Time to stop killing customers to make a profit

Dr Kevin Purse, a Research Fellow with the Hawke Research Institute at the University of

South Australia, has compared the tobacco industry in Australia with the asbestos industry.

He believes the Federal Government should follow its strong actions on asbestos with a

similar prohibition on tobacco.

The asbestos industry deliberately kept the devastating effects of asbestos exposure secret

until faced with overwhelming evidence. Trade unions and health officials lobbied for years

against the industry, demanding bans on producing, importing and the use of asbestos. Finally

the government acted in 2003, and Australia is one of more than 40 countries that prohibit

asbestos use.

Asbestos deaths from past exposure continue and may total 40 000 by 2020. Although the

death toll in Australia from tobacco is far higher15 050 annuallyand the cost of treating

tobacco-related diseases over $31 billion each year, the tobacco industry continues to facilitate

preventable illness and death by the production and sale of cigarettes.

For decades the tobacco companies denied that nicotine was an addictive drug and the

detrimental effects of smoking on health, saying even at the end of the 1990s that no one had

proved that lung cancer and heart disease were caused by smoking. In 2006 the industry still

denied the potentially lethal effects of passive smoking.

Australia has made serious efforts to reduce the harm done by the tobacco industry.

Advertising is restricted, there are increasing regulations around labelling and packaging of

products, smoking is banned in the workplace and other public areas, and health programs to

enable smokers to quit are in place.

Although these measures have assisted in reduced smoking rates, Dr Purse believes the

focus on reducing demand is limiting Australia's ability to reduce deaths from tobacco

smoking. He proposes tackling the supply of tobacco products by action like that against the

asbestos industrybanning the production, importation and sale of tobacco goodsand

recognises the difficulties of such action in the face of resistance from the industry.

A black market in tobacco might result from such drastic action but Dr Purse feels that

Australia's geographic isolation and efficient Customs would limit it. Alongside a ban would

be increased help for addicts to quit and for anti-smoking campaigns aimed at the young. His

argument is that if we are a civilised society there can be no place in it for industries like

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asbestos or tobacco that kill their customers in the quest for profit.

Required:

Explain how or wy tobacco companies can report accounting profit even though the consequences of their activities are belived to be causing significant social and economic impacts within society ( 20 mark )

Suggest an approach to accounting that would required tobacco production organisations to internalise the social and economic impacts that the suggestion can also include a departure from an existing or traditiional accounting practice. ( 20 mark cover )