What’s next for dealing with the growing illicit trade in tobacco that undermines legitimate retailers?
The rapid growth in illegal tobacco sales (the illicit trade) is continuing unabated around the country, led by organised crime. As well as providing much easier and cheaper access to illegal tobacco and illegal nicotine vapes that are turning up in schools, our legitimate retailers’ tobacco sales are being undermined, and increasingly they fear the groups who run these illegal outlets.
The margin on illegal cigarettes is so big, and the risks involved so low,
that selling branded cigarettes is more profitable than selling heroin. Demand is rising because sellers are getting away with it, and the more they sell and the more profit they make, the more stores are popping up. Illegal cigarettes are selling now in gift stores, spice stores, corner shops, tobacconists and grocery stores.
Syndicates can afford to lose 29 of 30 cigarette containers to law enforcement and yet still make a profit, according to a report last year from the Australian Criminal Intelligence Commission. KPMG estimates one in five cigarettes smoked in Australia in 2020 was illicit, with 19.3 per cent of all tobacco sold in Australia being illegal.
The Australian Lottery and Newsagents Association (ALNA) has long been an advocate for improved enforcement at street level and in retail stores. We want local police who are best placed to deal with organised crime to be given improved powers to shut down and substantially fine illegal sellers, and confiscate their illegal products. Without targeted fast enforcement action, which requires state and federal cooperation, we won’t see the situation improve.
ALNA, along with some other retail associations, has taken the unusual move of calling for more red tape and cost for our retailers by supporting Queensland and Victoria, which have no tobacco licensing schemes, to introduce them. We now need this to help identify legitimate retailers and to assist authorities in closing down illegal ones. However, this will be a pointless exercise if we don’t get renewed leadership from all governments to address the growing gap between enforcement, supported by strong legislation, and burgeoning illegal sales.
Several state governments are looking at this growing problem and what more they can do to address it. However, the real opportunity is for the new federal government to endorse a national illicit tobacco strategy, working with all state governments and agencies. A Parliamentary Joint Committee on Law Enforcement inquiry into illicit tobacco, which began in 2015, recommended exactly this in 2020: the development of a national illicit tobacco strategy, in conjunction with state and territory police forces, as a coordinated, national law enforcement-led response, including a range of other measures on proceeds of crime, consistent licensing, and a track and trace regime for
legitimate products. Unfortunately, the previous government merely noted the recommendations, and our retailers and communities are yet to see real actions.
The new federal Labor government has an excellent opportunity to reconsider the previous government’s mediocre response to the joint committee’s strong recommendations and to steer a new and effective course. The current situation is losing federal and state governments billions in lost excise and GST revenue. This could also consider the burgeoning problem of illicit nicotine vapes that are being supplied by these illegal sellers.
Delivering a national strategy working with state governments, legitimate retailers, state and federal law enforcement and other agencies to put an immediate stop to this illegal activity would be a quick policy win for
the new government and would signal strong support for our challenged small businesses that have been counting the impacts of this illegal activity for far too long.