Pat Conaghan (Cowper, National Party, Shadow Assistant Minister for Social Services) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes:

(a) the growing illicit tobacco industry is costing the country $4.2 billion in revenue each year this government fails to strengthen penalties and enforcement measures; and

(b) that the continued failure to seriously address the illicit tobacco trade:

(i) has enabled organised crime groups to fund serious criminal activity including large scale drug importation and human trafficking;

(ii) has seen an increase in violence and attacks on lawful retail tobacco businesses;

(iii) has had a detrimental effect to the health of individuals and community safety;

(iv) heavily impacts on public revenue to the amount of $4.2 billion annually; and

(v) continues to severely impact the ordinary trade of lawful retail tobacconists;

(2) recognises the leadership of the previous Government on enforcement on the illicit tobacco trade by:

(a) establishing the Illicit Tobacco Taskforce in 2018, a multi-agency taskforce to protect Australian revenue and detect and disrupt organised crime syndicates that deal in illicit tobacco; and

(b) introducing amendments to the Public Health (Tobacco and Other Products) Bill 2023 for the establishment of a new Illicit Tobacco and E-cigarette Commissioner with the Australian Border Force;

(3) commends the valuable work of law enforcement and other agencies to detect and respond to the escalating illicit tobacco trade and related crime; and

(4) calls on the Government to:

(a) increase the penalties for illicit tobacco offences;

(b) work with states and territories to implement compatible licencing systems for tobacco sales to assist in enforcement, detection, and disruption efforts; and

(c) ensure that multi-jurisdictional responses can be adequately funded.

I rise today to draw attention to the rapidly expanding illicit tobacco trade within Australia. I think most of the public would not be aware of its far-reaching impacts. The illicit tobacco trade within Australia is a multibillion-dollar—that's with a 'b'—illegal industry. In my view, and in the view of many others, we need to do much more to address this very serious issue. We have various agencies—Commonwealth and state—that have committed significant resources over the years to try and deal with the issue, with varying degrees of specific success but very little discernible impact on market supply.

But I would like to recognise those agencies, both federal and state law enforcement agencies, and, having done the work in the past—and my colleague from Wide Bay, who's next to me, has as well—I appreciate the difficulties that law enforcement agencies face. Despite the establishment of the Illicit Tobacco Taskforce by the coalition back in 2018, efforts have been compromised by the inability to disrupt the supply chain. It's extremely difficult, and unfortunately, when people think of illicit tobacco, they don't put it in the same terms as, say, cocaine or ice. It therefore doesn't get the attention that is needed to address this multibillion-dollar illicit industry.

Unlike other illicit substances, this particular criminal commodity can actually be measured against the government purse. In 2022, a report estimated that 23.5 per cent of all tobacco consumption in Australia—almost a quarter of all tobacco consumption—was illicit, resulting in a staggering $4.2 billion tax loss to the Commonwealth. In addition to the lost government revenue, we've seen direct negative impacts on legal tobacco retailers in general stores. I've spoken to numerous owners of legal tobacco shops. They are losing hundreds of thousands of dollars a month because of this illegal tobacco industry. These are people who pay tax and who employ people in our communities—legitimately and legally.

At the same time, whilst these legitimate industries have lost over $300 million in retail over the last two years, the fact that we're not seeing seizures on the border is contributing to this illicit tobacco industry. In the first six months of 2023, tobacco sales declined an additional 10 per cent. I'd love to say that's because people are giving up smoking, but the fact is that the 10 per cent relates to illicit tobacco.

Another very serious consequence of the illicit tobacco industry is organised crime syndicates using the illicit tobacco industry to fund more serious crimes, such as cocaine, ice and human trafficking. What we've seen, over the past 18 months to two years, is an increase in turf wars and serious crime, including firebombing, particularly in Melbourne and Brisbane, to protect their turf.

I call on the government to increase the penalties for tobacco offences, to work with the states and territories to implement compatible licensing systems and to ensure that multijurisdictional responses can be adequately funded because, without the simultaneous implementation of those three measures, we're not going to make a dent in this illegal industry.

Karen Andrews (McPherson, Liberal Party) Share this | Link to this | Hansard source

Is there a seconder for the motion?

Llew O'Brien (Wide Bay, National Party) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Gordon Reid (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

The Albanese Labor government is committed to dismantling the criminal syndicates that have made illicit vapes and illicit tobacco their trade. I want to go through a little bit about what this government is doing with regard to border enforcement against these illicit vapes and illicit tobacco.

On 14 January 2024, the government committed $188.5 million to Border Force over four years to harden the border against illicit tobacco and to develop a new end-to-end enforcement model to combat that illicit tobacco. The funding is for a new model that will span three key areas: enhancing preborder intervention to stem the flow of illicit tobacco to Australia; enhancing detection, disruption and destruction both at the national border and alongside our state and territory partners for enhanced domestic enforcement—and this also includes trialling new AI-enabled technology to detect the illicit tobacco threat and complex concealments at the border; and connecting all key stakeholders across the Commonwealth, states and territories, and across health and law enforcement to improve our collective effect.

The funding outlined on 14 January of this year is in addition to the support already provided by the government in funding the Illicit Tobacco Taskforce. This taskforce forms part of a broader Border Force response to the threat of illicit tobacco and contributes to a whole-of-government effort by proactively targeting and disrupting significant and serious actors and organised crime groups that deal in this illicit trade. Our border agencies are seizing record numbers of illicit tobacco. Last financial year, Australian Border Force made over 120,000 detections of illicit tobacco, seizing over 1.77 billion cigarettes and over 867 tonnes of loose-leaf tobacco. And Border Force is on track to seize even greater quantities of tobacco this year. But what are we doing beyond border enforcement—because that alone won't eliminate the issue throughout Australia or, indeed, in the state of New South Wales, because it is a complex and it is a multifaceted issue.

This government, the Albanese Labor government, is tackling the issue head-on, working with justice and law enforcement, those in health portfolios, and state and territory governments. I want to come back to the fact that we are working to dismantle these criminal syndicates that have a significant part of their trade in the illicit vape and tobacco space.

We know that illicit tobacco and, in particular, illicit vapes can have a significant effect on a person's health. I've seen it in the emergency department. I've also seen it in my time in the intensive care unit. One of those illnesses, particularly with vapes and illicit vapes, is a condition called EVALI, which is e-cigarette or vaping product use associated lung injury. EVALI is linked to these illegal vapes and how they heat up the vapour, which can then destroy the lung parenchyma, or the functional units of the lungs. What happens is that these electronic cigarette and vape cartridges can be refilled with illicit substances from illicit sources, and they can be contaminated with vitamin E acetate, and that is really strongly associated with this EVALI, the lung injury associated with vaping and the like. And that's not just from observational studies where patients have had imaging and pathology testing; this has actually been from bronchoalveolar lavage—fluid samples that have been obtained from infected patients. Fluid from their lungs has been taken as a sample and sent to pathology, and that's had a direct link back to this lung injury. That's one example of how illicit vapes can have an effect on patients throughout Australia. It's also been associated with the development of acute eosinophilic pneumonia—again, an inflammatory issue that affects the lungs.

Both of these have a significant impact on a patient's respiratory function and also have an effect on a patient's ability to combat infection and, if they have an infection, to clear that problem with their lungs. This is a really, really big issue that we have seen with illegal vapes.

That's why we've taken the time to ensure that there are penalties in place for those people that are breaking the law. Looking at the maximum penalty for illicit tobacco offences under the Customs Act, it's 10 years imprisonment and a monetary penalty of five times the duty evaded. The maximum penalty under the Taxation Administration Act is up to 10 years imprisonment. So there are significant penalties that are in place. This is a big issue throughout Australia, and this government is committed to ensuring that people aren't affected by illicit tobacco and vapes.

Llew O'Brien (Wide Bay, National Party) Share this | Link to this | Hansard source

I rise to speak on the motion in the name of the member for Cowper relating to illicit tobacco and vapes in our community and the sale of them. As we've heard from speakers previously, it is a major problem in all of our communities. It's continuing to spread. It really does represent a failing of government on a number of levels. I'm not suggesting for a minute that this is something that has started since the last federal election. I'm not casting aspersions on the other side for that. This is something that has been happening for a long time. Governments at all levels have failed to step in and stop it. What we've had is a health approach—an approach towards smoking and the health related aspects and an increase in excise, and measures have been introduced. That's all good and well, but, at the other end, we haven't had the policing, the enforcement and the awareness around the illicit market, which has burgeoned, absolutely exploded, with the unaffordability of legal tobacco.

In my electorate alone, in Wide Bay, I've had two shops firebombed—firebombed, in Australia! It's something we don't often hear about. In Victoria last year, there were over 30 shops firebombed. As a former policeman, when I hear that it's organised crime—very sophisticated syndicates, with resources—firebombing the shops, targeting people who aren't earning the right amount of money for their commitment to this illegal trade, what I think is, 'You can't hide a firebomb, but how many people are being stood over and beaten up who are not going to go to the police because they've been threatened by an organised crime syndicate or gang?' To use an old expression, they get their kneecaps broken, and they're threatened: 'If you go and tell the police, we're going to get your family.' Well, you're never going to hear about those.

This is a failing of government, because we have turned what is a health issue into a major crime issue. We've got gangs and syndicates with international reach that are plying their trade. When you look at the numbers here—$4.2 billion of excise and millions of tonnes of tobacco being seized—this is a problem that we need to address. As I said as I started my speech, I want to work with the government to stop this. At the end of the day, there is something that people need to remember here. When you go in and buy these cigarettes, this illicit tobacco, you might think to yourself, 'Stuff the tax man; he is taking money off me; I'll get around that and buy these illicit products,' but you've got to remember that these transactions are not victimless. With that transaction to buy that illicit tobacco, a bit of that money is going into the coffers of an organised crime syndicate who are dealing in human trafficking, prostitution of young and vulnerable women. All of these heinous offences are also contributed to by the same gangs that are giving you your cheap cigarettes.

As I said, I'll do anything I can to work with the government and to talk to all levels of government to bring about change because this is a problem that has the potential to harm Australians. In both a smoking and a health way it's been a failure, but now in a crime way it's a failure.

Aaron Violi (Casey, Liberal Party) Share this | Link to this | Hansard source

It's a pleasure to rise and speak on and pay tribute to the member for Cowper for this very important motion. As a society we're becoming more and more aware of the challenges illicit tobacco poses for individuals and the health of our society. At the moment, it is having impacts through increased crime. I know, in my community, we recently had a tobacconist firebombed, and that store was destroyed. It's the flow-on effect to other businesses around there. I know a bit of an icon in the Seville community, Branded Burgers, is next door to that tobacco station. They still haven't opened weeks and months after that firebombing, as their store was damaged in that fire. Innocent businesses have been impacted across the state. In my community, it's had a significant impact.

But not just the stores are impacted. You need to remember that CFA volunteers in my community had to go out and risk their lives—risk danger through chemical contamination and things like this—to make sure that fire was put out and didn't spread to other buildings that were all connected through that strip of shops. I want to pay tribute to the Seville CFA and the other brigades from Wandin, Hillcrest, Gruyere and Coldstream that came to support them when that Seville fire happened. It's an example of the ripple effect if we don't get illicit tobacco, which is driven by organised crime, under control.

One thing we don't talk about too often is that the crime is very much in our face. There is a significant economic impact as well, with $4.2 billion in lost revenue to the government through illicit tobacco, because they're not paying the taxes and excise. That's significant money that could be spent on other initiatives, like health initiatives, getting the budget in better nick and spending money on schools and hospitals. That is money that should be going to worthy causes that is not, because of illicit tobacco.

There are lots of other negative impacts that we sometimes don't talk about. Talking to many retailers in my community, across the state and across the country as well, we're facing a situation where families and small-business owners are coming to a really difficult choice that they have to make. We need to acknowledge this reality for these businessowners. If you have a legitimate convenience store, retail outlet or IGA—those kinds of stores—and you sell tobacco, if an illicit store moves into your community, your sales will drop significantly overnight. I'm not a huge fan of smoking. I never have been and never will be. But it's a legal product the use of which people choose to partake in. If a business is selling it, in many cases what's happening is that a family business has taken on a loan and potentially put their house on the line. They're watching a significant driver of their revenue and of the foot traffic into their stores drop, as people buy other products that drive sales in their store. Many families are now faced with a choice: do I continue to follow the law and watch my business go under, or do I start to join in this illegal activity? We need to clamp down on the illicit tobacco industry to make sure businessowners and families aren't faced with that tragic choice.

We've got options. Something was raised with me just last week by a retailer. We all remember the plain-packaging laws that were bought in previously. There's a $10,000 fine for every packet that doesn't meet the regulation. The reality is that the packets that come in from overseas and are sold illegally don't meet those regulations. This is an opportunity for the government to work with the appropriate authorities at state and territory and council levels to start blitzing those small businesses that are breaking the law and selling packaging that doesn't meet those regulations. If you start to blitz and fine them $10,000 for every packet, word's going to go out pretty quickly and they are going to start to take those products off the shelf.

We need to act. This response has been too slow. There's this existing lever, as I have just mentioned. There is the Illicit Tobacco Taskforce that the previous government brought in in 2018. There are many more options and many more levers that could be pulled. But, again, we are seeing this government be too slow to react and too reactive. It's letting others push this agenda. The member for Cowper's driving this agenda because this government is, again, asleep at the wheel. It is the Australian people, the people in my community, who are put in danger because of that.

Michelle Ananda-Rajah (Higgins, Australian Labor Party) Share this | Link to this | Hansard source

As I've said in this chamber before, I saw the physical effects of nicotine addiction up close and personal when I practised in a hospital. It results in accelerated atherosclerosis, which pretty much affects every single blood vessel in the body. Large organs are affected as well as small organs and everything in between. It results in stroke, heart attack and peripheral vascular disease, which then leads to serial amputation. The health effects of nicotine addiction are well recognised but probably less so are the societal hazards, although they are now becoming more evident in our streets and suburbs, particularly in Victoria.

The damaging effect of illicit tobacco in Australia is complex and requires a coordinated response across multiple jurisdictions, state and federal, as well as multiple departments. The illicit tobacco trade includes the unlicensed production or importation of tobacco plant or leaf and manufacturing of tobacco products. These activities are conducted by highly adaptive criminal organisations and can involve violence, including arson and assault, and result in evasion of tax and duties needed for the provision of other government services, such as. For example, health care or education. This unlicensed access to tobacco products by Australians of all ages results in worsening nicotine addiction.

It was the Labor government under Gillard and health minister Nicola Roxon that introduced plain packaging. It was a world first. Labor governments have a proud legacy of tobacco control. That one single intervention drove smoking rates down and it has been picked up by multiple other countries around the world. Now we are in a fight for our lives with respect to illicit tobacco. As a government, we are tackling the issue head on by working across justice, law enforcement and health portfolios, as well as state and territory governments. The Australian Border Force has seized illicit tobacco being imported into Australia that has equated to over 1.7 billion illicit cigarettes and over 867 tonnes of looseleaf tobacco—it's mind-boggling—in the last financial year alone and local raids of illegal suppliers has produced quick wins. The Illicit Tobacco Taskforce across the Australian Border Force, ATO, the Department of Home Affairs, the Australian Transaction Reports and Analysis Centre and the Australian Criminal Intelligence Commission, as well as the Commonwealth Director of Public Prosecutions, are targeting these criminal syndicates that are having the greatest impact in Australia and tackling activities at all points of the supply chain—offshore importation and production and domestic manufacture and sale.

We hear criticism that we are not doing enough when in fact we are doing a lot and it is being coordinated across multiple facets, multiple jurisdictions and multiple departments, such is the complexity. The syndicates are highly adaptive. There's so much money flowing through these syndicates. But we owe it to the Australian people to try to smash them.

Penalties are significant. For example, the maximum penalty for illicit tobacco offences under the Customs Act is 10 years imprisonment. It comes with a monetary penalty of five times the duties evaded or both. In January of this year the Albanese government announced a major Border Force crackdown on the importation of illegal tobacco and $188.5 million has been committed over the next four years to the Australian Border Force to deliver a new compliance model, in partnership with states and territories.

The Australian Border Force will lead Commonwealth state and territory partners in a coordinated effort to tackle all aspects of illicit tobacco. The model has three prongs. The first is to stem the flow of illicit tobacco into Australia. This means that the ABF, with international partners, will work to target and disrupt illicit tobacco in source and transit countries before it even reaches our borders. We will boost ADF capacity to combat illicit tobacco trade at the border, and we will bring together stakeholders to deliver a coordinated, multi-agency and multijurisdictional response across states and territories.

As I said, this is only one facet of the broad agenda that we have with respect to tobacco control. We are also targeting vapes, as this is a scourge for our youth that is essentially a gateway drug into nicotine addiction. In the middle of this year we'll be introducing legislation to finally see these vapes off our streets and out of our suburbs. We would like to ensure that our schoolchildren can go to school without being targeted by vape stores.

Warren Entsch (Leichhardt, Liberal Party) Share this | Link to 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.

Karen Andrews (McPherson, Liberal Party) Share this | Link to this | Hansard source

There being no further speakers, the debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.