Plain packaging legal bill could be $8m

Defending the decision to force all tobacco products to be sold in plain packaging could cost New Zealand $8 million in legal bills alone.

Eight tobacco producing countries have objected to the World Trade Organisation, arguing that the Government's plans would restrict trade and hurt tobacco growers. At least three countries - the Dominican Republic, Indonesia and Nicaragua - made submissions to the Ministry of Health, warning the Government it risked violating its international trade obligations.

The ministry has withheld the submissions, claiming that publication could prejudice national security and international relations.

Six more countries - Cuba, Honduras, Mexico, Nigeria, Zambia and Zimbabwe - could also join the legal fight.

Cabinet papers show officials are concerned about legal threats as tobacco producing countries continue to pursue Australia over its plain-packaging laws.

Associate Health Minister Tariana Turia announced last month that New Zealand will go ahead with plain packaging, becoming only the second country to do so after Australia. However, it would take a "wait and see" approach pending resolution of legal challenges against Australia.

Australia is locked in a trade dispute with the Ukraine and several other countries over its laws, introduced last year.

There was a "reasonably high risk" that New Zealand would also face a challenge through the WTO, officials said. It is estimated this would cost between $1.5m and $2m. Possible international investment arbitration with tobacco companies could cost up to $6m more, not counting damages.

Mrs Turia said last month: "In making this decision, the Government acknowledges that it will need to manage some legal risks. As we have seen in Australia, there is a possibility of legal proceedings."

It is not clear what would happen to New Zealand's plan if Australia loses its dispute. A spokeswoman for Mrs Turia said legislation was being prepared for introduction this year regardless.

"The New Zealand Government will be watching with interest, but it's too early to say how the WTO issue will affect progress with New Zealand's plans."

Officials estimate it could take another year to resolve the Australian dispute, if not longer. Under a wait-and-see approach, New Zealand could have difficulty introducing legislation this year.

Correspondence obtained under the Official Information Act reveals that tobacco companies have been lobbying Cabinet ministers, including Prime Minister John Key, to abandon the plan.

Mr Key's chief of staff Wayne Eagleson confirmed there had been "some email correspondence" with Philip Morris (NZ), but refused to release it.

Ministers forwarded most correspondence to Mrs Turia, because she was the minister responsible. In one letter, the New Zealand Convenience Store Association, a lobby group with strong links to the tobacco industry, complained to Health Minister Tony Ryall about Mrs Turia's objectivity.

They claimed Mrs Turia had allowed a Cancer Society representative who campaigned for plain packaging to speak on behalf of the Government at a smoke-free event in November. "There is a growing groundswell of opinion among retailers that the associate minister . . . is now compromised."

Mr Ryall responded that Mrs Turia was not compromised and there had been no mention of tobacco controls policies at the event. "I am advised Mrs Turia had lost her voice . . . she was not able to deliver the speech."

THE NUMBERS

About three out of five of the 293 "substantial" submissions received by the Ministry of Health supported plain packaging.

Supporters include health groups, academics and anti-smoking groups.

Opponents included tobacco companies, producers, business groups and retailers.

More than 20,000 postcards, petitions and standardised letters were also submitted, most of them produced by health groups and tobacco companies.

Of those submissions, 6 out of 10 opposed plain packaging.