Republished with Permission
Bryce Edwards
I am Political Analyst in Residence at Victoria University of Wellington, where I run the Democracy Project, and am a full-time researcher in the School of Government.
Cabinet Minister Casey Costello’s behaviour in the smoking portfolio is highly questionable, and her links to tobacco lobbying require further explanation. So far, anyone following her handling of tobacco issues might be inclined to metaphorically file the story under the category of ‘weird’ (which has become the common term after being used so much in the US presidential election campaign).
More critical observers will likely file Costello’s ministerial career under the label of ‘incompetent’ or even ‘corrupt’. One way or another, it doesn’t look like Casey Costello is fit to be a minister of the Crown. And her continuation in the role will likely tarnish Christopher Luxon’s administration over the next two years.
New material pointing to the influence of lobbyists on the government
One of the coalition government’s most controversial reforms since coming into office has been its tobacco and smokefree rollbacks. Under the authority of Associate Health Minister Casey Costello, the government has abolished the previous Labour government’s recent Smokefree reforms, and then reduced taxes on heated tobacco products by half. The radicalism of these rollbacks was largely unsignalled before the parties came to power, and it’s all been carried out without the usual transparency.
Observers, journalists, and anti-smoking campaigners have therefore sought to uncover the relevant decision-making process to see what influenced these big changes. One secret document in particular, appears to have swayed the reform programme, essentially becoming government policy.
Although only released this week under the Official Information Act, the document appears to have been written and provided to the minister by tobacco lobbyists. On receiving the document, Costello has treated it as official advice while also attempting to keep it out of the public’s eye.
The document makes the arguments for deregulating tobacco products. It makes the case against the existing rules because it claims “nicotine is as harmful as caffeine” and describes Labour's smokefree legislation as “nanny state nonsense” and “ideological nonsense that no other country had been stupid enough to implement”. It also advocates the policy reforms that Costello then implemented.
That the influential tobacco document might have been written by a tobacco lobbyist and passed on to Costello is hardly surprising. The minister and her NZ First party have many links to such lobbyists. For example, tobacco giant Philip Morris’ top lobbyist, David Broome, was the party’s chief of staff between 2014 and 2017. Apirana Dawson, who worked in parliament and managed New Zealand First’s election campaigns in 2014 and 2017, also now lobbies for Philip Morris. Dawson is still close to Shane Jones, who says he uses him for advice on developing policies.
The story of the mysterious lobbying briefing on tobacco
Casey Costello says the influential lobbying document came into her office on 6 December last year. She recently stated that she doesn’t know how it got into her office or who had written it. She later explained to the Ombudsman’s Office: “a hard copy of the document had been placed on my desk and… I did not receive the document through any other correspondence.”
Costello, a former detective, says she later investigated what her office staff knew about the document’s origins. As a result of this investigation, she “confirmed with all members of my office that none of them placed the notes on my desk”. Likewise, she says she “enquired with staff in my office about whether they knew who had authored the document and they advised that they did not”.
Despite not knowing who wrote the document or how it had come to be in her office, the minister then forwarded copies of it to Ministry of Health officials, to help steer their guidance in the policy process. From this point the document became an official part of the decision-making process.
Public information on the advice document
Also in December, RNZ’s investigative journalist Guyon Espiner made a request to Costello under the Official Information Act (OIA), asking for “all documents relating to tobacco and vaping policy”. Espiner had already been leaked the lobbying document, and it seems he was seeking to get an official version to report on.
However, Costello refused his request and provided no information at all. This was also followed in February by Costello answering a question in parliament about the document, to which she replied: “There was no specific document written. A range of information was provided to officials, including material like Hansard reports, the coalition agreement and previous NZ First policy positions.”
The Chief Ombudsman then investigated, finding that Costello had no reason to withhold the document, saying her actions were “unreasonable and contrary to law”. Not only did he force her to release the documents, the Ombudsman took the rare step of making her apologise to RNZ. He also complained that Costello had failed to supply his office with the necessary information that he had requested to carry out the investigation.
Document released to RNZ but redacted
Guyon Espiner published the news that Costello had finally released the contentious lobbying document to RNZ. Amazingly, her office had also redacted significant elements of it.
However, because Espiner had a copy of the leaked version, he could point to what Costello had chosen to redact. He says Costello's office redacted “all the material pushing for tobacco tax cuts and the claims that nicotine is no more harmful than caffeine and that the last government’s policy was ‘nanny state nonsense’.”
As to why these elements were censored, Costello cited that the OIA allows her to protect the “confidentiality of advice tendered by ministers of the Crown and officials”. But she wouldn’t answer Espiner’s questions about “how she could use this clause if she did not know who wrote the document” and “why she would give a document to officials without knowing its origin”.
Presumably, Espiner will appeal to the Ombudsman about the redactions. And, likely, Costello will once again be reprimanded.
Further evidence of tobacco lobbyists’ influence on the government
Espiner has also uncovered a further secret lobbying document that illuminates tobacco companies’ attempts to influence public policy. A paper titled “Designing a Smoke-free Future in New Zealand” has been leaked to him, mapping out how Philip Morris wanted to influence government policy on the sale of heated tobacco products.
The 2017 document discusses its strategy for targeting political parties, politicians, and think tanks to further the company’s business agenda. According to the document, one of the main targets for the lobbyists was NZ First.
The focus of the strategy was to get politicians to include heated tobacco products as part of the promotion of smoke-free alternatives such as vapes. Philip Morris leads the market with its IQOS, which, unlike vaping, heats a tobacco stick, producing a nicotine vapour.
According to Espiner, the document states that its number one objective was to “maintain political pressure to ensure a favourable regulatory framework” for the company’s tobacco products in this area. In particular, it wanted to encourage politicians to cut the tax on these products.
The document is useful for understanding how lobbyists strategize, especially because it discusses which particular politicians and groups to lobby. For example, the document suggests that its advocates should “Leverage on positions already advocated by the NZ Taxpayers’ Union, NZ Initiative and select public health stakeholders.”
This is particularly relevant because Casey Costello has been the chair of the Taxpayers’ Union before she came into parliament. The lobbying document identifies the Taxpayers’ Union as a partner in their tobacco strategy.
Not surprisingly, since Costello has been in parliament since 2020, her party has generally voted against smoke-free policies. According to a study released this month by the Public Health Communication Centre, NZ First voted for “progressive legislation” only two out of seven times in 2023 and 2024. Similarly, the ACT Party voted this way only two out of nine times.
In contrast, according to the study, National has supported progressive smokefree legislation on seven out of 10 occasions. And apparently, “The Labour Party, the Greens and Te Pāti Māori voted consistently in support of progressive smokefree legislation.”
Dissent on giving heated tobacco products tax breaks
Earlier in the year, Costello quietly cut excise taxes on heated tobacco products by 50 per cent. It has now been revealed that Treasury opposed this. Rachel Thomas of the Post reported on this over the weekend, saying that newly released documents show that Treasury opposed the tax cuts.
Treasury told the government that there was “no clear independent evidence that heated tobacco products are significantly less harmful than cigarettes”, and they pointed to the Health Ministry’s literature review to support this. Treasury had also argued that the tax cut – which the government had budgeted $216m for – should be reversed, with the money allocated to pay for cancer drugs.
Finance Minister Nicola Willis wouldn’t be interviewed on the matter or reply to written questions but instead stated to the journalist that the tobacco tax cut was “consistent with our coalition agreement with New Zealand First”. Responding to this, Labour’s health spokesperson, Ayesha Verrall, was reported saying that the issue “revealed how much lobbyists were influencing the government”.
Espiner has also uncovered more about the government’s decision to cut taxes on heated tobacco products via the cabinet paper related to the change, which noted that the process was not in line with usual policy-making: “The move to cut excise tax did not meet standard cabinet requirements for such proposals because no regulatory impact statement was provided, the paper also noted. Instead, the Ministry for Regulation and the Health Ministry would do a ‘post implementation review’ on the excise tax cut after a year.”
Costello’s credibility as a minister is in doubt
Opponents of Casey Costello say that she is “in thrall to tobacco lobbyists”, and it’s hard to disagree that this is exactly what it looks like. Although it’s possibly just a coincidence that the reforms that the new minister has now implemented are the same as the various lobbying documents advocate, there’s plenty of room to reasonably speculate about the linkages.
Costello still maintains that she has no relationship with the tobacco industry, but it doesn’t help her case that she refuses to do interviews on the topic. Given that she has been caught breaking the law in her handling of documents in the decision-making processes, public confidence in Costello must be starting to wane.
Many of Costello’s statements on her tobacco and smoking decision-making process aren’t very credible – especially in terms of the lobbying document at the centre of her reforms. Opponents will now watch her carefully, ready to expose further credibility deficits and slip ups.
Ultimately, this won’t reflect well on the coalition government. However, the bigger problem is that her tobacco and smoking rollbacks have become a clear case study of how lobbying and democracy in New Zealand now work.
Key Sources
Bryce Edwards (Democracy Project): The Role of tobacco interests in making government policy
Guyon Espiner (RNZ): Revealed: Politically charged tobacco policy document that NZ First Minister Casey Costello tried to hide
Guyon Espiner (RNZ): Leaked tobacco lobbying plan for 'political pressure' shows tobacco giant got its tax cut wish
Guyon Espiner (RNZ): Govt set aside $216m to pay for heated tobacco product tax cuts
Lillian Hanly (RNZ): Costello brushes off revelation tobacco giant Philip Morris targeted NZ First
Mountain Tui: Is Casey Costello Corrupt?
No Right Turn: Simply not credible
Public Health Communication Centre: Parliamentary voting for smokefree over two decades: Implications for future progress
Rachel Thomas (the Post): Treasury urged U-turn on heated tobacco tax breaks to pay for cancer medicines (paywalled)
This article was originally published on the author’s Substack.
