes, and will be able to continue to choose to sell e-cigarettes under the new licensing framework for no extra licensing fee. Maintaining the current e-cigarette restriction on specialist tobacconists does not represent a significant restriction on access to e-cigarettes.

As for a tobacco licence, an e-cigarette licence will not be issued to a person whose primary use for the licence is to supply e-cigarettes to persons attending a public event.

Laws for e-cigarette sellers (and other suppliers)Similarly to tobacco licence restrictions, a person who is granted a licence to sell e-cigarettes:

Must not:

o sell or supply to children (or offer or permit this to occur)

o include e-cigarettes in shopper loyalty programs or use marketing schemes that depend on the purchase of e-cigarettes (price discounts permitted)

o provide false information on e-cigarette laws (this also applies to manufacturers and other suppliers/distributors), or

o advertise e-cigarettes (including price discounts) unless the advertising is permitted in the Director of Public Health’s guidelines (for example, on a price board).

Must:

o keep e-cigarettes out of public view (except during a sale or restocking) in either a concealed storage facility or plain sales unit that complies with the same requirements on location, access, and design as tobacco sales units

o provide information to employees on the ban on supply to children as outlined in the Director of Public Health’s guidelines

o report to the Director of Public Health on the volume of e-cigarette sales (this will likely occur once a year upon licence renewal)

o display notices approved by the Director of Public Health, and


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o ensure packages and labels comply with the Director of Public Health’s guidelines. This also applies to manufacturers and other suppliers/distributors. At present there are no plans to require compliance with particular packaging or labelling requirements, however that may occur in future if, for example, plain packaging legislation similar to tobacco requirements were to become law.

E-cigarette laws for everyone (including employers) Similarly to current tobacco restrictions:

o Using an e-cigarette (often called vaping) will be banned in existing smoke-free areas.

o Selling or supplying e-cigarettes to, or for the use of, a child (or offering to do so) will be banned. This includes lending and giving. Employers must not permit employees to do these things within 100 metres of their premises.

o Advertising e-cigarettes will be banned. Some limited exceptions will apply, including in stage performances, books or similar as currently apply to tobacco products.

o Like the tobacco provisions, many of the requirements listed under the ‘Laws for e-cigarette sellers’ will apply to everyone, though because they relate mainly to the retail sale of e-cigarettes they will, in practice, generally be most relevant to retailers.

E-cigarette laws for under-18sSimilarly to current tobacco restrictions, a person aged under 18 years will be banned from:

vaping, or using an e-cigarette, and

possessing an e-cigarette (unless it is reasonably incidental to their employment with the holder of an e-cigarette licence).

A person aged under 18 years who fails to follow these bans does not risk a financial penalty. Instead, nominated officers under the Public Health Act may seize the products (without using force) and provide warnings and information. With the approval of a parent or guardian this may be done at a specific place and time. Officers may also require information on the identity of the supplier.

Smoke-free areas Using an e-cigarette in existing smoke-free areas will be banned. This is often called

vaping and will be referred to as ‘smoking’ in the Act so the concept of ‘smoke-free areas’ does not need to change.


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The existing ban on smoking will also be clarified in respect of non-tobacco smoking (such as smoking a herbal cigarette) so it is clear that all smoking is banned in smoke-free areas – no matter what substance is being smoked or its delivery system.

As is currently the case for tobacco smoking, an occupier of a smoke-free area must not allow a person to smoke in the smoke-free area.

Occupiers will continue to be required to display signs approved by the Director of Public Health.

Smoke-free areas include in cars with children or work colleagues, enclosed public places or workplaces, outdoor dining areas, playgrounds, sporting events, swimming pools, certain public events, areas declared smoke-free by occupiers, bus shelters and pedestrian and bus malls in the Public Health (Smoke-free Areas) Regulations 2014.

Enforcement and Penalties Nominated officers will be empowered to enforce the new e-cigarette laws. The Public

Health Act defines a nominated officer as the Director of Public Health, an environmental health officer, a medical health officer, a police officer, and a person (or member of a class of persons) approved by the Director of Public Health (which includes Tobacco Control Officers in Public Health Services).

Offences for failing to comply with the new e-cigarette laws will have the same penalties as similar tobacco control offences in the Public Health Act 1997, including the proposed increased penalty for selling or supplying to a person aged under 18 years.

The Public Health (Infringement Notices) Regulations 2012 will also be amended so nominated officers have the option of issuing an infringement notice (on-the-spot fine) for certain e-cigarette offences.

Laws for tobacco sellers


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Similarly to the proposed requirement for reporting volumes of e-cigarette sales, a person who holds a licence to sell tobacco products must report to the Director of Public Health on the volume of tobacco product sales (this will likely occur once a year). Information collected will be treated in the same way as the tobacco licence register and fall under the existing disclosure laws in section 147 of the Public Health Act. Some level of reporting is already required to the Australian Taxation Office and the Department’s reporting system will be designed to minimise administrative requirements on retailers.

The Director of Public Health may do a ‘fit and proper’ check for licence applicants or licence holders – the same as is proposed for e-cigarettes.

Other changes Healthy Tasmania announced that penalties for selling or supplying tobacco products to a

person aged under 18 years will increase. The increased penalties will also apply in relation to the same offence for e-cigarettes.

Healthy Tasmania also announced additional quit smoking information at the point of sale. Amendments to the Guidelines for the Sale of Tobacco may be used to enable this, and broadening the current power under which the Guidelines are made may be required to ensure adequate information is provided. Retailers may be involved in developing options for this.

There are also four additional changes proposed:

o removing personal living areas of a prison as permitted smoking areas under the Public Health Act (now that Tasmanian Prison Service facilities are smoke-free);

o removing an unintended drafting consequence, by ensuring the option of a penalty of imprisonment for failing to comply with the requirements of a nominated officer does not apply to a person aged under 18 years; and

o consequential changes as appropriate to:

Work Health and Safety Regulations 2012 (reg 328) - reviewing the inclusion of e-cigarettes in the exemption (for tobacco products) from the operation of Part 7.1 of the regulations (dealing with the use, handling, storage of hazardous chemicals at a workplace); and

o any regulations restricting smoking on educational campuses.


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The impact of proposed laws on business and competitionA new regulated environment is expected to affect businesses in, and seeking to enter, the e-cigarette market. There are, however, limited effects on competition, because the laws apply equally to everyone in that market and there is no cap on the number of licences that can be issued. The only exception is for specialist tobacconists. This is discussed further below.

Restrictions on market entrySimilarly to tobacco licensing processes, retailers of e-cigarettes will be required to obtain a licence to sell e-cigarette products and their accessories. This applies to all retailers equally. There is no plan to limit the number of licenses issued for e-cigarettes in Tasmania.

Commercial barriers to entry into the e-cigarette market are limited to the purchase of a plain display unit if the business is a retail outlet. This cost can be avoided if the retailer keeps e-cigarettes in a concealed storage facility (i.e. a facility or unit not in public view).

In the case of online sales, there are no set up cost impediments to market entry.

Specialist tobacconists seeking to sell e-cigarettes cannot remain a specialist but can revert to being a general retailer. This means they can no longer display ancillary tobacco products (such as a non-tobacco device or article designed or intended only for use in connection with tobacco) and must put all tobacco and e-cigarette products out of public view. This is the same approach now if the specialist tobacconist sold any non-tobacco product such as bread or milk. The reasons for maintaining the current restriction on specialist tobacconists selling e-cigarettes are discussed in the previous section.

To hold a tobacco or e-cigarette licence a ‘fit and proper test’ may be required. This form of market restriction is in the public and reputable businesses’ interest. It intends to prevent improper persons, such as those with history of non-compliance with relevant regulatory restrictions, from holding licences and undermining the tobacco controls.

Other aspects of the proposed legislation do not impose any other barriers to market entry in Tasmania.

Restrictions on competitive conductSimilarly to current tobacco restrictions, the proposed laws will prohibit advertising and marketing schemes (like shopper loyalty programs) in the e-cigarette market. This aims to limit non-smokers, former smokers or young people’s awareness of the product. Without restrictions on advertising, increases in e-cigarette and tobacco use may occur. The proposed laws prohibit the display of e-cigarettes, which can currently be placed next to confectionary and colourful products aimed at children. These restrictions on competitive conduct apply to all e-cigarette sellers and tobacco product sellers.


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Other aspects of the proposed laws do not impose any other barriers to competitive conduct. For example no restriction will be imposed on hours of operation, business ownership or size of the type of premises selling e-cigarettes.

Restrictions on product or service innovationSimilarly to current tobacco restrictions, including e-cigarettes in the smoking ban in smoke-free areas means e-cigarettes cannot be used in premises that sell them (for example, under an in-store ‘try before you buy’ approach).

Under existing law, there are already restrictions on liquid nicotine in the e-cigarette market. All Australian jurisdictions ban the retail sale of electronic nicotine delivery systems (ENDS) which are e-cigarettes that contain nicotine. ENDS are illegal in Tasmania under the Poisons Act 1971.

Restrictions on the entry of goods or servicesThere are no restrictions on the entry of goods or services that would give a competitive advantage to local, interstate, or international suppliers. The proposed laws apply equally to all e-cigarettes and all persons in the e-cigarette market.

Administrative discretionThe proposed ‘fit and proper test’ allows for administrative discretion by requiring the Director of Public Health to form a view on a case-by-case basis. A fit and proper test is a common requirement in licensing frameworks.

The Director of Public Health will continue to have the option of issuing mandatory guidelines. This ability exists in the Act already and will be extended to include e-cigarettes in the same way it does tobacco products.

Impact on businessRetail outlets that sell e-cigarettes will be required to complete an application (including a declaration for the fit and proper test) and visit a Service Tasmania outlet or a post office to pay the licence fee (paying online may become an option in future).

When new laws are introduced, businesses must familiarise themselves with the new laws, train staff and, if needed, make changes to their retail outlet to comply with advertising, storage and display requirements.

For the annual reporting of sales volumes, the time to collect this information is expected to be similar to general book keeping for tax reporting to the Australian Tax Office. An online reporting process may be feasible in the future.


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It is estimated that of the approximately 40 retailers who currently sell e-cigarettes most already sell tobacco. Their retail environment should already be aligned with the laws for tobacco retailers which mirror those proposed for the e-cigarette retail environment (for example, existing sales units that already comply with the Act).


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Compliance checks are not expected to create an extra obligation for existing tobacco retailers who want to sell e-cigarettes. However, enforcement officers will require more time with retailers who only sell e-cigarettes in the first visit to discuss requirements that will be unfamiliar to them.

Occupiers of smoke free areas cannot permit people to use e-cigarettes. This may affect some private businesses, councils, licensed venues, and employers. It is not expected that existing signage for smoke-free areas will need to change as a result of the proposed laws.

In practice, some public places (for example prisons, airports and hospitals) already prohibit the use of e-cigarettes. This legislation will provide the public and businesses with consistent rules that apply to tobacco and e-cigarettes.

Costs and benefits


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RetailersLicence Fees

To summarise the licence fee costs, a tobacco retailer may apply to sell e-cigarettes at no additional cost to their existing licence fees. A non-tobacco retailer may apply to sell e-cigarettes at approximately half the cost of existing tobacco licence fees. As set out in this table, a retailer who sells both products will therefore pay no more than a tobacco retailer currently pays.

Retailer 2017 (approx.)

2018 onwards (approx.)

Retailer that sells e-cigarettes but not tobacco (new fees)

$365 $550

Retailer that sells tobacco (existing fees)

$730 $1095

Retailer that sells both e-cigarettes and tobacco (no new fee on top of existing tobacco fee)

$730 $1095

Tobacco retailers

There will be a negligible cost to tobacco retailers who decide to sell e-cigarettes, estimated at $150 annually in terms of staff time. However, it is expected that this staff time would be met within existing staff activity.

Tobacco retailers who apply to sell e-cigarettes will pay no additional fee or direct cost additional to the fee paid for their tobacco licence. This acknowledges the relatively modest additional regulatory costs to the Department of administering e-cigarette laws among retailers who already comply with similar tobacco control laws, once the Department meets the costs of initial establishment, education and compliance work with retailers under the new arrangements. It also recognises that tobacco seller’s licence fees have increased to $730 in 2017 and to $1095 in 2018, closer to cost recovery levels. Fees will continue to be reviewed periodically against cost-recovery principles.

Tobacco retailers are not expected to have any initial costs for reconfiguration of storage requirements, as e-cigarettes are to be stored in a similar way to tobacco products.


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The estimated annual $150 cost to retailers for staff time is based on the time required to complete the application form in respect of e-cigarettes, read the guidelines, train staff, and participate in compliance and regulatory education sessions when inspection visits occur. These staff costs are estimated using Australian Bureau of Statistics 2016 average weekly earnings for retail workers.

There are currently an estimated 36 retailers of both tobacco and e-cigarettes in Tasmania, so the total cost to that retail business sector in Tasmania is estimated at $5,545 annually.

E-cigarette sellers who do not sell tobacco products

There will be a relatively small annual cost impost on retailers that sell e-cigarettes, but not tobacco, calculated at $515 in 2017 and $700 in 2018.

There will be a possible initial once-off cost of reconfiguring storage requirements depending on retailers’ current storage facilities.

The costs are estimated as:

Initial cost: estimated maximum establishment costs per e-cigarette retailero $3000 This is an estimated initial maximum cost of any reconfiguration of

storage requirements for e-cigs, which may be less or nil for some retailers. Annual cost: approximate fixed annual costs per e-cigarette retailer:

o $365.67 Licence fee (rising to $550 from 1 January 2018): the licence fee for e-cigarette sellers who do not sell tobacco will be approximately half the cost of a tobacco licence. This fee is less than the ‘full cost recovery’ model encouraged by the Department of Treasury and Finance’s Costing Fees and Charges Guidelines for Use by Agencies. However, this approach is preferred as a short-term step to enable implementation of the new laws in Tasmania to be evaluated before a future review of the appropriate fees in terms of cost-recovery principles.

o $150 Retailer staff time: this is an estimate of the value of staff time that will be required to complete the application form, read the guidelines, train staff, and participate in compliance and regulatory education sessions when inspection visits occur.

The direct cost for an e-cigarette licence is about $7 a week. Staff costs above are estimated using Australian Bureau of Statistics 2016 average weekly earnings for retail workers. Once any initial retail storage costs are met, each business will pay an estimated total (including licence fee) of $515 to be in a regulated e-cigarette market in 2017, rising to $700 in 2018 and beyond. While a $150 cost has been allocated to retailer staff time, it is expected that retailers are likely to accommodate this cost within existing salary costs.

The costs are not considered to be overly burdensome for retailers. It is generally accepted that businesses in a regulated industry should pay for, and benefit from, the cost of that


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regulation. Retailers can pass on the increased costs to consumers, either directly through the pricing of products or indirectly through the pricing of all products as the licence fee represents a fixed cost and is not attributable to volume of e-cigarette sales.

It is estimated these costs will affect approximately 4 retailers in Tasmania in the short-term, as most e-cigarette retailers also sell tobacco (for whom lower costs are estimated in the section above). The total annual cost to that retail business sector in Tasmania is therefore estimated at $2,060 in 2017 and $2,800 in 2018 and beyond.

Smoke-free Area Occupiers

In 2016, an overwhelming 89.9 per cent of respondents to a Launceston City Council survey about their smoke-free areas said that smoking bans were good for business.

In 2013, a review of Launceston City Council and Hobart City Council smoke-free areas found no businesses were lost due to the smoke-free area bans.

As the introduction of smoke-free areas in 2012 proved to have a positive impact on Tasmanian business, it can be expected that a ban on e-cigarettes and herbal cigarettes in smoke-free areas will have no cost or negative impact on occupiers of smoke-free areas. The risk of incurring costs through fines for failing to prevent smoking in smoke-free areas is entirely avoidable.

There are about 18.9 per cent of Tasmanians that smoke and a very low proportion that are estimated to use e-cigarettes, with minimal impacts on those users. The benefit of smoke free areas to occupiers is the health and comfort of non-smoking patrons, customers and the public in those areas.

It is not expected that existing signage for smoke-free areas will need to change as a result of the proposed laws.

Public

The benefit of the proposed legislation is to strengthen efforts to reduce uptake and social norms in relation to tobacco smoking, which is difficult to quantify.

In 2013-14, smoking cost the Tasmanian economy an estimated $468.8 million in health and medical costs, reduced labour and household productivity, absenteeism and fires. In addition it is estimated by a recent analysis of smoking costs that Tasmania incurs about $696.4 million in intangible costs based on the value of years of life lost from premature death17.

Even a small contribution from unregulated e-cigarette use to sustained smoking or uptake of smoking would have very large economic, social, and health consequences for Tasmania.

17 P Bennett Consulting (2015) Analysis of the Economic and Social Costs of Smoking in Tasmania 2013-14


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The other public health benefits of regulating e-cigarettes are difficult to quantify in financial terms at this stage. In general the expected benefits are:

Non-users are protected from potential and unknown health risks from second hand vapours,

Clarity in the understanding and awareness of e-cigarette and tobacco control laws, Simplified public messaging and education on the risks and potential risks of e-

cigarette use, Minimising the risk of future public health costs and harm arising from a

renormalisation of tobacco use linked to e-cigarette use if not appropriately regulated.

Government

The total attributable costs to the Tasmanian Government of establishing, regulating and enforcing e-cigarette laws are anticipated to be approximately $52,500 in 2017-18.

This figure is calculated by considering the direct administrative set-up and inspection activity related to licensing and sale of electronic cigarettes:

Assess applications, issue licences and correspond to retailers, Provide advice to retailers face to face on the laws and produce and redraft and distribute

a retailers guide, Conduct approved activities to test compliance with underage sales laws, Respond to enquiries about fees, their licence and the law, Monitor industry practices, Produce and distribute approved signs, Information technology support to develop e-cigarette seller’s register.

Estimated Total Attributable Costs:

($)

Staff costs for e-cigarette control (establishment, implementation, inspections, compliance etc).

31,636

Operational costs including travel, printing, Information Technology, corporate overheads

20,811

Estimated Total Attributable Costs

$52,447


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Given there are only an estimated 4 retailers in Tasmania selling e-cigarettes and not tobacco, forecast licence fee revenue will be relatively small at approximately $2,220 in 2018 and beyond. However, following the implementation of the new laws, the cost to Government will be reviewed. The implementation costs identified above will no longer apply. The FTE requirement may also reduce, unless there is growth in the number of retailers who sell e-cigarettes but not tobacco.

The costs of regulating e-cigarettes will continue to exceed the income derived from licences unless there is a substantial increase in uptake of fee-attracting licences by new retailers of e-cigarettes (who do not also sell tobacco).


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The benefit to government is further understanding of the e-cigarette market and their potential, including the case to review the laws if, for example, e-cigarettes are proven to be an effective aid for smoking cessation, through:

Knowledge of where retailers are located for compliance monitoring and education about the laws,

Information on the purchasing behaviour of tobacco smokers and e-cigarette users.

E-cigarette users Users who currently use an e-cigarette in smoke-free areas are likely to be inconvenienced by the ban on use in smoke free areas and the provision of smoking areas by occupiers in which both tobacco and e-cigarettes can be used. A person seeking to avoid exposure to second hand tobacco smoke will need to find an alternative location to use the e-cigarette, such as outside the premises (but not in a smoke-free area).

Under 18’s The benefits for people under 18 years of age will be protection from exposure to marketing and promotion of e-cigarettes and their potential to lead to tobacco use and smoking behaviour.


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ALTERNATIVE OPTIONS Option 1 – the framework in this RIS

The preferred option is the framework outlined in this RIS which provides a comprehensive approach to meet the need for new laws.

Option 2 – ban the sale and use of e-cigarettes

An alternative to regulating e-cigarettes is to ban their sale and use in Tasmania. This approach would require existing e-cigarette retailers to stop selling e-cigarettes. It would treat existing e-cigarette adult users as offenders. Tasmania would be the only jurisdiction in Australia to introduce such laws and it would be difficult to enforce and likely to lack public support. A ban may lead to increased legal and enforcement costs for government that may be more expensive than a more moderate regulatory approach. A ban may also not be effective under the Mutual Recognition Agreement, which provides for the mutual recognition of goods.

Option 3 – do nothing

This option would see no new laws for e-cigarettes introduced. None of the objectives noted in this RIS would be met. It would undermine efforts to denormalise tobacco smoking and prevent its uptake. It would impede the goal of preventing uptake of e-cigarettes by young people, non-smokers, and ex-smokers. There would be no protection from possible harms to bystanders from exposure to second hand vapour in smoke free areas (such as playgrounds, in a car, at a sporting event, in enclosed public places and schools.

Based on the advice of the World Health Organisation, and the National Health and Medical Research Council this option is not recommended given the potential health risks to bystanders from exposure to second hand vapour and, if supply to a child was not banned, the risk that e-cigarette use by children would lead to increased take-up of tobacco use.

While this option may save costs of up to $52 500 per year for the Government and $8 345 per year for the retail industry, any increase to future economic costs associated with an increase in tobacco smoking from a renormalisation linked to e-cigarettes is likely to be far greater than the cost of regulating e-cigarettes.

Option 4 – Regulate retail sale and not smoke-free areas for e-cigarettes

For this option, laws that relate to the retail environment for e-cigarettes (a licence to sell and bans on display and advertising) would apply. However there would be no restrictions on the use of e-cigarettes in smoke-free areas and as such no changes for existing occupiers of smoke-free areas. A ban on the supply of e-cigarettes to a child may or may not apply.


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This option would fail to achieve the regulatory objectives. For example, the smoke-free laws would not provide consistency with tobacco control laws that seek to de-normalise smoking and prevent uptake in children. Children in particular would not be protected from smoking behaviours and passive inhalation of vapours in areas such as playgrounds, cars, enclosed premises and schools.

Option 5 - E-cigarette restrictions without a licensing system

For this option, retailers who sell e-cigarettes would need to comply with the laws for e-cigarettes, but there would be no need for them to obtain a licence. Potentially, repeated non-compliance could be linked to a power to direct that a retailer no longer sell e-cigarettes. However, the value of a licence is to identify participating retailers, ensure that they are regularly visited and supported in complying with the new framework, and that they absorb to some degree the costs of participating in a regulated market place. Otherwise, retailers may not universally comply with or be aware of the new laws, as has occurred in Tasmania with some retailers when restrictions on cosmetic contact lenses were introduced without a licensing system. This option would cost retailers less in direct costs. However, it increases the likelihood of non-compliance, which may lead to increased costs such as penalties for failure to follow the new laws. Therefore, this option would be ineffective in achieving the regulatory objectives.


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Greatest net benefit / least net cost The Tasmanian Government’s preference is for option 1. Laws to regulate e-cigarettes and strengthen the tobacco licensing framework will deliver the greatest net benefit to the health of the Tasmanians. The Government’s preferred option is not intended to achieve full cost recovery. It strikes a balance between reasonable costs to e-cigarette retailers against the need to introduce regulatory controls to address the objectives outlined in respect of e-cigarettes. It is consistent with other jurisdictions’ initiatives and the literature about the known and as yet unknown potential health impacts of e-cigarettes and links to up-take of tobacco smoking.

The initial costs of establishing regulation of e-cigarettes to Government in terms of administrative and compliance activity is approximately $52,500. After establishment, the ongoing cost to Government is likely to be smaller although will still not reach cost-recovery. The likely reduction to annual costs is because the direct implementation costs and FTE requirement from the table in the previous section may reduce following initial implementation activity, but there will be an ongoing resources required for administrative and compliance activity for e-cigarette retailing. Costs may also require adjustment if there is growth in the number of retailers who sell e-cigarettes but not tobacco. The appropriate balance can continue to be reviewed as implementation of the new laws is evaluated.

The annual cost to the estimated 36 retailers who sell both tobacco and e-cigarettes is estimated to be only $150 in staff time per retailer which is expected to be absorbed in current retailer staff costs. In addition to that staff time, an estimated 4 e-cigarette only retailers will also incur an initial once-off cost of up to an estimated $3,000 to alter storage arrangements. Those four retailers will also pay a new licence fee of $365 in 2017 and $550 in 2018 and beyond.

This is far less than the costs related to the burden of tobacco smoking in Tasmania. Even a small contribution from unregulated e-cigarette use to sustained smoking or uptake of smoking could have very large economic, social, and health consequences for Tasmania.

Implementation of option 1 will ensure:

Existing tobacco control efforts are protected and not undermined by the potential for e-cigarettes to renormalise smoking behaviour, particularly by young people,

Non-smokers, former smokers and young people are not encouraged to experiment or start using e-cigarettes,

Non-users are protected from potential health risks from exposure to second hand vapour from e-cigarettes,

Enforcement of existing tobacco control laws is not compromised by lack of clarity in respect of smoke-free areas,

Only persons found to be ‘fit and proper’ are licensed to sell tobacco and e-cigarettes,


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More localised information can be accessed to assist in knowing whether actions being taken to address tobacco and e-cigarette use are working and provide new information on purchasing behaviour,

Increased penalties will further deter adults from supplying or selling tobacco to a person under 18 years of age.

The alternative options are not supported, noting the advantages but also significant disadvantages described in the previous section.


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Consultation processComments are invited on the impact of the proposed laws on competition and business in Tasmania.

A notice inviting comment will be published on the Department’s website, in the Gazette, in the Mercury, Examiner and Advocate newspapers, and in Public Health Services’ Tobacco Control Newsletter (sent to all tobacco retailers).

Comments are open from 7 January 2016 until 9am 30 January 2017.

Comments received (including author’s details) will be published on the Department website unless they are marked “Confidential”.

Comments will be reviewed and a report provided for the Minister for Health’s consideration.

Comments can be forwarded to:

Email (preferred): [email protected]

Post: Tobacco ControlDepartment of Health and Human ServicesGPO Box 125 HOBART TAS 7001


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mailto:[email protected]

Department of Health and Human Services

GPO Box 125HOBART TAS 7001

Email: [email protected] Visit: dhhs.tas.gov.au

Documents

HAVE YOUR SAY - dhhs.tas.gov.au Web viewElectronic Cigarette, Tobacco Supply and Licensing Laws – Regulatory Impact StatementDepartment of Health and Human Services. 3. Electronic