Andrew Hastie (Canning, Liberal Party, Shadow Minister for Industry and Sovereign Capability) Share this | Hansard source

I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes that:

(a) illicit tobacco has become a multi-billion dollar black market in Australia, increasingly linked to substantial organised crime activity, violent criminal networks and serious community harm;

(b) the Government's own Illicit Tobacco and E-cigarette Commissioner has estimated the illicit tobacco market to be worth between $4.1 billion and $6.9 billion in   .2024-25;

(c) the Government's repeated increases in tobacco excise have significantly widened the price gap between legal and illegal tobacco products, driving consumers toward the black market and dramatically increasing the profitability of organised criminal supply;

(d) in stark contrast to the Government's 2023 forecasts of a $3.3 billion revenue increase, the Parliamentary Budget Office has estimated that the Government's excise policies will reduce Budget revenue by more than $20 billion between 2024-25 and 2028-29;

(e) policy responses to illicit tobacco under the Government have been hopelessly weak and inadequate; and

(f) this Bill represents no more than a partial response to the serious escalation of illicit tobacco activity across Australia; and

(2) calls on the Government to finally develop and implement a comprehensive national strategy, and to deliver the range of accompanying practical actions that are now urgently needed, to decisively combat the spread of illicit tobacco and the associated proliferation of organised criminal activity".

The coalition will support the passage of the Combating Illicit Tobacco Bill 2026, and we will do so on the basis that it might assist law enforcement agencies and courts in dealing with the very serious problem of illicit tobacco. However, let's also be very clear: this bill is a minor and belated response to a crisis that has exploded under the Albanese government. Across Australia, illicit tobacco is at the core of what has become a multibillion-dollar black market. It is directly tied to organised crime, violence, intimidation and highly dangerous criminal activity. Its distribution has become a major criminal enterprise throughout the nation. Illegal tobacco stores are growing across Australia. Firebombings and violent attacks linked to organised criminal syndicates have become alarmingly common, and legitimate retailers are being undercut. Communities are being increasingly exposed to shocking criminal activity in this field, and, in short, the response of the Albanese government, after creating this very crisis in the first place, has been hopelessly insufficient.

This bill is aimed at increasing penalties, expanding investigative powers and amending proceeds-of-crime arrangements, and, on the face of it, those measures are better than nothing, and we therefore support them. However, it is astounding that the government wants Australians to believe that making these changes alone somehow constitutes some sort of comprehensive strategy, because it does not. The reality is that this legislation does almost nothing to address the underlying structural drivers behind the explosion of illicit tobacco.

The government's own illicit tobacco and e-cigarette commissioner has estimated the illegal tobacco market to now be worth between $4.1 billion and $6.9 billion annually, and that's a phenomenal figure. It's the direct result of the Albanese government's pursuit of tobacco excise increases and its inability to have thought about the consequences of those actions. Instead of properly analysing the relationship between excise settings and the expansion of the black market, the Treasurer and the health minister somehow forecast that their 2023 budget decision on this matter would return a $3.3 billion windfall to the Commonwealth over the forward estimates. Their central change—made in the May 2023 budget—was to impose a five per cent increase in tobacco excise each year for three years. These rises, respectively, came into effect on 1 September 2023, 1 September 2024 and 1 September 2025. They were additional to the existing twice-yearly indexation.

There will instead be an eye-watering revenue loss. The Parliamentary Budget Office have recently estimated that the excise policy settings will reduce budget revenue by more than $20 billion over the forward estimates, and their forecast is actually conservative. Other experts say that the loss will be between $5 billion and $11.8 billion annually.

So, three years on from the 2023 budget, we are now seeing senior Labor figures disagreeing among themselves about the impact of their own excise policies. On the one hand, the Treasurer is insisting that there is little to no connection between tobacco taxes and the growth of the illicit market. On the other hand, the Assistant Minister for Citizenship, Customs and Multicultural Affairs says that the high rates of tobacco excise have been one of the key drivers of growth in the black market and that it would be nonsensical to deny that connection. Australians are left with a government that cannot even speak with a unified voice about the causes of this illegal crisis, let alone drive the solutions that are needed.

The price gap between legal and illegal tobacco that Labor has created has resulted in one of the most lucrative criminal opportunities in our country's history. This is not speculation. This is the economic and social reality. Organised criminal syndicates are now deeply involved in illegal tobacco importation, distribution and retailing. There are highly sophisticated supply chains. There is intimidation and extortion. There are criminal turf wars, and many shops are openly selling illegal products with little fear of meaningful consequences. Meanwhile, legitimate small businesses are left trying to compete against criminals, who pay no excise and pay no tax.

This bill does not adequately address or tackle any of those realities. Instead, it leans largely on increasing maximum penalties, but increasing penalties on paper doesn't always mean stronger enforcement outcomes in practice. Courts rarely impose penalties anywhere near current maximums. Financial penalties are often difficult to recover, and many organised criminal networks treat fines as simply a cost of doing business. Ultimately, it's not the legislated maximum sentence that matters here. What's far more important is whether criminals believe there is a genuine likelihood of detection, disruption, prosecution and/or asset seizure. Those outcomes require resourcing, operational capability and effective coordination across jurisdictions and for Labor to rectify its complete and utter mess.

One of the biggest weaknesses in Labor's response has been the lack of coordination between Commonwealth and state and territory authorities. The coalition believes there must be a far more aggressive and coordinated enforcement response, one that includes stronger cooperation with state and territory governments to close illegal tobacco outlets, terminate leases where appropriate and disrupt retail networks that sustain this black market. At the moment, far too often, illegal tobacco shops simply reopen days after any enforcement activity occurs. There must also be improvements to law enforcement, border protection and information sharing capabilities that apply to this issue. At the moment, agencies are being expected to combat organised crime without leadership, direction and support from the government. Labor cannot continue to be weak on this issue. They need to implement a genuine national strategy. That could start with setting basic objectives and deadlines for action, which their illicit tobacco commissioner revealed have never been established.

Of course, none of this is to say that smoking should be encouraged. Most Australians understand the clear health risks associated with tobacco use, but public health objectives cannot be pursued in isolation from enforcement realities and criminal market dynamics. The reality is that the current settings have created an enormous illegal market that is fuelling organised crime. In short, Australians are now experiencing the worst of both worlds. Organised crime is booming, illegal tobacco is becoming more widespread, communities are facing increased criminal activity, and the budget is losing billions in revenue.

While the coalition will support this bill, we will also continue our calls for a far more serious and comprehensive national response, one that focuses on practical enforcement outcomes. Labor must admit they have got things wrong and own up to the role that their policy settings have played in driving black market growth. They need to direct and resource law enforcement agencies to help end this market. They need to help and empower the states and territories, and they need to immediately disrupt the organised criminal networks profiting from illicit tobacco across Australia. The Australian public expects far better than the hapless approach we've seen from the Albanese government to date.

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