Anyone who tried to deny that our country has a massive problem with illicit tobacco is either deluded or lying.
National Illicit Tobacco and E-cigarette Symposium
Canberra - 19 March 2026
I echo the Acknowledgment of Country, and of all the many distinguished guests, including Home Affairs Secretary Stephanie Foster, Border Force Commissioner Gavan Reynolds AO and colleagues across the Commonwealth, the states and territories, our partners from New Zealand and the United Nations Office on Drugs and Crime, and experts including researchers, health professionals and community advocates.
From the Government's perspective, I will endeavour to not pull any punches in providing context for your critical work today.
The problem
Anyone who tried to deny that our country has a massive problem with illicit tobacco is either deluded or lying. 'Cheap smokes' are everywhere with a now ridiculously ubiquitous retail distribution network.
The latest official estimates in the ITEC Commissioner's 2024-25 annual report are appalling.
- Between 50 and 60% of all tobacco products sold in Australia are now illicit – and this may get worse before it gets better.
- Organised crime groups earned an estimated $4.1 to $6.9 billion profit from this trade, which can be reinvested into other nefarious business including trafficking, scams and money laundering.
- Almost every vape purchased in Australia was illegal (about 95.7% of all e‑cigarette products sold) with a market value of about $1.6B.
What used to be seen as a health and revenue issue, has now morphed into a serious and organised crime crisis.
These are not victimless crimes. The explosion of this illegal trade has normalised law breaking for a significant proportion of Australians. Fuelling violence between crime cartels. Hurting legitimate retailers and workers. Risking the unwinding of decades of success in tobacco control policy and lowering smoking rates in Australia.
Illegal tobacco markets are not new. Every country has some level of illicit trade and the ABF set up an illegal tobacco strike team in 2015. But a perfect storm of factors over the last decade has led to the situation the country now faces.
A massive global surplus of cheap supply has been weaponised by transnational serious organised crime groups across the Middle East, south-east Asia and the Pacific, operating like multinational businesses, investing capital in what they perceive as a 'high profit–low risk' situation.
You may notice that I left out excise from the problems above, even though estimates of illicit tobacco excise evasion sit between $7.7 and $11.8 billion.
That's not because excise avoidance is acceptable – of course it's not. But, contrary to instinctive community suspicion, it had long been part of Australia's plan for tobacco excise collection to fall.
This was supposed to happen as smoking rates fell further though, not through excise evasion and other crimes. So let me deal with the giant excise elephant in the room upfront.
Tobacco excise is a 'Pigouvian tax' – a tax levied on activities that generate negative externalities and costs borne by third parties – primarily in this case public healthcare costs through smoking related deaths and disease.
A Pigouvian tax forces producers to include the external cost in their marginal cost, making the price of the good reflect its true social cost, aiming to reduce consumption.
The evidence is overwhelming that the single most effective lever to encourage people to quit or reduce smoking is price. Excise has been key to Australia's stunning success over decades in driving down adult smoking rates to amongst the lowest globally. A fact we can be proud of.
This has saved and extended countless thousands of lives as smoking kills one in every two users. Two out of every three long term smokers will die of a tobacco related illness, and 20% of the cancer disease burden in Australia is due to smoking. Billions of dollars have been freed up for other priorities in the health system.
But, the conundrum – a paradox as with all Pigouvian taxes – is that high-rates of excise over the last decade has contributed to creating a large price differential, one of the key drivers of the growth of the black market. To deny this is nonsensical, but to acknowledge this does not mean cutting excise makes sense now either.
This is not a partisan issue. While our government inherited a rapidly growing mess, successive governments have had a bipartisan approach to tobacco control. It is in the country's interests that this continue and that health policy not be surrendered to organised crime cartels.
In any event, debating past policy choices doesn't help much now. The question our society confronts is what to do next.
As of now, based on the information available and advice to Government there is no reasonable level of excise reduction that would make any material difference to the ubiquitous illicit supply chains and distribution networks operated by serious and organised crime.
So what else then to do if we are not going to surrender?
Australia's approach in response
The Commissioner's clear advice can be summarised in this way.
Firstly, the overriding goal of policy is to harden the environment and reverse the equation for organised crime – at every step, in every way – to make the illicit tobacco trade more risky and less profitable.
Secondly, this will take time, and to disrupt trade we must think about things at each stage: pre-border, at-border and post-border. Pressure across the whole chain: production, air and maritime routes, freight forwarders, import channels, warehousing, distribution and retail fronts. Shutting down financial channels—the cashflow that fuels the cycle.
While the Australian Border Force is working in overdrive at the border, no country can win this fight at the border alone as organised crime floods nations with cheap, plentiful product. I was in Singapore last year, and with their firm stance on law and order and tough border policies they have an illicit tobacco problem. It's not shopfronts there, but motorcycle couriers and sales online and via phones.
And thirdly, to hammer down illicit tobacco's market share, agencies must collaborate and work as one system: shared intelligence, consistent priorities, and coordinated action.
That's what today is about: taking stock, being honest about what's working and what isn't, and pushing forward together.
Pre-border, we are doing more and doing well. Intelligence sharing with foreign governments is rapidly improving, enabling disruption of more product before it even reaches Australia. Partners in the UAE, China, Singapore, Sri Lanka and elsewhere are collaborating. The best container of illegal tobacco is one that never even reaches Australia.
At and post border, in 2024-25 the ABF achieved record levels of seizures, supported by $188 million of extra funding. Seizing 2.66 billion cigarettes—up more than 320 per cent on four years ago. Over 2 years from 1 January 2024, the ABF seized more than 14 million vapes and vaping products at the border, with a street value of over $700 million.
Tempo matters. Over 72 hours, between 24 and 26 January, the ABF recorded 209 detections nationwide: 22 million cigarettes, 16,350 kilograms of loose‑leaf tobacco and 20,240 vapes. A strong result.
Other Commonwealth agencies are playing their part:
- The AFP's Criminal Assets Confiscation Taskforce has seized more than $38.7 million in assets linked to illicit tobacco investigations up to 1 January 2026, with further matters under active investigation under the Proceeds of Crime Act 2002. Stripping profits is essential: if crime doesn't pay, incentives shift.
- The TGA has taken part in more than 50 multi-agency enforcement activities to deter and disrupt the supply of unlawful vaping goods and is progressing several investigations with referral to the CDPP.
- The ATO in 2024-25 seized or destroyed 23 tonnes of illicit tobacco and 6.7 million cigarettes — nearly $58 million in excise equivalent duty, 28% higher than the previous year.
The point is, that these actions all raise the cost of doing business for criminals. They interrupt cashflow and money laundering. They disrupt supply chains and distribution networks. They make recruitment harder. They send a simple message: this market is getting tougher.
But to be clear, it is post-border that we can now make the biggest gains at the lowest cost to disrupt this trade. Australians will rightly think any public official who stands up and talks tough about seizures is not living in the real world unless and until the illegal shops are shut down.
And the only way this will happen is if the Commonwealth, States and Territories work seamlessly together. Simply put, we need each other.
The good news is that over the last 6 months inter-jurisdictional relationships have rapidly improved.
A year ago, most jurisdictions saw this as the Commonwealth's problem as we collect the excise. Yet there is now a deep determination to work together. The buy-in of State and Territory Police Ministers and Commissioners has been especially critical, given the urgent need to tackle organised crime cartels.
Following work through the National Illicit Tobacco and E‑cigarette Coordination Forum, which identified 50 elements of legislative reform, the Police Ministers Council received a distilled thematic analysis for action in December 2025.
But not everything can be done at once, and in January this year I asked the ITEC Commissioner to advise on the most urgent actions for States and Territories to prioritise. She identified 8 critical activities, relating mainly to licensing regimes, closure orders, landlord penalties and resourcing for street level enforcement.
Each jurisdiction started in a different place, but all are acting.
Leading the way are South Australia and Queensland who have toughened their laws and invested in enforcement with encouraging results. In particular, they are demonstrating that where enforcement occurs in 100% of a geographic area, then retailers see legal trade return rapidly to expected levels.
The latest critical step was Victoria's announcement on Sunday that they will shortly introduce new laws to provide for long term closure orders and raise the stakes for landlords which has been warmly welcomed.
Results of recent joint operations in WA and NSW have been publicised, and more National Weeks of Action in each jurisdiction are scheduled.
Commonwealth funding to the States and Territories is now flowing, through the ABF, AFP and Health. $84 million over 2 years is helping to put trained people on the ground, improve licensing and compliance systems, and enable tactical partnerships and joint operations.
Of course, when we tighten one part of the system, criminals test another. As the crackdown accelerates on shopfronts, we are working on scaling up responses to combat online sales which is where the market will try to move as retail activity gets tougher.
Health advocates are also doing interesting work reflecting on the ideal future licensing and retail model, asking why our society continues to permit standalone tobacconists. Australia now has around 40,000 tobacco retailers serving roughly 8% of the population who smoke, compared with about 7,000 petrol stations serving around 70% of Australians who drive.
That imbalance raises questions whether tobacco products should instead be sold only through mixed‑use retail settings, subject to stricter licensing, oversight and compliance. Interesting questions for the future.
Governance and the National Disruption Group
Resources of course matter, and since January 2024, the Australian Government has invested more than $345 million to strengthen the national response. But this is as much a governance challenge as a technical or operational one.
The ITEC Commissioner's work and the ABF‑led Illicit Tobacco National Disruption Group give us a stronger national backbone—connecting all partners into a coherent system for faster disruption. This supports:
- Aligned legal settings, privacy safeguards and joint operational protocols that can pool and share powers and information.
- Better tasking and deconfliction, and common targeting priorities.
- Intelligence cycles that move from detection to disruption, not just description.
ABF Commissioner Reynolds will update you on the National Disruption Group which is now kicking goals. Some things we can say in public forums, though much remains under wraps so criminals only find out when it hurts them. Al Capone got gaoled for tax evasion not his violent crimes!
Late last year, Minister Burke announced a crackdown on high‑risk financial services – including crypto ATMs – used to launder profits and conceal transactions, and last week new laws were introduced to the Parliament to give AUSTRAC more powers to act.
At the same time, the AUSTRAC CEO and the ITEC Commissioner warned banks to better scrutinise retailers linked to illicit tobacco, tightening the financial net around criminal supply chains. We are seeing immediate results: hundreds of high‑risk accounts reviewed and exited; merchant services and private ATMs withdrawn; suspicious transaction reporting has increased sharply; and banks have strengthened controls to shut down the money flows that keep illicit tobacco profitable.
Cutting off money flows starves the market and reduces its ability to regenerate after seizures. Following the money is not optional—it's central to durable disruption.
And tougher penalties in all jurisdictions are part of the answer, to give prosecutors and courts stronger signals about the harm involved and deter people from entering or staying in the market.
I announce today that the Government will strengthen Commonwealth laws and increase penalties to:
- Make the consequences much greater for criminals– with new offences and increased penalties in multiple acts for importing, manufacturing, moving or supplying illicit tobacco, and creating new offences for dealing with the kind of volumes that signal organised criminal involvement.
- Target unexplained wealth – as the AFP explained to me, while prosecutions are important, they can be slow and expensive. Hitting criminals where it hurts means using every tool – more rapidly taking their profits, cars, cash, houses, boats and toys away. This will mean closely aligning Commonwealth frameworks and the Proceeds of Crime Act with other jurisdictions.
- Activating enhanced law enforcement techniques like wiretaps and other powerful tools to track and disrupt criminal networks, by listing illicit tobacco offences as 'serious offences' in relevant laws.
The Government is also concerned about the rapid growth in unlawful importation, advertising and supply of nicotine pouches in Australia which you are seeing more often in your enforcement work.
Quite simply, pouches are disgusting. Massive unregulated doses of addictive nicotine, with substances that irritate the gum so the drug absorbs. No safety standards, replete with dangerous chemicals. Linked to mouth cancer and holes in the gums. We are actively pursuing options to respond to this growing threat, including reform of product regulation.
Demand reduction remains important
Alongside disruption and enforcement, supporting people to quit and avoid nicotine remains important.
The Cancer Council's Generation Vape study is encouraging. The rate of vaping amongst 14–17-year-olds started to drop late last year, falling from 18% in early 2023 to 15% in 2025. The number of young people who have never vaped has increased to 85% compared to 82% in early 2023. And the number of young people who have never smoked is at its highest ever level at 94%.
While these are good reasons to remain hopeful that a new generation will not become addicted to nicotine, hope is not a strategy. And public health experts are diligently monitoring the poly-use of cigs, vapes and pouches in this generation.
Whilst the Australian Government's Give Up for Good campaign is seeing promising results, the immediate priority now is our focus on serious and organised crime.
Conclusion
In closing, I acknowledge this is hard. Progress will not be smooth or linear. In some places things may get worse before they get better.
But giving up is not an option, nor is being distracted or seduced by misplaced hopes and false claims about excise reductions.
What does success look like? Fewer shopfronts linked to illicit networks. An end to firebombings. Fewer violent incidents. A lower illicit share of the tobacco and vape market. Rising prices for illegal products. Stronger excise compliance. More proceeds‑of‑crime recoveries. And most importantly safer communities and a fairer operating environment for honest retailers and workers.
Criminal networks adapt quickly. They experiment. They look for weak points. So our response must remain unified and adaptive, as we act with focus.
Every seizure, every prosecution, every licence suspension and every dollar stripped under proceeds‑of‑crime powers adds friction and puts the illicit market under further pressure.
The discussions you have today really matter for Australia and Australians and I wish you well. Organised crime doesn't get to win.