Monique Ryan (Kooyong, Independent) | Hansard source

Australia's illicit tobacco trade has exploded into one of the country's fastest growing criminal markets, costing $4 billion in the 2023-24 financial year. The Australian Criminal Intelligence Commission has linked criminal syndicates to more than 200 firebombings and at least three homicides since 2023. That violence is affecting suburban shopping strips, neighbourhoods and communities across the country. This issue is raised with me every week in the electorate that I have the honour to represent.

The Combatting Illicit Tobacco Bill 2026 creates new offences for large-scale illicit tobacco activity linked to organised crime. It increases penalties across importing, possessing, buying, selling, producing and manufacturing. It expands proceeds of crime tools, and it enables enhanced law enforcement powers for serious tobacco offences. These are sensible reforms. But I fear that the horse has bolted on the illicit tobacco market. More than half of all tobacco, cigarettes and most vapes in Australia are now purchased from an illicit market which exceeds the combined size of those for cannabis, cocaine, heroin and ecstasy. Through poor policy settings and public health measures, we have created one of the largest black markets the country has ever seen. Tobacco excise collection peaked at $16.3 billion in financial year 2020. The government is going to collect only $7.8 billion this financial year, even though close to two million Australians still smoke daily. We have turned a regulated and effectively taxed market into an unregulated criminal one.

This predatory and illegal industry is specifically targeting young Australians. The most recent child health poll from the Royal Children's Hospital Melbourne found that 26 per cent of young people aged 12 to 17 have used a nicotine product, mostly vapes, with 12 per cent currently using them and three quarters showing dependence. That means that one in 10 teenagers in this country are dependent on vapes. As a paediatrician I find those numbers deeply alarming. Addiction can happen quickly. Nicotine rewires the developing brain in ways that can create lifelong dependence. Young Australians who vape are three times more likely to take up tobacco smoking. And let's face it, the vaping prohibition has not protected young people. It's handed the youth nicotine market to criminal networks, which are selling unregulated products without ID checks in flavours deliberately designed to attract children.

That is a legislative and a policing failure. While the total cost to our country of tobacco and nicotine addiction was estimated at almost $36 billion in 2021, collection rates for tobacco fines are lower than those for speeding infringements. Those operators treat fines as a routine cost of doing business. Greater penalties without the resourcing and coordination necessary to collect them will not break this business model.

The city of Stonnington comprises part of the electorate of Kooyong that I have the honour to represent. In its submission to the Senate inquiry into this bill, the city of Stonnington noted that Victoria has only 14 inspectors to supervise the eight to 10,000 retailers statewide and that those 14 inspectors have to undertake visits in pairs for their safety. In addition, the Victorian licensing scheme does not currently extend to e-cigarettes, vaping products or nicotine pouches. We need a national licensing and regulatory framework to bring all states into alignment.

I also want to address the active and ongoing contribution to this policy mess from the tobacco industry. Representatives from Philip Morris recently appeared before a Senate committee examining the illicit tobacco trade in a closed in-camera session not listed on the inquiry's published program. This was permitted despite Australia's obligations under article 5.3 of the WHO Framework Convention on Tobacco Control, which requires governments to protect health policy from interference by the tobacco industry. The Department of Health's own guidelines are very clear. Interactions with tobacco executives should occur only when they are strictly necessary and they should respect the Australian government's commitments on tobacco control. Those guidelines expressly state that such consultation should be public. A secret session in front of a Senate committee is not public.

Philip Morris was also permitted to give evidence behind closed doors in February to a New South Wales parliamentary inquiry into the illegal tobacco trade. Closed sessions allow the company to lobby privately for the sorts of policies that would directly benefit it, such as cuts to tobacco excises. They allow the company to do that beyond the scope of what it said publicly and without the media or the public being able to gauge the expertise of the witnesses or to scrutinise the advice that's been given to committee members. Let's face it: the tobacco industry is not a neutral stakeholder. It is a commercial actor, and its profits depend on the continued sale of a product that kills 66 Australians every day and whose interests are directly affected by the outcome of that ongoing Senate inquiry and of this legislation.

We've also recently learnt from work done by journalists at the Guardian Australia that individuals with undisclosed links to tobacco industry bodies have been positioning themselves as independent law enforcement experts in Australian and international policy forums, opposing excise increases, lobbying for cuts to customs duties, advocating for the legalisation of nicotine pouches and adopting other positions that align directly with the commercial interests of the tobacco industry. Tobacco companies have used 'denial of harm' tropes for more than 50 years, but they're now trying to reframe this debate around the issues of crime and law enforcement, not health. They are deceitfully presenting industry aligned voices, funded voices and lobbyist voices advancing policies that serve commercial interests, but they're presenting them as neutral crime experts. This pattern of behaviour has been called out repeatedly by organisations like the Public Health Association of Australia.

The tobacco industry funds economic reports based on flawed surveys and flawed analysis, and then it feeds them into public debate. It channels money to business think tanks and to lobby groups like the Australasian Association of Convenience Stores, which purport to speak on behalf of small business owners but which are funded by the tobacco industry. Research published this year found that 48 per cent of internal tobacco company lobbyists and 55 per cent of third-party lobbyists working on behalf of tobacco companies previously held positions in the Australian government. Many of those have moved into lobbying positions for the tobacco industry within 12 months of having left public office. This is despite the cooling-off periods prescribed in the government's milquetoast lobbying code of conduct. I have consistently pushed for a stronger lobbying code of conduct and for proper cooling-off periods, but we don't have them and we won't get them in the ineffectual legislation that the government is about to put before this House. The ongoing and active influence of the tobacco industry in our politics demonstrates why those things are actively necessary.

The current drive for a major cut in tobacco importer customs duties is an industry influenced campaign. The recent budget reported that tobacco excise and Customs duty collection will amount to more than $4 billion in 2025-26. A 50 per cent cut in the Customs duty rate would deliver a tax windfall to the multinational tobacco companies of about $2.1 billion every year. British American Tobacco Australia would receive about $900 million, Imperial Brands $550 million and Philip Morris a sweet $540 million. No wonder the tobacco industry is lobbying for a cut in tobacco excises! This House should be clear-eyed about that strategy from this industry. It doesn't mean that every concern raised about enforcement or about settings around the excise is wrong—some of those concerns are legitimate—but it does mean that when we hear these confident claims about what's driving the illicit market and what will fix it, we should be asking, 'Who is making those claims and in whose best interest?'

There is no simple fix to the question of the tobacco excise. There's little correlation between tax levels and illegal tobacco trade. We have the most expensive legal cigarettes in the world, but the illegal tobacco trade flourishes in countries in which cigarettes are much cheaper than they are in Australia. To compete with the black market, the price of legal cigarettes would have to fall dramatically. Such a reduction in price would be regressive and it would harm public health. Canada's experience in the 1990s, when it halved its excise to combat cigarette smuggling, is quite instructive. Smoking rates rose, particularly among young people, quitting rates fell and the illicit trade persisted. It's also worth noting that there is no legal mechanism in Australian law to guarantee that these multinational cigarette importers would actually pass any tax cut down the retail supply chain to customers.

The tobacco industry can't be made to compete on price with organised crime. Any proposal to cut its taxes to address criminal supply chains is unsupportable. Having said that, there is little point to further tax increases unless they're going to actually increase revenue and decrease smoking, and, given the scale of the current illicit market, there's no good case for an increase in those excises.

I'm moving an amendment to this bill which highlights the issue of the tobacco industry's influence in this debate and which calls on the government to prohibit political donations from the tobacco industry under the Commonwealth Electoral Act. Political donations from the tobacco industry are already prohibited in states like New South Wales. At a federal level, most major parties voluntarily refuse tobacco industry donations, but the National Party continues to accept them—in 2024-25 alone, $137,500 from Philip Morris and $88,000 from British American Tobacco—and One Nation has also accepted tobacco industry donations in the past.

In relation to the WHO Framework Convention on Tobacco Control, the guidelines adopted by treaty parties in 2008 called for article 3.5 to be implemented across all branches of government, including legislators. Our legal obligations are clear, but we're not yet acting on them. This parliament should legislate immediately to prohibit political donations sourced from tobacco industry interests, including the tobacco retail sector, under the Commonwealth Electoral Act. The tobacco industry is the only commercial sector that is the subject of an international treaty specifically designed to insulate government policy from its influence, and that treaty exists because the industry's long history of manipulating public debate and purchasing political access has been extensively documented. We saw that just last month. A major tobacco company was granted a secret hearing into one of our Senate inquiries, while public health organisations waited their turn. The tobacco industry's current push for a 50 per cent cut in the tobacco customs duty is an influence campaign which is worth potentially $2.1 billion to the three major multinationals. When commercial actors of that scale can make political donations, the extent of policy capture is obvious.

The amendment that I'm moving calls on the government to prevent an industry, whose products kill 24,000 Australians every year—66 Australians every day—from purchasing political influence at the federal level. This parliament has previously failed to legislate such a ban, despite many calls from health groups, despite existing state-level obligations and despite our treaty obligations. We have an opportunity today with the bill, which is already appropriately focused on the harm that the tobacco trade does to this country.

I thank the government. With this bill, they are holding fast against the tobacco industry's, its lobbyists' and the voices for hire's efforts to reduce the tobacco excise. But I also urge this government to have the honesty and courage to confront the failure of its vaping prohibitions and to confront the enforcement resourcing gaps at the state level, as well as the question of whether further excise increases are actually reducing smoking or enriching organised crime and the question of the tobacco industry's ongoing and well resourced lobbying campaign to shape this parliament's answers and its actions.

I move amendments (1) to (3) as circulated in my name:

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

"(a) the public health harms of smoking are significant, including that around 24,000 Australians die every year from smoking;

(b) Australia's illicit tobacco trade had an estimated total economic cost of $4 billion in 2023-24, contributing to serious organised crime and community violence; and

(c) the influence of tobacco industry lobbying on public health policymaking is significant, including that:

(i) there is a revolving door between government and tobacco lobbyists, with around half of tobacco company lobbyists, including third-party actors, having held positions in the Australian government before or after working for the tobacco industry;

(ii) representatives of a major tobacco company, Philip Morris, reportedly appeared before the Senate inquiry into the illegal tobacco crisis in Australia in closed sessions not listed on publicly available hearing programs; and

(iii) the industry's push for a 50 per cent cut to tobacco importer customs duty is estimated to deliver annual tax windfalls of approximately $2.3 billion to multinational tobacco companies;

(2) calls on the Government to heed expert calls to legislate to prohibit political donations sourced from tobacco industry interests, including the tobacco retail sector, under the Commonwealth Electoral Act 1918; and

(3) further notes that the above measures, along with restrictions, enforcement and penalty provisions contained in this bill, are necessary to address the public health and community safety harms posed by tobacco to Australians".

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