Tobacco chief: Australia’s black market ranks top 3 in the world

A global executive at British American Tobacco has claimed this country’s illegal industry is “out of control” with Australia’s trade in illicit cigarettes up by a whopping 55 per cent.

The Illicit tobacco trade in Australia is up by 55 per cent. Picture: Australian Border Force

A global tobacco executive believes Australia has one of the three worst black markets in the world.

In an exclusive interview, Kingsley Wheaton, Chief Corporate Officer at British American Tobacco, said the local industry had descended into a “national crisis” where governments have favoured “ideology over logic”.

“This is hiding in plain sight. It’s out of control. If I’m honest - I couldn’t quite believe what I have seen.” Mr Wheaton told The Daily Telegraph, during his first trip to Sydney in several years.

“Australia takes its place alongside countries like South Africa and Malaysia as having the highest illicit market in the world. That’s where Australia is today,” he claimed.

A lack of regulation has resulted in Malaysia long being considered the world leader for illicit tobacco trade, while South Africa’s market has never recovered from a government decision to ban cigarettes for five months during the COVID-19 pandemic.

The comparison comes as the Albanese Government refuses to address the struggling cigarette excise, now charged at $1.40 per smoke, which has halved in earnings from a record high of $16 billion in 2019-2020.

Mr Wheaton said the tax had become “counterintuitive” due to widely available, cheaper illicit products causing the average price of cigarettes for an Australian consumer to fall, rather than increase.

“Enforcement deals with the symptom. What you have to deal with is the diagnosis. Tobacco excise in Australia is too high. By reducing it, you would not only remove some of the pressure of illicit trade, but you would also raise more money for the government” he said.

Health Minister Mark Butler recently argued “most countries that have lower-priced cigarettes also have burgeoning black market cigarettes”.

Responding to that claim, Mr Wheaton said: “We estimate the illicit market in Australia is now up to 55 per cent. Globally, our estimates are that about 14 per cent is illicit. So even on a very superficial comparison Australia is almost four times as high.”

The growing illicit market has had a profound impact on local retailers - with Australian supermarkets and grocers losing billions of dollars in sales from legal cigarettes in recent years.

Kingsley Wheaton, Chief Corporate Officer at British American Tobacco, believes Australia now has one of the top three black markets in the world. Picture: Jonathan Ng

This masthead has widely reported on the tobacco war in Sydney, with illegal retailers popping up on every corner - including opposite NSW parliament - and a range of criminal activities including arson attacks.

“Gang warfare. A national crisis. Stories of things that I never thought I’d hear in Australia. It’s a country where you’d think logic would prevail over ideology,” Mr Wheaton said.

Assessing the rest of the world, Mr Wheaton heralded the policy decisions in New Zealand, which has “smartly regulated” vapes, leading to a dramatic reduction in the overall smoking rate. While in Sweden, he said 50 per cent of all tobacco consumed is through oral pouches, with the country boasting the lowest lung cancer rates in the European Union.

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