Andrew Wallace (Fisher, Liberal National Party) | Hansard source

The coalition will support the passage of the Combatting Illicit Tobacco Bill 2026. We support measures that strengthen law enforcement powers, disrupt organised criminal activity and make it harder for criminals to profit from illicit tobacco. However, while this bill contains some worthwhile measures, we shouldn't pretend that it represents a comprehensive solution to the crisis that Australia now faces.

This bill is ultimately a response to a problem that has exploded under Labor's watch. It's a crisis that has been a number of years in the making and a crisis that extends far beyond just tobacco. This is about organised crime, community safety, lost government revenue and whether Australians can have confidence that the rule of law, which underpins our society, is being upheld. Australia is now facing a full-blown illicit tobacco crisis. The government's own illicit tobacco and e-cigarette commissioner estimates that the illicit tobacco market is worth somewhere between 4.1 and $6.9 billion annually. That figure alone should alarm every member of this House. This is not some small black market operating on the fringes of society. This is a sophisticated, highly profitable criminal enterprise generating billions of dollars every year.

Those profits are not flowing into the legitimate economy. They're not funding public services. They're not supporting Australian jobs. They're flowing directly into the hands of organised criminal syndicates, who are doing significant damage to our community, to our social fabric, by, as an example, firebombing legitimate businesses. The coalition's amendment correctly notes that illicit tobacco has become a multibillion-dollar black market increasingly linked to organised crime, violent criminal networks and serious community harm. We've seen the reports of firebombings. We've seen reports of extortion. We've seen criminal groups fighting over territory and profits. This is no longer simply a public health issue, as important as that is. It has become a significant law and order issue. It has become a significant domestic national security issue. Australians are rightly concerned.

The unfortunate reality is that this crisis did not emerge overnight, nor did it emerge by accident. The Albanese government's approach to tobacco excise has played a significant role in creating the conditions that have allowed this black market to flourish. The coalition's amendment notes that repeated increases in tobacco excise significantly widened the gap between legal and illegal tobacco products, driving consumers towards the black market and dramatically increasing the profitability of organised criminal supply.

Now, let me be clear: nobody on this side of the House is arguing that tobacco use should be encouraged—at least I don't think any of my colleagues are. Perhaps we might have some smokers on our side. But governments must recognise that, when legal products become dramatically more expensive, criminal markets step in to fill the gap. There is the age-old saying that 'nature abhors a vacuum'. That is precisely what has happened. Organised crime recognised the opportunity. The profits became enormous and criminal syndicates moved quickly to exploit that opportunity. While Labor was increasing the excise and celebrating projected revenue gains, criminal organisations were building a thriving black market right under our noses.

One aspect of this issue that receives far too little attention is the enormous loss of government revenue. Every illegal cigarette sold represents excise revenue that is never collected. Every shipment of illicit tobacco imported into Australia represents money that should have gone into the Commonwealth's coffers. While Labor originally forecast billions in additional revenue from its excise increases, the Parliamentary Budget Office has estimated that those policies will reduce budget revenue by more than $20 billion between 2024-25 and 2028-29. That is a staggering figure. That is money that could have been spent on hospitals, roads, defence, aged care, disability services and infrastructure. Instead, it is disappearing down the black hole of the black market.

Australians are being taxed more, while criminal syndicates avoid paying any tax at all. That is not fair to hardworking mum-and-dad Australian taxpayers or to small and big businesses alike. It is certainly not sustainable. At its core, illicit tobacco is one of the largest tax evasion schemes operating in Australia today. That is why I believe we need to think differently about this problem. For too long, governments have viewed illicit tobacco primarily through a health lens, but it must also be viewed through a taxation and organised crime lens. The Commonwealth has extensive powers to pursue Australians who fail to meet their tax obligations. We all know that. The Australian Tax Office has sophisticated capabilities. It has investigative, compliance and enforcement powers. Yet somehow criminal enterprises operating multimillion-dollar illicit tobacco networks continue to flourish.

Australians are entitled to ask how this could possibly be. How is it that there are hardworking, everyday Australians out there working hard to put food on the table and to pay their rent or their mortgage who are also paying their taxes, yet these criminal syndicates seem to be getting away with blue murder? If we can dedicate resources to investigating relatively small tax discrepancies that everyday mums and dads often get picked up on, surely we can dedicate greater resources to pursuing criminal syndicates that are evading millions of dollars in customs duties and excise revenue. The tax office can't keep going after the low-hanging fruit.

The money trail is often the most effective way to dismantle organised crime. We all know the stories of Al Capone and his exploits. He was never charged or convicted in the US of all of the many crimes and alleged murders that he had committed or organised to be committed. At the end of the day, they got him for tax fraud. That's something that we should be doing here. If we can't get these people for the firebombings, extortions and assaults, let's go after them from a tax perspective. Most people would be more scared of a tax inspector than they would be of a member of the police force. People who are involved in these illicit schemes should be worried about the tax office coming and knocking on their door. Who cares about how we get them off the streets or how they end up going to prison, as long as we get them off the streets and as long as they go to prison. If they go to prison for tax fraud, so be it. We need to follow the money, freeze the assets, seize the profits and take away the financial incentive, because, if organised criminals continue to make enormous profits, they will continue to find new ways to operate.

To be fair to the government, there are elements of this bill that the coalition welcomes. The bill seeks to strengthen the risk-to-reward calculation for criminal actors by increasing penalties and improving the ability of authorities to pursue criminal profits. The bill also strengthens proceeds-of-crime arrangements and expands investigative powers available to law enforcement agencies. Importantly, the legislation expands access to telecommunications interception powers for serious illicit tobacco offences. These are sensible reforms. They will provide additional tools for investigators, they'll assist police and enforcement agencies, and they should help make it harder for criminal organisations to operate.

For these reasons, the coalition will support the bill. Supporting the bill, however, does not mean ignoring its shortcomings. The reality is that much of this legislation focuses on increasing penalties on paper. The government talks big about stronger penalties, it talks big about longer prison terms, it talks big about larger fines, but penalties only matter if criminals believe that they will actually be caught. The central challenge is not simply the size of the penalty; the central challenge is enforcement. Courts already have significant penalties available to them, yet criminal organisations continue to operate because they do not fear being caught. That is why stronger enforcement must sit alongside stronger penalties. Without meaningful disruption, criminal organisations will simply adapt, and they will continue to operate.

Perhaps the greatest weakness of this bill is that it does not form part of a broader national strategy. The coalition calls on the government to finally develop and implement a comprehensive national strategy to combat illicit tobacco and organised criminal activity. That is exactly what is required. We need stronger border enforcement, we need greater intelligence sharing, we need stronger cooperation between Commonwealth agencies and state police, we need greater financial investigation capability, we need more aggressive use of proceeds-of-crime laws, and we need stronger coordination with states and territories. Many Australians have seen illegal tobacco stores shut down only to reopen days later. Many Australians have seen criminal operators appear to continue trading with little consequence. That cannot continue. There must be real consequences for those who repeatedly break the law, there must be meaningful disruption of criminal supply chains, and there must be a coordinated national response. This debate is ultimately about more than tobacco. It's about protecting communities. It's about ensuring criminal syndicates cannot operate with impunity, and it's about ensuring Australians actually feel safe in their neighbourhoods.

The growth of the illicit tobacco market has brought with it organised crime, intimidation, violence and criminal activity. The longer governments allow those networks to become entrenched, the harder they become to dismantle. That is why this issue deserves serious attention. That is why the coalition continue to push for stronger action. The coalition will support the Combating Illicit Tobacco Bill 2026. We support stronger law enforcement powers, we support stronger proceeds-of-crime measures, and we support sensible efforts to disrupt organised criminal activity. But Australians should be under no illusion. This legislation alone will not solve the problem. The illicit tobacco market is now worth billions of dollars. It's costing taxpayers billions in lost revenue. It is enriching organised crime, and it is creating real community safety concerns across Australia.

This crisis did not happen overnight. It developed over years of poor policy decisions, weak enforcement and government inaction. The Albanese government has lost control of illicit tobacco. This bill is an acknowledgement of that reality. The coalition will support any measure that helps restore order, but we will continue to argue for a broader, stronger and more comprehensive response, because this is no longer about tobacco; it's about organised crime, tax evasion and community safety, and it is about protecting the interests of Australian taxpayers.

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