by leave—I move opposition amendments (1) to (3) together:

(1) Title, page 1 (line 2), after "2002,", insert "and to reduce customs and excise duties on tobacco,".

(2) Clause 2, page 2 (table item 4, column 1), omit "Schedule 6", substitute "Schedules 6 and 7".

(3) Page 50 (after line 17), at the end of the Bill, add:

Schedule 7 — Reduction of tobacco customs and excise duties

Customs Tariff Act 1995

1 After section 19ACA

Insert:

19ACD Reduction of tobacco duty rates

(1) Despite anything else in this Act, each tobacco duty rate is taken, on the day (the commencement day) on which this section commences, to be replaced with a rate that is 20% of the tobacco duty rate on the day before the commencement day.

Treatment of indexation

(2) To avoid doubt:

(a) in working out, for the purposes of subsection (1), a particular tobacco duty rate on the day before the commencement day, take into account any replacement of that rate that occurs before the commencement day under section 19AB; and

(b) for the purposes of applying section 19AB in relation to the first indexation day that occurs after the commencement day, subsection (1) of this section applies when working out the tobacco duty rate on the day before that indexation day.

(3) If the commencement day would, apart from this subsection, be an indexation day under section 19AB then, for the purposes of applying section 19AB, the commencement day is not to be treated as an indexation day.

Effect on other rates for tobacco

(4) To avoid doubt, subsection (1) of this section applies for the purposes of determining an applicable rate under section 19ACA.

Which goods?

(5) This section applies in relation to goods that are entered for home consumption on or after the commencement day.

Definitions

(6) In this section:

commencement day has the meaning given by subsection (1).

tobacco duty rate means a rate of duty that is a tobacco duty rate for the purposes of section 19AB (see section 19AC).

Excise Tariff Act 1921

2 After section 6AAC

Insert:

6AAD Reduction of duties of excise on tobacco

(1) Despite anything else in this Act, the rate of duty applicable under subitem 5.1 of the Schedule is taken, on the day (the commencement day) on which this section commences, to be replaced with a rate that is 20% of the rate of duty applicable under that item on the day before the commencement day.

Treatment of indexation

(2) To avoid doubt:

(a) in working out, for the purposes of subsection (1), the rate of duty applicable under subitem 5.1 of the Schedule on the day before the commencement day, take into account any replacement of that rate that occurs before the commencement day under section 6AA of this Act; and

(b) for the purposes of applying section 6AA of this Act in relation the first indexation day that occurs after the commencement day, subsection (1) of this section applies when working out the tobacco duty rate (within the meaning of section 6AA) on the day before that indexation day.

(3) If the commencement day would, apart from this subsection, be an indexation day under section 6AA then, for the purposes of applying section 6AA in relation subitem 5.1 of the Schedule, the commencement day is not to be treated as an indexation day.

Effect on other rates for tobacco

(4) To avoid doubt, subsection (1) of this section applies when determining the rate of duty applicable under subitem 5.1 of the Schedule for the purposes of applying sections 6AAB and 6AAC.

Which goods?

(5) This section applies in relation to goods that are entered for home consumption on or after the commencement day.

(6) In this section:

commencement day has the meaning given by subsection (1).

Australia's tobacco wars have become a national organised crime crisis. We've seen hundreds of firebombings, even murders, in relation to the trade. The government estimates that organised crime groups are making between $4.1 billion and $6.9 billion in profit from illicit tobacco. In 2017 illicit tobacco accounted for around 10 per cent of consumption. By 2025 the Australian Bureau of Statistics estimated that the illicit share was around 80 per cent.

There need to be stronger measures that will potentially give our border and law enforcement agencies more-effective powers to combat this scourge, and the coalition's position on illicit tobacco could not be clearer. We support stronger legislation, better laws and tighter border controls. For that reason, we won't oppose this bill. But it does not go far enough. We need a broader response, and that's what the coalition is proposing through our amendments. We have put forward a comprehensive commonsense plan to crush organised crime gangs that are benefiting in the order of billions of dollars from the illicit tobacco industry. Our amendments would give legislative effect to some of the key components of the coalition's policy package. This includes our proposal for an 80 per cent reduction in the tobacco excise.

An 80 per cent excise cut would see the price gap dramatically narrowed, shifting sales from the black market back into legal businesses. It would see the price of a standard pack of 20 cigarettes reduced from $30 to $6, reducing the price advantage enjoyed on the black market. Currently a legal packet of cigarettes costs around $50, with more than $30 of that coming from the tobacco excise. Meanwhile, illegal packets sell for just $15 to $20. The objective is simple: remove the huge price gap that has made Australia one of the most lucrative markets for illicit tobacco in the world. Our plan and these amendments would make it harder for criminals to undercut legal retailers. The Parliamentary Budget Office estimates that an 80 per cent excise cut is sufficient to bring legal and illegal prices into alignment, making it difficult for the illicit market to compete. This would be reviewed after two years to ensure that the illegal market cannot rebuild.

We have also proposed necessary legislative changes to establish a regulated market for nicotine vapes and nicotine pouches while maintaining strong protections for children. Under the coalition's plan, vapes and nicotine pouches will be legalised, regulated and taxed. This will replace Labor's failed pharmacy-only vape model and total ban on nicotine pouches.

Of course, not every component of our policy can be implemented through amendments to the bill. The coalition will also introduce a $200 million law enforcement surge and a $60 million public campaign educating Australians about the risks of tobacco and smoking. And Deputy Speaker Freelander, I know you're a doctor yourself, and you know how bad smoking is, and I want to make very clear that the coalition encourages all Australians not to smoke. But we need to smash the illicit tobacco trade, and that's what our amendments will do. These are administrative and funding measures. We live in a world where, regardless of the risks, people are still going to smoke. But, where we have the opportunity to address the settings that have seen the rise in illicit tobacco, we should do so. Our approach is not enforcement instead of prevention, regulation or education. It is an effort to bring those elements together.

There is a clear difference between the coalition and the other side of the House when it comes to illicit tobacco. Under the government, we are seeing more illicit tobacco, more organised crime and more Australians purchasing illegal products. The coalition wants to crush organised criminal gangs by reimposing and enforcing the law and breaking the model used to sell illicit tobacco. That's what our plan will do, and that's what these amendments set out to achieve.

I thank the member for Canning for the tone in which he brought that. He could probably give some tips to the other leader of the opposition about the way to prosecute an argument with substance.

The government is not going to agree to these amendments. I appreciate that it's the opposition's policy to get into a bidding war with organised criminal syndicates, but that's not the government's approach. We've reached a farcical situation over the last couple of months. Last year they were talking about a 30 per cent cut to excise, then it was a 50 per cent cut, then One Nation pre-empted them and said they were going to do a 75 per cent cut, and the next week they announced 80 per cent. By next sitting week they'll be back here paying people to smoke! The difficult reality is that, despite whatever fantasy modelling or advice—if you can call it that—that underpins what passes for their policy, even if you wiped out all tobacco excise the illegal products would still be cheaper.

In addition, criminal gangs have significant elasticity in their profit margins to adjust their price downwards. This is a global issue. There's a massive surplus of cheap production of tobacco globally that's been weaponised and industrialised by these organised criminal syndicates. They're like multinational businesses. They're highly sophisticated, and they're attacking nations across the world regardless of their excise policies. That's just the reality of it. In addition, they're commodity agnostic. It's not enough. There's no magic solution. I wish there was. I genuinely wish there was, as other nations do. But they're commodity agnostic, and you've still got to go after them and dismantle them. The kind of money they're talking about just doesn't do that. Look at the money the government's investing through the federal police in chasing organised criminal syndicates onshore and offshore. You've got to think about this stuff pre border, at border and post border. Pre border, the best container of illegal tobacco is one that never reaches Australia.

I'm proud of the work of the Australian Border Force. They've been dialling up their international partnerships. We're working with trans-shipment points across the world—the cooperation with the Chinese customs authority has been well publicised—and with the UAE, Singapore and other nations. At border, the Australian Border Force have achieved record levels of seizures of tobacco and vapes over the last 12 months—over a kilotonne in just four months. That's a thousand tonnes through Operation Printwall, which is ongoing. Operation Printwall is still achieving those results. But it's post border that the biggest gains can and need to be made. As I said in summing up on the bill and as I've said before, we need the states and territories to dial up the urgency and shut the shops. We don't have the constitutional power to do that, but the states and territories do, and $98 million is now flowing over just two years to support them in that work.

I'll address the other points that were made in the amendment there. I get the seductive argument. It's a charlatan argument; it's not real, and it doesn't stack up. But I get the seductive nature of the argument around excise and price. The most pernicious and evil part of what the coalition are proposing is to let vapes rip—to legitimise and legalise vapes and put them in every corner store and to tax them. So their genius policy is to cut tax on cigarettes and legalise vapes and tax them. That's the only way it stacks up with so much revenue, which they've now spent 2½ times, since they announced their policy, on other measures. It is peak irony.

I heard the conspiracy theory of the member for Barker in his contribution—that the data wasn't right, somehow. Well, the gold standard data that was released two months ago by the Australian Institute of Health and Welfare shows that, despite everything these organised criminals are chucking at our country, adult smoking rates have continued to decline to the lowest on record—around 5.8 per cent—tracking towards the national goal of under five per cent. The government is not going to surrender those hard-won gains. Today 66 Australians will die of a smoking-related illness. Tomorrow 66 more will die, and 66 every day after that. The most important thing in the long run, though, is to stop young people ever taking it up, because if someone doesn't take up smoking by the time they're 25 they almost certainly never will. That's the pernicious evil in the vapes policy. They are not a way to get off cigarettes. If you want to do that for people, they can already go and get them on a prescription. They are a pathway to taking up cigarettes, which explains why those opposite have not released and will not release any credible modelling. They know it will kill untold thousands of Australians and condemn them to disease and early death. This idea that you let vapes rip as some kind of cool flavoured thing and then tax them is deeply irresponsible. I'll say it again: it's not the Labor Party or the government that takes donations from big tobacco and the vaping lobby. The same cannot be said for the National Party. The government's approach is to double down, not back down to organised crime.

The question is that the amendments moved by the honourable member for Canning be agreed to.

(In division) The members for Clark and Tangney entered the chamber whilst the doors were closed. I'll ask them to remove themselves from the division.

Bill agreed to.