Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026
Mr LLEW O'BRIEN (Wide Bay) (16:24): The Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026 is designed to enable Commonwealth law enforcement to crack down on Australia's very serious problem of the growing illicit tobacco trade and the organised crime groups behind it, and to strengthen the government's ability to seize criminal profits and unexplained wealth.
These are worthwhile objectives that address the supply side to reduce opportunities for illicit tobacco to enter the black market. But the government still hasn't tackled the demand side of illicit tobacco, and it fails to address the primary reason that the illegal tobacco trade is flourishing. That is because government policy, in trying to deter people from smoking through excessive tobacco excise, is driving law-abiding smokers to the illicit market because they can no longer afford legal, regulated tobacco products.
In 2017, illicit tobacco made up around 10 per cent of consumption. By 2025, that figure had exploded to about 80 per cent. Four out of every five cigarettes consumed in Australia are now estimated to come from the black market.
Smokers in Australia have turned to illicit nicotine products because the price of legal tobacco has almost tripled, driven by relentless excise increases. Today, a legal packet of cigarettes costs around 50 bucks, with more than $30 of that price made up in tax. Meanwhile, illicit tobacco sells for as little as $15 to $20 a packet.
These excise increases, made by successive governments, have handed a multibillion dollar market to organised crime. Labor's vape policy has been just as disastrous. Despite restrictions and bans, illegal vapes are available in shops across Australia.
The government itself admits that almost 96 per cent of e-cigarettes sold in Australia are illegal, in a black market worth around $1.6 billion. The profits are staggering. Criminal gangs are making between $4.1 billion and $6.9 billion from illicit tobacco alone.
That is truly astounding. That money is funding drug-trafficking scams, money laundering, extortion and violence, and the illicit tobacco trade has led to arson in Wide Bay, with a tobacco shop on the corner of Hilton Terrace and Earl Street at Tewantin set alight on Good Friday in 2023. A few days later, a tobacco and vape shop in Mary Street in Gympie was firebombed.
In Victoria, there have been almost 200 tobacco related firebombings and six homicides linked to this trade. What was a health issue has also become a full-blown law and order crisis. And, whilst criminal gangs get richer, taxpayers are paying the price.
The government's own illicit tobacco and e-cigarette commissioner estimates that illicit tobacco represents 50 to 60 per cent of tobacco sold in Australia in 2024-25, with an estimated market value between $4.1 billion and $6.9 billion. Estimated excise and duty evasion was between $7.7 billion and $11.8 billion. The illicit market is costing Australian taxpayers billions that could be funding prevention programs, hospitals, schools and essential services.
It's instead ending up in the pockets of organised crime. The Labor government has no intention of tackling the root cause of the problem. When asked repeatedly whether he would rule out reducing tobacco excise, the Prime Minister has refused to give a straight answer.
The coalition has a plan that will smash the organised crime business model. You do not defeat organised crime by protecting its profits; you destroy the profits. We will cut tobacco excise by 80 per cent, reducing the excise component on a packet of cigarettes from around $30 to roughly $6.
We will also replace Labor's failed pharmacy-only vape model and end the ban on nicotine pouches by establishing a regulated, legal market for adults. If adults are already purchasing these products, they should buy them from legitimate Australian businesses operating under Australian laws, not from criminal networks. But this is not just about tax; it's also about enforcement.
The coalition will invest $200 million in a nationwide law enforcement surge to shut down illegal tobacco shops, stop illicit shipments at the border, seize criminal assets and target the gang bosses behind these operations. We will back that with a $60 million education campaign exposing the criminal links behind illicit tobacco and vapes. This is about taking billions of dollars out of the hands of organised crime and returning those dollars to the legitimate economy.
Most importantly, it is about restoring common sense, because Australians deserve policies that improve health and economic outcomes. They deserve streets free from gang violence, and they deserve a government that is prepared to admit when a policy has failed and is prepared to take action to fix it. I support the new enforcement powers to stifle supply of illicit tobacco.
But the government must also take action to divert demand away from the illicit tobacco market and towards the legal retail market by taking action on tobacco excise.