How government greed turned citizens into criminals …
As a government, if you wish to stop a destructive public behaviour – you punish it. This can be through fines, incarceration, or economic coercion (taxes).
If you want to turn a public behaviour into a permanent cash-cow that props up the Budget – you tax it carefully.
Somehow, uniparty greed has found a way to implement a ‘worst of both worlds’ policy surrounding tobacco and nicotine products which has turned smoking into a criminal underworld gold mine.
Between 2010 and 2026, tobacco excise has increased in the order of 490% and returned half the revenue in real terms. People didn’t quit. If anything, there is evidence of Australia’s 30-year trend of decreasing smoking being reversed.
After reaching its lowest level with Millennials, smoking has become ‘cool’ again for Gen Z and Gen Alpha. Excessive taxation has destroyed all the good public health work done in this field.
Economically, this is not only a concern for the estimated $11 billion lost excise tax for tobacco.
It also involves the loss of general revenue associated with the full cost of tobacco which previously paid wages, kept stores open, and was re-invested in local communities.
Tens of billions is now being given to the black market where it funds violent crime. This tears apart Australian suburbs and has a follow-on health and economic impact that lowers the quality of life for everyone, not only those directly involved in illegal tobacco. Everything from personal safety to house prices are being affected.
Police have warned that this money, often funneled into crypto, has also been used to expand drug trafficking, firearms offences, worker exploitations, and property damage through activities such as coordinated firebombing.
Worse, if that is possible, the quality and safety of illegal tobacco and vapes is a matter of acute concern. Australians are now exposed to a considerably more dangerous product that was once strictly regulated for safety. And it’s dirt cheap. We are hearing reports of those who gave up smoking previously falling back into the habit because it’s only $10… As for kids, how likely is it that illegal traders are checking them for ID?
Every single feature of the system has been undermined.
It’s clear to me that public health, citizen choice, and the Treasury are in conflict.
And yet they should share the goal of a profitable, legal, regulated industry.
Our current incoherent approach to nicotine products is often referred to as ‘thoroughly broken’ by those trying to petition the government to act.
As Professor Ron Borland said, ‘We are worse off in every conceivable way.’
Tobacco isn’t quite Australia’s re-run of American Prohibition. However, it does share similarities. As with Prohibition, the first question we have to answer is: Should smoking tobacco (and other nicotine products) be legal?
Like alcohol, if the answer is ‘yes’, then any civil penalty or pseudo ban (vaping doctor certificates), should be discontinued.
The second question is: Do we consider smoking tobacco a health risk that costs the state money and which the state actively seeks to discontinue in the long-term?
If ‘yes’ – and this is what we were told for decades through school programs and public advertising campaigns – then the government cannot expect to use taxation on tobacco as a permanent feature in their Budget spreadsheet.
As Clive Bates said, ‘If you push it too hard – the taxes are too regressive, too brutal – then people will defect from the system and they will move to illicit trade and illicit suppliers will come in because there are enormous economic gains to be made.’
The Treasurer must have a replacement plan for tobacco revenue that does not entail continuously raising excise to the point criminals take over distribution.
Experts have suggested alternatives, such as using public information campaigns and alternate products, to wean society off tobacco long-term rather than smacking Australians with tax hikes on an addiction exasperated by economic stress.
To that point, there may never come a time when tobacco and nicotine products exit public use.
As with alcohol, they require a legally and economically stable environment that protects as many people as possible, dissuades new users, and yet does not create opportunities for crime. The most effective measure so far involved banning smoking from bars, clubs, restaurants, and residential balconies which turned it into a social inconvenience rather than a cost burden.
And here sits the heart of the problem.
Tobacco was a huge part of society until earlier suspicions of health risks were confirmed in the 1960s. Community anger and government complicity in a public health catastrophe created a lot of guilt and revenge.
Those days are almost gone. People who choose to smoke today do so knowing the risks and great lengths have been taken to contain those risks to the individual smoker. And so the conversation becomes one about public health costs similar to obesity. How is it fair, it’s said, that the public pay for the self-inflicted health problems of smokers? The numbers strongly suggest that this was never the case. Revenue on tobacco is widely held to cover the health bill. Until now.
The situation today reveals a growing smoking population with a more dangerous product and decreased revenue that doesn’t cover the cost of health, let alone the huge cost of policing the illicit trade. Economic arguments for the current excise level do not hold up to reality.
Scroll through the crime releases…
Permanent surveillance and enforcement on hundreds of tobacco shops. Thousands of online ad takedown orders. Monitoring nation-wide criminal distribution networks. Raiding shipping deliveries. Prosecuting and incarcerating those responsible. Storing and destroying the product. It’s an open-ended revenue drain. And then you have to include illegal vapes, of which the market is in the billions.
If you’re wondering how much policing this costs, the answer is, ‘we don’t know’. No full-cost figure is published. It’s estimated in the hundreds of millions just for policing itself at a state and federal level, while the government admits to investing approximately $350 million specifically for the ‘fight against illicit tobacco and vapes’.
Whatever the number is, it came out of your pocket.
The Australian Federal Police reported that 2.66 billion illegal cigarettes, 510 tonnes of loose-leaf tobacco, and 7.5 million vapes have been seized since 2016. Operation PRINTWALL saw the Australian Border Force intercept 998.5 tonnes of tobacco.
Just this year 20 million illegal vapes worth $1 billion were seized by the Australian Border Force since 2024. The Therapeutic Goods Administration removed another 2.2 million valued at $110.5 million in the same period. They also reported a 300-fold increase in requests to remove online ads for illegal vaping products.
These are not victories so much as temperature readings offering a glimpse at a thriving market.
We must sit down and soberly confront the truth.
Government informs the public that tobacco costs the taxpayer money through the healthcare system, and yet it desperately wants Australians to keep buying tobacco and funding the Treasury. When vapes entered the market, and people began to organically switch products due to health, convenience, and cost – government all-but banned the product. A cynic may say this had little to do with health and a lot to do with an absence of lucrative excise tax. The Treasury saw tobacco revenue evaporating and instead of taking the public health victory – they panicked. This raises serious questions about the government’s motives and ability to solve the current problem.
As Professor Hall with the National Centre for Youth Substance Use Research said: ‘Australia has attempted to regulate vapes by making them prescription-only products, but it’s very hard to get a prescription because doctors won’t prescribe them and most pharmacies won’t stock them.’
What can be done?
Listening at length to experts in the industry, it seems clear that we require a carefully timed approach.
The legal market must be restored before law enforcement can come down on the black market.
To do this in the wrong order risks wasting money and encouraging citizens to protect a criminal underworld to facilitate their smoking habit. This would entrench the behaviour we’re trying to resolve. As one expert said, in some communities, illegal tobacco sellers have reached a ‘Robin Hood’ status actively supported by locals. A path back to legal markets must be seamless as it would in any competitive business environment.
The suggestions that I have heard from a variety of people from within the industry include:
Setting the tobacco excise at a level that keeps cigarettes competitive against black market alternatives.
Removing the ban on vapes and adding the same location restrictions as smoking.
Considering an excise on vapes to recoup some lost revenue.
Ensuring that the tobacco and vape products on offer include a wide variety to ensure maximum customer return from the black market to legal channel.
And then…
Severe and serious penalties for black market traders and the criminal gangs involved.
Mandatory sentencing to simplify the process of cleaning up crime.
Reporting channels to allow people to alert police to continued criminal activity.
And as I have said publicly in front of the Panel of Harm Reduction Experts at the Legal and Constitutional Affairs References Committee, the solution will not be simple.
The cost of living is very high and will naturally lead otherwise law-abiding citizens toward illicit markets – in general. They don’t want to break the law. Any solution must deal with lifestyle measures right across our economy.
People are suffering and nicotine products are part of their lives.
All measures must be enacted with a least-harm approach to Australians who were pushed toward the black market due to government-enforced economic pressures.
And we absolutely must support the legal businesses who wish to help rebuild the market – this will include protecting these shops and owners from crime gangs. For example, insurers say it has become almost impossible to find cover for tobacconists after arson attacks…
Once the legal and government approach is fixed – the criminal infrastructure will have to be dismantled – rapidly – or it will adopt a new product such as alcohol – which is experiencing an almost identical problem.
Make no mistake, excessive alcohol excise has already started to push people toward extremely dangerous black market product. This is even more concerning than illegal tobacco.
No one can solve a public health problem for a product owned and distributed by the criminal underworld.
So please, help us solve it.
Senator Malcolm Roberts, Brisbane
