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

Ms PRICE (Durack) (18:42): I rise to speak on the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026. The coalition will not oppose this legislation. We support sensible measures that give Commonwealth law enforcement and border agencies stronger tools to combat the illicit tobacco trade.

Many in this chamber would know that this is an issue that I have campaigned and spoken on many times, so I do welcome the action that is being taken. However, nobody should mistake this bill for a comprehensive solution to a crisis that has been allowed to grow under this government. Quite frankly, we are really just tinkering at the edges.

The bill strengthens the offence framework covering the unlawful importation, possession, movement and sale of illicit tobacco. It also improves the ability of authorities to establish whether tobacco is illicit, strengthens provisions targeting criminal proceeds and tightens oversight of customs depots and licensed warehouses. These are sensible measures.

They have the potential to make it harder for criminal operators to exploit weaknesses in our enforcement framework and profit from the illegal tobacco trade. But the question before this parliament is whether the government understands the scale of the problem and is prepared to address its underlying causes. The government's own Illicit Tobacco and E-cigarette Commissioner estimates that illicit tobacco accounted for between 50 and 60 per cent of tobacco sold in Australia in 2024-2025, with an estimated market value of between $4.1 billion and $6.9 billion.

Estimated excise and duty evasion reached between $7.7 billion and $11.8 billion. That's a lot of schools and hospitals. These are extraordinary figures.

They represent billions of dollars in economic activity outside the lawful market and billions in potential government revenue that is not being collected. This is not simply a question of lost revenue or people buying cheaper cigarettes under the counter. The Australian Criminal Intelligence Commission has described illicit tobacco as one of the most significant organised crime commodities in Australia.

This is not confined to our capital cities. It is being felt right across Australia, particularly in regional Western Australia. In Durack, the electorate that I represent, legitimate small businesses are paying the price.

I was told by a local business in Durack that, over a six-month period, it suffered a $200,000 loss in sales each week. That is an enormous hit for any small business to absorb. The impact goes well beyond the sales figures.

It affects staffing, customer foot traffic and the long-term viability of the business itself. These are businesses that employ local people, support families and contribute to the communities in which they operate. When their revenue is threatened, the consequences are felt throughout the local economy.

Lawful retailers have followed the rules. They have absorbed excise increases, updated their compliance practices and adhered to successive legislative changes. Yet they are being forced to compete against illicit operators selling cigarettes for a fraction of the price of legal products.

A legal packet of 20 cigarettes can cost more than $40, with around $31 of that $40 attributable to tobacco excise. Meanwhile, illicit cigarettes can be sold for as little as $10 to $15 a packet. Consider what this means for a legitimate retailer.

They have to pay their staff, cover their operating costs, comply with regulations and account for the taxes imposed on the products they sell. Their illegal competitors can undercut them dramatically by avoiding these obligations. Clearly, this is not a level playing field.

It is legitimate small businesses that are paying the price while organised criminals exploit the enormous gap between the legal and illegal markets. These mainly small businesses should not be left to fight this battle alone. The government has a responsibility to ensure that its policies do not leave law-abiding retailers exposed to criminal operators who have no intention of playing by the rules.

How has the Albanese government responded? It has introduced new offences, increased penalties and announced additional enforcement funding. Around $365 million in additional enforcement funding has been provided since 2023-24.

Yet the illicit market has continued to expand. The government's failure has been its refusal to adequately confront the policy settings that have helped this black market become so profitable. In the May 2023 budget, Labor imposed additional five per cent tobacco excise increases in each of the three successive years on top of existing twice-yearly indexation.

Those increases took effect in September 2023, September 2024 and September 2025. At the time, Treasurer Jim Chalmers and Health Minister Mark Butler forecast that the higher excise rates would raise an additional $3.3 billion over the forward estimates. Instead, the government has faced substantial tobacco revenue losses as tobacco consumers have shifted towards the illicit market.

This raises a fundamental question about the effectiveness of the government's approach. If repeated excise increases help widen the price gap between legal and illegal products and criminal operators can exploit that gap to make extraordinary profits, then simply increasing penalties will not be enough. Enforcement is, of course, essential.

Those who import, distribute and sell illegal tobacco must face consequences. But enforcement alone simply cannot resolve a problem when the financial incentives driving the trade remain in place. That is why the coalition has proposed a more comprehensive alternative.

Our policy approach combines stronger enforcement with reform of the tax and regulatory settings that have driven customers into the black market, alongside measures to reduce smoking and nicotine harm. Firstly, the coalition has proposed an 80 per cent reduction in tobacco excise, bringing the excise component of a standard packet of 20 cigarettes from around $30 to around $6, with the rate to be reviewed after two years.

The purpose is not to encourage smoking. It is to reduce the enormous price differential that has helped make Australia such a lucrative illicit tobacco market and to help shift customers away from organised crime and back towards a lawful, regulated market. Secondly, we have proposed a $200 million nationwide law enforcement blitz to support additional raids, arrests, seizures, investigations, shop closures and disruption at the border.

This would strengthen the operational focus across the Australian Border Force, Australian Federal Police, Australian Criminal Intelligence Commission and AUSTRAC. Thirdly, we would establish a legal, regulated and taxed adult market for nicotine vapes and nicotine pouches while maintaining protections for children. Fourthly, we would invest $60 million in a national public awareness and education campaign exposing the organised crime behind illicit tobacco and vapes while reinforcing the dangers of smoking.

These proposals are intended to work together. Stronger enforcement disrupts criminal networks. Reform of excise settings seeks to reduce the price advantage enjoyed by illegal operators.

Proper regulation provides a lawful framework for adult consumers, while education addresses demand and reinforces the health risks. That is the difference between simply responding to the symptoms of the problem and attempting to address the conditions that sustain it. We will move amendments to this bill to give legislative effect, where possible, to key elements of our policy, particularly the proposed excise reduction and the changes needed to establish a regulated adult market for nicotine vapes and pouches.

We must ensure that legitimate businesses are not unfairly caught up in any new arrangements. Concerns raised by customs brokers, freight representatives and other legitimate participants in the import supply chain deserve serious consideration. The objective, frankly, must be to disrupt criminal networks and prevent illicit tobacco from entering the market, not to make life unnecessarily difficult for lawful businesses.

Legitimate businesses, we all know, are not the enemy. They should be partners in disrupting illicit trade, not collateral damage from the government's response. The coalition will not stand in the way of sensible measures that give our law enforcement and border agencies better tools, but we cannot pretend that another set of enforcement amendments by themselves will resolve this crisis.

For businesses across regional Western Australia, this is not an abstract policy debate. It is about sales, jobs, livelihoods and whether legitimate local businesses can remain viable while competing against criminal operators. The government must acknowledge that its approach has not worked and be prepared to address the conditions that have allowed this illegal market to flourish.

The coalition offers the only comprehensive response: stronger enforcement, a major law enforcement surge, reform of tobacco excise settings, regulated alternatives for adults and a serious public education campaign. I do support this bill because enforcement agencies need effective powers to do their jobs, but, together with my coalition colleagues, I will continue to push for broader reforms that are necessary to undermine organised crime and restore a fairer operating environment for legitimate retailers.

I thank the House.