Combatting Illicit Tobacco Bill 2026

Mr KENNEDY (Cook) (12:02): We will support the Combatting Illicit Tobacco Bill 2026, but it only addresses a fraction of the problem. Illicit tobacco is out of control under this Albanese government. I want to read a letter from one of my constituents who recently wrote to me: I am writing to complain about the proliferation of tobacconists in shopping centres near high schools.

I live at Jannali. There was only one store and the Woolworths that sold such products. And now two more tobacconists/convenience stores— for a total of three— have opened in a matter of months.

And the new store next to Woolworths has kids toys and lollies and posters displayed and for sale throughout the store. There should be tighter regulations on what can be displayed and sold in such stores. And a limit to the number of stores in a km area.

And these stores need to be regularly raided and checked to make sure they are not selling anything illegal to minors like vapes. A division having been called in the House of Representatives— Sitting suspended from 12:03 to 12:14 Mr KENNEDY: It's not just Jannali where these illegal tobacconists have exploded. It's Miranda, it's Caringbah, it's Cronulla—it's across much of the Sutherland shire and the electorate of Cook.

Why have they exploded? The tax is too high. The tobacco tax has allowed an illegal industry to flourish.

And we are not closing down the criminals in these illegal tobacconists. This is something this bill does not deal with at all. The tobacco tax is far too high, and it has created the space for an illegal industry to prosper.

These emails get to the heart of the debate. Parents shouldn't have to be compliance officers. A mother and father shouldn't have to walk up and down the local mall in Cronulla or in Jannali and see a shopping centre, wonder whether these are stores that are going to encourage their children with lollies or posters to come in for illegal vapes and worry whether illegal tobacco or worse is being sold behind the counter.

I recently had another email from a constituent in Cronulla. She emailed me with dread about one of her young boys in high school who had become addicted to vaping and nicotine because he was being sold illegal vapes repeatedly in the Cronulla mall. If this is a business operating in plain sight, governments should be enforcing the law.

That is what we need. Yes, these amendments increase penalties, and we support that. But laws already exist to stop that, and they do nothing on the size of this illegal industry.

Legitimate retailers also should not be smeared because illegal retailers have invaded their market. There's a man outside Cronulla IGA who sells legal cigarettes at a tobacconist. He sells legal cigarettes in plain packaging in plain sight.

This man has to contend with being smeared and, even worse, his livelihood being eroded because just out in the mall are multiple illegal tobacconists selling cigarettes at a fraction of the price, with the government claiming zero tax because they're taxing legal tobacco out of existence. It's not because there aren't some people trying. In the last financial year, the Australian Border Force seized more than 2.2 billion—that's 'billion' with a 'b'—illicit cigarettes at the border.

It seized more than 586 tonnes of loose-leaf tobacco. It seized more than 13.2 million vapes, one for every two Australians. This represented more than $4.7 billion in estimated tobacco duty evasion, and we know we're only capturing a fraction of what is making it through.

Think about this for a moment: two billion cigarettes—that's what was seized; imagine what's getting through. And we have some idea, because, right across Australia, illegal tobacconists are popping up everywhere. This isn't a few opportunists taking some duty-free from the Middle East and shoving it in their carry-on or their check-in.

What we're talking about here is an industrial-scale criminal market that the Prime Minister has allowed to flourish. And it's not just the Labor Party federally that has allowed this criminal enterprise to flourish. We've seen it with the CFMEU.

We see it within Victoria. This Labor government has a problem with illicit criminal activity in the tobacco market, in the construction market, in the housing market. The Prime Minister needs to stand up and stamp this out, for the mothers in Jannali and the mothers in Cronulla who are writing to me at wits' end because their children are getting addicted to illegal tobacco products.

I won't stand for it. Not only is the trade extraordinary; there is violence. The ACIC report that, since 2023, there have been more than 200 firebombings of stores and three homicides, including an innocent civilian—people getting killed over cigarettes, all because this government has put the tax too high.

This is why I reject the idea in this bill that we're simply dealing with a tobacco tax compliance problem. We've stuffed up the incentives monumentally, and the Prime Minister needs to admit this and fix it. Shops are being firebombed, people are being killed, we're seeing an innocent civilian being murdered for illicit tobacco, because they have stuffed it up.

I think back to that mum at Jannali, a resident who sees all these tobacconists opening up in the local shopping centre. They see lollies and toys displayed in those stores and they ask a question: who is taking responsibility for this? Well, the PM should.

It's time to stand up. This question deserves an answer. Who is going to take responsibility for this?

I'm going to fight for you. I'm going to fight for every person in my electorate who's sick to death of these businesses being unregulated and those few smokers who are sick to death of being charged the proverbial arm and a leg to smoke. The independent Parliamentary Budget Office estimated that illicit tobacco is around 80 per cent of all cigarettes consumed—80 per cent!

We have set this tax so high no-one's buying it legally. I've seen local cops in my area going into the illegal tobacco stores to buy their smokes, and I don't blame them, because we've stuffed this up. We've stuffed it up so badly that what we collect in tax from cigarettes has dropped from $14.7 billion in 2023-24 to $3.6 billion, an $11 billion drop in the tax take.

Australians instinctively understand something this prime minister doesn't: the more you tax something—the higher you tax something—the less of it you get. That is why taxation revenue has fallen through the floor on cigarettes despite it being 80 per cent or more of the price of a packet of smokes. The higher you make that tax, the less they'll buy it.

They'll go around it. We're seeing that same principle on display in our housing market: 'Let's tax housing a whole lot more; let's set a minimum 30 per cent tax and a maximum 47 per cent.' In some cases, that's double or triple what people would pay, and—surprise, surprise—we read in their own budget papers that we get 35,000 fewer houses because, the more you tax something, the less you get of it.

That's true with cigarettes. It's true with houses. Unfortunately, we have a prime minister who does not understand how business works or operates, and Australians are left to pay the price—Australian renters in Cook, Australian renters in Jannali and mums of local high school students at Jannali High watching these illegal tobacconists spring up like mushrooms all over the place.

Not only is a mum having to deal with her young son being addicted to nicotine at school; she's having to deal with rents that are going through the roof because we've got fewer houses—35,000 fewer, according to the Treasury's own budget papers. We have a government and a prime minister who do not understand how business and incentives work and operate. This isn't something that just the coalition is saying.

Those of you in Cook would have heard our premier, Premier Minns, and health minister Ryan Park—a Labor premier and a Labor health minister—take shot after shot at this Labor federal government for not understanding this. Ryan Park recently said that the federal government's excise is 'driving the black market'. That's a direct quote.

Premier Minns has talked about how he feels like he's fighting with one hand tied behind his back trying to close these stores down, because he knows what all of us know and what every constituent in Cook knows: this crazy tobacco tax at crazy prices has created and driven this market. This isn't a partisan issue. The Labor premier gets it.

The Labor health minister gets it. I get it. The mums and dads of high school students at Cronulla, at Jannali, at Miranda and at Caringbah get it.

They are watching their kids get addicted to cut-price vapes and cut-price cigarettes from the illegal tobacconists springing up everywhere. It's the Commonwealth agencies that control our international border. They are the ones that should be holding organised crime to account—and this is what it is: deep, organised crime.

They used to sell heroin. They used to sell meth. They used to sell cocaine and MDMA.

Now they're selling packs of Double Happiness to 16-year-olds down at Cronulla mall and Jannali mall. That's what's happening. This isn't your friendly local retailer bringing back a few boxes of duty-free.

We're talking about 2.2 billion cigarettes seized. That's a fraction of what's getting through. Parents at Jannali or Cronulla don't care about which level of government or which subsection of the act is involved.

They don't care that the penalties you already aren't enforcing are being doubled or tripled—which is what we're doing in this bill, which I support. What they want is leadership. They want a prime minister who leads and stands up for them, who doesn't push a piece of political legislation that doesn't deal with the underlying problem of excise.

We need a serious conversation about where these businesses are opening, how many can be in a cluster and whether they are actually legal, because most of them aren't. I feel for that guy in the Cronulla mall, outside the Cronulla IGA, selling plain-packaging cigarettes to people over 18—not selling illegal vapes—and watching his margins get eaten up by organised crime because this government is turning a blind eye.

We need to be much tougher where operators are caught deliberately selling illegal products. These guys are operating in plain sight day after day, selling to minors. If the penalty is simply to be absorbed as a cost of doing business, because the profit margins are so high—because we've set the taxes so high—that is not a deterrent; it's just a cost of doing business.

For me, the test is much simpler than the language in this bill. Can the parent in Jannali who wrote to me at the start of this bill walk through their local shopping centre and feel confident that the shops around them are operating lawfully, selling lawful products that won't be sold to their children? Can the honest small-business owner know that the government will not leave them to compete against an organised criminal network that firebombs competitors, that's committed murders—murders over a product that should be illegal—because we've stuffed up the tax, because we're taxing you too much?

Not only are we taxing you at the highest rate on total income you've ever been taxed in your life or with the highest tax on capital you've ever been taxed in your life; we're taxing cigarettes at the highest rate in the world and allowing criminal operators to operate in plain sight, making superprofits, selling cigarettes to your kids, firebombing your neighbours and, in some cases, murdering the competition.

That is what is going on here. Can organised crime look at Australia and conclude that illicit tobacco is easy money that the government just turns a blind eye to? Right now, I think they look at that and they say yes—yes, they can.

And constituents know that because they're living it. The message to criminal networks making superprofits from this trade should be simple: if you import it, distribute it and launder the proceeds, or knowingly sell illegal products to anyone—let alone children in my electorate—the government should use every lawful power to find you, shut your operation down, lock you up and take your illegal proceeds of crime away.

Now, yes, the coalition will support this bill, but it goes a tiny fraction of the way. The problem will not be solved; it'll be absorbed as a cost of doing business by these super criminal networks operating in our community. This is about protecting children, backing parents and honest businesses, keeping organised crime out of my electorate and keeping the kids in my electorate out of the shopfronts of organised crime.

We need to restore something basic: confidence that, when Australians see the law being broken in plain sight, the Prime Minister will stand up and act.