Combatting Illicit Tobacco Bill 2026
Dr WEBSTER (Mallee) (17:32): I rise to speak on the Combatting Illicit Tobacco Bill 2026. This bill is before the House because Australia is no longer dealing with a small compliance problem. Under Labor we are dealing with a black-market crisis, a public health crisis, a law and order crisis and a crisis of confidence in government policy.
This did not happen by accident. It is not something Australia can blame on events overseas. It is homegrown, and responsibility sits firmly with Labor.
The bill increases penalties, expands investigative powers, allows telecommunications interception in illicit tobacco investigations and strengthens unexplained-wealth, search warrant and proceeds-of-crime powers. Those are serious tools and they are needed, but let us be honest about why we are here. Under Labor legal tobacco has become so expensive and nicotine rules have become so distorted that a huge part of the market has simply gone underground.
People have not stopped using nicotine; they have moved outside the legal system Labor was supposed to protect. The Australian Bureau of Statistics says nicotine consumption in Australia increased by almost 40 per cent from 2017 to 2025. It also says illicit sources rose from 12 per cent of total tobacco consumed in 2017 to 80 per cent in 2025.
That is not a rounding error. That is not bad luck. That is Labor's policy failure in plain sight.
That is Labor's legacy. That is the health minister's legacy. They have allowed illegal tobacco to become normalised in the minds of too many Australians.
The ABS says household spending on legally purchased cigarettes and tobacco has almost halved since 2020, but please don't get excited. Labor cannot pretend Australians have suddenly stopped smoking. The evidence shows more people are buying illegal tobacco instead.
An article in the Australian on 3 June showed the explosion of illicit tobacco in stark terms, with the problem taking off after the June 2022 quarter—believe it or not, Labor's first quarter in office. In fact, someone in the House today said to me that their pouch of tobacco used to cost them $120 but now costs them $20. How is that possible?
Before Labor came to office, daily smoking was continuing to fall under the coalition government. The Australian Institute of Health and Welfare says daily smoking among Australians aged 14 and over fell from 19 per cent in 2001 to just 8.3 per cent in 2022-23. Labor points to legal sales as though the problem is shrinking, but legal sales alone no longer tell the full story.
Actual nicotine consumption is rising. That is what happens when government policy drives people out of the regulated market and into the hands of criminals. Labor's failure carries an enormous public health cost.
The AIHW has estimated the social cost of tobacco at $155.4 billion in 2021, projected to rise to $159.7 billion in 2022-23, with healthcare costs alone estimated at $7.9 billion. Tobacco remains the second leading risk factor driving Australians' burden of disease, accounting for 7.6 per cent of total disease burden in 2024. Labor wants this debate to sound like it is only about excise revenue or personal choice.
It is not. It is about people getting sick. It is about the pressure that smoking related disease puts on families, hospitals and taxpayers and communities who are living with increased crime, and it is about a government that has let the burden fall hardest on those with the least access to care.
In 2022-23, the AIHW reported that 20 per cent of people in remote and very remote areas smoked daily, compared with seven per cent in major cities. Women in very remote areas were 5.5 times more likely to smoke during pregnancy than women in major cities. For Aboriginal and Torres Strait Islander people living in very remote areas, smoking rates were 46.7 per cent, compared with 20 per cent in major cities.
As shadow minister for regional health, I say this plainly: Labor's tobacco policy failure hits hardest in regional Australia, where health services are already stretched, household budgets are already under pressure and people have fewer doctors and fewer services to turn to. I've been saying for seven years in this place that your postcode should not determine your health status, but under Labor it absolutely, increasingly does.
Then there is vaping. The AIHW says seven per cent of Australians aged 14 and over were recurrent e-cigarette users in 2022-23. The Department of Health, Disability and Ageing says one in six teenagers aged 14 to 17 have vaped and one in four people aged 18 to 24 have vaped.
It also says young people who vape are three times more likely to take up smoking. I remember the arguments when vaping came in that it would be an off-ramp from smoking. I don't think so.
I don't think anybody who looks outside in our streets and sees teenagers vaping more and more, eventually going on to smoking, would believe that. Australian research has warned that vaping could add at least $180 million a year in health system costs from only one part of the group of vape users who go on to smoke. That is on top of the already huge cost of smoking related disease.
This is also why Labor's failure to control the black market is such a public health disaster. For decades, governments have worked to make the dangers of smoking clear through warning labels, plain packaging and strict point-of-sale rules. Those protections only work when the market is regulated.
In the black market, which Labor has allowed to grow, those protections disappear. Estimates published before the latest ABS numbers had already placed the illicit tobacco market at around 55 per cent of the total market in 2025, valued at about $5.6 billion, with missed excise revenue estimated at between $7.7 billion and $11.8 billion. Treasury has downgraded tobacco excise revenue by $8 billion over the next five years.
So, under Labor, we have a black market undercutting lawful sellers, hollowing out revenue, weakening public health warnings and making organised crime richer. That is not a small policy problem. It is Labor's double failure.
It is a double failure. Labor's response has been a half-baked vaping prescription model. In fact, that is too generous.
It is not half baked; it barely made it to the oven. The pharmacy prescription framework has not worked. I said at the time it would not work, and here we are.
Illegal supply remains dominant, and pharmacists did not ask to be conscripted into Labor's failed nicotine controlled experiment. Labor's failure is also feeding organised crime. The Illicit Tobacco Taskforce was created to detect, disrupt and dismantle serious organised crime syndicates dealing in illicit tobacco.
The Australian Criminal Intelligence Commission has said that organised criminals view illicit tobacco as low risk and high reward. Even the Albanese government admits the illicit market has become a serious organised crime problem. The ACIC links illicit tobacco to organised crime entities and outlaw motorcycle gangs.
That is why this bill gives agencies stronger tools and lifts penalties. But the reality is even darker than that. This is not only an illicit trade; it is a violent one.
How many firebombings, how much intimidation, how much violence and how much criminal behaviour must communities endure before Labor accepts responsibility and says enough is enough? I've been told confidentially by police that senior officers are effectively unable to get involved at the retail illicit tobacco level unless matters escalate into overt violence, arson or other serious criminal conduct.
That should concern every member of this House because it means help comes after communities have already been put at risk. Hospitality venues are now vulnerable, too. High liquor excise and severe economic pressure may be creating incentives for illicit alcohol to follow the same path.
Some venues are tempted to mix illicit liquor with legal liquor just to survive in Labor's high-cost economy. If Labor does not act properly, the organised crime business model built around illicit tobacco could spread further. That should alarm every Australian.
Under Labor, health labelling has been undermined, point-of-sale controls have been undermined, legal retailers have been undercut, revenue has been lost, organised crime has thrived and Australians are paying the price. In my electorate, a constituent named Peter spelt out what this means for a lawful small business. His legal cigarette sales fell from about $10,000 a week to about $1,000 a week.
One former customer told him they were saving $400 a week by buying illegal cigarettes. That is what Labor's failure looks like on the ground. Honest regional businesses are losing lawful sales while criminals cash in.
If your business is next to an illicit tobacco store, you face another problem altogether. Insurance companies are charging high premiums or refusing to insure shops at risk of collateral damage from firebombing. I cannot believe that in 2026 we are talking about brazen organised crime spreading through modern Australia in this way.
It is an absolute indictment on Labor at federal and state levels. Enforcement matters, but enforcement alone cannot fix a market that Labor's own policy settings helped drive underground. If Labor wants to restore public health outcomes on tobacco and vaping it must confront the criminals.
But it must also confront the excise and regulatory settings that helped create this opportunity in the first place. The tobacco excise is simply too high. I'm told that cigarette price settings in 2019-20, when the coalition was in government, were still broadly within consumers' willingness to stay in the regulated market.
Under Labor, the tobacco market is broken. Public health warnings are not getting through. Lawful small businesses are being punished, criminals are being rewarded and decades of work to reduce smoking are going quite literally up in smoke.
This bill may give agencies stronger tools, but it is far too little and far too late. Minister Butler, the health minister, will be judged for this failure. Labor will be judged for this failure.
And communities like mine will keep paying the price until Labor has the courage to fix the mess that Labor helped to create.