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Feeding the Illicit Trade

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Cheap illicit tobacco keeps smoking rates alive – and the Health Department confirmed it.

They admitted that illicit cigarettes are cheaper because they avoid excise, and that cheap cigarettes encourage people to smoke.

When criminals flood the market with excise-free cigarettes, people keep smoking. It’s that simple.

Yet the government refuses to reduce the tobacco excise, clinging to the claim that high prices are the key to lowering smoking rates.

Make that make sense.

Transcript

CHAIR: Thank you very much. Senator Roberts.  

Senator ROBERTS: Thank you for appearing today. We are all agreed that smoking is very, very harmful to human health. Let’s put that aside. We are not agreed that the low price that people face when it comes to buying tobacco illicitly is overwhelmingly attractive to people. We know of policemen and policewomen and public servants who are buying illicit tobacco. The barriers to entry are very small. How much do you allocate to the quit smoking campaign? Isn’t it true that in recent years the decline in smoking rates has stopped and it’s been flat in Australia? It’s continuing to decline in other countries but it is flat in Australia.  

Ms Clancy: Thank you for your question, Senator. I will take the second part first, if I may, and then come back to the first part. Smoking prevalence has trended downwards over three decades, with some occasional flattening or plateaus as we go. Recent studies have shown that this decline continues. Our highest quality data is brought out every three years. At the moment, our most recent is 2022 data. One in 10 adults, 10.6 per cent, were current daily smokers. That is a steady decline from 22.4 per cent in 2001. More recent national representative estimates support this trend. In 2022-23, 8.3 per cent of people aged 14 and over smoked daily. In 2023, approximately one in 10, 10.8 per cent of representative adults, were current daily smokers in the HILDA study, which is a slightly different cut or set of data. The next high-quality data release will be at the end of this year, which will look at 2025 rates. We are very much anticipating those rates and will use those to tweak our policy settings as necessary. There are also a number of other data sources we use in the intervening years that tend to show that we’re still on a downward trajectory, although we are concerned. Our job is to be concerned about smoking rates.  

Senator ROBERTS: Thank you. I agree with you that the data shows that, over decades, smoking rates did decline. But the data I’ve seen shows a graph that clearly shows that in the last few years it has been flat, whereas in other countries it has continued declining. How much is budgeted for the quit smoking campaign? How much has been paid?  

Ms Brown: I don’t have the expenditure amounts here. The government has committed, since 2023-24, $78.7 million over a four-year period. That’s invested in the Give up for Good smoking, vaping and tobacco public health campaigns. That’s at the Commonwealth level. As I mentioned in relation to other measures, there are also campaigns implemented through the states and territories to varying levels.  

Senator ROBERTS: Is the total spending around about half a billion dollars over four years, the total projected spending? 

Ms Brown: On the campaign, no, Senator.  

Senator ROBERTS: On all the campaigns.  

Ms Brown: I am not sure that the Commonwealth has the total figure of investment in all campaigns across all states and territories. The federal government has committed $78.7 million over four years, since 2023-24.  

Senator ROBERTS: Do you agree that the low price of cigarettes through the illicit tobacco industry makes it attractive to smoke?  

Ms Clancy: We know that price is a determinant of whether people smoke and how much they smoke.  

Senator ROBERTS: Is the driver of the cheap price of illicit tobacco the fact that it is illicit tobacco and is not paying excess?  

Ms Clancy: Sorry; can you repeat the question?  

Senator ROBERTS: Is the driver of low priced illicit tobacco the fact that it is escaping paying any excise, so we have very low priced cigarettes illicitly?  

Ms Clancy: Yes.  

Senator ROBERTS: Thank you.  

Ms Clancy: Criminals are bringing tobacco into the country without paying the excise they should pay and therefore their products are cheaper.  

Senator ROBERTS: We have got, as Senator Colbeck tried to establish, a low-price cigarette/tobacco industry; it’s illicit but it’s still there.  

Ms Clancy: Yes, illicit tobacco is available and it is evading the excise.  

Senator ROBERTS: It makes it very attractive to smoke because the price is low. This is an issue for the department of health in terms of preventing people smoking, because it is encouraging people to smoke because of illicit tobacco.  

Ms Clancy: Cheap cigarettes do encourage people to smoke. We, along with all of our partner agencies in the Commonwealth and the states and territories, are looking at a range of measures—some of which you’ve heard about this morning and in previous hearings—to tackle the illicit market and reduce their ability to sell in this country.  

Senator ROBERTS: Thank you. These questions are for the ATO. The revenue decrease has been around about three-quarters of the revenue it was a few years ago, which is a big impact on the ATO revenue and a big impact on the people. Could you walk us all through the process of how the excise rate is set and particularly what is the minister’s role? Do you consult the department of health?  

Ms Hawkins: Thank you for the question. As I mentioned earlier, the excise rate is legislated through government. A change would be a policy issue for Treasury. That is set and then the ATO’s role is to administer it. It’s important to recognise, though, that it’s been illegal to grow or manufacture tobacco in Australia without a licence. There are no current licences. What that means is that all tobacco sold in Australia that’s legal is imported. As such, there is actually no excise collected on domestic tobacco. The Department of Home Affairs is responsible for the administration of the Customs Act and the Customs Tariff Act, from which customs duty is applied to imported tobacco at rates which are equivalent to excise duty. It is a policy issue. It is legislated through government and it is not a rate that is determined by the ATO.  

Senator ROBERTS: Thank you for that clarification. That’s understood. Could you tell me what consultation is asked of the ATO? Do you provide advice in that process? What is your role in the process of developing the excise rate? You don’t have responsibility for it. I accept that’s the government and the Treasury. But how do you get involved in that? Do you get involved in it? Are you concerned about losing $12 billion in tax revenue?  

Ms Hawkins: The ATO are involved in that discussion, when it comes to Treasury, in providing any input that they seek from us, but we do not have direct control over what that rate is set at. We are always open to providing information, as requested, and being part of discussions where we can provide intelligence or information that would be useful in the process.  

Senator ROBERTS: What advice have you given over the last four years?  

Ms Hawkins: There was a question which I took on notice previously which was asking about whether the ATO was in direct discussions with regard to where the excise rate landed. I said I would take that on notice because I am not privy to, at that point in time, exactly what discussion we would have contributed to. I am more than happy to take that on notice. 

Senator ROBERTS: Thank you. Could you specifically mention in the answer on notice the advice that the ATO has given to the government. I understand that the government sets the excise rate. Could you give us the advice you’ve given to the government?  

Ms Hawkins: I am happy to take that on notice.  

Senator ROBERTS: Thank you. 

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The Price of Compassion?

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A $68.5 million budget measure (allocated over three years) intends to provide HIV treatment to people who are not eligible for Medicare.

Why are Australian taxpayers funding treatment for non-citizens when we are in the middle of a cost-of-living crisis?

Officials declined to comment on this, stating the policy and funding mechanism were developed strictly by the Department of Health.

I then shifted the discussion to the Significant Cost Threshold (SCT) for visa health requirements, which was raised from $51,000 to $86,000 in July 2024.

How this works is that if a medical officer of the Commonwealth estimates that an applicant’s health condition (such as HIV, a physical disability, or other chronic illnesses) will cost the Australian healthcare system more than $86,000, they fail the health requirement, and the visa is refused (unless a specific waiver is applied).

I asked whether this framework allows Australian citizens a “perfect way” to bring in family members with known health conditions to receive immediate taxpayer-funded care, provided the projected costs fall just under the $86,000 limit.

The Department repeatedly stated they could not answer the “family member” line of questioning.

They reiterated that immigration rules and the $86,000 threshold are applied uniformly to all applicants, independent of separate Department of Health funding measures.

Data on exactly how many people reside in Australia under the updated threshold was taken on notice.

Transcript

Senator ROBERTS: I’ll get back to the topic I started on this morning. It’s an immigration issue, not a health issue.  

Ms Foster: We’ll just get our chief medical officer up to the table.  

Mr Willard: I can speak broadly about the criteria. There’s a health criteria that applies to all visas. It looks at questions of health protection for Australians. It looks at costs to the health service, and it looks at the access to health treatment for Australians. It’s applied across all our visa types. It’s applied on a risk management basis. It looks at where somebody is coming from, and the sorts of health risks that might be presented. It looks at what the person might be doing in Australia, whether they’re going to go to a medical facility, whether they’re staying for a short time or whether they’re looking for a permanent visa. All of these factors are taken into consideration when the health criteria are assessed. Dr Grant Pegg, our chief medical officer, oversees the system that undertakes medicals. I think there are very large numbers of medicals undertaken each year.  

Senator ROBERTS: Can you tell me what the three basic criteria are again?  

Mr Willard: It’s health protection for Australians. It’s cost to the health system, and it’s access to Australian health services.  

Senator ROBERTS: This is primarily with No. 2—cost. The 2026-27 federal budget included $68.5 million, or $69 million, over three years to provide HIV treatment and pre-exposure prophylaxis, which is medication that stops transmission to people in Australia who are not eligible for Medicare. They’re not eligible for Medicare, but we are paying for their treatment anyway so they don’t infect Australians with their HIV. Is that the logic behind this allocation? I know it wasn’t allocated by you.  

Mr Willard: Because it is a measure from the department of health, I really can’t talk to the logic behind the measure.  

Senator ROBERTS: Why should Australians allow entry of people with HIV and then pay for their treatment, especially when Australia is under pressure economically and individual Australians are under pressure cost-of-living-wise?  

Ms Foster: Mr Willard is unable to comment, because the measure was developed by the department of health.  

CHAIR: Senator Roberts, I think that the right place for this is at the community affairs estimates committee next week.  

Senator ROBERTS: But I want to know. Many Australians are calling for noncitizens who have HIV or AIDS to be deported instead of paying for their medical care. We’re letting people in here with a known liability of cost to Australians. What is your response to that criticism of this budget allocation—the criticism, not the budget allocation itself? People are concerned that we’re letting in people who have a disease, and now we’re paying for their treatment.  

CHAIR: Senator Roberts, I think that is asking the officials at the table for their opinion on a matter that is not within the purview of the questions allowed to be asked at Senate estimates, particularly as it relates to the budget.  

Senator ROBERTS: Okay. I’ll move on to the next one. Australia raised the significant cost threshold for visa health requirements in July 2024, from $51,000 to $86,000. For those following this thread, I’ll give a quick explanation. The significant cost threshold determines whether a health condition, such as HIV/AIDS or physical disability, is likely to impose significant costs on Australia’s health and community services. Exceeding it typically means failing the health requirements for a visa, although health waivers are available for some visa subclasses, including partner and humanitarian. A person who comes in under your new, higher cap can access medical care and medications for free or for a small co-payment depending upon the state in which they live. How many people are here under this arrangement across all health conditions?  

Mr Pegg: I don’t have the data in that detail, so I’d have to take that on notice.  

Senator ROBERTS: If you could. Thank you. This is my last question on this topic, Chair.  Isn’t this a perfect way of getting a family member into Australia and having their care paid for straightaway? The other part of the question is that the numbers are increasing, which means the Australian taxpayer is paying more.  

Mr Pegg: Perhaps, if I can just offer, that’s the purpose of the operation of the significant cost threshold—to try and avoid significant cost to the Australian healthcare system. That’s why it exists.  

Senator ROBERTS: Could you explain that more?  

Mr Pegg: When someone is identified as having a health condition through the immigration medical examination as part of their visa process, they’re then costed by a medical officer of the Commonwealth who looks at that, on a hypothetical basis for someone with the same condition—the nature of condition and severity— to determine what their costs might be to the Australian healthcare system. That could be lab tests, X-rays, visits to the doctor—those sorts of things. There’s a comprehensive process that is undertaken to do that. When that’s undertaken, a figure is determined, and then, if that figure exceeds the number that you talked about, $86,000, that is considered to be ‘not meeting the health requirement’.  

Senator ROBERTS: The first part of my question was: isn’t this a perfect way of getting a family member into Australia and having their care paid for straightaway?  

Ms Sharp: Are you talking about a situation where the health requirement is waived? I guess what we’re saying is that the general rule is that if you fail the health requirement—as in your healthcare costs are coming in above $86,000—you will not be granted the visa; you won’t come to Australia.  

Senator ROBERTS: That’s initial assessment. Forget about the—well, the payment matters, but I’m not interested in the total amount. What I want to know is: isn’t this a perfect way of getting a family member into the country and having their health care paid for straightaway? That’s basically what it is. The government’s allocated $69 million over three years to provide treatment and pre-exposure prophylactics just for people with HIV. They’re coming in here with a known condition, and we pay for the treatment.  

CHAIR: Was there a question, Senator Roberts?  

Senator ROBERTS: Isn’t this a perfect way of getting a family member into Australia and having their health care paid for?  

CHAIR: This is a question that the officials at the table have responded to. It sounds like—  

Senator ROBERTS: Yes or no?  

CHAIR: you’re not using the same words to describe the same thing. I think the officials at the table have spoken about what their role is. I think you’re talking about it in a different way, but it’s not necessarily what the officials are—  

Senator ROBERTS: It’s about immigration, though.  

CHAIR: I think they’ve responded to your question, which is that there’s a program that exists to essentially weed out, for want of a better term, people who have costs higher than the amount the official said.  

Senator ROBERTS: No. If they’re projected to have a significant cost threshold higher than $86,000, then I understand, but, if it’s less than $86,000, isn’t this a perfect way of getting a family member into Australia and having their care paid for straightaway?  

Ms Foster: Senator, I don’t understand the link between the answers we’ve been giving and the family member issue. 

Senator ROBERTS: Yes or no?  

Ms Foster: That’s why we’re struggling to answer you.  

Senator ROBERTS: Yes or no?  

Ms Foster: We don’t understand the relation of the question to the information we’ve given, and, in a sense, it’s asking us for an opinion: ‘Is this a perfect way to do something?’ That’s not our role. Our role is to provide you with information about how the program operates.  

Senator ROBERTS: Okay, I’ll make it easier. Is it a way of getting a family member into Australia and having their care paid for straightaway?  

Ms Sharp: We might finish it where we began which is I think you need to direct this question to the department of health to ask them for the policy reasoning behind the measure—which group of people they were aiming to support.  

Ms Foster: We apply our immigration rules irrespective of whether or not the government has funded a measure such as this through the department.  

Senator ROBERTS: One of your immigration rules covers a significant cost threshold maximising at $86,000. If you assess an application to migrate here and it’s less than $86,000 then they are welcomed in. Is it a way of getting a family member in here?  

Ms Foster: We don’t understand the relationship between what we’ve told you and the question about a family. I can’t say that any more clearly. I’m not trying to be unhelpful. We just don’t understand the question.  

Senator ROBERTS: Could a citizen of Australia use this to bring in someone who is going to cost Australia money and health care immediately?  

Ms Foster: The rule would apply irrespective. We would apply that rule as part of our visa consideration to any visa applicant.  

Senator ROBERTS: I understand that, but this is a way for a citizen of Australia to bring in a family member and have their health care paid for by the taxpayer?  

Ms Foster: I’m sorry, but we have nothing further to add.  

Senator ROBERTS: Thank you. 

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Tracking Vaccine Dollars

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In this session with the Department of Health, I inquired about the total cost of our childhood vaccination program. While I didn’t receive an immediate response, the question was taken on notice.

The TGA also offered to provide a cost-benefit analysis of these vaccines. Frankly, I’m not expecting an honest reply. I will wait and see.

If they fail to deliver, I’ll pursue it at the next estimates. 

— Senate Estimates | February 2026

Transcript

Senator ROBERTS: How much do these vaccines cost the taxpayers every year: rotavirus, hep B and meningococcal ACWY?  

Dr Peatt: I don’t have the individual breakdowns of those vaccines, but I can tell you that, in 2024-25, the National Immunisation Program, which includes a raft of supporting activities that—  

Senator ROBERTS: Is that childhood vaccines?  

Dr Peatt: No, this is the full complement of National Immunisation Program vaccines and also other activities like communications and data collection, for example. We spent $762.8 million.  

Senator ROBERTS: Is there any chance of getting a breakout for the children’s vaccines?  

Dr Peatt: It’ll be dependent on whether that information is commercial-in-confidence, but I’ll take that on notice and get back to you.  

Prof. Lawler: I’ve mentioned previously that the regulator is involved in balancing the risk and benefit. I would highlight that it would be difficult to talk to the cost of vaccines unless we also recognise that these vaccine-preventable diseases cause an incredible burden of mortality, morbidity and cost. In fact, in the US, RSV is the leading infectious cause of paediatric hospitalisation. So the risk benefit is as important as the cost.  

Senator ROBERTS: That’s a good point, Professor Lawler—perhaps if you could include in that the benefits.  

Dr Peatt: Certainly.  

Senator ROBERTS: Denmark, Sweden, Norway, France and the Netherlands do not recommend rotavirus vaccines except for high-risk cases. The varicella vaccine in Denmark, Sweden, Norway, Finland, France and Portugal is not recommended except for high-risk cases, and hepatitis B vaccine is not recommended for routine use in Denmark, Norway, Finland, UK—Britain—France, Germany or the Netherlands. Surely the default is don’t vaccinate unless the need has been established. Can you show me any of these countries where the absence of the vaccination has led to a higher incidence of child harm—not infection but harm—than vaccinated countries?  

Dr Peatt: As my colleague Professor Lawler has outlined, it’s very difficult to compare different countries. That’s really because there are different disease impacts in each different country, which can be related to the public health measures that are in place and also the different diseases that are circulating. We also have different funding mechanisms. In Australia, we’re very fortunate to be in a country that has a program that provides vaccines for free that are recommended by our advisers. We are very fortunate in that sense. So I’d say that it’s very difficult to compare one country to another in terms of how they fund or recommend their vaccines. But I will throw to Associate Professor Katherine Gibney, who may be able to give you an idea about some of the assessment and information that they take into account when they recommend vaccines in the Australian context.  

Prof. Gibney: Certainly, ATAGI takes the epidemiology and burden of disease of each of these vaccine-preventable diseases into account as we consider who to recommend the vaccines for. Establishing a clinical need isn’t just about infection—in fact, counting numbers of infections is not particularly interesting. It’s hospitalisations, severe disease and death that we’re particularly interested in or long-term consequences that could be prevented through vaccination. So that’s really what we look at. The first question is: is there a need for a vaccine? Then we look at the vaccine. Considering that TGA has already assessed the effectiveness and the safety, we further review that in the context of the clinical need. Further to that, when we provide advice to PBAC, they look not only at the clinical effectiveness and need but also at the cost-effectiveness. So ATAGI don’t assess that, but that is assessed for every vaccine before a recommendation is made that it be added to the NIP.  

Senator ROBERTS: Well, could you show me anywhere where the absence of the vaccination has led to more hospitalisations and more deaths?  

Prof. Gibney: Certainly we can take that on notice and provide that.  

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