Mary Aldred (Monash, Liberal Party) Share this | Link to this | Hansard source

We are debating the Combatting Illicit Tobacco Bill today because Australia is no longer dealing with a simple tobacco policy. We are dealing with a national crime crisis—a crisis that is making Australians feel unsafe in their own homes, unsafe in their communities and unsafe in their workplaces. The tragedy is this: these are not the consequences of some unforeseeable external shocks. This crisis has grown rapidly under the Albanese government because of a tobacco control policy that has created one of the most lucrative black markets in this country, a black market controlled by organised crime, a black market that is no longer hidden in the shadows. It is exploding in suburban shopping strips; it is spilling into family neighbourhoods, and innocent Australians are paying the price.

Today, the victims are mums; young workers; small-business owners; immigrants, who moved here for a better and safer life; and children and ordinary families, who had absolutely nothing to do with organised crime. A 27-year-old woman, Katie Tangey, lost her life after a house linked to the tobacco wars exploded into flames. Think about that for one moment. A young woman is dead. Her family is shattered. Their lives have been destroyed. All because the offenders targeted the wrong house. Yet this government is still pretending this is just a regulatory issue.

In Bega, a 19-year-old girl working a night shift at a rural service station allegedly had a handgun pointed at her while cigarettes and cash were stolen. A teenager just doing her job. Somebody's daughter, who was trying to earn a living, is now impacted for the rest of her life. Australians expect their kids to go to work and return home safely. They don't expect their life to be threatened over a pack of 20s. In Altona, residents living just doors away from a targeted tobacco store had to flee for safety as fire tore through the building. Neighbouring businesses lost power, which meant the adjoining small-business owners lost income and were not able to recoup that back.

These are not isolated incidents anymore. This is violence becoming normalised. That's what I find so horrifying about the illicit tobacco crisis. Our communities deserve better. They deserve to feel safe. They deserve to feel proud of their neighbourhoods. Two hundred and eighty-five fire bombings linked to the illicit tobacco trade have now occurred across Australia. Let that sink in. That's 285 fire bombings in Australian suburbs and in local shopping strips, near homes, schools, cafes and small businesses. And every single one of those attacks has victims. The proceeds of these crimes are funding bikie gangs, criminals and terrorists. They've never had it better under this illicit tobacco crisis and this high excise regime.

My own interest in this issue began around six months ago after the ramraiding of a small family owned grocery store in Longwarry, a great little town in my electorate of Monash. The owners had done nothing wrong. They refused to be threatened by a criminal gang. They paid a price for that. This is wrong. The Albanese government continues to speak about public health while communities are being terrorised by the criminal empire their policy settings have helped create. The reality is this: when you create a market worth billions of dollars, criminals will fight for control of it.

Under this government, illicit tobacco has exploded from an already serious issue into a full-scale criminal economy. The government's own figures show that the illicit tobacco market has surged to 55 per cent of total consumption, worth $6.9 billion. The only thing that is worse is the approximately 97 per cent illicit vape market in this country in terms of the black market economy. Smoking rates are not going down. For the first time in around 30 years, there's been an uptick in smoking rates in Western Australia.

The recent criminal intelligence wastewater report shows an annual uptick of four per cent in nicotine in wastewater nationally. That's an increase in metro areas. It's an increase across regional Australia. This is not good for better health outcomes. Between 2022 and 2025, the proportion of tobacco sold outside of Australia's legal system has increased by 285 per cent, and that's money not going to schools, not going to hospitals and not going into communities like mine. More importantly, it's not going to the increased insurance bill that so many shop owners and, in some cases, residential owners have faced as a result of being deemed a risk due to fire bombings and ram raids that are associated with local illicit tobacconists. It is flowing directly into the hands of organised crime.

For the past few years this government has ignored repeated warnings. Treasury warned that excessive increases in tobacco excise would strengthen incentives for the illicit trade. Law enforcement warned organised crime was moving aggressively into the market. Retailers warned violence was escalating. But the government doubled down anyway, because they prefer to put policy pride ahead of the safety of ordinary Australians and the people who elected them to lead.

When legal cigarettes cost more than $40 a packet and illegal products are available for a fraction of the price, criminal networks have moved and will move in. This is not ideology; this is economic reality. It is a crisis affecting migrant families who work 16-hour days to build a small business, only to watch organised crime take over their stores and bully them into selling illicit products. It is a crisis affecting young women and young people working in retail, at petrol stations or in convenience stores. It is a crisis affecting children who now see boarded up shops, burnt out buildings and police tape near their homes—and they're being sold illegal products too.

Australia is becoming less safe because this government has refused to confront the consequences of its own failed policy settings. What is the government's response? More of the same—more denial, more spin. The Australian Border Force has said we can't seize this problem away, because enforcement is chasing a black market that government policy keeps recreating. I draw attention to the ABF's submission to the current Senate inquiry. It's quite illuminating. It quietly notes that the tobacco excise is responsible for the explosion in black market warfare. The submission notes:

The ABF assesses that the most effective responses to illicit tobacco are those that integrate criminal, regulatory and administrative levers across jurisdictions.

The ABF submission continues, quite remarkably:

While enforcement action remains essential, the scale, resilience and adaptability of the market demonstrate that enforcement alone will not deliver sustained reductions in illicit tobacco activity.

Even the New South Wales Labor health minister, Ryan Park, warned over the last couple of days that enforcement alone is futile, arguing that states are stuck playing a game of whack-a-mole as long as the federal government's high tobacco excise continues to fuel the illicit market. The New South Wales Labor premier, Chris Minns, has shown moral and economic leadership that his federal counterpart lacks. While Chris Minns has spoken unequivocally, the federal government has been all over the shop. One senior federal minister told a Senate estimates hearing late last year that there was no link between the high excise tax and the illicit tobacco market. Another minister in this place said you'd have to be 'deluded or lying' not to acknowledge it. I agree with him. Now do something about it.

Every time this government refuses to rethink its failed excise strategy, organised crime gets richer. They were the biggest winners on budget night. The $14 million in state and territory funding announced on budget night is a drop in the ocean compared with the $6.9 billion in profits the illicit market is making. Every time they ignore the explosion of the illicit trade, another suburban community is placed at risk. This government—this health minister, this home affairs minister, this Treasurer and this Prime Minister—cannot keep pretending; this is not working. The consequences are real. The consequences are unsafe communities, unsafe workplaces and an unsafe Australia. This is the real legacy of the government's failed tobacco tax experiment. Unless Australia fundamentally changes course, we risk entrenching a permanent criminal economy that undermines public safety, prioritises the coffers of organised crime and leaves everyone across our community—everyday Australians—paying the price.

The government's failure is revealed by this budget's figures as well. The extraordinary revenue downgrades have laid bare how Tuesday's budget is exposed and the government's failed approach to tobacco control policy is not working. No-one believes the revenue has disappeared because people have stopped smoking. It's because consumers have opted out of paying tax on the government's sky-high tobacco excise, switching to cheap smokes supplied by organised crime. It's a decision they've made not because they want to but because they are compelled to in an extreme cost-of-living environment. The revenue forecasts over the forward estimates also show that Treasury itself does not believe the government's enforcement-only approach will be successful in regaining control over the tobacco market, with continued downgrades as far as the eye can see. That is the reality confronting this parliament today.

I want to commend the intervention by people who are prepared to show leadership on this. Yesterday the New South Wales Premier, Chris Minns, again called on his national counterpart to cut the tobacco excise tax. I want to mention some medical professionals as well. Dr Nick Coatsworth, the former Commonwealth deputy chief medical officer, has said:

Australian smokers are being forced by tax policy into funding organised crime.

And all the while cheap cigarettes are available to a now growing group of smokers.

Coatsworth calls this 'disastrous public health policy'. I should also note that Dr Coatsworth is a respiratory specialist. Dr Ed Jegasothy, who is a senior researcher in the School of Public Health at the University of Sydney, says:

The Commonwealth can maintain its position only by denying basic market economics.

Tax reduction might not work perfectly. But neither will the status quo.

So, too, says Dr Colin Mendelsohn, a general practitioner who has worked for 40 years helping smokers quit. Another GP, Dr Joe Kosterich, says the higher excise is counterproductive to reducing smoking rates and is simply fuelling the black market.

I have spoken to many GPs over the last six months. Their interest in the issue of illegal tobacco has been motivated by their patients—patients who want to quit smoking, patients who are wearing the consequences, through asthma, emphysema and cancers. They believe harm reduction is a far better option than, effectively, prohibition—taxing people who, often, are in a low socioeconomic category and who are already staring at an electricity bill stuck to their fridge, wondering how they're going to pay it at the same time as buying groceries. Why are we punishing them and their children? We should be helping them through harm reduction, like education and—dare I say—a regulated framework for legal vapes. The overtaxing of poor working people in this country through an exorbitantly high tobacco excise is a great moral injustice set upon them by a party that is supposed to exist in this place to stand with them. There's a moral piety from the government on this issue. It should be confident enough to argue the merits of this case alone.

My motivation is to stand up for the retail staff and small-business owners in my electorate, who have been physically attacked or ramraided, or live in fear. And it goes back further than that as well. All of us have known someone or loved someone who has died through cancer. I've lost someone through smoking induced lung cancer, and I'd want to spare anyone from that.

To the government: get on with your job and show some real leadership. The coalition will support this bill, but it is too little too late and does not deal with the real issues at hand.

Trish Cook (Bullwinkel, Australian Labor Party) Share this | Link to this | Hansard source

Today I rise to speak in strong support of the Combatting Illicit Tobacco Bill 2026. This is a vital piece of legislation that forms the central pillar of the Albanese Labor government's relentless crackdown on a trade that has for too long operated in the shadows of our economy while casting a very long and dangerous shadow over our communities. For many years, public perception of illicit tobacco was somewhat benign. It was perhaps viewed as a victimless tax dodge or a niche issue for health advocates. But today the reality on the ground and in our suburbs tells a far more sinister story. What we are witnessing now is no longer just a revenue problem or a regulatory hurdle; it is a serious organised-crime crisis, and it is a crisis that threatens the safety of our streets, the viability of small businesses and the health of the next generation.

To understand the necessity of this bill, we must first understand the staggering scale of the problem. The first Illicit Tobacco and E-Cigarette Commissioner was appointed by our government and produced the Illicit Tobacco and E-cigarette Commissioner report 2024-25. This report estimates that the value of the illicit tobacco market in 2024-25 was between $4.1 billion and nearly $7 billion. Let's be clear about what that money represents. These are not funds being tucked away by mums and dads. These billions of dollars represent a massive war chest for organised crime syndicates. This is the black economy in its most destructive form.

Organised crime groups are reaping profits, and that capital doesn't stay in the tobacco trade; it acts as seed funding for a broader spectrum of misery. This money is the lifeblood of criminal syndicates, directly funding the importation and distribution of drugs, high-level cyberscams that target our seniors, and sophisticated money-laundering operations that undermine the integrity of our financial institutions and systems. This trade fuels a cycle of violence that has moved from the underworld into everyday lives. In recent times, we have seen firebombings of shopfronts, brazen acts of intimidation, and public violence. This isn't just about cheap cigarettes; it is a direct assault on public safety and the rule of law.

As the member for Bullwinkel, I see the local ripple effects of this global criminal enterprise. Our electorate, spanning from the Perth Hills to the rapidly growing suburbs in the valleys, is home to hundreds of small businesses—newsagencies, convenience store operators and service station franchisees. These are the people who are doing the right thing. They're paying taxes and adhering to strict age-verification protocols, and they contribute to our local economy. When an illicit tobacco pop-up shop opens down the road, selling unregulated, untaxed products at a fraction of the legal price, it isn't competition; it is economic sabotage.

We're not acting in a vacuum here. The Australian public is of course demanding this reform. A major national survey by the Australian Council on Smoking and Health, ACOSH, and its partners, released in March 2026, revealed a clear mandate for change, and we are acting. Their survey of over 5,000 Australian adults revealed:

Overall, the Australian public's perception that there are too many shops selling tobacco was widespread (64%) and most respondents (75%) believed it is very easy or easy for Australians who smoke to buy illegal tobacco products right now.

This sentiment is backed by a startling reality. ACOSH CEO Laura Hunter recently pointed out:

… around 70% of Australians rely on petrol, yet we have only about 7,000 petrol stations across the country.

…   …   …   

But tobacco—a product that is deadly when used as intended … is sold in over 40,000 outlets.

…   …   …

Forty thousand outlets is an open invitation for illegal operators to exploit the system.

She went on:

When tobacco is sold on every corner, it makes enforcement harder and it normalises a deadly product …

We must also address the risk this poses to decades of national tobacco control policy. Australia has been the world leader in lowering smoking rates, through plain packaging, education and sensible taxation. As a nurse, I am of course totally supportive of these measures, having seen the devastating effects of smoking. I remember when every second person on buses, in workplaces and even on aeroplanes smoked, and we've come a long way since those times to protect our future generations.

However, when the availability of cheap, unregulated, illicit tobacco, often sold without health warnings and in attractive non-compliant packaging, threatens to undo that progress, this is particularly concerning in regard to our youth. The explosion of illicit chop-chop and unregulated e-cigarettes is designed to hook a new generation on the devastating product of nicotine. By removing the price signals and health warnings that we know work, these criminal actors are directly attacking the health of our children. We cannot allow the progress of the last 30 years to be torched by criminals looking for a quick profit.

This bill addresses the crisis by fundamentally changing the business model of illicit tobacco through two key objectives. First, we are rebalancing the risk-to-reward calculation. For too long, the penalties for dealing in illicit tobacco were seen by criminals as a mere cost of doing business—quite affordable. If the fine is $50,000 but the profit is $500,000, the criminal will pay the fine with a smile. This bill ends that. We are raising offence penalties to match the actual severity of the harm caused, ensuring that the punishment is a genuine deterrent and not a line item in a ledger. Second, we are attacking the profit motive. By making the proceeds-of-crime regime more effective, we are going after the one thing that criminals care about: their money. We are expanding law enforcement powers to investigate and ensure that the consequences for criminal actors are swift, severe and financially ruinous.

The Albanese Labor government is not just talking about this issue; we are delivering the resources that we need to win this fight. Since 2023-24, we have provided $346 million in funding to the Australian Border Force, a significant investment in our front line, and we also appointed the first ever Illicit Tobacco and E-cigarette Commissioner and backed back this with an additional $21.3 million in the 2025-26 budget. This commissioner is the general in this fight, coordinating our national response across every agency.

Our strategy is built on three clear, actionable pillars: disruption at the border, where we're stopping the flow of it before it reaches our shores; enhanced detection and destruction using state-of-the-art technology to find and seize products within our communities; and national coordination, breaking down the silos between the Commonwealth and state authorities to ensure there are no blind spots for criminals to exploit. The results speak for themselves. Since January 2024, in a country of nearly 30 million people, more than 14 million vaping products have been seized by the Australian Border Force. In just the final six months of last year, we took over a billion illicit cigarettes off the streets. That is a billion cigarettes that do not fund a crime syndicate and do not end up in the lungs of Australians.

The only way to truly shut down this trade is if the Commonwealth, states and territories work seamlessly together. The criminals, of course, don't care about state borders, but neither should our enforcement efforts. On that note of cooperation, I want to take a moment and give a significant shout-out to my colleagues in the Western Australian parliament, the Cook Labor government—no relation. In March of this year, the WA parliament passed some of the toughest, most comprehensive tobacco and vaping laws in this country. By introducing massive financial penalties—up to $21 million for companies—and potential 15-year prison sentences, Premier Roger Cook and health minister Meredith Hammat have sent a clear message: WA will not be a playground for organised crime. These laws, which include the power to shut down illegal shops for up to a year, provide the perfect state-level complement to the federal bill that we are debating today, and this is what Labor in power looks like—federal and state governments working as one to protect our communities and put criminals behind bars.

I briefly want to touch on the e-cigarettes aspect of this bill. We have seen an explosion in disposable vapes, often sold in bright colours with flavours like watermelon or bubblegum, and these are not smoking-cessation tools. They are a delivery system for high-concentration nicotine, designed to appeal to teenagers. The 14 million seizures that I mentioned earlier—this bill will give us the legislative teeth that we need to go further. We are closing the loopholes that allow these products to flood our convenience stores, and we're making it clear that, if you sell vapes to kids in our community, we are coming for your profits and your liberty.

There is much more to do around tobacco, and this bill is about much more than just tobacco itself. It's about the kind of society that we want to live in. We want to protect small businesses, prioritise the health of our children and ensure that crime does not pay. As a nurse, I have seen the consequences of tobacco use up close. I've held the hands of patients struggling for breath. I've sat with families as they have navigated the heartbreak of preventable illness. In the clinical setting, we fight to save lives one person at a time, and I'm very proud to be in a House where we have the power to protect millions. As Laura Hunter from ACOSS rightly said, a product that kills two of three long-term users should not be readily accessible in our communities. I commend this bill to the House.

Andrew Hastie (Canning, Liberal Party, Shadow Minister for Industry and Sovereign Capability) Share this | Link to 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.

Carina Garland (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Ted O'Brien (Fairfax, Liberal Party, Shadow Minister for Foreign Affairs) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Tom French (Moore, Australian Labor Party) Share this | Link to this | Hansard source

There is a particular kind of shopfront that people in my electorate know well. The windows are blacked out, the signage is usually doing a lot of the work, the product range is not exactly subtle and the whole operation has the unmistakeable feel of a business that would prefer nobody asked too many questions. People in Moore see these shops. They see the cheap cigarettes. They see the vapes. They see the young people going in and out. They see legitimate businesses trying to do the right thing, while other operators appear to be making their own rules, and they ask, 'How is this still happening?' That is the practical question behind this bill.

The Combatting Illicit Tobacco Bill 2026 is not a lecture about smoking. It is not about making life harder for small businesses that comply with the law. It is not about chasing someone for a minor mistake at the counter. It is about a growing illegal market in tobacco and nicotine products and the need for Commonwealth law to respond properly to the scale of that market. Australians are not naive. They know illegal markets exist, but what concerns them is when the whole thing starts to look open, normalised and almost casual. That is why this bill is necessary.

Before I came into this place, I was an electrician and then a lawyer. Neither trade leaves you with much patience for people who think the rules are optional. On a worksite, rules exist because people get hurt when they are ignored. In employment law, rules exist because power gets abused when they are ignored. In public health, rules exist because harm does not fall evenly; it falls hardest on the people with fewer choices and fewer resources.

The illicit tobacco market is not just a bit of tax avoidance. It is not just a few cartons being moved under the counter. It is a large, profitable and increasingly visible illegal market. The basic point is this: illicit tobacco is now estimated to make up at least half of the tobacco market in Australia. The profits are counted in the billions. The revenue lost to the Australian community is counted in the billions. Almost every vape sold in this country is estimated to be illegal. It is happening in suburban shopping strips, near schools, near legitimate retailers, near families and in communities like mine. While the public-facing end might look like a small shop with blacked out windows, behind it sits something much more serious: illegal supply chains, unlawful importation, storage facilities, cash movements, money laundering, intimidation and significant criminal profit.

There is also a public health issue here. Australia has spent decades reducing smoking rates. Plain packaging, advertising restrictions, public health campaigns and tobacco excise have all played a role. Those reforms are not perfect, but they worked. Fewer people smoke. Fewer people start smoking. Fewer people die from tobacco related illness. But, when illegal cigarettes are being sold for a fraction of the lawful price, that work is undermined. When illegal vapes are cheap, colourful, easy to get and plainly attractive to young people, we are dealing with what is already in front of us. A young person who might never have smoked a cigarette can be drawn into nicotine addiction through a vape that should never have been sold to them in the first place, and I do not accept the argument that the answer is to surrender the field to the illicit market and cut the tobacco excise because illegal operators have found a profitable gap. That is actually a very strange argument. It's basically saying that, because the system has been exploited, the sensible policy is to weaken the system. I do not think that is the lesson we should be drawing. The lesson is that, where an illegal market becomes too profitable and too low risk, the law has to change the calculation.

That is what this bill does. The bill has three main parts. First, it increases penalties for illicit tobacco offences. Second, it improves the investigative tools available to law enforcement. Third, it strengthens the proceeds of crime regime so agencies can better pursue money and assets connected to this trade.

The first part of the bill increases criminal penalties offences for the importation, possession, buying, selling, supply, production and manufacture of illegal tobacco. That includes increasing the maximum penalty for intentional importation of tobacco to defraud the revenue from 10 years to 15 years imprisonment. It also significantly increases the financial penalties attached to this offending. That is necessary because the current risk profile is simply not enough. The profits are substantial, and the consequences are manageable. Penalties risk becoming part of the cost of doing business. Illegal markets respond to incentives like any other market. This is not about imposing heavy penalties for the sake of looking tough; it's about matching the law to the scale of the conduct. When an illegal market is generating billions of dollars, penalties have to be more than an inconvenience.

The second part of this bill gives law enforcement better investigative tools. Under the Surveillance Devices Act, some powers are only available where the relevant offence carries a sufficient maximum penalty. By increasing penalties for illicit tobacco offences, the bill allows law enforcement to use tools such as surveillance device warrants, computer access warrants and tracking capabilities across a broader range of offending. That is important because this trade does not operate through one person at one counter. These are networks. They use phones, encrypted messages, bank accounts, corporate arrangements, storage sites, drivers, shopfronts and people whose role may be to keep others at a distance from the day-to-day offending. If we want law enforcement to deal with that properly, they need the tools to match the conduct.

The bill also amends the Telecommunications (Interception and Access) Act so that specified illicit tobacco offences are treated as serious offences. That means agencies will be able to seek telecommunications interception warrants when investigating these networks. That is a significant power, and it should be treated as such. No parliament should casually expand enforcement powers and then hope for the best. There should be warrants, there should be thresholds, there should be accountability, and there should be scrutiny. But, if illegal networks are using sophisticated communications to import, distribute and profit from illicit tobacco and nicotine products, then lawful enforcement must be able to investigate that conduct lawfully and effectively.

The third part of this bill strengthens the proceeds of crime regime. There is limited value in only catching the person at the counter if the proceeds continue to move through the broader network. There is limited value in seizing a few boxes of illegal tobacco if the people organising, financing or benefiting from the trade are left untouched. If we are serious about disrupting this market, we have to make it less profitable. The bill amends the Proceeds of Crime Act to make it easier to pursue the proceeds, instruments and benefits of crime. It expands search warrant powers, including person-search warrants. It updates provisions dealing with electronic devices, account based data and cloud based material. It expands examination orders. It improves information-sharing with Commonwealth regulators. Put more plainly, it helps law enforcement follow the money—not just public statements, not just seizures and not just activity at the shopfront. The financial structures behind the trade also have to be addressed.

The proceeds of crime changes are also about keeping pace with how criminal wealth is held and moved. Once upon a time, evidence might have been in a filing cabinet, a ledger or a shoebox full of cash. Sometimes, I suspect, it still is, but criminal innovation is not always as glamorous as television makes it look. Increasingly, relevant information is on a phone, in an app, behind a login, in cloud storage, in account based data or connected to digital assets. The law cannot pretend that all evidence lives in a drawer.

Financial arrangements linked to serious offending are often deliberately difficult to untangle. They may involve layers, nominees, businesses, relatives, cash, property or other arrangements designed to separate the person directing the conduct from the money being made. The bill also allows information obtained under proceeds of crime powers to be shared with other Commonwealth authorities for specified regulatory purposes, including such regulators as AUSTRAC, ASIC and APRA. That is sensible.

Illicit tobacco is not just moved through the ports and shopfronts; it is moved through accounts, businesses, financial services and professional structures. If a regulator has a role in protecting public revenue, monitoring obligations, licensing or enforcing regulatory standards, relevant information should not sit uselessly in a silo. Government agencies are very good at creating silos. Sometimes we even give them acronyms so they look more official. But illegal markets do not respect administrative boundaries.

The bill also removes the requirement for a preliminary unexplained wealth order before a court can consider the main unexplained wealth application. That might sound technical, but technical steps matter. Anyone who has spent time around litigation knows that process can be used properly, and process can be used as a fog machine. If a procedural step adds work without adding fairness, then it is not protecting justice; it is protecting the person with the better lawyer and the longer runway. This bill sensibly removes that duplicated step.

The bill also deals with protective orders, closed court orders, equitable sharing arrangements and service of documents including electronic surveillance. These amendments are designed to make the system work more effectively.

I also want to say something about legitimate businesses. There are businesses in our community that follow the law. They pay tax. They meet their obligations. They deal with the inspections, compliance costs, licensing requirements, employment obligations, insurance, rent, wages and all the other realities of running a business. They should not be expected to compete with operators selling illegal products at unlawful prices. That is not competition. It is cheating. The same principle applies in workplaces, procurement, taxation and small business. Rules only work if they are enforced with enough seriousness that compliance is not treated as a mug's game. This bill is part of restoring that seriousness.

I also acknowledge that scrutiny committees have raised issues about increased penalties, privacy impacts and search warrant powers. Those questions should be taken seriously. A parliament should not expand coercive powers without asking hard questions. Enforcement powers must be justified. Safeguards must be real. Warrants must not become rubberstamps. Privacy should not be treated as a decorative extra, nor should we pretend the current position is acceptable. It is not acceptable for legitimate businesses trying to compete with illegal operators. It is not acceptable for communities dealing with intimidation and criminal activity. It is not acceptable for parents to worry about illegal vapes being sold to kids. And it is not acceptable to the public health system that it bears the cost of tobacco related illness.

Doing nothing has consequences, too, and those consequences are already visible. In Moore, I often speak about the basic expectation that government should deal with the problems people can see in front of them, and this is one of those problems. People do not need a 40-page explainer to know something is wrong when the illegal tobacco shops are operating openly in our streets. They do not need a lecture about customs law to know that the law should already apply in practice, not just on paper. They want the law enforced. They want the illegal profits pursued through proper legal processes. They want young people to be protected. They want legitimate businesses treated fairly. And they want the rules to apply consistently.

This bill will not solve the whole problem by itself, and no serious person would claim that. We still need the cooperation of the states and territories. We still need broader enforcement. We still need local policing. We still need public health work. We still need action on illegal vapes. We still need to keep the pressure on financial networks to allow illicit profits to move around the economy.

But this bill is a necessary step. It increases the penalties, improves investigative powers, strengthens the proceeds-of-crime laws, supports a more joined-up Commonwealth response and sends a clear message that the Commonwealth is not only concerned with packets being sold at the counter but is also concerned with the networks, the money and the structures behind the illicit trade, and that is the right approach. People in Moore are entitled to expect better, and I commend the bill to the House.

Jason Wood (La Trobe, Liberal Party) Share this | Link to this | Hansard source

I go back to my time—many, many years ago—at the organised crime squad in Victoria Police. Back in 2000, you'll find, organised crime realised there was money to be made in tobacco. At the time we didn't have very strong Commonwealth laws or state laws, and they were pretty much evading tax. There was a huge investigation by the tactical investigation unit. Subsequently, the power of legislation wasn't there, and they lost the court case.

I entered parliament in 2004 and was on the committee for law enforcement. We went down with the customs officers—they were showing us how much tobacco was being seized—and my question was: how do you go with prosecutions? They said: 'We don't. It's too dangerous for the customs officers.' This shows, going back in time, how bad the problem was. Over the years, it has just got worse.

I took over the role of assistant minister in the Morrison government. One of the responsibilities I had was to look at tobacco, and a request came through from the Australian Border Force. They needed certificates to have a magistrate basically declare that an item seized was tobacco. For, initially, three months they had to store the tobacco there. We changed that so it could be immediately destroyed. Once I went down there and visited the customs office where there was a mail house for items coming in from around the world. It was incredible to see how many cigarettes were being seized at that time.

And then you look at shipments. In Australia, organised crime just need one shipment out of 70 to get through—it could be a bathtub full of cigarettes—and they've made their profits. I've been exceptionally disappointed with Victorian Labor governments. We had a police ministers conference where I actually raised it with the Attorney-General and the chief commissioner at the time, to say we really needed to do something about tobacco and organised crime. Sadly, the response at the time was, 'It's not an issue, so we don't need to worry about it.' Obviously, we've now seen all the firebombings and everything since.

When it comes to law enforcement, the easiest way to do this—this is something I've been pushing for; I made speeches on it when in government—is for the states to have a penalty notice regime. The Commonwealth powers—the legislation changes and the stronger penalties—are fantastic, but the state and territory police are not going to use them. Even the surveillance powers and search warrants—again, the Australian Border Force can't use these powers. I say to the government: you need to give the Australian Border Force the surveillance powers, the telephone intercept powers, because they have to call on the Australian Federal Police when they're with these operations, with the Illicit Tobacco Taskforce. If members are seconded there and the ones who aren't have another operation—it could be a paedophile ring or major drug trafficking—that's always going to get priority. We need the Australian Border Force to get that priority.

To come back to the point I was making before, the state police need to be given something similar to a penalty notice, where they can issue fines. It could be, initially, $10,000 or $100,000—and it goes to a million dollars. At the moment in Victoria, under state Labor, there are only 14 of these so-called tobacco licensing inspectors for 10,000 venues. It's absolutely ridiculous—only 14! They've seized a half a tonne or something of cigarettes. It is a complete failure. I'm especially blaming the state Labor government of Victoria. If they had got on this years ago, we wouldn't be in this situation.

When it comes to tariffs, I do agree with colleagues. Reducing them does make a difference. When it comes to the excise—

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

The debate is interrupted in accordance with standing order 43. The debate may be resumed a later hour, and the member will have leave to continue speaking when the debate is resumed.