Plain packaging for tobacco is no "slam dunk," Prime Minister John Key says.

The Health Ministry today released an assessment on the impact of a plan to strip all branding off the packaging of tobacco products.

Officials backed the plan, saying it would reduce the likelihood of consumers being misled about the harmfulness of tobacco and increase the effectiveness of existing health warnings. It would also bring New Zealand into line with a plain packaging policy in Australia due to take effect in October.

But the paper warned of a ''reasonably high risk'' of legal action that could cost millions of dollars in legal costs alone.

Australia has already been challenged by three countries through the World Trade Organisation (WTO) and by tobacco companies at the High Court for its plain packaging policy. The objections are over the alleged violation of international trade rules and the loss of value in trademarks.

Officials said New Zealand would face legal costs of $3m to $6m for "international investment arbitration" and a further $1.5m to $2m to defend a WTO case.

Key today said the Government felt it was "likely" to be able to legally introduce plain packaging but it was "not absolutely clear cut".

‘‘There are lots of things we need to consider - I wouldn’t say it’s a slam dunk by any chance that plain packaging will take place but nor would I rule it out. It really is, genuinely, a true consultation period," Key said.

''As the National Party, we haven’t made the decision yet about whether we would support that any further."

He declined to say whether or not the Government might be put off by the potential costs of litigation, saying it was ‘‘far too early to know’’.

Associate Health Minister Tariana Turia said plain packaging was "a powerful tool" to help make the country smoke-free by 2025.

''There is strong evidence that plain packaging would further reduce the appeal of tobacco products and smoking in general, strengthen the impact of mandated pictorial health warnings, and reduce false perceptions about the harm from tobacco products," Turia said.

Philip Morris Corporate Affairs Manager Christopher Bishop said there was "no credible evidence" that plain packaging would reduce smoking, but there was "growing evidence of major international concern about the policy".
 
''Reports about the consideration of plain packaging in New Zealand have already met strong opposition from consumers as well as from many retailers who are against a policy that won’t reduce smoking, but that will add yet another regulatory burden to the way they run their businesses," Bishop said.

- © Fairfax NZ News