Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026
Ms COKER (Corangamite) (16:51): Australians should be proud of how far we have come in reducing smoking rates over the past two decades. We've seen a significant decrease in the number of people smoking, and that's absolutely a good thing. It's good for the health and wellbeing of Australians and it's good for our health system.
But organised criminals are threatening our progress. These criminals are exploiting the illicit tobacco industry and making huge profits from it, putting public health and legitimate businesses at risk across the nation. That's why this bill is so important.
The Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026 strengthens the Commonwealth's enforcement powers and makes it harder for criminals to profit from illegal tobacco. For communities like mine across the Bellarine, Surf Coast and the broader Geelong region, this is about protecting young people and also backing local businesses and making sure organised crime cannot operate above the law.
The bill would create new offences relating to importing, possessing and conveying illicit tobacco. These offences will give authorities better ways to address unlawful activity across the supply chain. The bill also recognises that investigators need to be able to act on the evidence available to them because in so many instances there are practical indicators that can raise reasonable suspicion that tobacco is being sold unlawfully.
These include products with non-compliant packaging, tobacco concealed to avoid detection, missing import documentation and tobacco being sold for less than the excise and the GST that would ordinarily apply. As part of this bill price alone will not establish every offence and the circumstances of each case will matter, but, where tobacco is being sold at a price that could not cover costs, authorities should be able to ask where it came from and whether the law has been broken.
This is a pragmatic, practical approach to enforcement. It recognises the way illicit tobacco is sold and distributed, rather than leaving officers to rely on evidence that can be difficult to obtain in a complex investigation. The legislation also strengthens consequences for serious offending and makes absolutely clear that companies can be held accountable where the relevant offences apply.
A business structure should not provide protection for people who use it to facilitate illegal trade. That's a simple principle, but it's so important for local retailers. Business owners who follow the rules and run a legitimate business should not be undercut by a competitor selling illicit tobacco at a price that lawful businesses cannot match.
Those operators are not competing on a level playing field. They are avoiding obligations that legitimate businesses meet every day, and they can use the resulting profits to expand their operations. That is unfair to local businesses and damaging to the broader community.
Stronger enforcement will not solve every problem facing small retailers, but it is an important part of ensuring that the law applies equally. The bill also addresses tobacco products for which customs duty can be refunded. Under the existing arrangements, tobacco intended for export or sale to eligible travellers can be subject to duty refund provisions.
The legislation strengthens the controls that apply to these products, keeping them under customs control until they are exported or sold to eligible travellers. The aim is to prevent tobacco that is entering these arrangements from being diverted into the domestic illicit market. This is another example of closing a gap that can be exploited by people who are looking for ways around the law.
Customs controls need to follow the product until it reaches its lawful destination. There are also changes to the way illicit tobacco is seized and disposed of. Australian Border Force officers deal with large quantities of seized goods.
The administrative processes involved can consume considerable time, particularly when procedural requirements delay the disposal of products that have already been taken out of circulation. The bill streamlines those arrangements and reduces unnecessary administrative burdens. Officers need to be able to carry out their work efficiently while maintaining appropriate safeguards and accountability.
The legislation also strengthens requirements for customs brokers, depots and warehouses. These businesses have important responsibilities in the movement and storage of goods entering Australia. Their operations must not be used to facilitate illicit tobacco imports.
The new requirements are intended to make it harder for unlawful activity to pass through legitimate commercial infrastructure without being challenged. Businesses holding relevant licences will need to meet stronger obligations and take reasonable steps to prevent their operations from being used in connection with illicit tobacco. This is not about placing unreasonable burdens on businesses that do the right thing.
It is about making sure that those operating in the customs supply chain understand their responsibilities and cannot ignore serious unlawful activity taking place through their facilities. Strong enforcement also means following the money. Seizing tobacco and prosecuting an offender are important, but neither necessarily improves the financial incentive to commit the crime again.
Organised criminal groups can treat a seizure or a fine as a cost of doing business if they are able to retain the proceeds. The Australian Federal Police has an important role in identifying and confiscating assets linked to criminal activity. It has confiscated more than $47 million in assets associated with illicit tobacco offending.
That work demonstrates why the financial side of enforcement matters. This bill strengthens aspects of the proceeds of crime framework, including provisions dealing with pecuniary penalty orders, production orders and unexplained wealth. Pecuniary penalty orders allow courts to require offenders to pay an amount reflecting the benefits they have obtained from criminal conduct.
The bill clarifies how those benefits are assessed and how restrained property can be used to satisfy a penalty order. The legislation also makes changes to production orders which help investigators obtain information relevant to their inquiries. Better access to information can be particularly important when financial dealings and criminal networks extend across jurisdictions.
Changes to the unexplained-wealth framework will help clarify how a person's wealth is assessed, including property the person owns or controls. The purpose of these reforms is to ensure that authorities have workable legal tools to identify criminal wealth and recover the proceeds of offending. Someone who has made money through an illicit tobacco operation should not be able to keep that wealth simply because it has been moved, concealed or held through complicated arrangements.
Nor should a criminal penalty be treated as a bill that can be paid while the rest of the profit stays in the bank. For the people running these operations, removing the financial reward can be just as important as removing the products from sale. Of course, Commonwealth legislation alone will not end the illicit tobacco trade.
Products must be stopped at the border. But distribution networks also need to be disrupted and illegal retailers dealt with. That requires cooperation between the Commonwealth, states and territories.
State and territory authorities have an important role in inspecting premises, enforcing retail laws and closing businesses engaged in illegal activity. More than 1,000 illicit tobacco stores have been closed by state and territory authorities. That is significant work, but it also shows how much enforcement is needed beyond the border.
In Victoria, effective action against illegal tobacco retailers will remain important. The problem cannot be solved by making seizures at the port if the same products can still find their way into shops and onto the streets. Agencies need to share information, coordinate investigations and act on evidence wherever it leads.
All of this is shown by the Australian Institute of Health and Welfare, which reports that daily smoking among Australian adults had fallen to 5.8 per cent in 2025. This shows that our approach is working. It is a considerable improvement on the rates Australians experienced in previous decades.
We should recognise that achievement while being realistic about the work still required. Tobacco continues to cause serious illness and premature death. Nicotine addiction remains a concern, particularly for young people, and the availability of illegal products makes the job of protecting public health harder.
Australia's tobacco control measures have been built over many years. They have relied on public education, regulation, taxation and support for people who want to quit. Enforcement against the illicit market is another part of that effort.
Despite this, the opposition has pointed to the fall in tobacco excise revenue as evidence that the government's approach has failed. But fewer people smoking means less tobacco being sold legally, and that means less tobacco excise being collected. The purpose of tobacco policy is not to maximise the amount of tax collected from smokers.
The purpose is to reduce smoking rates and the enormous health burden that comes with them. That's why I'm so concerned about the proposals to make tobacco significantly cheaper. We need to deal with the illicit market by cutting tobacco excise, but cutting tobacco excise doesn't deal with the criminal networks behind that market.
That requires enforcement. It requires governments working together to close businesses that are selling illicit tobacco. We also need to keep the focus on young people.
Australia has made enormous progress in reducing smoking rates, and we must ensure the next generation does not become addicted to nicotine. That means continuing the public health measures that have brought smoking rates down, tackling illicit products being sold to our communities and strengthening the mechanisms to catch those who are doing the wrong thing.
The most effective response is to disrupt the supply chain and ensure that those profiting from criminal activity face real consequences. Since 2024, the Albanese government has committed more than $365 million to tackling illicit tobacco and nicotine products. This bill adds to that work by addressing specific weaknesses in the customs and proceeds of crime frameworks.
There will still be challenges. Criminal operators will continue to look for new ways to move products and hide their involvement. Enforcement agencies will need to keep adapting and governments will need to maintain cooperation if they are to make lasting progress.
But the answer is not to accept the illicit trade as inevitable. It is to give authorities the power they need, apply those powers effectively and make sure the consequences reach the people responsible. The legislation before us is a practical part of that response.
It strengthens offences. It improves customs controls over tobacco products, streamlines seizure and disposal processes, places clearer obligations on relevant licence holders and improves the ability to recover criminal proceeds. For the Bellarine and Surf Coast and my broader region, I want to see local businesses able to operate fairly.
I want young people protected from the harms of tobacco and nicotine. Criminal operators must be given no opportunity to make money at the community's expense. We have made real progress in reducing smoking in Australia and improving health outcomes across the nation.
Protecting that progress requires us to deal with the illicit market as well as continue the great public health work we are doing. It has served us well, and I support this bill. Debate adjourned.