Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026

Ms ALDRED (Monash—Opposition Whip) (12:50): I rise to speak on the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026, a narrowly focused set of legislative changes to address Australia's illicit tobacco market. It seeks to strengthen the Commonwealth's enforcement over tobacco imported into and held within Australia with stronger controls around customs depots and warehouses, revamped licensing and compliance settings, and new mechanisms to stop tobacco being diverted into the illegal domestic market.

In essence, these changes to the Customs Act mean prosecutors will no longer need to prove an accused person knew the tobacco in their possession had been smuggled. Instead, law enforcement can rely on the product's characteristics—for example, no plain packaging, an implausibly low price or a pack of 30s that can no longer be legally bought and sold here—to establish that those products have entered Australia illegally.

Good stuff. The coalition won't oppose moves to strengthen enforcement or introduce real consequences for illegal conduct, but I'd like to make a couple of points beyond that. First, we all continue to hear from this government that its settings are right, that everything is working and that it might be all the Victorian government's fault, as we heard in question time last week.

I do have some sympathy for that argument, until you look at the string of arson attacks across South Australia and New South Wales in the past fortnight alone. Yet under this government there is still the insistence that it has this all under control. The facts would suggest otherwise.

This is the second bill in a matter of months seeking tougher penalties and greater enforcement for a problem that will keep playing out as whack-a-mole for overstretched and underresourced police and enforcement agencies while the government refuses, point-blank, to address the real underlying driver here. Don't take my word for it. Professor James Martin, a criminologist at Deakin University specialising in black markets, and Edward Jegasothy, a senior lecturer in public health at the University of Sydney, wrote this of the bill: The federal government is attempting to pass yet more legislation to combat the illicit tobacco and nicotine trade.

This time, the commonwealth argue, enforcement agencies will have the powers they need to make a meaningful difference. This follows the pattern we feared and predicted a year and a half ago: more restrictive and punitive legislation aiming to do what the previous legislation was supposed to. Meanwhile, the problem gets worse, further justifying more laws.

On the Assistant Minister for Citizenship, Customs and Multicultural Affairs—who, I might add, I believe is acting in good faith, even though I have my disagreements with him—they wrote: A big part of the problem is who the laws are most likely to affect. Assistant Minister for Customs … claims the laws will target "serious criminals" … However, in practice, the new laws will almost certainly not affect those at the top of the criminal hierarchy, who rarely, if ever, would be caught handling an illicit product.

Martin and Jegasothy go on, in an article in the Monthly, to say,'The problem persists until this government accepts that high tobacco taxation is the driver.' Why does this bill miss the mark? The government's own explanatory memorandum undermines its own approach. It defends the new offences on the basis that pecuniary penalties are treated by criminal actors as a cost of doing business, absorbed and offset against the significant profits generated from illicit tobacco.

I would say that that is precisely the problem that this bill fails to address. Where margins are wide enough that fines, seizures and even prosecution are simply priced in as a cost of trade, extra penalties and faster forfeitures won't shift behaviour among the syndicates or their customers. Not one of the bill's eight measures touches the price gap, moderates excise or stabilises the legal market.

It targets tobacco reaching our shores while leaving untouched the demand that legitimate retailers, hemmed in by price, can no longer meet. And there are consequences for legitimate businesses. The price gap carries real costs.

Small and family-run retailers keep losing customers to illicit sellers, undercutting them by 70 to 80 per cent, while their communities absorb the firebombings, extortions, increased insurance costs, violence and staff assaults that come with control of the trade. Meanwhile, the later stages of the enforcement stay weak. Domestic prosecutions and convictions sit in the single digits each year, against tens of thousands of border detections, and courts often hand down non-custodial sentencing, even for commercial-scale offending.

More offences on the statute book won't change this without genuine prosecutions, genuine custodial outcomes and a price setting that lets legal products actually compete. The bill also changes how these offences are proved by reversing the onus of proof. The new offences sit on presumptions.

Once certain facts are shown—unpaid duty, goods missing from a cargo report, packaging that fails Australian requirements, a sale below the combined duty and GST—the law 'takes it to be' reasonable to suspect unlawful importation. The defendant then bears the burden of pointing to evidence to rebut it. The explanatory memorandum concedes this reverses the onus of proof and is generally considered undesirable in criminal law.

Lawyers better qualified than me can reasonably disagree on that trade-off. What's harder to reconcile is the government's willingness to compromise a core criminal law protection to chase the supply chain while refusing to revisit the tax settings that have created and are driving this black market in the first place. Higher maximums only matter if courts impose them, and the record shows they mostly don't.

The Commonwealth Director of Public Prosecutions told the Senate inquiry into this issue that between July 2018 and December 2025 it received 430 referrals, finalised 405 prosecutions and secured 284 convictions. Of those, only 107 offenders—roughly 38 per cent—received any actual custody. A further 79 got a prison term with no time to serve, 67 got a community based order, 25 were fined and six were discharged without conviction.

These outcomes fall well short of the maximums that parliament has legislated for. The Customs Act sets out a 10-year maximum for importing or possessing illicit tobacco. Once the Combating Illicit Tobacco Bill 2026 commences, that rises to 15 years and fines of up to 12,000 penalty units—roughly $4.4 million.

Yet convictions run at just 30 to 40 a year, while the market runs into the billions, and most convicted offenders avoid full-time custody entirely. The new offences here, carrying maximums of five to 10 years and fines of $2.18 million and $2.91 million, sit on top of maximums the courts already decline to use. I think that is a fair point to raise.

A further wrinkle shrinks these figures even more. Under section 4J of the Crimes Act, all Commonwealth tobacco offences can be, and mostly are, dealt with summarily. When a matter goes that route, a 10-year maximum shrinks to two years and a five-year maximum shrinks to 12 months before a court has even begun weighing the offender's circumstances.

The maximums announced by government are, in most cases, a fraction of what gets reported. The reasoning is well established, and the DPP states it plainly: a maximum penalty is a yardstick reserved for the worst case imaginable, not a guide to typical sentencing. Raising it has no real bearing on ordinary sentences, and it's these ordinary sentences organised crime actually factors in.

Parliament has lifted tobacco penalties repeatedly now—in this bill, in last month's act and in offences already on the books—while actual sentences imposed have barely moved. On the evidence available, the maximum penalty is rarely, if ever, applied. So what would actually help?

If the government genuinely wants to protect communities, retailers and revenue, the response must go beyond more enforcement powers as the only lever. First, tackle the price gap. Until excise comes down substantially, tougher penalties will stay marginal to the calculations of the syndicates running most of today's illegal tobacco and nicotine market.

Second, address demand through visible, nationally consistent compliance at the point of sale, not just the border. Third, make the courts a genuinely effective part of the response, working with the attorneys-general on sentencing consistency and custodial baselines for serious repeat or organised offending. None of that features in this bill.

This bill is a more elaborate version of the enforcement-first approach parliament passed only a few weeks earlier. It creates new offences, shifts the onus of proof, speeds up seizure and strengthens proceeds-of-crime provisions. I am sure that enforcement agencies will welcome that additional and added efficiency, but, as long as consumers can buy illegal tobacco for a fraction of the taxed price and the odds of serious penalties stay low, retailers and communities will continue to bear the brunt and see little change.

Two bills in a month have expanded the enforcement framework, yet neither has grappled with the economic conditions sustaining the market. Until that price gap is addressed, the Commonwealth will keep legislating against the supply of a market its own tax settings have created and continue to drive. The coalition has put forward the only comprehensive platform on tackling illegal tobacco in Australia.

My colleagues and I have argued for cutting the excise—in my case, for a year. Others in my party room and the National Party have done so for longer. But this is no longer a partisan issue.

The crossbench, state and federal Labor parliamentarians and a teal member of parliament all share the view that the excise needs to be cut. New South Wales premier Minns has called for an aggressive cut, and I commend his moral courage and urge the Prime Minister to follow him. If he can't follow Chris Minns, perhaps he can listen to his own backbench, who, in a minority report to the Senate inquiry, broke from the government's official approach.

Last week, in question time, the Prime Minister dodged the question five times, but I suppose dodging a question five times beats not telling the truth about something 50 times. He dodged it on breakfast television too. We've now learned that, alongside Treasury's elasticity pricing modelling, an agency within the Department of Home Affairs is also looking at the excise, so I have faith that the government is taking baby steps on the road to illegal tobacco Damascus.

One teal MP has acknowledged the status quo isn't working and supports an excise cut, and I commend her for that. Her common sense isn't shared by all of her colleagues, though. The member for Kooyong argues against a cut.

Wary that a further rise in excise would only strengthen the black market's price incentive, however, she has also argued that increasing the tobacco excise would encourage the black market. I think it's worth recalling what JFK once said: 'We enjoy the comfort of opinion without the discomfort of thought.' That fits well. This debate has been too often driven by ideology rather than facts and behavioural economics to be included in those considerations.

Think for a moment who actually bears the cost of what this bill is meant to address. Katie Tangey, the innocent Melbourne woman murdered in a case of mistaken identity by illegal tobacco gang leaders, would have turned 29 this Tuesday. My thoughts are with her family, and I want them to know that I'm fighting on this issue so that this doesn't keep happening to more families across Australia.

This government claims to be the parliamentary wing of the union movement here to stand up for working people. Right now it's retail staff, often young, often having their first experience in the workplace, often on the minimum wage, standing behind a counter because it's their job and having to face the full consequences of this, which are violent. The Australian Border Force, on the issue of the excise influence, said as much in its submission to the Senate inquiry that price is a driver in this.

Criminologist James Martin has said that, once a black market reaches this scale, you simply cannot police your way out of it without other measures. The government's own figures show the illicit market has pushed past half of all of the tobacco consumed worth billions of dollars every year. Meanwhile, smoking rates, the entire justification for this policy, are no longer falling as they should.

Western Australia has recorded an uptick for the first time in three decades. Wastewater testing shows nicotine consumption climbing nationally, and the New South Wales department of health has shown that smoking rates have tipped over 15 per cent in that state. This government has been warned by Treasury, the Australian Border Force, state premiers, doctors and its own backbench in a Senate report that the illicit market cannot be policed away while the financial incentive to run it remains at large.

Australians deserve better than a government with its head in the sand on this issue.