Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026
Ms CLUTTERHAM (Sturt) (13:05): I rise today to speak in support of the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026, which is the next step in the government's ongoing crackdown on the criminals behind the illicit tobacco and vapes trade. We know illicit tobacco presents multiple threats to Australians and Australian communities.
Firstly, illicit tobacco involves products that are made, distributed and sold illegally, avoiding regulations and tax laws. This illegal trade presents a serious challenge to Australia by weakening public health efforts, regulations and the economy. Secondly, we know that profits from illicit tobacco and e-cigarette sales often fund organised crime.
This not only harms the safety and health of our communities but makes it harder for law enforcement to deal with other criminal activities, worsening social and economic problems. Thirdly, the illegal trade in tobacco and e-cigarettes causes the government to lose a large amount of that revenue. That money could otherwise be used to fund important public services and health programs.
Fourthly, the illegal trade puts public health at risk by exposing people to unregulated and potentially harmful substances. It also weakens efforts to inform the public about the dangers of these products and to discourage their use. E-cigarettes have led to more young people becoming addicted to nicotine, creating new cycles of dependence.
Finally, illicit tobacco damages the trust in regulatory systems designed to protect consumers. It reduces public confidence in regulatory bodies and creates unfair competition for businesses that follow the rules and comply with regulations. Illicit tobacco is not a victimless crime.
It undermines public health objectives, harms legitimate businesses, deprives governments of critical revenue and provides a significant source of profit for criminal enterprises. Illicit tobacco needs to be cut off at the source. Cutting the tobacco excise is not cutting illicit tobacco off at the source.
It just makes legal tobacco products cheaper and more accessible. It reverses decades of successful smoking reduction and increases future public healthcare and hospital costs because it causes a myriad of health conditions, including lung cancer, which often leads to death. Smoking kills people.
It's deliberately addictive and it kills. Making it legally cheaper means more addiction, more health issues, more strain on health systems and more people dying. It also fails to stop criminal syndicates from lowering black market prices further.
Organised crime can maintain price advantages by cutting their own rates. Competing with organised crime on price is a race to the bottom. Governments have a duty to set legal and ethical boundaries.
Governments work to create laws that minimise or prevent things like exploitation, discrimination, abuse, modern slavery, bribery and corruption. And they work to create laws that minimise harm while trying to ensure every time that one set of rules and regulations minimising harm does not cause harm in another area. Harm prevention, protecting human rights, promoting public health and practising fairness are duties of government.
Lifestyle choices are up to the individual. If you want to smoke, smoke. If you want to drink, drink.
These choices are not illegal, and governments should not act to suppress personal freedom and individual autonomy, but smoking and drinking are harmful. We know this. Everyone knows this.
That harm leads to antisocial behaviour and strain on the public health system. Governments have a duty to minimise this, and that is what a high excise is all about. Reducing the excise to price match with organised crime is a dereliction of that duty, if that is your sole motivation for the reduction.
The tobacco excise is high for a reason—because it is embedded in public health goals. Subsidising or matching illicit pricing risks legitimising illegal syndicates and ignoring those public health goals. So the government's attention has been directed at the source of illicit tobacco: organised crime.
A central reform contained in this bill is the creation of new offences for importing, possessing or conveying illicit tobacco. Existing offences require prosecutors to prove that tobacco has been imported by a person with intent to defraud the associated revenue. This involves establishing that the person was aware that tobacco was subject to a duty collection framework and that that duty must be paid on importation.
This offence was designed for a previous era, where low-level criminals were trying to defraud revenue. Now, the scale and sophistication of organised crime have grown such that a new and more targeted approach is required. This bill operates to amend the Customs Act to introduce a number of measures to increase the deterrence of criminal conduct in respect of the unlawful importation of tobacco and to support more effective enforcement options and related prosecutions.
The measures are also intended to prevent the diversion of tobacco products into the domestic market where those tobacco products are required to be exported from Australia. These measures will also go some way to improving the operational efficiency of the Australian Border Force and its capability to respond to the prevalence of illicit tobacco imported unlawfully and then circulated within the Australian community.
The measures are not intended to affect legitimate participants like importers, customs brokers and depot and warehouse operators who comply with their legal obligations. The bill also amends the Proceeds of Crime Act 2002 to introduce three measures to strengthen the pecuniary penalty order framework, modernise the production order framework and strengthen Australia's unexplained wealth framework.
These measures will ensure that law enforcement agencies are able to detect and disrupt organised crime actors and recover the profits and wealth generated by criminal activity. There are a total of eight measures. The first modernises illicit tobacco offences under the Customs Act by introducing two new offences with a reasonable suspicion test, meaning that goods that were unlawfully imported by a person in circumstances which defraud the revenue and then four new offences for tobacco imported without the permission or in breach of permit conditions.
All six of these new offences are supported by evidentiary presumptions. The second clarifies the language in paragraph 233 of the Customs Act to ensure that tobacco imported unlawfully may be prescribed as a tier 1 good in Customs Regulation 2015 to enliven stronger penalties under the Customs Act. The third measure extends customs control over duty refunded tobacco until export or sale or until withdrawal or disallowance of an application for a refund of customs duty, thereby reducing diversion risk and strengthening supply chain integrity.
The fourth measure streamlines seizure and disposal of illicit tobacco by expanding the definition of 'special forfeited goods' in the Customs Act such that it includes tobacco imported in breach of permit conditions, which modernises the requirements for publication and service of seizure notices, and by removing the claim process for the return of seized illicit tobacco.
The fifth introduces new licence conditions, uplifts existing tobacco related licensing obligations and strengthens governance for licensed depots and warehouses through expanding the remit of the National Customs Licensing Advisory Committee. The sixth will amend the Proceeds of Crime Act to clarify and strengthen production order powers used in proceeds of crime investigations.
The amendments clarify that production orders may be sought after proceedings have commenced, and they remove jurisdictional limitation on the issue of production orders, allowing them to be issued relating to one or more documents that are located in or accessible from Australia. The amendments also realign penalties for interference with information-gathering processes to effectively punish those who seek to destroy or deface property tracking documents.
The seventh will improve the operation of the pecuniary penalty order framework in the Proceeds of Crime Act. The amendments will clarify how pecuniary penalty order amounts are calculated, including that an amount may only be reduced by amounts that have been paid rather than amounts that are payable. The amendments will also clarify that a person's effective control of property is assessed at the date of a restraining order or that the responsible authority applies for an order under section 141 of the act, which ensures that property remains available to satisfy a pecuniary penalty order.
Finally, the eighth measure will amend the definition of 'total wealth' in the Proceeds of Crime Act to clarify how it is calculated for the purposes of determining unexplained wealth amounts during proceeds of crime proceedings. The amendment will ensure that items of property that can be traced to a single source are not required to be counted multiple times in determining unexplained wealth amounts.
To be clear, this should be construed not as watering down the regime but as amending it so it better stands up to scrutiny with improved prospects for effectiveness. Briefly returning to measure 1, the evidentiary presumption, the bill will contain a list of what are called 'observable indicators' of illicit activities. If any one of these indicators is established, then that is taken to satisfy the reasonable suspicion test of the criminal offence.
The reasonable suspicion test under these new laws is an objective test. It doesn't depend on what an officer or anyone suspects. This allows enforcement agencies to focus on observable facts rather than try to prove every detail of a concealed illicit supply chain.
This is an evidentiary presumption system. An evidentiary presumption is a starting assumption the law makes about a fact or a situation. It's not the final word, but it sets the baseline.
So, if no-one produces evidence to the contrary, such that the presumption is not rebutted, the presumption usually stands. Examples of the new objective indicators include non-compliant retail packaging or non-compliant tobacco products, like menthol cigarettes hiding in plain packaging, or acts that conceal tobacco to avoid detection or if the tobacco sales price is below the excise and GST combined.
That fact alone will establish the reasonable suspicion that it was unlawfully imported. Given the scale of the problem with the importation of illicit tobacco in this country, the objective indicator measures will provide the Australian Border Force and all state and territory police forces with a powerful and effective tool to pursue organised crime and improve prospects of conviction because of the evidentiary presumptions.
So, to those operating a retail store, if the Australian Border Force or other law enforcement agency enter a store and observe one of these indicators, they can take action. Selling illicit tobacco is no longer worth the risk, because you'll get caught. Concealing illicit tobacco activities is no longer worth the risk; you'll get caught.
And participating in any way in the illicit tobacco industry is no longer worth it; you'll get caught. This bill contains a series of measures that are practical and targeted and that focus on the problematic elements of the sector without posing additional risks to public health. They are directed at cutting illicit tobacco off at the source.
They are directed at organised crime and directed at strengthening our borders so illicit tobacco does not reach our shores in the first place. And, if it does, the measures are directed at disrupting what happens in the postborder phase and improving prospects of conviction. I commend the bill to the House.