25/09/2025

Labor promised tough action on smoking. What they’ve delivered is a policy failure that’s driven more Australians into the black market, slashed revenue available for health funding, and handed a cash bonanza to organised crime.

When Labor announced its latest tobacco excise hikes in 2023, Treasury forecast an extra $3.3 billion in revenue over four years. That kind of forecast only makes sense if you believe legal tobacco sales would hold steady and the black market would stay small. Neither has happened. Illicit tobacco took off like a rocket and Treasury’s excise revenue projections fell apart.

You’d think a mistake that big, measured in the billions, would prompt some soul-searching from our bureaucrats. But no, the Albanese Government’s Illicit Tobacco Commissioner, Amber Shuhyta, recently claimed that “changing the excise rate would not necessarily be effective” in deterring criminal networks.

Really? Legal cigarettes are now pushing $50 a pack. On the black market, you can get the same product for half that or less. And Labor has made the problem worse by banning most nicotine vapes rather than taxing and regulating them. That decision has handed yet another growing market to black market criminals. Illegal vapes are now widely available, unregulated, and untaxed – often sold in the same networks as illicit tobacco.

While some government experts are still defending this mess, anyone with experience in practical law enforcement knows we need a change of course. Former Australian Border Force Tobacco Strike Team head Rohan Pike has been blunt: excessive excise is fuelling organised crime. Responding to Ms Shuhyta’s comments, he said Labor’s policies had made Australia “world-leading in tobacco-related organised crime growth and violence.”

“Wastewater data shows nicotine consumption flatlining over the past decade and increasing over the last two years,” Mr Pike said.

This isn’t a partisan issue, it’s just common-sense. Even state Labor governments are warning Canberra to change course. NSW Premier Chris Minns has called for a cut to excise, saying it’s driving illegal sales. Victoria’s Minister for Tobacco Regulation, Enver Erdogan, has linked the tax directly to black market growth and crime. The only people who haven’t gotten the message seem to be Mark Butler and Labor’s appointees.

The consequences of this policy are now impossible to ignore:

• There’s more nicotine than ever in our community. More Australians are turning to the black market. Legal sales are down, but the illicit trade is booming. Wastewater data shows nicotine use is rising, not falling.
• Tax revenue is vanishing. In 2019–20, tobacco excise brought in $16.3 billion. By 2025–26, Treasury expects just $7.4 billion. That’s more than half gone – and no one seriously believes we’ve cut the rate of smoking by that much. Billions that should be going into hospitals and health programs have disappeared.
• Organised crime is cashing in. Those missing tax revenues are being enjoyed by organised crime. Illicit tobacco is now a key income stream tied to money laundering, gang violence, and firebombings of suburban tobacconists. Every police resource spent chasing this trade is one taken away from targeting harder drugs or illegal weapons.

So now we’ve got the worst of all outcomes: more Australians smoking illicit tobacco, less funding for health, and criminals making a fortune.

The Government was warned. According to reports, Treasury advice at the time of the 2023 excise hike flagged that further tax increases could drive up illicit trade. Labor went ahead anyway, and now we’re living with the consequences.

How much longer will the Government refuse to admit they got this wrong? How many more billion dollar budget shortfalls and violent gang incidents will it take before ministers admit that hiking excise in the middle of a black market boom is only making things worse? So far they remain doggedly committed, with tobacco excise increasing the cost of cigarettes by almost 7 per cent due to excise changes from 1 September 2025.

To be clear, I want fewer Australians to smoke. It’s not good for you. But as a former drug squad detective I know if we’re serious about that goal, we need policies that actually work and don’t fuel organised crime.

Australia led the world on tobacco control with plain packaging and strong public health campaigns. Those worked. By contrast, the Government’s latest episode is one of the worst failures of public policy in living memory.

It’s time for a reset. The goal should be reducing smoking and protecting public health – not handing over billions in tax revenue to criminal syndicates. A smarter, more balanced approach is possible. What’s missing is the political courage to admit this one’s failed.