Government failures allow the illegal tobacco trade to act with impunity

After years of warnings about tobacco’s lethal cost, Australia tried to tax cigarettes out of existence. But criminals quickly worked a way around that and have turned tobacco shops across the country into black marketeers selling products that kill and make children addicts while they fight gang wars to control their illegal trade.

There are other victims, too. The federal government is losing multiple billions of dollars in tax because black-market cigarettes avoid tobacco excise. State governments are forced to pay billions treating people with smoking-related illness, while suburban shopkeepers face escalating rents, insurance hikes and falling amenity as tobacco outlets, as well as possible after-dark arson attacks.

Firefighters outside a vape and tobacco store that was firebombed in Melbourne.Credit: Nine News

And if the people running many of the shops are unperturbed about breaking the law – one Newtown tobacconist happily displayed her wares when asked by our reporters if she sold cheap cigarettes – there is no denying swaths of smokers appear just as unconcerned.

A Herald investigation by Lucy Macken and Riley Walter found the number of businesses registered to sell tobacco products of the illicit or legal variety since 2015 had reached almost 20,000, up from 19,000 a year ago. Nearly 40 per cent of tobacco consumption across Australia was illicit last year, according to FTI Consulting’s latest industry-commissioned report, Illicit Tobacco in Australia. That’s an increase of 28.6 per cent from 2023.

Meanwhile, a war is being waged in our suburbs. Two firebombings this month in Auburn and Mount Pritchard, and the NSW Police decision to launch a strike force to investigate one notorious gang’s involvement in illicit tobacco, suggests Sydney is going down the same path Melbourne has walked for more than two years, with regular ram raids and arson attacks on tobacco outlets as criminal gangs fought to control the illicit tobacco trade.

Where immense profit lies, crime follows, but apart from fiddling at the edges, governments and authorities have been slow to react to the advent of the tobacco black market.

The Albanese government announced an extra $188.5 million for Border Force to work with the states on illegal cigarettes, funded by an increased excise duty. That was in January last year. Initially successful, it failed to blunt the trade.

In NSW, the number of authorised inspectors will double to 28 and a new licensing scheme, effective from July 1, will tie the licence to compliance. NSW also increased fines for people selling black-market tobacco products from $11,000 to $154,000, and up to $22,000 for selling to children. Given the plethora of new outlets, they have yet to prove much of a deterrent, especially when compared with South Australia, which also last November introduced fines of $750,000 for first offences and $1.1 million for later convictions.

Responsibility for breaking the illicit tobacco trade is dissipated through the labyrinths of federal, state and local governments. Premier Chris Minns has laudably agreed to the opposition’s terms for a parliamentary inquiry. It must come up with solutions to stop gangs and their street dealers acting with such impunity.

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