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

Dr SCAMPS (Mackellar) (13:14): I rise to speak on the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026. This bill is intended to improve Australia's customs enforcement framework for illicit tobacco and make it easier for law enforcement agencies to disrupt the increasingly sophisticated criminal networks operating in this market.

The bill creates new offences relating to the unlawful importation, possession and conveyance of tobacco. Importantly, it moves away from an enforcement model that requires prosecutors to prove an intention to defraud and instead introduces objective, observable indicators that can establish reasonable suspicion. I thank the Assistant Minister for Citizenship, Customs and Multicultural Affairs for his engagement with me and with Cancer Council Australia on a previous customs related amendment that I moved to the Combatting Illicit Tobacco Bill 2026.

This amendment would have designated tobacco manufacturing equipment as a prohibited import under the Customs (Prohibited Imports) Regulations 1956. It would have made it an offence to import that equipment unless written permission had been granted by the relevant minister or authorised person, providing a mechanism to intercept equipment intended for illegal tobacco production before it became operational in Australia.

While we did not reach an agreement on that amendment, controls on tobacco manufacturing equipment remain an area where Cancer Council Australia does see merit, and I look forward to revisiting this with the minister in the future. While the bill we are debating today does address real gaps in the current enforcement system, it comes at a time when the evidence tells us very clearly that Australia still has a long way to go in combating illicit tobacco.

Estimates published by the Australian Bureau of Statistics in June 2026, just a few months ago, suggest that around 80 per cent of all nicotine consumed in Australia in 2025 came from illicit sources. This trend is particularly concerning among younger Australians, with the Cancer Council's young adults study, conducted in early 2026, reporting an illicit purchase rate of 79 per cent among surveyed young adults aged 18 to 24.

Together, these figures highlight the extent to which illicit tobacco and nicotine products have become entrenched in the Australian market. This is all happening despite overall smoking rates continuing to fall. Australia's long-term tobacco control policies have contributed to extraordinarily important reductions in smoking, but the illicit share of the remaining market has grown dramatically.

The Illicit Tobacco and E-cigarette Commissioner, the ITEC Commissioner, estimates that illicit tobacco accounted for between 50 and 60 per cent of the tobacco market in 2024-25. It's also estimated that criminal networks derived between $4.1 billion and $6.9 billion in net profit from illicit tobacco in that financial year alone. The Australian Transaction Reports and Analysis Centre, AUSTRAC, describes illicit tobacco as a 'serious organised financial crime problem', generating billions in criminal proceeds that are laundered through the Australian financial system.

Its 2026 assessment says that the market is underpinned by transnational crime groups and outlaw motorcycle gangs, with competition for the market associated with widespread arson attacks, multiple homicides and other violent assaults. The ITEC Commissioner has said that criminal enterprises have streamlined their efforts—now, Australia, we must step up ours.

The health implications of tobacco use must also remain front and centre. Tobacco smoking remains our largest preventable cause of cancer and contributes to heart and lung disease and premature death. Illicit products bring additional public health concerns because they frequently sit outside Australia's regulatory requirements.

The AIHW notes that illicit products may contain higher levels of nicotine, potentially increasing addictiveness. But perhaps the most profound public health effect of the illicit market is that it makes a deadly, addictive product cheaper and easier to obtain. The latest national survey found that 50 per cent of people buying branded illicit tobacco obtained it from a tobacconist.

Across the Northern Beaches, constituents are sick to death of watching tobacco shops appear in neighbourhood shopping strips, near schools and near bus stops—in places where children and teenagers walk every day. Residents from all over the Northern Beaches have contacted me about these shops. They have described tobacconists opening within walking distance of primary schools and displaying lollies, American candy and products that are attractive to children alongside tobacco and vaping products.

They are selling illegal products in broad daylight, seemingly with impunity. One of the key challenges we still face is enforcement of the retail environments in which these products are sold directly to our communities. Australia needs a comprehensive approach grounded in national consistency in enforcement reform.

This would include: a nationally consistent licensing regime covering the entire tobacco supply chain; a unified national enforcement framework with minimum penalties and powers; a permanent national illicit tobacco and vape intelligence capability; mandatory national reporting of enforcement activity; and substantially greater resourcing of enforcement bodies.

The inconsistency of licensing rules between states and territories creates opportunities to exploit the weakest parts of the regulatory system. Queensland's multipronged approach to illicit tobacco is leading the way in reducing consumer use of these products. That state has the largest enforcement team per capita in Australia: strong penalties for retailers found selling illegal tobacco or vaping products and free nicotine replacement therapy and telephone counselling via Quitline for eligible groups.

Other states and territories are still playing catch-up on strengthening laws and boosting enforcement workforces. Discrepancies remain between jurisdictions in holding landlords accountable for illegal sales. In addition to an increase in legal sales in Queensland, calls to Queensland's Quitline have doubled following their recent enforcement campaign.

The recent Senate inquiry into Australia's illegal tobacco crisis recommended that the Commonwealth work through National Cabinet towards a nationally harmonised illicit tobacco enforcement framework, encompassing licensing obligations, inspection powers, penalties, intelligence sharing, supply chain integrity and retail compliance. The Australian Medical Association has similarly called for: nationally consistent retail licensing; national data capability across health, police, border, revenue and corporate regulators; stronger closure and licence-cancellation powers; and legislation designed to close loopholes rather than create the next one.

And consider this: there are approximately 9,500 supermarkets across our country, but Australia now has around 40,000 retailers selling tobacco, despite the fact that only a minority of Australians smoke. This illustrates the scale of the problem we are facing and that we need to do more. Dramatically reducing tobacco excise, which has been suggested by some here, is an ill-considered kneejerk reaction and is not the answer.

We must listen to our peak health bodies, who have the expertise in this area. Again, the Australian Medical Association says that tobacco taxation has contributed materially to declining smoking rates and warns that lower prices are particularly likely to affect young people and people who are experiencing socioeconomic disadvantage. The AMA instead points to border enforcement, supply chain controls, retailer licensing, intelligence sharing and targeted criminal enforcement.

The Public Health Association of Australia likewise says there is no evidence that a reduction in tobacco duties would eliminate Australia's illicit market. The Public Health Association warns that, if tobacco companies retain part of the tax reduction, consumers may see little benefit at all, and, if prices do fall, cheaper legal cigarettes could increase tobacco consumption without dismantling the criminal supply chains already operating throughout Australia.

The Canadian experience deserves particular attention. In 1994, the Canadian federal government and several provinces responded to a serious contraband problem by dramatically reducing tobacco taxes. Legal cigarette prices fell by roughly half in parts of Canada, but the illicit supply networks did not disappear.

In the 11 years before the rollback, Canadian per capita cigarette consumption had fallen by 42.3 per cent. In the five years afterwards, it fell by just 3.2 per cent. Added to this, government lost almost Can$5 billion in tobacco tax revenue over that five years.

The provinces that retained higher taxes experienced a much larger fall in consumption than those that cut them. Smoking rates among young people and young adults also increased following the roll-back. Provinces that cut taxes experienced more smoking initiation and lower quitting rates than provinces that maintained higher prices.

Canada ultimately moved back towards stronger taxation alongside coordinated enforcement, licensing, supply chain controls and measures to disrupt contraband. Reducing the legal price of cigarettes is not the silver bullet. If we are to make headway into addressing the problem of illicit tobacco in this country, it means a number of things.

It means dismantling the illicit tobacco supply chain. It means stronger, nationally consistent licensing and consequences for people who facilitate this trade. It means every state and territory having consistent legislation, specialist teams, intelligence and resources to act.

It means national consistency in shutting down shops selling illicit products. It means national data and intelligence-sharing. At the same time, it means reducing demand, supporting people to quit, investing in effective public awareness campaigns and preventing the next generation from becoming addicted in the first place.

This bill strengthens important parts of the Commonwealth enforcement architecture, but no Commonwealth customs bill on its own can solve what we are facing. Australia has made enormous progress in reducing smoking, and the rise of illicit tobacco should not cause us to abandon that progress. It should cause governments at every level to become more coordinated, more sophisticated and more determined in the way that we protect it and the health of all Australians.

I commend the bill to the House.