New data from the Australian Bureau of Statistics (ABS) reveals that 80 per cent of cigarettes and other nicotine products consumed in Australia last year were illegal, highlighting a massive failure of government policy and a boon for organised crime.
Black Market Boom
The ABS estimates that illicit nicotine consumption has surged, with the share of illegal tobacco rising from 12 per cent in 2017 to 80 per cent in 2025. Overall nicotine consumption increased nearly 40 per cent between 2017 and 2025, even as household spending on legal tobacco dropped sharply. The figures are based on wastewater analysis of nicotine metabolites combined with data on legal cigarette spending.
Legal tobacco prices have almost tripled since 2016, yet the latest federal budget downgraded tobacco excise revenue by $8 billion over five years. The government has responded by appointing an Illegal Tobacco and E-cigarette Commissioner and doubling down on enforcement.
Industry Criticism
British American Tobacco Australia criticised the government, stating: “The criminal syndicates now controlling the illicit market are none of those things [law-abiding]. They are firebombing shopping strips, intimidating retailers and recruiting young people into organised crime.” The company called it “deluded irony” for the health minister to attack Big Tobacco while presiding over the largest expansion of black market tobacco in history.
State Response
In Victoria, new laws allow authorities to issue closure notices for up to 90 days for shops selling illicit tobacco, with fines over $2.4 million and up to 20 years’ imprisonment for defiance. Landlords can terminate leases due to long-term closure orders. The state is also providing $13.4 million to triple inspector numbers, on top of $46 million for a new licensing scheme.
Victoria’s minister for Casino, Gambling and Liquor Regulation, Ender Erdogan, said: “If you are selling illicit tobacco in Victoria, we are closing the door on your business. The illicit tobacco trade puts Victorians in harm’s way. It funds organised crime and requires a coordinated effort across borders to stamp it out.”
