Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026
Mr WALLACE (Fisher) (13:20): The coalition will not oppose the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026 in the House. We support sensible measures that give Commonwealth law enforcement and border agencies stronger tools to combat illicit tobacco trade. But we should be very clear about what this bill can do and what it can't do.
It can make prosecutions easier. It can strengthen proceeds of crime powers and tighten controls around customs depots and licensed warehouses. What it cannot do on its own is fix the economic conditions that have allowed organised crime to turn illicit tobacco into one of the most lucrative criminal markets in Australia.
Australia's illicit tobacco crisis is no longer simply a question of public health. It is a law and order issue. It is a community safety issue.
It is a revenue issue and, as I said in this House in June, it has become a significant domestic national security issue. The government's own Illicit Tobacco and E‑cigarette Commissioner estimates that illicit tobacco represented between 50 and 60 per cent of tobacco sold in Australia in 2024-25. The estimated value of that market was between $4.1 billion and $6.9 billion, with excise and duty evasion estimated at between $7.7 billion and $11.8 billion.
That is an extraordinary amount of money moving outside the legal economy and into the hands of criminal gangs, criminal networks. These are not backyard operators selling a few cheap packets of smokes under the counter. The Australian Criminal Intelligence Commission describes illicit tobacco as one of the most significant organised crime commodities in Australia.
We've seen firebombings, extortion, intimidation and violence linked to this trade. Innocent people have been killed, legitimate businesses have been targeted, communities have been put at risk and criminal groups have fought over territory because the profits are so large. The Australian Border Force has described illicit tobacco as a low-risk, high-reward commodity and has warned that the market continues to grow in scale, complexity and profitability.
AUSTRAC has warned that illicit tobacco is also an increasing money-laundering threat. This bill contains worthwhile measures. It creates a clearer framework of offences dealing separately with unlawful importation and with the possession, movement, sale and supply of illicit tobacco once it is inside Australia.
Importantly, it also addresses one of the practical problems faced by prosecutors. Under the existing framework, cases can be frustrated by the need to prove that an accused person knew tobacco had been unlawfully imported. This bill makes it easier to prove tobacco is illicit by allowing prosecutors to point to obvious warning signs, such as unrealistically low price, non-compliant packaging or no evidence of a legitimate supply chain.
That can include tobacco being sold at an extraordinarily low price. Those are practical changes that should make it easier for authorities to act against the people moving illicit tobacco through the domestic market. The bill also strengthens proceeds of crime arrangements.
That matters because when you are dealing with organised crime, you have to follow the money. I made this point in June, and it remains just as important today. If you can't immediately arrest these thugs for the firebombing, the extortion or the violence, then go after the money.
Freeze the assets, seize the profits, and strip away the financial reward that keeps these criminal enterprises operating. The bill also strengthens customs licensing, compliance and oversight arrangements, including a greater scrutiny of people associated with customs depots and licensed warehouses. Again, these are sensible measures, and the coalition will not stand in their way.
But nobody in this House should mistake another round of enforcement amendments for a more complete solution. Australia did not arrive at this point because the criminal law was missing one more offence. We arrived here because a huge illegal price gap created an extraordinary profit opportunity, and organised crime seized that opportunity.
In the 23 May budget, Labor imposed an additional five per cent tobacco excise increase in each of the three successive years, on top of the existing twice yearly indexation. Those increases took effect September 2023, September 2024 and September and 2025. At the time, the government forecast those higher excise rates would raise an additional $3.3 billion over the forward estimates.
Instead, tobacco excise revenue has fallen sharply as more of the market has shifted underground. The coalition's position is that you cannot separate enforcement policy from the incentives that make the illegal trade so profitable. If the black market can massively undercut the legal market, criminals will keep being attracted to it.
If those criminals can make extraordinary margins, they will absorb seizures, arrests and shop closures as a simple cost of doing business. That's why the coalition has put forward a better plan. Our policy would reduce tobacco excise by 80 per cent, cutting the excise component on a standard packet of 20 cigarettes from around $30 to around $6, with the rate reviewed after two years.
The purpose is not to encourage smoking; let me make that perfectly clear. The purpose is to attack the price differential that organised crime has exploited and to bring consumers back into a lawful, regulated market. We would combine that with a $200 million nationwide law enforcement surge focused on raids, arrests, seizures, investigations, illegal shop closures and border disruption.
That means a stronger operational focus across the Australian Border Force, the AFP, the Australian Criminal Intelligence Commission and AUSTRAC. We would also establish a legal, regulated and taxed adult market for nicotine vapes and nicotine pouches while maintaining protections for children. And we would invest $60 million in a national public awareness and education campaign to expose the organised crime behind illicit tobacco and vapes and reinforce the dangers of smoking.
This is not a choice between tax reform and enforcement. Australia needs both. We need to shrink the criminal profit margin and then hit what remains with the full force of the law.
We need to stop shipments at the border, shut illegal shops, seize criminal assets, follow the money and arrest the people running these networks. We also need to restore some basic common sense to the tax settings that have helped make the black market so profitable. Tobacco excise revenue peaked at around $16 billion in 2019-20.
By last financial year, it had halved to around $8 billion. At the same time, organised crime groups are estimated by the government to be making billions from illicit tobacco. This is a perverse outcome.
Australians are collecting less tax while criminals are collecting more money. A policy designed to raise revenue and reduce smoking has instead helped create a market in which lawful retailers are undercut by organised crime, and illegal sellers operate without age checks, product standards or regulatory oversight. The coalition's position is straightforward: we support giving police and broader agencies and prosecutors better tools.
We support stronger proceeds-of-crime powers. We support making it harder for criminal syndicates to hide behind evidentiary gaps or exploit— The DEPUTY SPEAKER ( Ms Claydon ): The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour, and the member will be granted leave to continue speaking when the debate is resumed.