Warren Entsch (Leichhardt, Liberal Party) Share this | Hansard source

I rise to speak on this motion about illicit tobacco, which is certainly a matter of significant concern not only in my electorate but across our nation. The burgeoning illicit tobacco trade is an issue that affects public health, economic stability and law and order in our country. We're all aware of the staggering financial implications of this illegal trade—billions lost in potential revenue, a sum that could boost our public services and infrastructure. The issue runs deep, deeper than just the taxation revenue gap. It's a matter of national integrity and public safety. The reality we face is one of organised crime flourishing under the veil of the illicit trade, where the hard work of our law enforcement is continually undermined by the increasingly brazen and whack-a-mole style resilience of their operations. The current situation is deteriorating rapidly and requires greater attention and decisive action from the government.

The real-world ramifications of this issue are best articulated through the experiences of small-business owners like Pamela, who owns a series of legitimate tobacconist outlets in Far North Queensland. Her account and those of many others in the industry paint a stark picture of the rapidly growing challenges faced by law-abiding businesses due to the rapid growth of the black market. Pamela describes the increasing struggle to survive being viciously undercut by illicit operators, who are brazenly operating in broad daylight whilst avoiding tax and evading the strict and onerous regulatory controls that ordinary tobacconists must adhere to.

With around 50 black-market retail shops operating in Far North Queensland, and nine in Cairns alone, the scale of the problem is undeniable. The solution is not to raise the tobacco excise even further, as Minister Butler has sought to do in recent times. We are only pushing the legal operations to the brink while forcing smokers to the black market and denying ourselves taxation revenue in the process. The pricing disparity between legal and illegal tobacco products is central to this issue. Illegal operators can procure a 20-pack of cigarettes for as low as $1 or $2, while legal operators face excise and GST of $28 per pack. Consequently, while a 20-pack of cigarettes from black-market operators can cost as little as $10 or $15, the cheapest legal retail option is significantly higher, around $33. For roll-your-own tobacco, illegal operators often sell a 25-gram pouch for $20. This is particularly concerning when considering that the legal operators, on the cheapest 25-gram packs, face excise and GST costs alone of $52 per pack, pushing the retail price to around $57. The margin that legal operators have to work on is razor thin, while the black-market operators effectively have an unchecked licence to print money.

As well intended as those opposite might suggest the new federal tobacco excise increases are, the fact remains that this approach is fundamentally flawed and, in many cases, leads to significantly worse outcomes for all involved. If the government is going to charge an astronomical amount of excise on a product, it has to be prepared to back it up with an extraordinary law-enforcement regime. Right now there is far too much illicit tobacco getting through the border. Illegal operators are unperturbed by the insufficient law-enforcement efforts, and they are quite literally making more money than the drug trade. We're seeing routine bombing, ram raids and escalating violence against tobacconists all across the country. The government seems to be quite content to send legal tobacconist operators to the brink of bankruptcy. All the while, ex-smokers are returning in droves and handing over their cash to these brazen, violent criminals. The government needs to get its act together on this issue. It's absolute madness, and it's getting worse. It needs to be stopped without delay.

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