My question is to the Minister representing the Prime Minister, Minister Wong. Minister, last week I visited the once vibrant and thriving Victoria Street in Richmond, in Victoria, where 10 small businesses were burnt to the ground due to the firebombing of an illicit tobacco shop. I met with Ha, Andrew and Nok and another group of business owners who have all been affected by the organised crime behind the tobacco wars, and their fears and frustrations are very real. Illicit tobacco now accounts for around 80 per cent of the market. At the same time, consumption has risen by around 30 per cent. Can the minister admit that the Prime Minister has failed small businesses by allowing Australia's illicit tobacco market to become a serious organised crime problem?

I'll make a few points. First, it is the case that illicit tobacco is not just a health problem and not just a revenue problem; it is a serious organised crime crisis. It's a major source of funds for serious and organised crime, which also is used to fund other harms and crimes. I would make the point that the government does not believe we should be surrendering to either organised criminals or big tobacco. I would make the point that the government has committed more than $365 million to enhance border detection, seizure and joint enforcement activities with states and territories to target illicit supply chains and retail operations. We would also make the point that the only way to stamp out the black market is for states and the federal government to work together. It is the states that regulate the sale of tobacco.

We do need strong momentum across states, territories and the Commonwealth to fight the black market together, and the government is contributing to that response. I can also advise the chamber that the government has set up the Illicit Tobacco National Disruption Group. It's a first-of-its-kind, whole-of-government capability to target and disrupt criminals and enablers operating in the illicit tobacco market.

Senator Hume, first supplementary?

Minister, you're right on some things. In my home state of Victoria, there have been more than 200 tobacco related arsons in the past three years alone. Organised crime is making an estimated between $4 billion and $7 billion a year from illicit tobacco. That money has been funding the firebombings, extortions, drugs, scams and violence that we see in the news every week. Can the Prime Minister look small-business owners in the eye and commit that his government will put a stop to the organised crime behind illicit tobacco that is destroying their businesses?

First, we again say that the only way in which we can fight the black market is by states, territories and the Commonwealth regulators and governments working together to confront the black market. I want to be very clear about that. Second, we don't believe that some of the changes that have been proposed, including by those opposite, are sound. We are concerned about the message and behavioural impact that that will have on, particularly, children and the increase in smoking rates that that could lead to.

Senator Hume, second supplementary?

Minister, the current system is also bleeding the budget. Tobacco excise revenue has halved from around $16 billion to $8 billion while organised crime has collected billions instead. The independent Parliamentary Budget Office estimates that the coalition's package, which includes cutting the tobacco excise by 80 per cent, will improve the budget by around $8 billion over four years. This will bring sales out of the black market and back into the legal economy. Does the minister agree that the current system is broken and more must be done?

I think, Senator Hume, that we agree that more must be done, but we don't believe that the answer to it is to simply reduce the excise and to make access to these products cheaper. We do know—I think we all are aware of this—that there's been an explosion in vaping, which is a huge challenge in schools, in families and in our communities. What the government does not want to see is another generation of Australians become hooked on nicotine.