MATTERS OF URGENCY
Senator O'SULLIVAN (Western Australia—Deputy Manager of Opposition Business in the Senate) (16:41): This is an important debate about illicit tobacco. I thank Senator Cash for bringing this important issue before the Senate. What we know is that, across Australia, suburban shopping strips have been firebombed, businesses are being threatened and sadly people are being killed because criminal gangs have often been allowed to take control of the tobacco market.
What began as a public health challenge has become a lucrative market for organised crime. The illicit tobacco trade is estimated to be generating between $4.1 billion and $6.9 billion for criminal organisations. Those profits do not remain behind the counter of illicit stores; they fund drugs, drug trafficking, drug dealers, scams, money laundering and violence throughout our community.
In Victoria alone, there have been almost 200 tobacco related arsons and six homicide crimes linked to the trade. Yet the Albanese government continues to protect the very business model that makes this criminal enterprise so profitable. A legal pack of 20 cigarettes now costs around $50, with approximately $30 of that price made up of government tax.
One illicit pack can be sourced in Asia for less than $5 and then sold locally here in Australia for somewhere between $15 and $20. That enormous price difference makes Australia a serious target for organised crime. Every time a customer is pushed from a legitimate retailer, more money flows out of the legal country and into the hands of criminal gangs.
Labor's approach has not eliminated demand; it has simply gifted criminals with a highly lucrative market. The coalition's plan will attack the gangs where it hurts: their profits. We'll cut tobacco excise by 80 per cent, reducing the excise for a standard packet of 20 cigarettes from around $30 to just over $6.
This will dramatically narrow the price gap between legal and illicit tobacco. It will bring revenue back to Australian businesses and strip billions of dollars from organised crime. But excise reform is not enough.
We will back it with a $200 million nationwide law enforcement surge. That means more raids, arrests and seizures; shutting down the illegal tobacco stores; intercepting shipments at the border; and following the money through the Australian Federal Police, the Australian Border Force, the Australian Criminal Intelligence Commission and AUSTRAC. We will also legalise, regulate and tax vapes and nicotine pouches for adults.
Labor's prohibition model, like all of these models, failed. It failed dismally. It has not eliminated these products; it has simply placed their manufacture and sale in the hands of criminals.
Australian adults should be purchasing regulated products through legal businesses with strong safeguards preventing their sale to children. This policy is not about encouraging smoking. We want fewer Australians smoking and vaping.
That's why our plan includes a $60 million public health campaign. The government cannot pretend that its present approach is succeeding. I ask them: what is your plan?
Tobacco consumption has increased substantially since the end of 2021 while the legal market has collapsed and criminals have prospered. The consequences for the budget are equally stark. Tobacco excise revenue has fallen from around $16 billion in 2019-20 to around $8 billion.
The coalition analysis indicates that, if Labor's repeated revenue writedowns continue, tobacco excise receipts would fall to zero by 2029-30. The independent Parliamentary Budget Office estimates that our package will improve the budget by around $8 billion over four years and more than $20 billion over a decade, principally by bringing tobacco sales back into the legal economy.
We will also direct the ACCC to monitor tobacco prices and report publicly, helping to ensure that the excise reduction is passed through to consumers. You cannot defeat organised crime while preserving its competitive advantage. Australians deserve more than a government that watches excise revenue collapse while illegal tobacco shops multiply and criminal violence escalates.
They deserve a government prepared to confront the cause of the crisis, not merely manage its consequences. The coalition has a comprehensive plan to restore Australian control of this market, protect legitimate businesses, safeguard our communities and smash the gangs. (Time expired)