The federal government announced earlier this year that it wanted cigarettes to be sold in plain packaging, without brand logos, images and colours, from 2012.
However, the ‘Alliance of Australian Retailers’ don't want that to happen.
The Daily Telegraph reports the Alliance of Australian Retailers's campaign, which was registered only last week, is being funded almost entirely by three tobacco giants including Philip Morris and British American Tobacco.
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They're about to launch an advertising blitz against the measure, arguing it will put a strain on small shopkeepers.
A series of full-page ads are planned for newspapers this weekend followed by television ads accusing Labor of adding to the cost of living, the newspaper says, and accuses Crosby Textor of organising the research behind the ad campaign.
Deputy Prime Minister Wayne Swan said the report was "horrific", calling on Opposition Leader Tony Abbott to explain his party's involvement in the campaign.
"There's a real question mark here about his trustworthiness and whether he's fit to be prime minister," Mr Swan told Fairfax Radio.
"Mr Abbott has to explain what discussions they've had about packaging."
QUIT executive director Fiona Sharkie said the campaign was actually about protecting the interests of big tobacco companies.
"This campaign is purely about an industry terrified of declining profits and one that will do anything to save its bottom line," she said.
"We should be asking what this newly formed 'alliance' is getting from the tobacco industry to come out against plain packaging."
Ms Sharkie said plain packaging wasn't going to stamp out smoking overnight.
"Retailers will have time to adjust to the gradual change in demand," she said.
"Instead of doing favours for the tobacco industry, retail associations should be helping their members diversify their business to cope with this inevitable change."
Ms Sharkie supported Labor's move towards plain packaging, saying research showed it made cigarettes less appealing to teenagers.
Former Howard government advisers and Liberal Party strategists reportedly devised the campaign.
Involvement denials
Crosby Textor has denied that it is involved in the campaign.
"Crosby Textor is not involved in any capacity with the Alliance of Australian Retailers and any suggestion to the contrary is completely false."
The Liberal Party has denied it is involved in a tobacco company-funded anti-Labor advertising blitz, saying it would also consider implementing plain packaging.
Opposition Leader Tony Abbott told ABC Radio in Brisbane his party had "absolutely nothing to do with any sort of pro-smoking campaign".
If the coalition was elected to power on August 21, it would "certainly consider" implementing plain packaging, he said.
Liberal senator Cory Bernardi said he was confident the party was not involved with the alliance.
"If they want to talk about who is captive to spin doctors and special interests you have to look no further than the Labor Party," he told Sky News.
Spokeswoman for the Alliance of Australian Retailers Sheryle Moon said there was no credible evidence that plain cigarette packs reduced smoking, and she denied the Liberal Party is involved in its campaign.
"That's definitely untrue, the Alliance of Australian Retailers is a group of four retail associations which have come together on the back of what our members have been telling us about the regulation on regulation (around cigarettes)," she said.
Ms Moon said the move would instead add time to shop transactions and ultimately cost businesses money.
"It's difficult to identify the consumer package that's required, it's difficult to restock shelves," she told ABC television.
"Those transaction times cumulatively add up to more time and more cost for small business, particularly if I am a single owner-operator in a corner store."
Ms Moon said the campaign, which cost "around" $5 million, would run until the policy was overturned.
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