[Intl-tobacco] Australia - Lateline - 23/03/00: Tobacco Battle (fwd)

[Robert Weissman]

Lateline - 23/03/00: Tobacco Battle
Source: Australian Broadcasting Corporation, Thursday, 3/23/00
LATELINE  Late night news & current affairs 

 TV PROGRAM TRANSCRIPT

URL: http://www.abc.net.au/lateline/archives/s113020.htm

Broadcast: 23/03/00

  Tobacco Battle

  State Attorneys-General are set to consider legal action against tobacco
companies in Australia. Sally Neighbour probes the likelihood of such
action - and its chances for success - with two Attorneys-General and
representatives from the tobacco industry and the anti-smoking lobby.

  ---------

  Compere: Sally Neighbour

  SALLY NEIGHBOUR: Rob Hulls is Victoria's Attorney-General and a vocal
supporter of taking action against the tobacco companies.

Eric Windholz is the director of corporate relations for the world's
largest tobacco company, Philip Morris.

Trevor Griffin is South Australia's Attorney-General and is yet to be
convinced that Australia should follow the US path.

All three join us from Melbourne.

And here in Sydney is Andrew Penman.

He heads the Tobacco Control Coalition, which is running a class action
against Australia's tobacco companies.

Welcome to all of you.

SALLY NEIGHBOUR: Rob Hulls, can you do here in Australia what Mississippi
Attorney-General Mike Moore did in the States?

ROB HULLS, VICTORIAN ATTORNEY-GENERAL: Look, I certainly think so.

The reality is that smoking kills.

13 die every day in Victoria as a result of smoking.

We also know that tobacco companies have in the past withheld information,
pertinent information about the harmful effects of their product and we
also know that State governments have spent billions of dollars in
relation to health care costs to try and fix up the tobacco mess.

The real question is who pays.

In America, courts decided the tobacco companies should pay and I'm of the
view, very strongly of the view, that that should also apply here in
Australia.

SALLY NEIGHBOUR: What commitment do you need from your fellow
attorneys-general tomorrow to get the ball rolling?

ROB HULLS: Well, no one State can take this on on their own.

I understand in America, in one State alone, the disbursements amounted to
some $20 million.

So, it would need a concerted effort, but the fact is that I think that if
all States get together, or at least three or four States show a real
commitment to take on the tobacco companies, it should be done.

SALLY NEIGHBOUR: Trevor Griffin, how much support is there among the other
attorneys-general for an action like this to be mounted?

TREVOR GRIFFIN, SA ATTORNEY-GENERAL: Well, I can't speak for my
colleagues.

For myself, I've very cautious about embarking upon very expensive and
extensive litigation where the prospects of success are not high.

We sent from South Australia our Solicitor General to the United States in
1997.

So to a very large extent, we're ahead of the game.

He was given the task of looking at how the American system was operating
to get these rather huge settlements that were being reported in
Australia.

He concluded that there were quite significant differences between the
legal system and the constitutional system in the United States and that
those systems in Australia and particularly, he came back with the view
that largely the litigation occurred in the United States because of the
separation of the executive from the legislatures and it was impossible to
get the legislatures to act to recover some forms of compensation, perhaps
by way of revenue.

SALLY NEIGHBOUR: Eric Windholz, why shouldn't Philip Morris be sued for
false and misleading conduct and or negligence?

ERIC WINDHOLZ, PHILIP MORRIS: Well, first of all, let me just say that our
legal advice is very strong and very clear.

Based on what we understand the attorneys-general are considering, we have
very strong defences.

Our advice is that the case would be speculative and have poor prospects
of success.

But also let me say that I don't think that anyone is served going back
into the past and trying to analyse what companies did or didn't know, or
did or didn't do.

That will cost millions of dollars in lawyers' fees and tie up the court
for months.

We are better-served as a community in trying to have a reasonable
rational dialogue about what is the best way of dealing with tobacco
issues in our society.

Is it through consultation, cooperation, dialogue, trying to seek common
ground, or are we going to run off to the courts and engage in
confrontation, time-consuming and very expensive litigation?

SALLY NEIGHBOUR: Well, Rob Hulls, which are we going to do?

ROB HULLS: This is a nonsense argument by the tobacco companies.

We already know that back in 1993 the tobacco companies embarked upon an
Australian witness development program.

So, they've been waiting for this type of litigation to take place.

They've been preparing for it since 1993.

The other thing that we have to understand about tobacco companies is that
they have delivered a memo to many of their employers, employees at least,
that says that before you write anything down, always ask the question
"Would you feel comfortable if a competitor, the Government, the
Anti-Smoking Lobby or the news media saw your document?"

So that raises real concerns about how fair dinkum the tobacco companies
are in relation to any sort of negotiation.

The action was successful in America and I would be very keen for all
States here in Australia to get behind at least attempting to further
pursue some sort of legal action.

SALLY NEIGHBOUR: Eric Windholz, a quick response to that?

ERIC WINDHOLZ: Let me say that there was no court victory in the United
States.

What there was was an out of court settlement which was effectively a
business decision to agree to a prospective tax increase.

Tobacco taxes in Australia amount to billions of dollars each year.

The Government in 1999 will collect close to $5 billion.

The public health community have estimated that those taxes are more than
three times what governments spend in treating smoking-related illnesses.

They have also said themselves that because of that fact, the medical cost
recovery argument that spearheaded the US settlement could not be
sustained in Australia.

That's their words, not ours.

SALLY NEIGHBOUR: Andrew Penman, what's your response to that -- that you
can't set about claiming the recovery of medical costs here, because the
tobacco companies pay so much tax?

ANDREW PENMAN, TOBACCO CONTROL COALITION: Well let me say first of all,
that I think the attorneys-general have an historic opportunity in their
hands here to address the major public health problem in this country at
the moment.

But that historic opportunity will only be seized if the objectives are
right.

I don't think it's sufficient for the attorneys-general to simply be
commercial lawyers seeking to pursue debt recovery for the States.

The issue here is the fact that 18,000 people die of tobacco-related
disorders every year in this country and around 25-30 per cent of our kids
are addicted to nicotine by the age of 16.

Now we have to have a litigation strategy which seeks to make the tobacco
companies responsible for that state of affairs, because we have very
strong evidence, based upon the documentation, that it's their misleading
and deceptive behaviour over the last 25 years that has forestalled
effective Government action.

Now it's the very sort of action which the Attorney-General from South
Australia is suggesting might be considered as an alternative.

But the fact is that governments and the political process have failed us
because of the power of the tobacco industry and its misleading
representations to Government.

So you've left the attorneys-general and the Tobacco Control Coalition
with the only option available to them of litigation.

But if I can go to the -- to Mr Windholz's statement about the situation
in the United States.

SALLY NEIGHBOUR: Very quickly, so we can move on.

ANDREW PENMAN: It's untrue to say there have been no decisions against the
tobacco industry in the United States.

There have been two jury decisions which have found the tobacco industry
guilty on the very issues of false representation, misleading and
deceptive conduct which the Tobacco Control Coalition alleges in the
action that it's pursuing before the Federal Court at the moment.

SALLY NEIGHBOUR: Rob Hulls, we've heard a lot about the evidence in the
United States, but the Federal Health Minister, Michael Wooldridge, says
that the Commonwealth's legal advice is that such an action here would be
very unlikely to succeed.

How can you be sure this just won't be a giant waste of taxpayers' money?

ROB HULLS: What will be suggested at tomorrow's meeting of the
attorneys-general is that at least the majority of States, but certainly a
number of States, get together and look at further pursuing this matter.

I think that's very important.

I think we owe it to our constituents to further pursue this matter.

I have to say, I get sick and tired of the tobacco companies saying,
"Look, we pay taxes and our taxes go into health care, and therefore
you're wasting your time suing us."

It's like me saying, "Look, damages have been awarded against me in a
particular court matter, but I don't have to pay, because I pay taxes."

It's an absolute nonsense argument and the States owe it to all members of
their community to further pursue this matter.

SALLY NEIGHBOUR: Eric Windholz, a response?

ERIC WINDHOLZ: First of all, the taxes are very relevant.

Some States themselves have justified taxes or tax increases on the basis
that they will recoup public health expenditure.

As recently as 1996, the NSW Act stated as one of it objects that it was
intended to recoup public health expenditure.

But I'd like to come back to the main point and that is as a mature
society, how are we going to deal with tobacco products in the future?

Are we going to try to deal with these issues through consultation,
discussion, trying to find common ground, or are we going to resort to
timely confrontation and very expensive litigation, in the end, only the
lawyers would be guaranteed to benefit from.

SALLY NEIGHBOUR: Trevor Griffin, what's your view?

Are there alternatives to litigation here?

TREVOR GRIFFIN: There may well be.

What I think we have to do is to damp down all the hype at the moment
about this being perhaps the 'Magic Pudding' that's going to provide more
funds for our health system to combat the injuries and death which come
from smoking tobacco.

I think we've got to be realistic about this.

In the United States, action was taken in civil litigation for no other
reason than that they couldn't get legislators to move.

Very largely because there was a great deal of influence by tobacco
companies on legislators.

They carried a great deal of weight in the voting system.

SALLY NEIGHBOUR: What are the tiffs here then?

TREVOR GRIFFIN: In Australia there are a couple of alternatives.

One, of course, is just increase taxes.

The taxes are already quite hefty in relation to tobacco products.

Another may well be to look at whether there's any criminal action that
might be pursued.

I think we've got to look at this realistically.

SALLY NEIGHBOUR: What sort of criminal action do you mean by that?

TREVOR GRIFFIN: I'm not prepared to telegraph any punches on that at this
stage.

This debate is something we'll have in the standing committee of
attorneys-general tomorrow.

We'll look at whether or not we need to get further advice.

>From my advisor's perspective, the Solicitor-General of South Australia,
he's recommending caution and I naturally am reflecting that caution.

I've been involved as a State Attorney-General in quite extensive
litigation in my State, which has been very expensive for the State.

It's brought some benefits, but we know where this can end up years down
the track, tens of millions of dollars later, and we've gained nothing,
when, in fact, maybe an alternative, such as increasing taxes, might have
got us more in the short-term, rather than waiting around spending a lot
of time and energy on civil litigation.

SALLY NEIGHBOUR: Rob Hulls, what is your agenda, is it just the money?

If so, couldn't you achieve it as Trevor Griffin says, simply by raising
taxes?

ROB HULLS: The bottom line is you've got to do what's right.

If, indeed, the tobacco companies happen to be found negligent in relation
to the way they've promoted their product in the past, then they ought
pay.

It's as simple as that.

I have to say that the taxation argument that's been promoted by the
tobacco companies is a nonsense.

I notice the tobacco company says now, after all these years of
misinformation, that we ought to sit down and negotiate.

When the tobacco companies knew this matter was going before SCAG, they
sent off letters to every attorney-general in the country, in effect
saying, "Don't pursue this litigation, otherwise we may pull our workforce
out of Australia altogether."

This is a nonsense argument where they say they want to sit down and
negotiate.

ANDREW PENMAN: That statement from Philip Morris, on the misleading and
deceptive scale, ranks about a nine.

There have been attempts to misrepresent the facts about smoking and
health for about 25-30 years in this country.

At every turn, the recommendations of science have been opposed bitterly
by Philip Morris and the other tobacco companies in this country.

It reminds me of Lady Macbeth, who was so steeped in blood that she had no
other option but to continue to spill more blood.

What Philip Morris wants to do is to spin out time, talk, misinform,
restrain the legislative action, while it continues to reap the ill-gotten
rewards of killing Australians.

We have had 25 years in this country, since the passage of the Trade
Practices Act, where we could have taken effective action.

And had we taken effective action, we would have had smoking rates in this
country around the 5-10 per cent mark.

We've got to address that situation and it's a matter of urgency.

SALLY NEIGHBOUR: Eric Windholz, in the face of concerted action by several
Australian States, won't you fold as you did in the US and negotiate a
settlement?

Isn't that the most pragmatic approach?

ERIC WINDHOLZ: The reality is that Australia is very different to the US,
and that the Australian tobacco market would be very unlikely to be able
to sustain settlement payments of the billions of dollars that we hear
attorney-generals referring to.

The Government already takes 70 per cent of the recommended selling price
of cigarettes in taxes.

Any increase of that would have to be borne by smokers.

The reality is we don't have billions of dollars sitting in the bottom
drawer.

We would have to increase prices -- smokers would have to pay.

That would then increase the already burgeoning illegal trade in tobacco
which now is estimated to be about 5 per cent of the legitimate market and
costing Government about $300 million.

It will also decrease the profitability of the industry which, in turn,
would put into jeopardy the viability of the market.

We have to recognise that we operate in a global market and according to
global forces.

Like any other company, Philip Morris looks for a predictable, stable
investment environment.

Today, we are committed to remaining in Australia, we are committed to
providing jobs for Australians, markets to Australian farmers and business
to the Australian companies that provide us with goods and services.

But if action like this is contemplated, then I think it would only be
prudent for any good businessman in any company to have to reassess the
situation.

ANDREW PENMAN: Can I just say that these threats about withdrawing from
this country need to be taken with a grain of salt and on a misleading and
deceptive scale, I'd rank that as about six.

We have the World Bank, no less, a major anti-smoking lobbyist in Philip
Morris' minds I'm sure, but the World Bank saying that the tobacco
industry is really a net liability to economies.

If you got rid of the tobacco industry, there would be a positive economic
benefit.

To say that we're going to lose jobs in the face of advice like that from
the World Bank, you may as well go on to say there'll be less demand for
undertakers and there'll be less demand for thoracic physicians.

Because that's the sort of economic activity the tobacco industry spawns
in this country.

SALLY NEIGHBOUR: Rob Hulls, is that what you are after -- putting the
tobacco industry out of business?

ROB HULLS: No, not at all.

What we're really after -- and I think there are similarities between
America and Australia.

People die in America from smoking and people are dying in Australia as a
result of smoking.

And I think it's important that we at least look at the feasibility of
taking action against tobacco companies with a view to try to recover some
of those health care costs.

It worked in America.

I believe that we need at least to look at it in Australia.

As I said, you've got to do what's right.

If people are dying because of misinformation spread by tobacco companies,
as attorneys-general, we have a crucial role to play.

SALLY NEIGHBOUR: Eric Windholz, are you fighting a losing battle here?

ERIC WINDHOLZ: Look, we hope that, in the end, the facts will be seen for
what they are and that some reason and commonsense will prevail and that
as a mature society that we will come to the conclusion that discussion,
consultation, cooperation is a preferable way of resolving issues
concerning tobacco than time-consuming, confrontational and very expensive
litigation.

SALLY NEIGHBOUR: Rob Hulls, what decision can we expect out of the
attorney-generals' meeting tomorrow on this?

ROB HULLS: Well, I would have hoped that I'd have my colleague, Trevor, on
side.

But from indications tonight, that may well not be the case.

But look, I think we certainly need more than one State to take the
tobacco companies on.

I would hope that there will be three or four States that are at least
prepared to look at a feasibility study in relation to this matter.

That's the first step, but I would be very keen to pursue the matter
further.

I think the longer we leave it, who knows, the more documents are being
shredded, and the more misinformation is being spread.

I think we need to act now, and I would be very keen for most States to
get on board.

SALLY NEIGHBOUR: Trevor Griffin, will SA get on board, at least to the
extent of supporting a feasibility study into some course of action?

TREVOR GRIFFIN: No-one can prejudge what I may say tomorrow.

I want a cool, calm look at the issue.

I want us to look at what the risks are.

I want us to look at what the objective is, because if the objective can
be achieved without litigation, maybe, as I've indicated earlier, through
increased taxation measures or some other action, then I think we ought to
look at those options.

Because in the end, it is about providing support through our broader
community.

It is about dealing with the consequences, the very serious consequences
of consuming tobacco products.

I think both Rob Hulls and I are at one in relation to our concern about
the tobacco industry and the damage it does to those who consume tobacco
products.

We may not be at one in relation to the way in which we both identify the
objective we want to achieve, and more particularly, how we get to that
objective, and that's the big issue.

We want to take, I think, a calm, cool and collected look at what the
options are, what we want to achieve and then make some considered
decisions and not get swept up in the hype, which quite obviously is now
accompanying this debate, about possible billions of dollars worth of
damage, when maybe we can solve the problem in some other, easier way.

SALLY NEIGHBOUR: Rob Hulls, just finally, even if you do get your
feasibility study tomorrow, how many years is it going to be before we see
you in court on this?

ROB HULLS: Well, the tobacco companies have been preparing for this day
for a long time.

It wouldn't surprise me at all if they have some of the most senior QCs in
the country already tied up on their side.

That's why I think we need to move sooner rather than later.

I would hope that this particular motion that's been debated tomorrow at
SCAG doesn't go into a black hole.

I hope we can move on the feasibility study almost immediately.

And if the feasibility study says litigation is the way to go, we ought to
move sooner rather than later.

SALLY NEIGHBOUR: We are out of time.

I'm sorry, Andrew Penman, we have run out of time.

Gentlemen, thanks very much, all of you, for joining us.

MULTIMEDIA

 Tobacco Battle. Audio Discussion

Sally Neighbour probes the likelihood of such action - and its chances for
success - with two Attorneys-General and representatives from the tobacco
industry and the anti-smoking lobby.

/lateline/av/20000323tobacco.ram

 Tobacco Battle. Background Video.

Australia could soon be following the US through its war between state
governments and the tobacco industry. Margot O'Neill looks at how big
tobacco in America was forced to pay up. (RealVideo )

/lateline/av/20000323ll_tobacco.ram