By Kieran Rooney and Annika Smethurst
Smoking and vaping rates have been climbing since the COVID-19 pandemic began due to an influx of illegal cigarettes and a growing black market, with new analysis showing high taxes on cigarettes are pushing people towards illicit nicotine products.
Analysis from Victoria’s independent Parliamentary Budget Office found that legalising and regulating vapes would potentially remove their illegal market but was unlikely to drive down illegal cigarette sales.
Firefighters outside a vape and tobacco store on Sydney Road in Coburg on June 7.Credit: Nine News
The report also included data provided to the federal Health Department from Cancer Council Victoria that showed the rates of people aged 14 and over who are smoking, vaping or using both had soared since the pandemic.
“The illicit tobacco market is primarily driven by the price discrepancy between legal and illicit tobacco stemming from the imposition of excise of tobacco, which is subject to indexation and periodic discretionary increases,” the budget office analysis said.
“As prices in the legal tobacco market continue to grow, more smokers are faced with a price they either cannot or will not pay … For some, it will drive them to quit or reduce smoking, but for others, it will push them into the illicit market.”
Libertarian MP David Limbrick asked the budget office to analyse the impact of legalising vapes on the current black market for e-cigarettes and tobacco, which is at the centre of dozens of arson attacks between organised crime figures.
“This report clearly demonstrates the advice we have been getting from public health officials has been disastrous – because more people are smoking, and organised crime are having a field day,” he said.
The Cancer Council Victoria data showed that since 2020 the number of people smoking, vaping or both rose from 12.5 per cent of the population to 17 per cent, largely driven by a more than tripling of vaping rates. Dual users were also among the fastest-growing groups.
But the data also showed minor increases in cigarette use, rising from 11.2 per cent in 2020 to 11.8 per cent in 2023. Although this number has trended upward slightly, it is still below smoking rates in 2018, which were at 12.3 per cent.
The biggest hikes in smoking rates appeared to come from respondents aged between 14 and 17. The Cancer Council Victoria research found figures were erratic in this group but they appeared to be trending upwards overall between 2020 and 2023. There were also minor increases among groups aged over 35.
Australian Border Force officers checking illegal cigarette imports found in shipping containers in Melbourne.Credit: Luis Escui
Limbrick said vaping should be legalised and made an adult consumer product to undermine illicit trades and provide a legal alternative for smokers.
“I can say this was predictable because I have been predicting exactly this for the last five years. The federal government are currently debating laws which will make this problem even worse using the same bad advice,” he said.
Legislation before the federal parliament will ban non-therapeutic vapes from being imported, manufactured and supplied, regulating them as a therapeutic product handled by pharmacists rather than sold in retailers.
Previous analysis reported by The Age has valued Victoria’s black market for vapes at up to $500 million.
The budget office did not forecast additional costs if the Allan government committed any additional funding to regulate a legalised vape market, with about $1.5 million already provided every year to councils for enforcement.
However, this could change as the Victorian government develops its tobacco licensing scheme. Premier Jacinta Allan committed to introduce a scheme in March but no further details have been provided and are not expected until later in the year.
Since mid-2023, crime organisations have waged a turf war for control of the illicit tobacco trade in Victoria. They’ve launched dozens of firebombing attacks on shops to pressure them to sell illegal cigarettes and pay regular “taxes” to crime bosses.
Credit: Matt Golding
Deakin University senior lecturer in criminology Dr James Martin said the current policy was “emphatically not working” and vaping rules were overly restrictive while the black market flourished.
“They have taken an extreme approach in terms of requiring people to get a prescription for vapes,” he said.
“We have a situation where we require people to get a prescription to get something less problematic than cigarettes, which you can buy over the counter.”
Martin said other research did not support that vaping was leading to increases in youth smoking, pointing to the National Drug and Alcohol Survey that showed a decline in daily smoking among younger groups.
He said government policies have been unable to drive down black market sellers, which is where most underage vapers access their products.
“The policies are a total disaster,” Martin said. “Most people see a law or ban as an obstacle that will make it less appealing to criminal gangs but often it’s seen as a job opportunity because the ban helps them make money.”
Get the day’s breaking news, entertainment ideas and a long read to enjoy. Sign up to receive our Evening Edition newsletter here.