Canberra - The rampant illicit tobacco trade in Australia is not simply an economic issue; it is a grave threat to the rule of law, fiscal responsibility, and potentially even national security. The inability of law enforcement to effectively combat this illegal activity undermines the principles of a free market, rewards criminal behavior, and deprives the government of vital tax revenue that could be used for essential services.

The Australian federal police (AFP) told a parliamentary inquiry that the destruction of seized vapes is costing as much as $13 per kilogram. This cost, coupled with the expense of storing seized goods, represents a significant drain on taxpayer dollars. Furthermore, the sheer volume of illegal tobacco entering the country suggests a failure of border protection and customs enforcement. We must ask: are our borders secure, and are we doing enough to prevent illicit goods from entering the country?

The inquiry heard that approximately 2.66 billion illegal cigarettes, 510 tonnes of loose leaf tobacco, and 7.5 million e-cigarette products have been seized since 2016. Yet, despite these seizures, the illicit market continues to thrive. This suggests that current penalties are not sufficient to deter criminal activity. Stricter penalties, including longer prison sentences and larger fines, are needed to send a clear message that illegal tobacco trade will not be tolerated.

The Albanese government's mid-year budget update in December projected tobacco excise revenue of $5.5 billion for 2025-26. However, this figure was revised down to $4.1 billion in the recent federal budget, demonstrating the significant financial impact of the illicit tobacco trade. This lost revenue could be used to fund vital infrastructure projects, support our military, or reduce the tax burden on hardworking Australians.

Anthony Helmond, the manager for law enforcement at financial watchdog Austrac, revealed that criminal gangs are utilizing money laundering techniques to process profits from illegal cigarette sales. This underscores the need for stronger financial regulations and greater cooperation between law enforcement agencies and financial institutions to track and seize illicit funds. The government must also crack down on cryptocurrency and other methods used to evade detection.

More than 200 firebombings and three deaths have been linked to the illegal trade in since 2023. This violence is a direct result of the government's failure to effectively combat illegal tobacco trade. It also raises concerns about the potential for these criminal networks to engage in other illicit activities, such as drug trafficking and terrorism. Stronger border security and law enforcement are essential to protect our communities from these threats.