New Zealand plan to drop smoking ban draws line under Jacinda Ardern era

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New Zealand’s new conservative prime minister is to abandon one of the world’s toughest smoking bans as part of a clutch of policies that signal a desire to take the country in a radically different direction from Jacinda Ardern.

Christopher Luxon, a former Unilever and Air New Zealand executive and leader of the National party, who was sworn in on Monday, said this week that his administration’s “number-one job is to fix the economy”.

The new centre-right government lost little time in unveiling measures aimed at rolling back Ardern’s progressive agenda, including lifting a prohibition on new oil and gas exploration, scrapping Māori names for government departments and repealing the generational smoking ban.

The parliament is expected to convene next week.

Danyl McLauchlin, an author and academic, said the new government represented the formal end of an era under Ardern — who led New Zealand for five years and became a global liberal icon before stepping down this year — as the country swung back to the right.

Nicola Willis, the incoming finance minister, said the repeal of the smoking ban was one of a number of moves to restore fiscal prudence, accusing the Labour government of leaving behind some “nasty surprises” in the budget in an interview with broadcaster TVNZ.

The smoking ban, which would have been among the strictest in the world if it had come into effect as planned in July 2024, would have reduced the amount of nicotine in cigarettes, outlawed their sale to anyone born after January 1 2009 and slashed the number of stores selling tobacco by 90 per cent to only 600 outlets.

It was considered to be a globally pioneering move when passed last year and inspired the UK to propose a similar policy.

The law’s repeal will preserve about NZ$1bn ($610mn) in annual tax revenue from cigarette sales, the new government argued. But Willis said the decision, which was proposed by the coalition’s smaller parties, was also driven by concerns that the ban would create a black market for tobacco and increase retail crime.

Willis said her party remained committed to reducing smoking but questioned whether the law would have yielded the intended benefits. Health studies have shown the law could have saved more than $1.4bn in averted health costs by 2040 and reduced mortality by almost 23 per cent for women and more than 9 per cent for men.

“There’s no proof or evidence they would have the effects that were promised,” Willis said.

Health Coalition Aotearoa, a public health advocacy group, called the reversal “a massive setback”, adding that it would “cost thousands of lives and have the greatest effect on Māori” communities, which it noted had the highest rates of smoking.

“This is major loss for public health, and a huge win for the tobacco industry — whose profits will be boosted at the expense of Kiwi lives,” HCA co-chair Boyd Swinburn said in a statement.

Willis also said there would be a mini-budget before Christmas in which the government would outline its spending plans.

Miles Workman, senior economist with ANZ bank, said the new administration’s determination to return New Zealand to fiscal surplus created scope for more public spending cuts.

That would reverse Labour’s spending during the coronavirus pandemic, which was criticised for adding to higher inflation. Price growth has cooled in recent months, hitting 5.6 per cent in September compared with the year before, down from 7.3 per cent in June but still above its target of 1-3 per cent.

“People are paying for the excessive fiscal stimulus in higher cost of living and higher mortgage rates,” Workman said.

The new government will also consider reforms to the central bank to limit its mandate to tackling inflation. Under current legislation, the Reserve Bank of New Zealand also takes account of employment.

New Zealand’s deficit is forecast to be NZ$11.4bn, or 2.7 per cent of gross domestic product, in the year to June 2024, up from NZ$10bn in the 2022-23 fiscal year, according to the Treasury’s pre-election forecast.

Justin Murray, chair of investment bank Murray & Co, said although New Zealanders were comfortable with some policies, including the smoking ban, their preference for fiscal restraint was reflected in the result of the October election, in which Labour lost almost half its parliamentary seats.

He said voters’ “trust had clearly gone” from Labour — which had enjoyed two terms in power, one with an outright majority — despite its efforts to walk back some of the Ardern era’s more “radical and experimental” policies under Chris Hipkins, who replaced her in January. 

Murray argued the new government should look to encourage foreign investment in areas such as infrastructure spending and welcomed “pragmatic” moves to refocus the central bank on inflation targeting.

“The public understands pragmatism is needed in restoring fiscal prudence and restoring the government’s books,” he said.