Chief Ombudsman criticises Costello over withholding tobacco documents

Casey Costello has again been reprimanded by the Chief Ombudsman for her handling of a mystery document containing tobacco-industry friendly ideas, which she passed to health officials to develop policy.

In December, the associate health minister gave health officials the document, which claimed "nicotine is as harmful as caffeine" and argued Labour's smokefree generation policy was "nanny state nonsense".

The document also argued strongly for tobacco tax cuts - a policy which has now been implemented by Costello.

But the New Zealand First minister maintains she does not know who wrote the document or even how it came to be on her desk.

Now Chief Ombudsman Peter Boshier has released a new investigation into Costello's handling of the document.

He says he is "concerned the associate minister was unable to produce any records about the provenance of the notes" and has "taken the rare step of notifying the chief archivist about the record keeping issues in this case".

The chief archivist has a range of powers to examine matters relating to record keeping, under the Public Records Act.

Boshier is not taking interviews on the case but in a statement said he had recommended Costello reviews the way she handled requests for information about the document and "takes steps to address the identified deficiencies".

Costello told the Chief Ombudsman's investigation that the notes which make up the document were "not written by ministerial staff, none of them had placed the notes on her desk nor did they know who prepared them".

She told him that "she believed the notes were created by copying and pasting from a variety of sources over a significant period of time before the coalition government was formed".

But this explanation creates problems for Costello.

RNZ has the full document and it contains excerpts from the coalition agreement - so the document was clearly finished after the government was formed.

Costello also told the Chief Ombudsman "the likely source was a political party staffer or volunteer".

That also creates issues for Costello.

When Costello released the mystery document to RNZ under the Official Information Act she made redactions under a clause of the OIA which protects the "confidentiality of advice tendered by ministers of the Crown and officials".

Costello initially denied the document existed at all.

In February, Labour health spokesperson Ayesha Verrall asked Costello in a written parliamentary question who wrote the document.

"There was no specific document written," Costello repulsed. "A range of information was provided to officials, including material like Hansard reports, the Coalition Agreement and previous NZ First policy positions."

The document argues strongly for tax cuts for smokeless tobacco or Heated Tobacco Products - a market where tobacco giant Philip Morris has a market share close to a monopoly.

"Giving up smoking should also mean giving up paying huge excise taxes," the document says. "Excise tax is a tool to discourage use, we want to encourage smokers to use these products and one of the best ways to do that is to make it cheaper than cigarettes."

Costello recently cut the excise tax on HTPs by 50 percent and set aside a contingency fund of $216 million to cover the tobacco tax cuts.

She did this despite health officials saying there was no strong evidence either that they worked as a smoking cessation tool or that they were significantly safer than cigarettes.

The dominant HTP in the market is the Philip Morris IQOS, where sticks of tobacco are inserted into a device and heated to a vapour, rather than burned.

A May Cabinet paper signing off on the excise tax cut says 7200 smokers could switch to HTPs as a result of them being cheaper although it is unclear how much of the tax cut would be passed on to consumers.

"Because this product currently has a monopoly market in New Zealand, the extent to which a reduction in excise duty on HTPs would be passed on to consumers via lower retail prices is unclear," the Cabinet paper says.

The two senior corporate communication positions at Philip Morris are held by people who previously held senior roles in NZ First.

David Broome, chief of staff for NZ First between 2014 and 2017, is external relations manager at Philip Morris.

Apirana Dawson - who was director of operations and research in the office of Winston Peters between 2013 and 2017 and led the election campaigns for the party in 2014 and 2017 - is Philip Morris director of external affairs.

Boshier's investigation is the second reprimand Costello has had from the Chief Ombudsman.

In July, Boshier forced Costello to apologise to RNZ and to Otago University Professor of Public Health Janet Hoek for trying to keep information about tobacco and vaping policy secret.

In that ruling, Boshier said Costello's actions in withholding the information were "unreasonable and contrary to law".

Costello's office has been approached for comment.