Cigarette and e-cigarette. Photo: Getty Images

PoliticsSeptember 9, 2019

Over-regulating e-cigarettes hurts those who need them most

Guest writer

Cigarette and e-cigarette. Photo: Getty Images

Heavy-handed regulation of the vaping industry will only help Big Tobacco, argues economist Jenesa Jeram.

E-cigarette regulations are on the horizon to deal with the vaping Wild West, an industry landscape with no legislation or enforcement.

For a long time, the lack of regulation didn’t really matter. The vaping industry has managed to get along quite peacefully, winning goodwill from public health and generally acting responsibly through self-regulation.

But lately, media headlines have been dominated by some “bad guys” who have entered the vaping scene: Big Tobacco. And they’ve brought their big guns of money, scope, and experience. They also have a reputation for doing bad things that threaten public health.

And so convenient battle lines have been drawn between the “good guys” in public health versus the “bad guys” in Big Tobacco.

The good guys almost unanimously support the use of vaping as a useful tool to help people quit smoking, but want regulations to keep the bad guys at bay and deal with possible risks that might arise from vaping. The bad guys claim that they also want people to quit smoking, and support vaping and the use of other risk-reduced products as a way of helping people get there.

And as for the homegrown vaping industry? They hate the bad guys too, but wouldn’t necessarily support all the regulations that the good guys want.

It can get confusing. The good guys and bad guys seem to want a lot of the same things.

I should know.

Last year I authored a report with The New Zealand Initiative on the evidence behind e-cigarettes and other nicotine-containing products and how to regulate vaping. It argued that smokers need access to a diverse range of products to help them quit, including e-cigarettes and other risk-reduced products – some of which are produced by tobacco companies.

For those who don’t know, the New Zealand Initiative is a public policy think tank and business membership organisation with over 70 members from a range of industries. Three of those members happen to be tobacco companies. For some in public health, the Big Tobacco link may as well have been emblazoned in neon lights.

I guess some people would say that made me one of the bad guys.

Well, I’m no longer with The New Zealand Initiative. I can say what I want. And what I want to say is that I wish more people had heeded the report’s warning: over-regulation hurts the little guy more than it hurts big companies.

Some regulations are good and necessary. Regulations to ensure product safety, accurate labelling, responsible advertising, and monitoring uptake by young people can do good. However, over-regulation could have a stifling effect on the currently diverse vaping industry.

Recent media interviews with associate health minister Jenny Salesa suggest that new regulations may include a ban on advertising, vaping products would be “removed from shop shelves”, and maximum nicotine strengths will be set. It is hard to say how much the threat of Big Tobacco contributed to these regulations, or how much their current media prominence has made them a convenient scapegoat. Other boogeymen that may have justified heavier regulation – such as high youth vaping rates – remain unproven in official statistics.

Juul products have come under fire in the US for selling e-cigarette flavours that appeal to young people

The threat of total radio silence certainly explains why you might have seen e-cigarette companies ramp up their advertising over the last few weeks. Once regulations are in place, it will become much more difficult to attract new customers or inform customers about new products.

For consumers, this is bad. A recent study provides some of the first causal evidence that e-cigarette advertising on television encourages adult smokers to quit. Advertising is also an important means of informing consumers of new products and changes to those products.

Though such regulations might have good public health intentions, the market implications have not been thought through.

Advertising facilitates competition in the market, where companies can compete on price, improvements and innovation, or reputation (as a signal for quality). Without a means of communicating their superiority over their competitors, the incentives to improve on each of those three things is reduced.

A lack of competition means only a few big players control the market – and tobacco companies are well poised to rule that monopoly.

You don’t have to have a moral position against tobacco companies to be concerned about this. The point is that, more often than not, monopolies hurt consumers.

Tobacco companies, as the incumbent, have the business models and resources to have a good crack at the e-cigarette market. Bigger companies are better able to absorb the regulatory and compliance costs. Your homegrown start-ups face more financial risks and barriers when entering the market. Heavy restrictions on marketing are one such barrier, making it more difficult for new players to communicate to customers.

But the worst-case scenario is that over-regulation undermines the entire e-cigarette industry, making it harder for smokers to switch to e-cigarettes. Making vaping less effective for users, by limiting nicotine strengths or e-liquid flavours, certainly risks achieving that. Again, Big Tobacco wins as people would simply continue to smoke.

So should tobacco companies have any place in the e-cigarette market?

It really isn’t for me to decide. In fact, the only voices that should really matter are the voices of e-cigarette and risk-reduced product users themselves.

There are bound to be some vapers who baulk at the idea of continuing to hand over their money to tobacco companies after quitting smoking. Some New Zealand vaping companies are already being proactive about this – proudly distancing themselves from Big Tobacco, and they’re doing so without government intervention.

But there will also be some consumers who may prefer the tobacco company e-cigarette or risk-reduced products, and their preferences should be respected too. My report called for a diverse and competitive market, recognising that different products will work for different consumers. As long as the products are helping smokers cut down or quit smoking, it is hard to see the bad in that.

In this final Wild West shoot-out, regulations to hammer the bad guys or keep out boogeymen are likely to have collateral damage. And it will be Big Tobacco who end up on top if smaller e-cigarette companies are decimated.

Jenesa Jeram represents no corporate interests and receives no tobacco funding.

Keep going!

PoliticsSeptember 5, 2019

Cheat sheet: Blueprint to rescue NZ waterways revealed

Toby Manhire

Editor-at-large

The government has just published its plan to halt the degradation of waterways and restore the health of freshwater over a generation. But one group says it ‘throws farming under the tractor’.

What’s this then?

David Parker, the environment minister, has just announced government plans for waterways. “Our rivers, lakes and wetlands are under serious threat after years of neglect. We can’t continue to go on like we are. If we don’t fix things now they only get worse and will be more expensive to fix,” he said, while riding the policy river aboard a raft of documents: an Action Plan for Healthy Waterways and a redrafted National Policy Statement and Environment Standards.

“Somebody has got to stand up for the rivers,” said Parker. “And we are.”

Have they scrapped a target in favour of a dashboard?

No, that was yesterday. The plan here is to improve the quality of our rivers, lakes and wetlands within five years, and get them back to rude health – swimmable, drinkable, generally fun to be with and not replete with shite – within a generation.

“Cleaning up polluted waterways is a long-term challenge that will take a generation to fix, but the steps in this plan will make a real difference and get things heading in the right direction,” said Parker.

How long is a generation?

“Everyone knows roughly,” said Parker. “It’s decades.”

What’s the plan then?

The headline change is controls on farm land intensification – intensification being a critical part of what makes some waterways 100% Open Sewer New Zealand. The brakes will be applied, pending regional councils introducing their plans by 2025.

So a ban on intensification?

Agriculture minister Damien O’Connor was quick to reject that impression. “This is no ban on intensification,” he said. Dairy or beef farmers could still intensify, just so long as they “do it in a way that doesn’t have an adverse impact on the wider environment”.

What else?

New regulations would require better management of stormwater and wastewater, tighter controls to prevent sediment loss from earthworks and urban developments, and farmers and growers drafting plans to ensure they manage environmental risks and follow good practice.

Farmers would need to take immediate action to reduce nitrogen loss in catchments with high nitrogen levels and exclude stock from waterways, including “more fencing and wider setbacks to keep stock out of waterways, reduce erosion, and capture contaminants before they reach the water.” They’d need, too, to meet new standards for intensive winter grazing, feedlots, and stock holding areas.

How did all that go down with Federated Farmers?

Like a warm cup of Manawatu River. The plans would “throw farming under the tractor”, it said in a statement. Some farms, it said, would have to reduce their nitrogen by up to 80%. “It becomes very hard to continue economically farming animals or growing vegetables under a regime like this. The long term targets for nitrogen reduction, are effectively unachievable in some parts of the country, and will end pastoral farming in these areas.”

Under the tractor!?

A “ridiculous statement”, countered O’Connor when it was put to him during the press conference. He said the nitrogen reductions were achievable, and had been reached after discussion with farming experts. He said the plans wouldn’t require change from farmers already following best practice, and he wanted to see “best practice become normal practice in rural and urban New Zealand”.

O’Connor stressed that he had sympathy “people in the cities who don’t understand what they do”, and “we know some farmers feel they are under pressure and we understand their concerns”, which was why the time span was set to a generation.

What did the National Party have to say about that?

Environment spokesperson Scott Simpson sprayed a “Short-sighted and flawed” condemnation. “The government is taking a complex issue that requires a measured, science-based approach and is instead proposing we hamstring our most profitable sector, which accounts for 60% of our exports. We all want improved water quality but this drastic action will smash the economic engine of our country.”

The Greens were always big on rivers, weren’t they?

There was no Green minister onstage at this morning’s announcement , but co-leader Marama Davidson issued a statement highlighting the intention to treat water as taonga and recognise te mana o te wai (“the innate life force of the water”).

It was high time, she said, for “a holistic approach that ensures our water stays clean and healthy from the mountain to the sea … Part of our Confidence and Supply agreement with Labour is to improve water quality and prioritise achieving healthy rivers, lakes and aquifers with stronger regulatory instruments, with funding for freshwater enhancement. We are really happy to see this important work coming to fruition”.

Any other responses, please?

Irrigation NZ was happy, acclaiming “an all-encompassing solution which includes direction for urban development as well as rural land and water”. The plan “will put a stop to ‘finger pointing’”, it said, presumably before reading Fed Farmers’ response.

Fish and Game NZ thought it was a step in the right direction, with “a number of good options”, but felt it risked letting the worst of the intensifying farmers get away with it unless there were tough sanctions.

What interests do Māori have?

Many. Among the proposals is to “strengthen the requirement to identify and reflect Māori values in freshwater planning”. But it will require much more than well-intentioned sentiments. A substantial Waitangi Tribunal report last week recommended a new regime to allocate water to Māori, criticised the priority given to farmers in water allocation, said it was time for the courts to rule on whether Māori retain native title in water.

What will the government do on water allocation?

That prickly issue has been parked – or dry-docked, if you prefer – until after the next election.

What’s the timing on this current consultation?

It is open until October 5. You can make a submission here.