In general terms, the coalition will support the parliamentary passage of the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026. However, we are also strongly opposed to the Albanese government's hapless and ham-fisted overall approach to the illegal tobacco crisis in Australia. That's a matter to which I will return in a few moments.

In short, the coalition will always be prepared to endorse measures that will potentially give our border and law enforcement agencies more effective powers to tackle the scourge of illicit tobacco. There is a very clear public interest in ensuring that the Australian Border Force, the Australian Federal Police and other Commonwealth agencies have the legal tools they actually need to disrupt illicit tobacco supply chains, prosecute those who profit from them and prevent weaknesses in our customs system from being exploited by organised crime.

This bill makes a small set of changes in pursuit of those objectives. It revises offences under the Customs Act 1901 relating to the unlawful importation and subsequent possession, movement, sale and supply of tobacco. It also adjusts the evidentiary framework applying to illegal tobacco offences, including the circumstances that might be relied upon to establish that tobacco is illicit. Those are reasonable reforms.

Additionally, the bill amends the Proceeds of Crime Act 2002 to expand access to relevant documents and strengthen provisions dealing with assets that may otherwise be structured or shielded from confiscation. It also makes changes to the regulatory framework for custom depots and warehouses, including licensing, compliance and oversight arrangements and the fitness and propriety requirements applying to licence holders, associated persons and those with access to customs controlled premises and goods. Again, those are worthwhile measures, albeit that some industry stakeholders are already and perfectly justifiably expressing that there is a need for more clarity on what the definition of 'take all reasonable steps' is.

All of us in this parliament should be making it harder for organised criminals to infiltrate—

Order! The member is entitled to be heard in silence. It's a bit disrespectful.

Not the first time, and I'm sure it won't be the last time!

All of us in this parliament should be making it harder for organised criminals to infiltrate legitimate supply chains, exploit weaknesses in customs controlled environments and divert tobacco into the domestic black market—so the coalition won't oppose the broad direction of the bill. However, we should also be very clear about what this bill does not do. It is not a comprehensive solution to Australia's illicit tobacco crisis. It does not address the root causes of that crisis at all, including the economic ones. These have transformed Australia into one of the most lucrative and profitable illicit tobacco markets in the world. And the introduction of the bill certainly does not detract from the wanton incompetence and negligence of the Albanese government in allowing Australia's illegal tobacco problem to deteriorate so dramatically. This is no longer some peripheral black market activity; it is a major organised crime problem, a border security problem, a community safety problem, a public health problem and a revenue problem.

The Australian Bureau of Statistics has calculated that around 80 per cent of all tobacco and nicotine products consumed in Australia now come from the illicit black market. It's an astonishing figure. The government's own Illicit Tobacco and E-cigarette Commissioner has also estimated that the value of that market was between $4.1 billion and $6.9 billion in 2024-25, and that the excise and duty evasion for the same financial year was between $7.7 billion and $11.8 billion. It's a huge amount of money forgone in revenue through that excise.

Australians have witnessed the disastrous consequences for themselves. They have seen tobacco shops firebombed, legitimate businesses destroyed, a mass of extortion, intimidation and violence, and organised crime groups fighting rapaciously over territory and profits in suburban shopping areas. Across this country, we've all seen the rise of these illicit tobacco shops, the massage parlours which are really illegal brothels next door, and the associated crime that grows up around it. It's a real problem, and it's compromising community safety across our great country. This is no longer simply a question of people buying cheap cigarettes under the counter; it is a gigantic organised crime industry, with major consequences for entire communities. Yet the Albanese government continues to behave as though the solution is simply another enforcement announcement, another taskforce, another penalty or another legislative amendment, when that is clearly not the right way forward. We've all seen the evidence.

Even the agencies charged with enforcing these laws acknowledge that reality. The Australian Border Force now describes illicit tobacco as 'a low-risk, high-reward commodity'. It has also conceded that the market is still continuing to increase in scale, complexity and profitability. In short, criminal networks are exploiting enormous and profitable price differentials. Accordingly, they can absorb seizures and enforcement activity as another cost of doing business because the underlying profits remain so large. Having established these ratlines that come through our borders, who knows what else is coming to our shores illegally—not just illicit tobacco but also drugs, guns and other tools that terrorists opposed to our country will use to commit acts of violence.

These facts are at the heart of the problem. You cannot fix the illicit tobacco crisis by only changing the potential consequences for criminals if you're not equally prepared to address the massive economic incentives that keep drawing criminals toward such a massive honey pot. Yet Labor has made those incentives even more enticing to criminals. In the 2023 budget, the Albanese government imposed an additional five per cent increase in tobacco excise every year for three years. Those increases took effect in September 2023, September 2024 and September 2025, and they came on top of the existing twice-yearly indexation of tobacco excise.

At the time, the Treasurer and the health minister said that they expected those measures would raise an additional $3.3 billion over the forward estimates. Instead, legal tobacco revenue has completely collapsed from almost exactly that very moment with a phenomenal acceleration in the share of consumers buying the illegal products. These aren't adults who can smoke legally. We're talking about our youth, our kids, the very people we should be protecting from these illicit tobacco sales. The black market has flourished, organised crime has exploded in association with it, and the government, far from making money, has lost billions of dollars of revenue in the process.

These are just some of the many reasons why the coalition has proposed a fundamentally different approach. Our policy is not based on the fantasy that the government can simply keep increasing tobacco taxes indefinitely, watch the legal market all but disappear and then somehow magically police its way out of the consequences. Our objective is very clear. Our objective on the coalition side of the House is to destroy the business model of the criminal gangs. That's why the coalition has proposed an 80 per cent reduction in tobacco excise. That would reduce the excise component on a standard packet of cigarettes from around $30 to around $6, with the rate to be reviewed after two years.

That is a policy designed to remove the extraordinary price differential that has driven consumers out of the legal and regulated market and into the hands of organised crime. It is designed to radically alter the current dynamics of the market, to make legal tobacco competitive with illicit tobacco again and to deprive revenue from the criminal gangs and return it to the Commonwealth, to be put to use elsewhere through public health campaigns against smoking, to enforce the law and to also invest in schools and hospitals and infrastructure—all of those things that this Labor government is neglecting right now.

But our policy does not stop with excise reform. We have also proposed a $200 million nationwide law enforcement surge. Yes, we're going to hit them economically, we're going to destroy the business model and we're also going to come after them with the law. We're going to hit them hard with the law. That will mean more raids, more investigations, more arrests, more seizures, more shop closures and more border disruption. Our work will be designed to give enforcement agencies a fighting chance. We will enable a stronger operational focus across the Australian Border Force, the Australian Federal Police, the Australian Criminal Intelligence Commission and AUSTRAC.

Notwithstanding how well in particular the Queensland government has done in this area without any meaningful help from the federal government, we will also give the state and territory governments much more support than they have received over the past four years. We have also proposed a legal, regulated and taxed adult market for nicotine vapes and nicotine pouches while maintaining strong protections for children. We live in a world where people are going to smoke and use tobacco products, regardless of the health risks. Everyone knows the health risks of tobacco: lung cancer, emphysema, blood clots, heart disease, throat cancer, mouth cancer, tongue cancer—all sorts of complications. Please don't smoke.

But people will still smoke. That's why we have to be realistic and why we have proposed $60 million for a national public awareness and education campaign. It is to expose the organised crime behind illegal tobacco and vapes while reinforcing the health dangers of smoking. It is to move people from an illegal black market onto a legal market which at least, in the end, is regulated by the Australian government, delivers revenue to the Australian government and keeps people operating within the law. That's what we want, ultimately.

There are many differences between the coalition's approach and Labor's. For reasons that defy logic, Labor sees illicit tobacco purely as an enforcement problem. The coalition sees the full picture, the big picture, and is addressing excise, regulation, demand, public health, organised crime, border security, revenue and enforcement. It's great to see young kids up there, Deputy Speaker, as we speak about tobacco. Kids, please don't smoke. It's not good for your health. The coalition here is working to kill and break the illegal tobacco market and also make the legal tobacco market work for Australians.

For reasons that defy logic, Labor sees illicit tobacco purely as an enforcement problem. However, we see the big picture. You cannot solve this crisis by addressing only one of those things. That's why the coalition intends to use the consideration of this bill to put elements of our policy directly before the parliament. We will move a consideration in detail amendment. If passed, this amendment will give legislative effect to some of the key components of the coalition's policy package. This amendment includes our proposed 80 per cent reduction in tobacco excise and the necessary legislative changes to establish a properly regulated adult market for nicotine vapes and nicotine pouches.

Of course, not every component of our policy can be delivered through amendments to this bill. Our $200 million law enforcement surge and our $60 million public campaign on educating Australians about the risks of tobacco and smoking use are principally administrative and funding measures. But where this parliament has the opportunity to address and reform the settings that have contributed to this crisis, the coalition believes it should do so. This bill should also be referred to the Parliamentary Joint Committee on Law Enforcement for inquiry and report. That committee has examined illicit tobacco before. Its remit encompasses the performance and activities of Commonwealth law enforcement agencies, changes in criminal activity and the effectiveness of law enforcement methods.

At a time when illicit tobacco has become one of the most lucrative markets for organised crime in this country, there is every reason for that committee to examine whether the government's latest measures are adequate and, more broadly, whether Commonwealth agencies have the full suite of resources, structures and powers they require. The government should have nothing to fear from that scrutiny. If these laws are as important as the government says they are then they should withstand serious examination. And if there are more lessons to be learned from the catastrophic growth of this illegal tobacco market, parliament should hear from them.

The coalition's position on this legislation is clear. We support stronger enforcement, better laws, tighter customs and border controls, and improved pursuit of the criminal profits generated by illicit tobacco. For those reasons, we will not oppose the bill. But this bill, again, is nowhere near enough. Australia cannot arrest, seize and prosecute its way out of a market in which organised crime continues to enjoy extraordinary profit margins. Unless the federal government tackles the economic incentives, improves enforcement, restores integrity to the legal market and gives consumers lawful and regulated alternatives, organised crime will continue to adapt and sustain itself. The choice is very clear: on that side of the House, more illicit tobacco, more organised crime, more Australians breaking the law in purchasing those illegal tobacco products; on this side of the House, reimposing the law, breaking the economic model used to sell illicit tobacco, and enforcing the law and crushing these organised criminal gangs. That's what we want to see: more Australians operating within the law.

The coalition has put forward a comprehensive plan designed to achieve exactly those things, so we won't oppose the measures contained in this bill, and we will seek to drastically improve them by pushing for a much broader response. It will be a response that is capable not merely of, fairly trivially, inconveniencing the criminal gangs behind illicit tobacco but of smashing the market and the model that keeps them in business.

I commend the sensible elements of this bill to the House. However, I also condemn the government for its ongoing unwillingness and ineptitude when it comes to destroying the criminal gangs behind this currently entrenched and evil trade.

I thank the member for Canning. If I can just add, as a deputy speaker, please, kids, don't smoke. It will ruin your health. It will ruin your lives. Don't smoke.

I understand the member for Pearce would like to present a copy of her speech for incorporation into Hansard, in accordance with the resolution agreed to on 6 November 2025.

The incorporated speech read as follows—

I would like to speak in strong support of the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill. This bill is the next step in the Albanese Labor government's crackdown on the criminals behind the illicit tobacco and vaping trade. It is the most comprehensive modernisation of Australia's illicit tobacco customs enforcement framework since 2018. It ensures laws designed for a very different market can keep pace with increasingly sophisticated criminal enterprises.

Illicit tobacco is not a victimless crime. It undermines public health, harms legitimate businesses, deprives governments of critical revenue and provides significant profits for serious and organised crime. The trade is being fuelled by a massive surplus of cheap global production. Tobacco can be produced for less than a dollar a packet, and that surplus is being weaponised by transnational criminal networks.

These syndicates operate like multinational businesses. They are sophisticated, well-resourced and commodity agnostic. They do not care whether they are trafficking methamphetamine, tobacco, counterfeit luxury goods, wildlife or human beings. They want to make money and will exploit any weakness in our borders, laws or regulatory systems.

But as we go after these criminals, it is important to recognise that Australia is continuing to make progress in reducing smoking. The latest evidence from the Australian Institute of Health and Welfare shows that daily smoking among Australians aged 14 and over fell to 5.8 per cent in 2025, down from 8.3 per cent in 2022-23. Daily vaping remained broadly stable at 3.6 per cent. These are hard-won public health gains. They must not be surrendered to criminal enterprises trying to get Australians—particularly young Australians—hooked on nicotine.

Smoking remains the leading cause of preventable death and disease in Australia and contributes to around 20 per cent of our cancer burden. Two in three long-term smokers will die from a smoking related illness. This bill follows the passage last sitting week of the Combatting Illicit Tobacco Bill, which raised penalties, opened up new law enforcement techniques and updated proceeds-of-crime laws. This legislation builds on that work and further raises the stakes for criminals involved in the illicit tobacco trade.

Current tobacco offences often require prosecutors to prove that tobacco was imported with an intention to defraud the revenue. They may also need to demonstrate that the person involved knew the tobacco was subject to customs duty and that duty was payable. That approach is increasingly unfit for purpose. Organised crime groups have adapted by distancing themselves from the border and importation process. They use layers of intermediaries, shell companies, freight operators, warehouses and retail outlets. Direct evidence of a person's intention or knowledge can therefore be extremely difficult to obtain.

This bill creates new offences for importing, possessing or conveying illicit tobacco. The new framework focuses on unlawful conduct and better reflects the reality of concealed and distributed supply chains. It also introduces observable indicators of illicit activity. An established indicator may satisfy the reasonable suspicion element; it does not, by itself, establish guilt.

Importantly, reasonable suspicion is an objective test. It focuses on observable facts rather than requiring officers to prove every hidden detail of a criminal supply chain. Indicators include non-compliant retail packaging; non-compliant tobacco products, including products concealed in plain packaging; tobacco concealed to avoid detection; missing import invoices or required paperwork; and tobacco sold for less than the combined value of applicable excise and GST. That final indicator is particularly important. The fact that tobacco is being sold below the excise and GST payable can, by itself, establish reasonable suspicion that it was unlawfully imported. This will be a powerful tool for the Australian Border Force and state and territory police forces.

Anyone involved in the illegal tobacco and vaping trade should take notice. If law enforcement enters a retail premises and establishes one of these indicators, action can be taken. The focus will be on serious criminals and organised networks. However, the framework will also make it easier to target retail businesses that possess or sell illicit tobacco. The offences apply to a 'person', and under Commonwealth law that includes a corporation. A tobacconist company, warehouse company, distributor, transport business or logistics company may be investigated and prosecuted where appropriate. Anyone involved in this trade—from senior figures in criminal networks to retailers—should be looking for a new line of work.

The bill also introduces stronger consequences for serious offending, ensuring organised criminals receive penalties that properly reflect the gravity of their conduct. The bill closes an important loophole affecting duty-refundable tobacco. This tobacco is supplied to duty-free operators for export or sale to eligible travellers. Under the current framework, it is not subject to customs control in the way it should be, creating opportunities for diversion into the black market at duty-free prices. The bill restores customs control until the tobacco is exported or sold to an eligible traveller. This will reduce opportunities for diversion and ensure appropriate oversight throughout the supply chain.

For legitimate duty-free operators, these reforms largely formalise existing expectations and practices. They are designed to close a regulatory gap, not impose unnecessary burdens on responsible businesses. The bill also streamlines the seizure and disposal of illicit tobacco. The amount detected by the Australian Border Force has increased significantly, yet seizure processes remain heavily administrative and resource intensive. Frontline officers can spend hours documenting and processing individual seizure notices. That is valuable operational time that could instead be spent stopping illicit drugs, weapons and other dangerous goods from entering Australia. These reforms will support faster seizure and disposal processes. They will also ensure that tobacco imported in breach of permit conditions can be dealt with as swiftly as tobacco imported without a permit. The legislation strengthens integrity across the customs supply chain.

Illicit tobacco operations often depend on facilitators and intermediaries that provide access to storage facilities, freight networks, depots and warehouses while maintaining an appearance of legitimacy. The bill introduces additional licensing conditions for Customs brokers and Customs controlled depots and warehouses. Licence holders will be required to refrain from conduct that facilitates, assists or enables the importation of prohibited tobacco products. They will also have a positive obligation to take all reasonable steps to prevent such conduct within their operations.

The bill elevates existing tobacco related licensing obligations into the legislation and expands the role of the National Customs Broker Licensing Advisory Committee to include applications for new depot and warehouse licences. This will provide a more consistent approach to licensing integrity and compliance, ensuring legitimate operators are not disadvantaged by businesses that facilitate criminal activity.

The second major part of the bill strengthens Australia's proceeds-of-crime framework. Prosecutions should be pursued where the evidence supports them, and illicit tobacco should be seized and destroyed. But these measures alone are not enough. Organised crime is driven by profit. What hurts criminal syndicates is the loss of their cash, houses, cars, boats and other assets. To create a lasting deterrent, law enforcement agencies must be able to recover criminal profits efficiently.

Monetary penalty orders require offenders to repay the financial benefits derived from criminal activity and help ensure that crime does not pay. This bill clarifies how those benefits are calculated, ensures penalties are reduced only in appropriate circumstances and allows restrained property to be used more effectively to satisfy court ordered penalties. A criminal should not be able to deduct a fine from profits made through criminal activity and claim that the benefit has been repaid. A penalty is a penalty. The offender must repay the profit and face the penalty.

The bill also updates production orders, which help law enforcement obtain information relevant to criminal investigations. These reforms clarify existing powers, strengthen offences for interfering with production order processes and allow authorities to seek orders during proceedings when new information arises. They also support a more consistent approach across Australia's eight jurisdictions, where rules can currently differ or conflict.

Finally, the bill strengthens the unexplained wealth framework by clarifying how a person's total wealth is calculated. This will support a more realistic assessment of wealth and ensure property owned or controlled by a person can be considered. Together, these reforms will better equip law enforcement to identify, restrain and recover the financial rewards that make organised crime attractive.

This bill comes at a time when illicit tobacco networks continue to grow in sophistication. The reforms modernise enforcement, strengthen supply chain integrity, improve operational effectiveness and ensure organised criminal groups face stronger consequences. Action is being ramped up pre-border, at border and post-border. The best container of illicit tobacco is the one that never reaches our shores or passes through our border. The Australian Border Force is disrupting increasing quantities of illicit tobacco offshore and at the border. But the most urgent area for action is post-border.

State and territory governments must shut the illegal shops. Australians would not accept a methamphetamine laboratory operating in the middle of a local shopping centre. They should not be expected to accept criminal businesses openly selling illicit tobacco and illegal vapes to children and young people.

I acknowledge the nation-leading work of Queensland and South Australia in disrupting this trade. I also welcome Victoria's new laws, which took effect this week and give inspectors and police the power to close businesses found selling illegal tobacco. Six Melbourne stores in Footscray and Richmond have already been ordered to close for up to 90 days. It does not matter whether the premises is a tobacconist, convenience store, lolly shop, gelato shop, service station, barber, clothing store, restaurant or any other retail outlet. Any business that chooses to engage in the illegal tobacco trade must be subject to enforcement action.

It is deeply disappointing that the coalition has supported an approach that risks allowing the vaping market to expand and undermining Australia's public health progress. This government will not allow criminal syndicates or vested interests to undermine Australia's public health achievements.

I urge all members of this House, and the other place, to support the swift passage of this bill. Our law enforcement officials have asked for these powers. They need the tools to disrupt criminal networks, seize illicit products, confiscate criminal profits and protect our communities. This bill strengthens Australia's borders, supports legitimate businesses and ensures organised crime cannot exploit weaknesses in our laws or treat penalties as simply another cost of doing business. I commend the bill to the House.

Australia's illicit tobacco trade is now one of the fastest growing criminal markets in this country. It cost us an estimated $4 billion in 2023-24. It's bigger than the combined markets for cannabis, cocaine, heroin and ecstasy. Since 2023, it has brought more than 200 firebombings and at least three homicides to Australians' suburbs.

Our customs laws were written for another era—for the occasional small-scale duty dodger, not for the organised crime syndicates currently running Australia's national distribution networks and neon lit shopfronts on our high streets.

This bill, the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026, separates the offence of importing illicit tobacco from the offences of possessing and moving it around Australia, so that a shopkeeper in Malvern or a warehouse operator in Dandenong can be prosecuted without the Crown first having to prove exactly how the product came into the country. It will allow the courts to draw the obvious inference from the obvious facts—that cigarettes sold for less than the excise and GST payable on them, with no documentation of origin, in packaging that ignores our plain-packaging laws, and carrying flavours which are already banned in this country are clearly illicit.

The bill also strengthens the powers of investigators to obtain documents, and it closes off pathways used to shield assets from proceeds-of-crime action. The assistant minister is right on this point: what hurts criminals is not the condemnation of our communities; it's losing the cash, the cars and the houses.

So this is good legislation, but I want to be clear why we need it, because I'm concerned that the government could be about to cave to the tobacco industry, to the convenience store industry and to their lobbyists by cutting the tobacco excise. If it drops the tobacco excise, this government will add to a long succession of short-sighted, stupid failures from both sides of politics in this very important policy area.

The Howard government's 1999 reforms replaced a weight based excise with a per-stick system of tobacco taxation. That excise was indexed to the CPI until 2010, when Kevin Rudd's government increased it by 25 per cent. In 2013, Prime Minister Rudd announced a four by 12.5 per cent series of automatic annual increases in the excise over and above the ordinary indexation. In 2016, the Liberal government legislated a second four by 12.5 per cent escalator, which operated between 2017 and 2020. That was already part of the Labor opposition's platform at that time, so it had bipartisan support. In 2023, the current treasurer added another five per cent a year increase for three years, and alongside these increases the excise is automatically indexed twice a year.

So, of the 4.3-fold increase in the tobacco excise that Australia has seen between August 2013 and September 2026, about three-quarters occurred under the coalition, which is now, quite remarkably, proposing cutting that excise by 80 per cent, taking it back roughly to where the Howard government left it in 2007—a tacit acknowledgement of its own policy failure. The mess in which we now find ourselves, if we blame it on the tobacco excise, is one for which we can hold all of the major parties responsible. But it's my belief that the excise is only part of the problem; it is by no means all of it.

In fact, the illicit market's take-off in 2020-21 coincided with the end of the escalator. What changed after 2020 was not the tax. What changed was that, for the better part of a decade, we've seen enforcement which was close to non-existent and penalties which have been derisory, and, in most cases, anyone can open a tobacco shop without so much as a licence. Criminals have discovered that they can sell duty-not-paid cigarettes over the counter in broad daylight and nothing will happen to them. So they have—by the tens of thousands. And the people who saw this first aren't the people in this place. They're the people in our communities. In its submission to the Senate inquiry into the illegal tobacco crisis, Stonnington described the position that every Victorian council has found itself in: illegal tobacco shops multiplying along its shopping strips; residents and legitimate traders demanding action; and a council which has no power to licence, inspect or close tobacco retailers.

Until recently, Victoria had 14 inspectors to supervise as many as 10,000 tobacco retailers across the state, and those 14 inspectors had to conduct their visits in pairs for their own safety. In the May 2026 Victorian budget, the government committed $13.4 million to triple Tobacco Licensing Victoria's inspector numbers and to create new closure powers. But, even when that target is reached, we'll still only have one inspector for every 200-odd tobacco shops. The states and the local government areas need help.

Our councils know our shopping strips. They know which shops open last month and who owns the buildings. Through their rates databases, they know the identity of every property owner in their municipality. Councils can be the eyes on the ground, and they are the level of government most committed to our communities, but they've never been given the tools or the partners to act on what they're seeing every day. This bill will give our federal agencies better tools. The task now is to make sure that the state licensing regimes, the closure orders and the landlord liability laws that are finally arriving in Victoria are actually backed by inspectors, a police interest and a commitment to enforcing them.

Illicit tobacco is not a tax problem. It's an enforcement problem, and the blatancy of the trade is its greatest weakness. Unlike the trade in heroin or cocaine, illegal tobacco needs a shopfront. It needs a lease, a sign and a cash register. Every one of these shops is visible to passers-by. They're a blot on the landscape of our suburbs. Every one is visible to a regulator and to a police force which actually choose to look. We wouldn't tolerate unlicensed shops selling alcohol or firearms or prescription medicines on our high streets. We shouldn't be tolerating this.

That leads me to the second half of this debate and the reason for my second reading amendment. In the last month, two parties in this parliament have announced their answer to organised crime is to cut the tax that organised crime is evading and that tobacco companies are paying. We've just heard from the shadow minister to that effect. The coalition proposes to cut excise by 80 per cent, from about $30 a pack to $6. One Nation proposes a 75 per cent cut and a three-year freeze on indexation. Both of those proposals are being presented as crime fighting measures, but they are, in fact, nothing of the sort.

Consider the arithmetic. The tobacco excise is currently about $30.57 on a packet of 20 cigarettes. A budget-brand legal pack costs $40 or more. An illicit pack sells for as little as $10—and as little as $7 by the carton. If you halve the excise, an illegal pack will still cost about $27. If you cut it by 80 per cent, the retail price will still be $16 to $26—as the coalition itself has acknowledged—which is still two to four times the price of illicit cigarettes. If you abolish the excise altogether, an illegal pack will still cost more than a $7 illicit one. There is no reasonable level of excise reduction that would make any material difference to the supply chains run by serious and organised crime. Those calling for a cut in the excise never name a reduction that would make taxed cigarettes competitive, because there simply isn't one. And that is the flaw in their argument.

Nor does international evidence help the tax cutters. If high excise caused black markets, then low tax countries would have small black markets. But this is not the case. About 65 per cent of tobacco sold in Malaysia and South Africa is illicit. In Brazil it's about half. But all tax tobacco far less than we do.

One country has actually tried the experiment that the opposition is proposing. In 1994, Canada halved its federal cigarette excise to fight smuggling. Five provinces matched that cut. Prices in those provinces fell by almost half. But, within a year, the gap in smoking rates between the provinces that cut and those that hadn't had widened, because more young people started smoking and fewer smokers quit. Teenage smoking rose for the first time since the 1970s. One study attributed around 190,000 additional daily smokers to that single decision by Canada. Federal revenue fell by billions, and the smuggling networks were not dismantled. In fact, by 2008, contraband was back to a third of both the Ontario and Quebec markets. It still sits there. Canada bought a decade of decreased smuggling at the price of a generation of extra smokers, and then it got that same black market back. That is the experiment that the coalition and the One Nation are asking us to repeat.

There is no mechanism in Australian law to compel tobacco multinationals to pass a single cent of any excise cut onto smokers. On this year's budget, figures show a 50 per cent cut in customs duty could hand as much as $2.1 billion a year to three companies—about $900 million to British American Tobacco, $550 million to Imperial Brands and $440 million to Philip Morris—and 80 per cent would cut them even more. And that prize explains the intensity of the lobbying campaign which is now being waged in this parliament.

On 4 May this year Philip Morris appeared before the Senate inquiry in a closed session which was unlisted on the public program. That was the first platform given to a major tobacco company in this parliament in 16 years, and it was permitted despite Australia's obligations under article 5.3 of the WHO Framework Convention on Tobacco Control.

The Australasian Association of Convenience Stores, which is running the retail case for a cut in the excise, is led by a chief executive who began his career as a BAT trainee. Its policy adviser spent 20 years at Philip Morris. All three tobacco multinationals are paying members of the Australasian Association of Convenience Stores. And the association was a founding member of the Alliance of Australian Retailers, the front group that the tobacco companies set up in 2010 when they were fighting plain packaging, until its funding was exposed and it was forced to withdraw.

About half of the tobacco industry lobbyists in this country previously held positions in government. And the National Party, the only major party still taking tobacco money, accepted $137,500 from Philip Morris and $88,000 from British American Tobacco in the last financial year alone.

The tobacco industry has deliberately reframed a health and regulatory debate as a crime debate so that industry aligned voices can present themselves as neutral experts on law enforcement. But this is, in the end, a health debate. Smoking still kills 24,000 Australians every year—66 Australians every day. Price is the second-most powerful reason smokers give for quitting, and young people and people on low incomes are the most price sensitive of all. The National Drug Strategy Household Survey 2025 reported daily smoking at a record low of 5.6 per cent, down from 19.5 per cent in 2001.

Fifteen of Australia's leading health organisations, led by the Cancer Council, have put it plainly: even if we cut the tobacco tax altogether, illicit products will remain cheaper. Legal tobacco will become more affordable. Industry profits will skyrocket. Smoking rates will increase, and people will die. Illicit tobacco is primarily an enforcement and health issue. It is not a tax issue.

So I ask the Albanese government and the health minister—who I understand just today has received an award from the Public Health Association of Australia lauding him for his work on the tobacco excise, cigarette smoking and the need to fight these things in this country—don't let a lobbying campaign and big tobacco bully you into a policy that every serious health body in this country opposes and that international experience has shown will not work. There is a legitimate case to freeze the tobacco excise until enforcement catches up. There is no legitimate case for a cut in the tobacco excise. And so that with, I move the second reading amendment circulated in my name:

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

And I commend this bill to the House.

Is the amendment seconded?

I second the amendment and reserve my right to speak.

I rise today in support of the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026. The bill amends the Customs Act 1901 and the Proceeds of Crime Act 2002 to introduce a series of measures aimed at clarifying criminality associated with illicit tobacco products and enabling enforcement and prosecution. At its core, this bill is about protecting Australians. It's about protecting public health, protecting communities from serious and organised crime and protecting the integrity of our borders. It's also about ensuring that Australia does not surrender decades of successful tobacco control policy to international criminal syndicates who profit from addiction, disease and lawlessness. The Albanese Labor government has a clear position: we are not going to abandon evidence based health policy because organised criminals have identified an opportunity to make money, nor are we prepared to create a new generation of Australians addicted to nicotine by winding back protections that have helped drive smoking rates to historic lows.

Australia has one of the strongest and most enviable tobacco control records in the world. Daily smoking among adults has fallen dramatically. According to recent Australian Institute of Health and Welfare data, daily smoking rates have fallen to around 5.8 per cent of adults. This is hundreds of thousands fewer smokers than only a few years ago. Smoking nevertheless remains Australia's leading cause of preventable disease and death, responsible for enormous human suffering and healthcare costs. The simple truth is that consuming tobacco kills people. The evidence is overwhelming and has been established over many decades. Smoking is linked to lung cancer, heart disease, stroke, chronic obstructive pulmonary disease and numerous other illnesses. Public health experts estimate that smoking kills approximately two in every three long-term smokers and remains responsible for around one in five cancers diagnosed in Australia. Behind the statistics are real people—families who watch loved ones struggle through chemotherapy, children who lose parents too early, and grandparents who never meet their grandchildren. I should note that I lost my own grandfather, Bob, to the health impacts of smoking. These are the human consequences of nicotine addiction and tobacco use.

The harms do not stop with traditional cigarettes. E-cigarettes or vapes are also part of the problem. This is important as the coalition have made public statements that we don't need to worry about vaping. In the last decade, vaping has emerged as a significant public health challenge. Alarmingly, vaping products are readily available and heavily marketed in ways that appeal to children and teenagers. In the towns throughout my electorate of Whitlam, like many other places in Australia, vape shops have sprung up near schools and in shopping centres frequented by young people.

The evidence base on vaping harms is growing. Studies from Australia and internationally have linked vaping to nicotine addiction, respiratory disease, cardiovascular impacts and exposure to toxic chemicals. Recent research from the University of Sydney presents strong concerns regarding links between vaping and both lung and oral cancers. These products frequently contain highly concentrated nicotine, heavy metals and harmful chemicals. Dental professionals have reported increasing cases of gum disease, oral inflammation, tooth decay and other oral health complications associated with vaping and nicotine pouches.

Equally concerning is the relationship between vaping and smoking uptake. Young people who vape are much more likely to progress to conventional cigarette smoking. The idea that vaping would act as an exit ramp from nicotine addiction has simply not been reflected in the experience of many Australian communities. The public health dimensions are deep, and they are alarming.

There's also an environmental dimension to vapes in particular. Disposable and illicit vaping products have become a form of toxic litter in our suburbs. They contain lithium batteries, plastics and chemical residues. Despite being an electronic waste requiring proper disposal, they are routinely discarded in parks, streets, school grounds and waterways. Communities are left to manage the environmental consequences while criminal syndicates pocket the profits. Understanding the problem requires us to understand the nature of the illicit market. Illicit tobacco is a global challenge. A packet of cigarettes can be manufactured in parts of South-East Asia for mere cents. Those products can then be smuggled across borders and sold at prices that undercut legitimate products while still generating enormous criminal profits.

This is not a uniquely Australian problem. Jurisdictions throughout Europe, North America and Asia continue to grapple with illicit tobacco, illegal nicotine products and organised-crime infiltration of supply chains. The international experience demonstrates two important lessons. First, enforcement matters. Second, organised crime adapts when governments fail to act. The Albanese Labor government has chosen action. Since 2024, the Commonwealth has committed more than $365 million towards combating illegal tobacco and vaping products. Enforcement is now occurring before products leave foreign ports at Australian borders and throughout domestic supply chains, and the results have been significant. The Australian Border Force, alongside partner agencies, has achieved record seizures.

Over the last year, authorities seized more than 2,300 tonnes of illicit tobacco and 13.2 million vaping devices. Criminals have been denied profits, and harmful products were prevented from reaching Australian consumers. Over a kiloton of tobacco was seized in just four months under Operation PRINTWALL because of the Australian Border Force's strengthened controls and trusted partnerships. The Therapeutic Goods Administration and the Australian Border Force have prevented almost 24 million illicit vaping products from entering Australian communities since January 2024. This success has also been possible due to greater collaboration among relevant agencies. The National Disruption Group, established under the leadership of the Australian Border Force, has united Commonwealth, state and territory agencies in a coordinated response. The AFP led Criminal Assets Confiscation Taskforce has restrained tens of millions of dollars in criminal assets.

Why should Australians who do not smoke care about this issue? It's because the harms extend far beyond nicotine consumption. Evidence internationally and domestically has linked illicit tobacco supply chains to broader organised criminal activity. Around the world, investigations have uncovered exploitation, coercive labour practices and modern slavery risks within segments of illicit tobacco production and distribution networks. Closer to home, communities are experiencing the consequences firsthand. Illegal tobacco shops have become focal points for criminal activity. We continue to hear about firebombings, extortion attempts, intimidation and turf disputes connected to illicit trade. Small-business owners operating legally should not have to compete with criminal enterprises using illicit products, untaxed profits and intimidation to establish themselves in commercial precincts.

We are also witnessing distortion of local retail markets. In some communities, illicit tobacco and vape stores are saturating the streets where traditional small businesses struggle to survive. Criminally funded operators can also absorb losses, subsidise rents and use tobacco sales to support broader illicit activity. The result is unfair competition and a weakening of legitimate local commerce. All this unwelcome trade and consumption of harmful cigarettes and vapes is also a direct cost to taxpayers.

Australians rightly expect Medicare and our public hospital system to be there when tobacco related illnesses require treatment. Yet illicit tobacco avoids the taxation and excise systems that help fund public services. Every packet sold on the black market undermines revenue that could otherwise support health care, education, border protection and community services. The coalition and One Nation say that Australia should simply slash tobacco excise rates to compete with illicit products on price. That argument is deeply flawed. A packet of illegally manufactured cigarettes produced overseas for a fraction of a dollar will still generate substantial criminal profits, even if excise is reduced.

Legitimate businesses paying wages, complying with regulations, meeting packaging standards and operating within Australian law cannot realistically compete with international criminal syndicates on price. Reducing the excise won't eliminate organised crime. It would simply reward it. Worse, it would mean surrendering public health policy to criminal behaviour. If organised criminals smuggle tobacco successfully, the answer surely cannot be to weaken tobacco control measures that have saved countless Australian lives. Nor should we forget the vaping component of this debate. The coalition's recent comments concerning the legalisation and availability of vapes and nicotine products ignore the reality that vaping itself has become a major public health concern. A focus only on cigarette excise while ignoring vaping is half baked. The objective should be fewer Australians addicted to nicotine in any form.

That brings me to the bill before the House. This legislation complements the Combating Illegal Tobacco Act 2026 and modernises Australia's customs enforcement framework to deal with the realities of today's illicit tobacco market. We are proposing a comprehensive modernisation package that updates laws designed for a very different environment and equips agencies to respond to increasingly sophisticated criminal enterprises.

The bill creates new offences for importing, possessing and transporting illegal tobacco. It introduces tougher penalties for people involved in large-scale illegal tobacco operations. It gives customs officers stronger and simpler powers to seize illegal goods. It applies customs controls to tobacco products that have received a refund of tobacco duty. It strengthens the licensing rules for customs brokers and operators of customs depots and warehouses. And it improves the operation of proceeds of crime laws to ensure that criminal profits can be identified, restrained and confiscated.

Prosecutors will no longer need to prove detailed knowledge or intent in cases where dishonesty or deception is used to cheat the government out of revenue. This has often been difficult because organised crime groups distance themselves from importation activities. Instead, the bill introduces a set of objective observable indicators. This will enable authorities to more easily establish criminal intent for an individual or company distributing or selling these products where those products clearly do not meet the product standards or pricing regime expected for authorised tobacco. This is what we mean by modernising the current legislation. By making evidentiary presumptions and enforcement arrangements more realistic, authorities will be better able to prosecute.

This legislation is backed up by ongoing funding. The 2026-27 budget will add $20.3 million over four years to combat the illegal tobacco market. This means more boots on the ground, strengthening licensing, supporting joint operations and enabling storage and destruction. We know that illicit tobacco is a low-risk, high-reward activity for organised crime. This legislation increases the risks, strengthens enforcement tools and improves the ability of law enforcement agencies to follow the money. It's also part of a broader strategy.

The Commonwealth is working with states and territories, many of which have implemented tougher enforcement regimes. Queensland and South Australia have taken a lead, demonstrating that strong compliance operations, shop closures and enforcement activity can disrupt criminal business models and drive meaningful impacts. Making it easier to shut the shops is where the states and territories really do play a critical role. Illicit tobacco will not become legitimate even if the excise is different. These shops need to be closed in the interests of public health and dismantling transnational syndicates.

We know that this is a public health issue, a law enforcement issue, a community safety issue and an organised crime issue. The Albanese Labor government is taking a serious, balanced and evidence based approach. We are strengthening border protection, supporting states and territories, investing in enforcement, targeting criminal profits and maintaining our commitment to reducing smoking and nicotine addiction across Australia.

I rise to speak on the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026, a narrowly focused set of legislative changes to address Australia's illicit tobacco market. It seeks to strengthen the Commonwealth's enforcement over tobacco imported into and held within Australia with stronger controls around customs depots and warehouses, revamped licensing and compliance settings, and new mechanisms to stop tobacco being diverted into the illegal domestic market. In essence, these changes to the Customs Act mean prosecutors will no longer need to prove an accused person knew the tobacco in their possession had been smuggled. Instead, law enforcement can rely on the product's characteristics—for example, no plain packaging, an implausibly low price or a pack of 30s that can no longer be legally bought and sold here—to establish that those products have entered Australia illegally. Good stuff.

The coalition won't oppose moves to strengthen enforcement or introduce real consequences for illegal conduct, but I'd like to make a couple of points beyond that. First, we all continue to hear from this government that its settings are right, that everything is working and that it might be all the Victorian government's fault, as we heard in question time last week. I do have some sympathy for that argument, until you look at the string of arson attacks across South Australia and New South Wales in the past fortnight alone. Yet under this government there is still the insistence that it has this all under control. The facts would suggest otherwise. This is the second bill in a matter of months seeking tougher penalties and greater enforcement for a problem that will keep playing out as whack-a-mole for overstretched and underresourced police and enforcement agencies while the government refuses, point-blank, to address the real underlying driver here.

Don't take my word for it. Professor James Martin, a criminologist at Deakin University specialising in black markets, and Edward Jegasothy, a senior lecturer in public health at the University of Sydney, wrote this of the bill:

The federal government is attempting to pass yet more legislation to combat the illicit tobacco and nicotine trade. This time, the commonwealth argue, enforcement agencies will have the powers they need to make a meaningful difference.

This follows the pattern we feared and predicted a year and a half ago: more restrictive and punitive legislation aiming to do what the previous legislation was supposed to. Meanwhile, the problem gets worse, further justifying more laws.

On the Assistant Minister for Citizenship, Customs and Multicultural Affairs—who, I might add, I believe is acting in good faith, even though I have my disagreements with him—they wrote:

A big part of the problem is who the laws are most likely to affect. Assistant Minister for Customs … claims the laws will target "serious criminals" …

However, in practice, the new laws will almost certainly not affect those at the top of the criminal hierarchy, who rarely, if ever, would be caught handling an illicit product.

Martin and Jegasothy go on, in an article in the Monthly, to say,'The problem persists until this government accepts that high tobacco taxation is the driver.'

Why does this bill miss the mark? The government's own explanatory memorandum undermines its own approach. It defends the new offences on the basis that pecuniary penalties are treated by criminal actors as a cost of doing business, absorbed and offset against the significant profits generated from illicit tobacco. I would say that that is precisely the problem that this bill fails to address. Where margins are wide enough that fines, seizures and even prosecution are simply priced in as a cost of trade, extra penalties and faster forfeitures won't shift behaviour among the syndicates or their customers.

Not one of the bill's eight measures touches the price gap, moderates excise or stabilises the legal market. It targets tobacco reaching our shores while leaving untouched the demand that legitimate retailers, hemmed in by price, can no longer meet. And there are consequences for legitimate businesses. The price gap carries real costs. Small and family-run retailers keep losing customers to illicit sellers, undercutting them by 70 to 80 per cent, while their communities absorb the firebombings, extortions, increased insurance costs, violence and staff assaults that come with control of the trade.

Meanwhile, the later stages of the enforcement stay weak. Domestic prosecutions and convictions sit in the single digits each year, against tens of thousands of border detections, and courts often hand down non-custodial sentencing, even for commercial-scale offending. More offences on the statute book won't change this without genuine prosecutions, genuine custodial outcomes and a price setting that lets legal products actually compete.

The bill also changes how these offences are proved by reversing the onus of proof. The new offences sit on presumptions. Once certain facts are shown—unpaid duty, goods missing from a cargo report, packaging that fails Australian requirements, a sale below the combined duty and GST—the law 'takes it to be' reasonable to suspect unlawful importation. The defendant then bears the burden of pointing to evidence to rebut it. The explanatory memorandum concedes this reverses the onus of proof and is generally considered undesirable in criminal law. Lawyers better qualified than me can reasonably disagree on that trade-off. What's harder to reconcile is the government's willingness to compromise a core criminal law protection to chase the supply chain while refusing to revisit the tax settings that have created and are driving this black market in the first place.

Higher maximums only matter if courts impose them, and the record shows they mostly don't. The Commonwealth Director of Public Prosecutions told the Senate inquiry into this issue that between July 2018 and December 2025 it received 430 referrals, finalised 405 prosecutions and secured 284 convictions. Of those, only 107 offenders—roughly 38 per cent—received any actual custody. A further 79 got a prison term with no time to serve, 67 got a community based order, 25 were fined and six were discharged without conviction.

These outcomes fall well short of the maximums that parliament has legislated for. The Customs Act sets out a 10-year maximum for importing or possessing illicit tobacco. Once the Combating Illicit Tobacco Bill 2026 commences, that rises to 15 years and fines of up to 12,000 penalty units—roughly $4.4 million. Yet convictions run at just 30 to 40 a year, while the market runs into the billions, and most convicted offenders avoid full-time custody entirely. The new offences here, carrying maximums of five to 10 years and fines of $2.18 million and $2.91 million, sit on top of maximums the courts already decline to use. I think that is a fair point to raise.

A further wrinkle shrinks these figures even more. Under section 4J of the Crimes Act, all Commonwealth tobacco offences can be, and mostly are, dealt with summarily. When a matter goes that route, a 10-year maximum shrinks to two years and a five-year maximum shrinks to 12 months before a court has even begun weighing the offender's circumstances. The maximums announced by government are, in most cases, a fraction of what gets reported. The reasoning is well established, and the DPP states it plainly: a maximum penalty is a yardstick reserved for the worst case imaginable, not a guide to typical sentencing. Raising it has no real bearing on ordinary sentences, and it's these ordinary sentences organised crime actually factors in. Parliament has lifted tobacco penalties repeatedly now—in this bill, in last month's act and in offences already on the books—while actual sentences imposed have barely moved. On the evidence available, the maximum penalty is rarely, if ever, applied.

So what would actually help? If the government genuinely wants to protect communities, retailers and revenue, the response must go beyond more enforcement powers as the only lever. First, tackle the price gap. Until excise comes down substantially, tougher penalties will stay marginal to the calculations of the syndicates running most of today's illegal tobacco and nicotine market. Second, address demand through visible, nationally consistent compliance at the point of sale, not just the border. Third, make the courts a genuinely effective part of the response, working with the attorneys-general on sentencing consistency and custodial baselines for serious repeat or organised offending.

None of that features in this bill. This bill is a more elaborate version of the enforcement-first approach parliament passed only a few weeks earlier. It creates new offences, shifts the onus of proof, speeds up seizure and strengthens proceeds-of-crime provisions. I am sure that enforcement agencies will welcome that additional and added efficiency, but, as long as consumers can buy illegal tobacco for a fraction of the taxed price and the odds of serious penalties stay low, retailers and communities will continue to bear the brunt and see little change. Two bills in a month have expanded the enforcement framework, yet neither has grappled with the economic conditions sustaining the market. Until that price gap is addressed, the Commonwealth will keep legislating against the supply of a market its own tax settings have created and continue to drive.

The coalition has put forward the only comprehensive platform on tackling illegal tobacco in Australia. My colleagues and I have argued for cutting the excise—in my case, for a year. Others in my party room and the National Party have done so for longer. But this is no longer a partisan issue. The crossbench, state and federal Labor parliamentarians and a teal member of parliament all share the view that the excise needs to be cut. New South Wales premier Minns has called for an aggressive cut, and I commend his moral courage and urge the Prime Minister to follow him. If he can't follow Chris Minns, perhaps he can listen to his own backbench, who, in a minority report to the Senate inquiry, broke from the government's official approach. Last week, in question time, the Prime Minister dodged the question five times, but I suppose dodging a question five times beats not telling the truth about something 50 times. He dodged it on breakfast television too.

We've now learned that, alongside Treasury's elasticity pricing modelling, an agency within the Department of Home Affairs is also looking at the excise, so I have faith that the government is taking baby steps on the road to illegal tobacco Damascus. One teal MP has acknowledged the status quo isn't working and supports an excise cut, and I commend her for that. Her common sense isn't shared by all of her colleagues, though. The member for Kooyong argues against a cut. Wary that a further rise in excise would only strengthen the black market's price incentive, however, she has also argued that increasing the tobacco excise would encourage the black market. I think it's worth recalling what JFK once said: 'We enjoy the comfort of opinion without the discomfort of thought.' That fits well. This debate has been too often driven by ideology rather than facts and behavioural economics to be included in those considerations.

Think for a moment who actually bears the cost of what this bill is meant to address. Katie Tangey, the innocent Melbourne woman murdered in a case of mistaken identity by illegal tobacco gang leaders, would have turned 29 this Tuesday. My thoughts are with her family, and I want them to know that I'm fighting on this issue so that this doesn't keep happening to more families across Australia. This government claims to be the parliamentary wing of the union movement here to stand up for working people. Right now it's retail staff, often young, often having their first experience in the workplace, often on the minimum wage, standing behind a counter because it's their job and having to face the full consequences of this, which are violent.

The Australian Border Force, on the issue of the excise influence, said as much in its submission to the Senate inquiry that price is a driver in this. Criminologist James Martin has said that, once a black market reaches this scale, you simply cannot police your way out of it without other measures. The government's own figures show the illicit market has pushed past half of all of the tobacco consumed worth billions of dollars every year.

Meanwhile, smoking rates, the entire justification for this policy, are no longer falling as they should. Western Australia has recorded an uptick for the first time in three decades. Wastewater testing shows nicotine consumption climbing nationally, and the New South Wales department of health has shown that smoking rates have tipped over 15 per cent in that state. This government has been warned by Treasury, the Australian Border Force, state premiers, doctors and its own backbench in a Senate report that the illicit market cannot be policed away while the financial incentive to run it remains at large. Australians deserve better than a government with its head in the sand on this issue.

I rise today to speak in support of the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026, which is the next step in the government's ongoing crackdown on the criminals behind the illicit tobacco and vapes trade.

We know illicit tobacco presents multiple threats to Australians and Australian communities. Firstly, illicit tobacco involves products that are made, distributed and sold illegally, avoiding regulations and tax laws. This illegal trade presents a serious challenge to Australia by weakening public health efforts, regulations and the economy. Secondly, we know that profits from illicit tobacco and e-cigarette sales often fund organised crime. This not only harms the safety and health of our communities but makes it harder for law enforcement to deal with other criminal activities, worsening social and economic problems.

Thirdly, the illegal trade in tobacco and e-cigarettes causes the government to lose a large amount of that revenue. That money could otherwise be used to fund important public services and health programs. Fourthly, the illegal trade puts public health at risk by exposing people to unregulated and potentially harmful substances. It also weakens efforts to inform the public about the dangers of these products and to discourage their use. E-cigarettes have led to more young people becoming addicted to nicotine, creating new cycles of dependence. Finally, illicit tobacco damages the trust in regulatory systems designed to protect consumers. It reduces public confidence in regulatory bodies and creates unfair competition for businesses that follow the rules and comply with regulations.

Illicit tobacco is not a victimless crime. It undermines public health objectives, harms legitimate businesses, deprives governments of critical revenue and provides a significant source of profit for criminal enterprises. Illicit tobacco needs to be cut off at the source. Cutting the tobacco excise is not cutting illicit tobacco off at the source. It just makes legal tobacco products cheaper and more accessible. It reverses decades of successful smoking reduction and increases future public healthcare and hospital costs because it causes a myriad of health conditions, including lung cancer, which often leads to death.

Smoking kills people. It's deliberately addictive and it kills. Making it legally cheaper means more addiction, more health issues, more strain on health systems and more people dying. It also fails to stop criminal syndicates from lowering black market prices further. Organised crime can maintain price advantages by cutting their own rates. Competing with organised crime on price is a race to the bottom.

Governments have a duty to set legal and ethical boundaries. Governments work to create laws that minimise or prevent things like exploitation, discrimination, abuse, modern slavery, bribery and corruption. And they work to create laws that minimise harm while trying to ensure every time that one set of rules and regulations minimising harm does not cause harm in another area. Harm prevention, protecting human rights, promoting public health and practising fairness are duties of government. Lifestyle choices are up to the individual. If you want to smoke, smoke. If you want to drink, drink. These choices are not illegal, and governments should not act to suppress personal freedom and individual autonomy, but smoking and drinking are harmful. We know this. Everyone knows this. That harm leads to antisocial behaviour and strain on the public health system. Governments have a duty to minimise this, and that is what a high excise is all about. Reducing the excise to price match with organised crime is a dereliction of that duty, if that is your sole motivation for the reduction.

The tobacco excise is high for a reason—because it is embedded in public health goals. Subsidising or matching illicit pricing risks legitimising illegal syndicates and ignoring those public health goals. So the government's attention has been directed at the source of illicit tobacco: organised crime. A central reform contained in this bill is the creation of new offences for importing, possessing or conveying illicit tobacco. Existing offences require prosecutors to prove that tobacco has been imported by a person with intent to defraud the associated revenue. This involves establishing that the person was aware that tobacco was subject to a duty collection framework and that that duty must be paid on importation. This offence was designed for a previous era, where low-level criminals were trying to defraud revenue. Now, the scale and sophistication of organised crime have grown such that a new and more targeted approach is required. This bill operates to amend the Customs Act to introduce a number of measures to increase the deterrence of criminal conduct in respect of the unlawful importation of tobacco and to support more effective enforcement options and related prosecutions.

The measures are also intended to prevent the diversion of tobacco products into the domestic market where those tobacco products are required to be exported from Australia. These measures will also go some way to improving the operational efficiency of the Australian Border Force and its capability to respond to the prevalence of illicit tobacco imported unlawfully and then circulated within the Australian community. The measures are not intended to affect legitimate participants like importers, customs brokers and depot and warehouse operators who comply with their legal obligations.

The bill also amends the Proceeds of Crime Act 2002 to introduce three measures to strengthen the pecuniary penalty order framework, modernise the production order framework and strengthen Australia's unexplained wealth framework. These measures will ensure that law enforcement agencies are able to detect and disrupt organised crime actors and recover the profits and wealth generated by criminal activity.

There are a total of eight measures. The first modernises illicit tobacco offences under the Customs Act by introducing two new offences with a reasonable suspicion test, meaning that goods that were unlawfully imported by a person in circumstances which defraud the revenue and then four new offences for tobacco imported without the permission or in breach of permit conditions. All six of these new offences are supported by evidentiary presumptions.

The second clarifies the language in paragraph 233 of the Customs Act to ensure that tobacco imported unlawfully may be prescribed as a tier 1 good in Customs Regulation 2015 to enliven stronger penalties under the Customs Act. The third measure extends customs control over duty refunded tobacco until export or sale or until withdrawal or disallowance of an application for a refund of customs duty, thereby reducing diversion risk and strengthening supply chain integrity.

The fourth measure streamlines seizure and disposal of illicit tobacco by expanding the definition of 'special forfeited goods' in the Customs Act such that it includes tobacco imported in breach of permit conditions, which modernises the requirements for publication and service of seizure notices, and by removing the claim process for the return of seized illicit tobacco. The fifth introduces new licence conditions, uplifts existing tobacco related licensing obligations and strengthens governance for licensed depots and warehouses through expanding the remit of the National Customs Licensing Advisory Committee. The sixth will amend the Proceeds of Crime Act to clarify and strengthen production order powers used in proceeds of crime investigations.

The amendments clarify that production orders may be sought after proceedings have commenced, and they remove jurisdictional limitation on the issue of production orders, allowing them to be issued relating to one or more documents that are located in or accessible from Australia. The amendments also realign penalties for interference with information-gathering processes to effectively punish those who seek to destroy or deface property tracking documents.

The seventh will improve the operation of the pecuniary penalty order framework in the Proceeds of Crime Act. The amendments will clarify how pecuniary penalty order amounts are calculated, including that an amount may only be reduced by amounts that have been paid rather than amounts that are payable. The amendments will also clarify that a person's effective control of property is assessed at the date of a restraining order or that the responsible authority applies for an order under section 141 of the act, which ensures that property remains available to satisfy a pecuniary penalty order.

Finally, the eighth measure will amend the definition of 'total wealth' in the Proceeds of Crime Act to clarify how it is calculated for the purposes of determining unexplained wealth amounts during proceeds of crime proceedings. The amendment will ensure that items of property that can be traced to a single source are not required to be counted multiple times in determining unexplained wealth amounts. To be clear, this should be construed not as watering down the regime but as amending it so it better stands up to scrutiny with improved prospects for effectiveness.

Briefly returning to measure 1, the evidentiary presumption, the bill will contain a list of what are called 'observable indicators' of illicit activities. If any one of these indicators is established, then that is taken to satisfy the reasonable suspicion test of the criminal offence. The reasonable suspicion test under these new laws is an objective test. It doesn't depend on what an officer or anyone suspects. This allows enforcement agencies to focus on observable facts rather than try to prove every detail of a concealed illicit supply chain.

This is an evidentiary presumption system. An evidentiary presumption is a starting assumption the law makes about a fact or a situation. It's not the final word, but it sets the baseline. So, if no-one produces evidence to the contrary, such that the presumption is not rebutted, the presumption usually stands. Examples of the new objective indicators include non-compliant retail packaging or non-compliant tobacco products, like menthol cigarettes hiding in plain packaging, or acts that conceal tobacco to avoid detection or if the tobacco sales price is below the excise and GST combined. That fact alone will establish the reasonable suspicion that it was unlawfully imported.

Given the scale of the problem with the importation of illicit tobacco in this country, the objective indicator measures will provide the Australian Border Force and all state and territory police forces with a powerful and effective tool to pursue organised crime and improve prospects of conviction because of the evidentiary presumptions. So, to those operating a retail store, if the Australian Border Force or other law enforcement agency enter a store and observe one of these indicators, they can take action. Selling illicit tobacco is no longer worth the risk, because you'll get caught. Concealing illicit tobacco activities is no longer worth the risk; you'll get caught. And participating in any way in the illicit tobacco industry is no longer worth it; you'll get caught.

This bill contains a series of measures that are practical and targeted and that focus on the problematic elements of the sector without posing additional risks to public health. They are directed at cutting illicit tobacco off at the source. They are directed at organised crime and directed at strengthening our borders so illicit tobacco does not reach our shores in the first place. And, if it does, the measures are directed at disrupting what happens in the postborder phase and improving prospects of conviction. I commend the bill to the House.

The coalition will not oppose the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026 in the House. We support sensible measures that give Commonwealth law enforcement and border agencies stronger tools to combat illicit tobacco trade.

But we should be very clear about what this bill can do and what it can't do. It can make prosecutions easier. It can strengthen proceeds of crime powers and tighten controls around customs depots and licensed warehouses. What it cannot do on its own is fix the economic conditions that have allowed organised crime to turn illicit tobacco into one of the most lucrative criminal markets in Australia.

Australia's illicit tobacco crisis is no longer simply a question of public health. It is a law and order issue. It is a community safety issue. It is a revenue issue and, as I said in this House in June, it has become a significant domestic national security issue. The government's own Illicit Tobacco and E-cigarette Commissioner estimates that illicit tobacco represented between 50 and 60 per cent of tobacco sold in Australia in 2024-25. The estimated value of that market was between $4.1 billion and $6.9 billion, with excise and duty evasion estimated at between $7.7 billion and $11.8 billion. That is an extraordinary amount of money moving outside the legal economy and into the hands of criminal gangs, criminal networks.

These are not backyard operators selling a few cheap packets of smokes under the counter. The Australian Criminal Intelligence Commission describes illicit tobacco as one of the most significant organised crime commodities in Australia. We've seen firebombings, extortion, intimidation and violence linked to this trade. Innocent people have been killed, legitimate businesses have been targeted, communities have been put at risk and criminal groups have fought over territory because the profits are so large. The Australian Border Force has described illicit tobacco as a low-risk, high-reward commodity and has warned that the market continues to grow in scale, complexity and profitability. AUSTRAC has warned that illicit tobacco is also an increasing money-laundering threat.

This bill contains worthwhile measures. It creates a clearer framework of offences dealing separately with unlawful importation and with the possession, movement, sale and supply of illicit tobacco once it is inside Australia. Importantly, it also addresses one of the practical problems faced by prosecutors. Under the existing framework, cases can be frustrated by the need to prove that an accused person knew tobacco had been unlawfully imported. This bill makes it easier to prove tobacco is illicit by allowing prosecutors to point to obvious warning signs, such as unrealistically low price, non-compliant packaging or no evidence of a legitimate supply chain. That can include tobacco being sold at an extraordinarily low price. Those are practical changes that should make it easier for authorities to act against the people moving illicit tobacco through the domestic market.

The bill also strengthens proceeds of crime arrangements. That matters because when you are dealing with organised crime, you have to follow the money. I made this point in June, and it remains just as important today. If you can't immediately arrest these thugs for the firebombing, the extortion or the violence, then go after the money. Freeze the assets, seize the profits, and strip away the financial reward that keeps these criminal enterprises operating.

The bill also strengthens customs licensing, compliance and oversight arrangements, including a greater scrutiny of people associated with customs depots and licensed warehouses. Again, these are sensible measures, and the coalition will not stand in their way.

But nobody in this House should mistake another round of enforcement amendments for a more complete solution. Australia did not arrive at this point because the criminal law was missing one more offence. We arrived here because a huge illegal price gap created an extraordinary profit opportunity, and organised crime seized that opportunity.

In the 23 May budget, Labor imposed an additional five per cent tobacco excise increase in each of the three successive years, on top of the existing twice yearly indexation. Those increases took effect September 2023, September 2024 and September and 2025. At the time, the government forecast those higher excise rates would raise an additional $3.3 billion over the forward estimates. Instead, tobacco excise revenue has fallen sharply as more of the market has shifted underground.

The coalition's position is that you cannot separate enforcement policy from the incentives that make the illegal trade so profitable. If the black market can massively undercut the legal market, criminals will keep being attracted to it. If those criminals can make extraordinary margins, they will absorb seizures, arrests and shop closures as a simple cost of doing business.

That's why the coalition has put forward a better plan. Our policy would reduce tobacco excise by 80 per cent, cutting the excise component on a standard packet of 20 cigarettes from around $30 to around $6, with the rate reviewed after two years. The purpose is not to encourage smoking; let me make that perfectly clear. The purpose is to attack the price differential that organised crime has exploited and to bring consumers back into a lawful, regulated market.

We would combine that with a $200 million nationwide law enforcement surge focused on raids, arrests, seizures, investigations, illegal shop closures and border disruption. That means a stronger operational focus across the Australian Border Force, the AFP, the Australian Criminal Intelligence Commission and AUSTRAC.

We would also establish a legal, regulated and taxed adult market for nicotine vapes and nicotine pouches while maintaining protections for children. And we would invest $60 million in a national public awareness and education campaign to expose the organised crime behind illicit tobacco and vapes and reinforce the dangers of smoking.

This is not a choice between tax reform and enforcement. Australia needs both. We need to shrink the criminal profit margin and then hit what remains with the full force of the law. We need to stop shipments at the border, shut illegal shops, seize criminal assets, follow the money and arrest the people running these networks.

We also need to restore some basic common sense to the tax settings that have helped make the black market so profitable. Tobacco excise revenue peaked at around $16 billion in 2019-20. By last financial year, it had halved to around $8 billion. At the same time, organised crime groups are estimated by the government to be making billions from illicit tobacco. This is a perverse outcome. Australians are collecting less tax while criminals are collecting more money. A policy designed to raise revenue and reduce smoking has instead helped create a market in which lawful retailers are undercut by organised crime, and illegal sellers operate without age checks, product standards or regulatory oversight. The coalition's position is straightforward: we support giving police and broader agencies and prosecutors better tools. We support stronger proceeds-of-crime powers. We support making it harder for criminal syndicates to hide behind evidentiary gaps or exploit—

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