At a convenience store on a Tuesday afternoon, the cashier asks: "Do you want the cheaper ones?"The cashier turns around, opens the black cupboard door with "Smoking Kills" scrawled across it and pulls out a packet of cigarettes.But what's most surprising is, they look legitimate.
One of them pulls a packet of cigarettes out from his pocket — Marlboros in their original, trademark red packaging.This is a black market that has spiralled 'out of control', robbing taxpayers and legitimate retailers of billions of dollars.In Victoria, organised crime has long been synonymous with the tobacco trade.Stores from Melbourne to Ballarat, selling illegal tobacco and vapes, have been torched by rival gangs vying for control of what's become a very lucrative black market.
To this day, police are still detecting — and destroying — illegal tobacco, often concealed among other crops like this one, worth $20 million, near Parkes in New South Wales. Around two in three people who smoke throughout their lifetime will die from their habit, according to a study published in BMC Medicine magazine.
Tax Office analysis estimates the size of the illicit market was at least $2.3 billion in 2021/22, around 13 per cent of the tobacco market. The tobacco excise has undoubtedly helped reduce smoking rates but it's also grown to become a huge cash cow for successive federal governments. The Albanese government will increase the excise by a further five per cent each year for the next three years as part of its plan to drive smoking rates down to five per cent by 2030.
Nicotine consumption has remained “largely steady” in recent years, according to the latest National Wastewater Monitoring Report. If smoking rates have "flat-lined", as the health minister suggested, then these figures appear to back Pike's warning that Australians are not necessarily quitting smoking in big numbers — they're turning to illegal cigarettes and vapes.From the Australian Border Force headquarters in Canberra, Assistant Commissioner Erin Dale heads up the Illicit Tobacco Taskforce , which includes officials from the ABF, Tax Office, Australian Criminal Intelligence Commission and the AFP.
Because it's a federal tax, responsibility for cracking down on the black market has traditionally fallen to the federal government. ABF officers raid a store in Sydney as part of Operation CALOR, set up to disrupt the black market for tobacco.In New South Wales and Victoria — the two most populous states — it's nearly impossible to monitor shops for compliance because there's no licensing regime for tobacco.
Ritchies Supermarkets CEO Fred Harrison says in the past two years, his business has lost $120 million in legitimate tobacco sales as the black market has exploded.His business has lost $120 million in legitimate tobacco sales in the past two years, he says, as the black market has "deteriorated alarmingly".
"We can't just put our hands over our eyes and our fingers in your ears and pretend it doesn't exist," she says.Freeman points to Australian Institute of Health and Welfare data which shows daily smoking rates have fallen sharply from 24 per cent of adults in 1991, to 11 per cent in 2019 and about 8.3 per cent in 2023.
Australia is the only country in the world with a prescription model, and some fear this highly restrictive approach will see vapes go the same way as cigarettes.