Pat Conaghan (Cowper, National Party, Shadow Assistant Treasurer) | Hansard source

I'm pleased to rise to speak on the Combating Illicit Tobacco Bill 2026. Sometimes we stand in this place and make speeches on topics that we have little understanding of because it's out of our remit. I'm confident in speaking on this particular bill. I speak quite often about my time as a detective in the NSW Police, in particular my time as an undercover operative in the drug enforcement agency for 2½ years. During those days, we'd infiltrate organised crime.

I'm confident in saying I know exactly what organised crime gangs and groups are thinking about this bill right now. They would be thinking, 'We love the Labor government, which has sat there and done nothing for the past four years and let us earn billions of dollars through the illicit tobacco and vaping trade,' and they would say, 'Thank you, Labor government for the factories of cash, the cars, the lifestyle in Dubai, in Thailand and in Australia, and all that money that we've reinvested into our business model for more serious illicit drugs, for human trafficking and all the other horrible things that organised crime do.' They would be saying, 'Thank you Labor because you've let us make this money.' They would now say: 'Thank you for this weak, limp Combating Illicit Tobacco Bill, because it will do nothing to our business model. It will continue to allow us to make money. It will continue to allow us to live like kings around the world, and it will continue to contribute to the demise of legitimate businesses in Australia.'

Now, for those of you who may be listening, I'll give you a little bit of an education in history over the past four or five years. Back in 2022, the illicit tobacco market sat at around 20 per cent. That would fluctuate somewhere between 13 and 20 per cent in the preceding years. It is now, after four years, at 80 per cent. Eighty per cent of the tobacco market is illicit. I can't blame the punters out there—and I should put on the record that I don't like smoking and I don't like vaping, but they are legal products. Well, tobacco is legal; vaping is not. But, hey, you see everybody standing on every single corner looking like they're on fire every time they breathe out. But I can't blame the average punter who wants to spend $20 on a packet of cigarettes instead of up to $80.

What we've actually seen since we've hit the 80 per cent mark—and this is the business model of the cartels, mind you—is those $20 packets double because the cartels know that they've got the market. The average punter will say, 'Well, you know, it's just double.' It's still half the price. It's still half the price of the legal tobacco. So they'll go ahead and purchase that.

And then we see what's happened to vaping. The government, when they first came in, outlawed vaping. It's illegal. Nobody's going to use it. Nobody's going to go down to the corner shop anymore and buy a vape. Well, we all know the proliferation of those pop-up shops selling illegal vapes to kids. Every speaker said it. They don't care who they sell it to. These are criminals. For teachers and principals around Australia, it is the bane of their existence with teenagers in toilet blocks. I actually heard of a teacher who would take the kids out to vape at morning tea so they wouldn't have the problem. Now, that's unique. I don't know what the parents thought of it. But that was a practice that they had.

The government outlawed it, so, in conjunction with illicit tobacco, where we're now losing around $7 billion a year in excise, instead of legalising vaping—again, I can't stand it. But what we're getting at the moment is Chinese crap. I use that term specifically because we don't know what's in it. It's not quality controlled. It's not regulated. It is poison. It is poison going into a 12-year-old's lungs. And it's pushed towards children. They're fluorescent. They've got characters. They've got graffiti on them. It is pushed towards our young people deliberately. And we've seen now popcorn lung over a couple of years of use of it. Instead of regulating this industry and taking it out of the cartel's hands, we've handed the whole industry to them along with another $7 billion in excise if we comparatively did it with tobacco. But, no, this government says, 'Oh, this will work.' They're really living in la-la land. So we have had in four years a drop of $7 billion to $9 billion in excise and a whole industry of vaping, which is controlled 100 per cent by cartels within and around Australia.

And not only is that doing damage to our economy; it's doing damage to the fabric of our society. I've spoken about the corner pop-up shops and the number of mums and dads who have stopped me and said, 'Pat, how do we stop this?' And I'll get to how we stop it before the end of the speech. 'How do we stop this? How do we stop these people preying on our children and turning our main streets into something that would resemble a bazaar market in India?'

But there are also the social implications. We have had over 300 firebombings between Victoria and Sydney. In my 30 years of law and law enforcement, I have never heard of anything like that—shootings, innocent people killed, families terrified and business owners terrified. If there's a property leased to one of these pop-up vape or illicit cigarette retailers, you can't get insurance on either side or above. You might be a legitimate owner of a commercial premises that you bought for your superannuation down the road, and, because of this illicit activity and the permission of this government for it to occur, you're not being insured anymore. So, if that place gets firebombed, there goes your superannuation, there goes your property and there goes the people who may want to rent your commercial property, because you can't get insurance. So there's more than one flow-on effect here.

Then you have the legitimate business owners who are being forced by the cartels to sell their product. These are nasty people. I've dealt with them. I've operated with them. The things that you see on TV, the lengths that they will go to, are true. And these poor business owners are out there saying: 'I have to put food on the table. I have to make a living. I have to look after my kids. I have no other choice than to sell it.'

So how do we change it? We start by changing the excise. I'll be shouted down by those saying I'm doing the devil's work for the British alcohol and tobacco and the vaping groups. I don't like them. I don't like cigarettes. I don't like vaping. But the fact is that we have pushed the purchase price so high that the average punter has to buy the cheaper one. We need to review that whole system, whether it's 80 per cent, whether it's 50 per cent or whether we go back to 2019, but we have to make it a viable alternative. We have to take and break the business model of the organised crime groups. We have to break it and smash it because it's the same business model that they use to put the vapes through, and it's now the same business model that they use to put the illicit alcohol through. I warned of this years ago. I warned alcohol was coming because I know how they operate. Anybody could have seen it. This government should have seen it.

So we change the excise and then we give law enforcement resources and power. I've been calling on a standalone agency, similar to the one in the United States, to deal with this. The Federal Police cost about $1.5 billion a year to operate. We're losing $7 billion to $9 billion. A standalone agency would make us money. It would bring back the excise and it would break the cartels that are operating here. We have to give them the funding, we have to give them the resources and we have to change the status quo.

This bill does none of that. It tinkers around the edge of enforcement, prosecution and penalties. There's no purpose or reason to increase the penalties when nobody's being prosecuted. I'm not against increasing the penalties, mind you, but it's not addressing the real issues. It's not addressing the business model or how to smash that business model. It's not addressing the lack of enforcement. When you have the New South Wales Labor premier and health minister criticising this government on their policies on tobacco and vaping, you know there is something seriously wrong with the system.

So instead of tinkering around the edges with penalties and enforcement, do something real. Take this back to the drawing board. Use the things that I and other members have said and make it a real combating illicit tobacco bill. Combat the bad guys. That's the idea about this bill. Don't let them operate the way they've been operating for the last four years. Don't let them get to 100 per cent of the illicit tobacco market. What will happen once they get to 100 per cent is they will increase the price again. They will make a peak price. They will work it out. They're smarter than government. They will work out what the pain price is that the average punter will pay, and that is what they'll charge them. That is what they'll continue to do until we break its back. This bill does not break an egg. It does not do anything to address those real issues. Take it as read that, if this bill passes with no changes, you will see no changes outside of this bubble in the real world.

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