2.4 Expenditure on tobacco products

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Another way of estimating tobacco consumption is to quantify spending by consumers on tobacco products.

2.4.1 Private final consumption

The ABS publishes quarterly reports of the amount spent by consumers on various products and services as part of a major quarterly report quantifying Australia's gross national product.29 Private final household consumption includes estimates of household spending on a range of goods and services, and data for each category of expenditure for each quarter back to 1971 is available electronically.68 Table 2.17 and Figure 2.10 show ABS estimates of total amounts Australians spent on cigarettes and other tobacco products between 1971 and 2006. To provide an estimate of trends in the quantity smoked per person (rather than just changing prices of cigarettes and numbers of people smoking), the second column adjusts these figures to take into account changes in the average price of tobacco products before and since 2005, and also divides them by the number of people 16 years and over.

Note that ABS estimates of final private consumption of tobacco products are based not on sales data but rather on manufacturing figures adjusted to take into account the estimated impact of increases in duty on the retail price of cigarettes.

As can be seen from Table 2.17, total spending on tobacco products over the 35 years until June 2006 has increased almost 17-fold. However it must be remembered that the total population has also increased over that period and that the price of tobacco products has increased significantly, well beyond increases in the consumer price index. Taking into account price increases in tobacco products, Australians in 2006 are spending 70% per capita less than what they were spending on tobacco products (per capita) at the peak of consumption in the early 1970s.

2.4.2 Household expenditure

An alternative estimate of trends in tobacco consumption is provided by average household spending on tobacco products as reported in the ABS' (approximately) six-yearly surveys of household expenditure.69

The ABS estimates of household expenditure are compiled from diaries of spending by all members of the household but are calculated for the household as a whole, regardless of numbers and employment status of people in the household. The data included in Table 2.1870 are averages across all household types. Figure 2.11 shows the same information, adjusted to take into account increases in tobacco prices over the same period.

Average household expenditure roughly doubled in the 20 years since 1984. When the substantial increases in tobacco prices over that period are taken into account, it would seem that households in 2004 are purchasing on average a third of the quantity of tobacco products they were purchasing in 1984.

Table 2.19 sets out average expenditure as reported in the ABS' Household Expenditure Survey for households with various levels of income.[25]

While households with lower-than-average income tend to spend (on average) around the same amounts on tobacco products as higher-income households, average spending on tobacco products as a percentage of total weekly expenditure is higher among low-income households.71 Patterns of smoking and personal expenditure among different socioeconomic groups are explored in more detail in Chapter 1, Section 1.7 and Chapter 9, Section 9.4 .