New federal data suggests Australia's illicit tobacco market has contracted by between 79 and 1,400 tonnes over the past year, pointing to an inflection point in the crackdown.
The illicit tobacco commission compiled the estimate by combining wastewater testing for combustible nicotine with Australian Institute of Health and Welfare data on household use; it spans a wide range because the black market is difficult to measure. Assistant Minister for Customs Julian Hill called the data encouraging, and federal data shows tobacco seizures at the border are up 50 per cent on the same time last year.
Annual spending on illegal tobacco is estimated at $8.5 billion. Legal cigarettes cost more than $50 a pack, compared with $10 to $20 for illegal ones. The market has been associated with years of criminality, including homicides and more than 300 firebombings. Melbourne has suffered particular damage, with an underworld gang controlled by Kaz Hamad orchestrating a wave of violence to control the market.
The political response remains divided. The Coalition and One Nation are calling for drastic excise cuts to strip profits from criminal networks, a position also urged by NSW Premier Chris Minns. Labor has maintained that narrowing criminals’ profit margins is not the right approach and would lead to higher smoking rates, and has instead focused on border enforcement and state-led retailer crackdowns. Victoria has been slow to act, only beginning shop closures in September, long after other states.
Academics from the University of Sydney and Deakin University argued before the new data release that an enforcement-only response to the illicit market would fail in the same way as the war on drugs. Citing Australian Bureau of Statistics data showing illicit sources of tobacco grew from about 12 per cent to as high as 80 per cent as legal prices rose, they wrote: “The division is … not partisan but jurisdictional, with the Commonwealth collecting the excise while the states are left with the mess.”
Analysis
Why This Matters
- The $8.5 billion black market funds organized crime and has directly driven a wave of firebombings and homicides affecting public safety.
- The policy choice between high taxes and enforcement versus excise cuts will shape public health outcomes and government revenue for years.
- The jurisdictional clash over who profits and who cleans up the consequences exposes a structural flaw in Australia's tobacco regulation.
Background
Australia enforces some of the world's highest tobacco taxes and strictest plain-packaging laws. According to ABS data cited in the sources, this drove the illicit share of the market from around 12 per cent to as high as 80 per cent. The resulting violence, overseen by gangs like the one linked to Kaz Hamad in Melbourne, turned tobacco control into a major law-and-order issue.
Key Perspectives
Federal Labor Government: The enforcement-based approach is showing results, with record border seizures and a market contraction. The government opposes cutting the excise, arguing it would increase smoking rates.
Coalition and One Nation: Drastic excise cuts are needed to destroy the profit incentive that sustains the criminal black market.
Researchers from University of Sydney and Deakin University: The enforcement-only strategy is likely to fail because the high tax itself is the root cause. They characterize the problem as jurisdictional, with the Commonwealth collecting revenue while states manage the violence and disorder.
What to Watch
- The impact of Victoria's shop closures, which began in September, on the state's share of the black market.
- Whether the government responds to growing calls from state Labor leaders, such as Chris Minns, to adjust the tax settings.
- Next year's data release to see if this contraction over one year is the start of a trend or a temporary effect of intensified enforcement.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedAustralia’s illicit tobacco market shows signs of shrinking, according to new data.Brisbane Times - Latest News: “New data points to major inflection point in the fight against illegal tobacco. Australia’s lucrative illicit tobacco market may finally be shrinking”
- SupportedThe data suggests the market contracted by between 79 and 1,400 tonnes over the past year.Brisbane Times - Latest News: “New federal data suggests the black market has contracted by between 79 tonnes and 1400 tonnes over the past year.”
- SupportedThe estimated contraction points to an inflection point in the crackdown.Brisbane Times - Latest News: “New data points to major inflection point in the fight against illegal tobacco.”
- SupportedThe commission estimated the market by combining wastewater testing for combustible nicotine with AIHW data on household use; the estimate spans a wide range because the black market is difficult to measure.Brisbane Times - Latest News: “Because the black market is difficult to measure, the estimate spans a wide range. It was developed by combining wastewater testing for combustible nicotine with the best available measure of household use, being Australian Institute of Health and Welfare data released earlier this year.”
- SupportedThe commission says the crackdown has yielded results.Brisbane Times - Latest News: “The illicit tobacco commission, which compiled the data, believes it shows the crackdown has yielded results.”
- SupportedAssistant Minister for Customs Julian Hill called the data encouraging.Brisbane Times - Latest News: ““Just 12 months into scaled-up enforcement … the data is encouraging, including record seizures at the border,” assistant minister for customs Julian Hill said.”
- SupportedFederal data shows border tobacco seizures are up 50 per cent on the same time last year.Brisbane Times - Latest News: “Federal data shows seizures of tobacco at the border are up 50 per cent on the same time last year.”
- SupportedAnnual spending on illegal tobacco is estimated at $8.5 billion.Brisbane Times - Latest News: “Annual spending on illegal tobacco is estimated at $8.5 billion, more than on ecstasy, heroin, cannabis and cocaine combined.”
- SupportedLegal cigarettes cost more than $50 a pack, compared with $10 to $20 for illegal ones.Brisbane Times - Latest News: “NSW Labor Premier Chris Minns has also been calling to wind back taxes that have pushed legal cigarettes above $50 a pack, compared with the $10-$20 price for illegal ones.”
- SupportedThe illegal tobacco market has been associated with homicides and more than 300 firebombings.Brisbane Times - Latest News: “Australia’s lucrative illicit tobacco market may finally be shrinking after years of rampant criminality including homicides and more than 300 firebombings”
- SupportedThe Coalition and One Nation are calling for excise cuts, and NSW Premier Chris Minns has also called to wind back tobacco taxes.Brisbane Times - Latest News: “The Coalition and One Nation have been calling for drastic cuts in the tobacco excise to strip profits from criminal networks. NSW Labor Premier Chris Minns has also been calling to wind back taxes”
- SupportedResearchers wrote: “The division is … not partisan but jurisdictional, with the Commonwealth collecting the excise while the states are left with the mess.”Brisbane Times - Latest News: ““The division is … not partisan but jurisdictional, with the Commonwealth collecting the excise while the states are left with the mess.”