13.5 How affordable are cigarettes in Australia?

The affordability of tobacco is affected by factors beyond upfront cost. There are two main factors that influence the affordability of tobacco products:

1. The price of tobacco
2. The amount of disposable income available to people who smoke.

The interrelationship of these factors determines affordability. As Blecher and van Walbeek describe it, ‘affordability considers the simultaneous effect of income and price on a person’s buying decision’(p167). ¹ Even when tobacco prices may be lower relative to other goods and services, the increased cost of essential household expenses may mean there is less disposable income available for tobacco products. Tobacco affordability is typically examined at a population level, for example, the World Health Organization has suggested that the affordability of cigarettes can best be assessed by examining prices relative to earning capacity. ²

13.5.1  Changes in affordability over time in Australia

The affordability of cigarettes in Australia since 1994 is shown in Figure 13.5.1, depicted as the time taken in minutes by a worker on average Australian wages to earn enough income to purchase 20 cigarettes from the leading cigarette brand at that time. Table 13.5.1 shows detailed calculations of this measure of affordability.

In 1994, less than 15 minutes of work was required to afford 20 cigarettes from the leading brand. This steadily grew to 19 minutes in 2003, after which affordability plateaued until 2010. Following a large tobacco tax increase in April 2010, then large scheduled annual excise increased from 2013 to 2020, the affordability of cigarettes rapidly decreased. By 2021—after the final 12.5% tax increase was evident in the 2021 price data—the number of minutes required to work to earn 20 cigarettes had more than tripled since 1994, and more than doubled since 2010. Affordability did not meaningfully change between 2022 and 2023.

Table 13.5.1 shows that in 1994, it was possible for a person who smoked 20 cigarettes per day to earn enough money to purchase a week’s supply of cigarettes in about one and a half hours. By 2001 it took just over two hours to buy the same number of cigarettes, and by 2014, over three hours. By 2019 it took four hours, and five hours of work was needed by 2020. In 2023, a weeks’ worth of cigarettes required 5.6 hours of work on average wages, equivalent to 14% of an average full-time working week.

13.5.2  Differences in affordability across tobacco products

Figure 13.5.2 shows the affordability of factory-made cigarettes (FMC) compared to roll-your-own (RYO) tobacco, measured as the number of minutes needed to work on average Australian wages to afford 20 cigarettes in 2023 from the leading FMC and RYO product (assuming 0.6 grams of tobacco per RYO stick). Just over 48 minutes of work were required to earn 20 factory-made cigarettes. The equivalent number of RYO cigarettes took about 9 minutes less to earn. In other words, RYO cigarettes were about 18% more affordable.

13.5.3  The affordability of cigarettes to Australian children

As with adults, young people’s perceptions of the costliness of cigarettes are affected not just by recent price changes and the price of other goods and services but also by the amount of money they have available to spend on themselves. A 1997 study by the National Centre for Research into the Prevention of Drug Abuse ³ demonstrated that the probability of children having smoked in the last month was clearly related to the amount of pocket money they had at their disposal. The study also showed that, between 1992 and 1994, increases in pocket money resulted in cigarettes becoming more rather than less affordable to students in Perth and Sydney, despite increases in cigarette prices. (See Section 5.22   for further discussion of factors affecting uptake).

Table 13.5.2 shows the recommended retail price of popular tobacco products among teenagers in selected years between 1996 and 2022/2023. It also indicates the average amount of pocket money that Australian teenagers reported having to spend on themselves, among students who received any money, in each of the years of the triennial Australian Secondary Students' Alcohol and Drug Survey. ^4-11  From on these data, Figure 13.5.3 plots the number of cigarettes that could have been purchased by students on average levels of pocket money (or earnings) as determined in the surveys. For roll-your-own tobacco, an average tobacco weight of 0.5 grams per cigarette is used, based on evidence of the decreasing average weight of tobacco used among adult Australian smokers. ¹² Figure 13.5.4 plots the percentage of students that could afford the equivalent of one pack per week of the most popular cigarette brands over time, and Figure 13.5.5 shows the percentage of students that could afford one pouch of the most popular RYO brand.

cigarettes in 2022/2023 as they could in 1999.

Figure 13.5.4 shows the proportion of students who could afford the average cost of 20 cigarettes from the leading brands of factory-made cigarettes, by age group. The proportion of students who could afford the equivalent of a pack of cigarettes increased from 1996 to 2005, then remained generally steady until 2011. In 2011, more than 92% of 16 and 17-year olds, and 70% of 12 to 15 year olds, who received money each week could afford 20 cigarettes. This declined substantially for both age groups in 2014, and declined again between 2017 and 2022/2023. The plateau between 2014 and 2017 was largely driven by the increasing availability and popularity of small very cheap supervalue packs. The proportion of students who could afford 20 cigarettes from the leading brands halved from 2011 to 2022/2023 among 12-to-15-year-olds, and declined by almost one-third among 16 to 17 year-olds.

The affordability of roll-your-own tobacco pouches to teenagers began to decrease after 2008—see Figure 13.5.5. The affordability of the historically most popular brand, Champion, in the smallest available pouch size, declined each year from 2008 to 2017, so that almost two-thirds fewer 12 to 15 year old students, and one-third fewer 16 and 17 year olds, could afford to purchase the leading RYO pouch in 2017 compared to 2008. However, as evident between 1999 and 2002, 2011 and 2014, and 2017 and 2022/2023, as the size of the leading RYO pouch decreased, the affordability of RYO tobacco either increased, or the decline in affordability decelerated.

References

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2.  World Health Organization. MPOWER: A policy package to reverse the tobacco epidemic. Geneva, Switzerland: World Health Organization, 2008. Available from: http://www.who.int/tobacco/mpower/mpower_english.pdf.

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11.  Scully M, Bain E, Koh I, Wakefield M, and Durkin S. ASSAD 2022/2023: Australian secondary school students’ use of tobacco and e-cigarettes., Canberra: Australian Government Department of Health and Aged Care, 2023. Available from: https://www.health.gov.au/resources/publications/australian-secondary-school-students-use-of-tobacco-and-e-cigarettes-2022-2023?language=en.

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