The Australian Bureau of Statistics (ABS) captured significant attention earlier this year with its report on tobacco usage in the country, revealing that a substantial portion of tobacco consumed originates from illegal sources.
This alarming statistic underscores a critical issue for both public health organizations and law enforcement agencies.
To understand this situation better, it’s essential to review the trends in tobacco consumption over recent years.
A graph based on ABS data illustrates the nicotine intake from legally purchased cigarettes and tobacco products, tracing back to 2016. The figures show relatively stable consumption, averaging around 4,500 kg of nicotine per quarter for the initial years despite annual tax increases, which eventually positioned Australian cigarettes as the priciest in the world.
However, in mid-2019, there was a noticeable decline in the consumption of legally sold tobacco products. As tax hikes persisted, this decline accelerated significantly, leading to current figures that are approximately one-third of what they were a decade ago.
At first glance, this might appear to be a victory for anti-tobacco advocates and a positive development for public health, suggesting that traditional tobacco companies are struggling. Yet, this perspective does not encompass the entire narrative.
When nicotine is consumed, it is eventually excreted, leading to a different story reflected in wastewater analysis. The data indicates a stark increase in illegal nicotine consumption, presenting challenges for law enforcement.
According to ABS estimates, the illegal tobacco market is contributing significant quantities of nicotine, while the legal market shows a smaller but increasing trend. Additionally, other nicotine products, such as pouches, prescription nicotine, and gum, are also part of this evolving landscape.
This trend suggests that the black market is increasingly serving as a substitute for traditional tobacco companies, bringing its own set of complications.
One might assume from these figures that approximately 80% of cigarettes sold in Australia are illegal, which would imply rising smoking rates. However, the reality is more complex. The data from wastewater reflects the volume of nicotine rather than the actual number of cigarettes consumed, making it crucial to distinguish between the two.
Becky Freeman, a public health professor at the University of Sydney, notes that the 80% figure likely stems from individuals consuming larger quantities of nicotine from illegal products. She points out that illicit cigarettes vary in strength, and those who purchase them are often heavier users. “This suggests that individuals smoking illegal tobacco are likely consuming more due to the absence of price constraints,” she explains.
Having dedicated over two decades to tobacco control, Professor Freeman asserts that these findings align and present a comprehensive view of the issue. She adds that despite the concerning trends, overall smoking rates are still declining.
A recent survey conducted by the Australian Institute of Health and Welfare indicated that daily smoking rates fell to 5.6% in 2025, down from 8.3% in 2022-2023. However, some experts, including former deputy chief medical officer Dr. Nick Coatsworth, have raised questions about this data, pointing to rising rates in certain regions like Western Australia.
Moreover, this situation has created a significant gap in tax revenue. Every dollar that shifts to the black market is a dollar lost to taxpayers. The Illicit Tobacco and E-cigarette Commissioner’s office estimates that evasion of excise and duties could cost Australia up to $11.8 billion for the 2024-25 financial year. In the latest federal budget, $8 billion was deducted from projected tobacco excise revenues over the next five years.
Smoking remains the leading cause of preventable morbidity and mortality in Australia, carrying a hefty economic burden estimated at over $136 billion annually due to healthcare costs and lost productivity associated with smoking-related diseases.
With this context in mind, the pressing question arises: how can this problem be addressed? Opinions on solutions vary. Dr. James Martin, a criminologist at Deakin University, argues that Australia is experiencing a widespread consumer rebellion against cigarette pricing. He highlights that a daily smoker faces costs exceeding $15,000 annually.
Dr. Martin expresses surprise at the government’s persistent focus on policies that have led to the current situation rather than exploring alternative strategies. He compares the effect of pricing tobacco out of reach to outright bans, stating that both ultimately redirect demand to illegal markets.
Perceived as a low-risk, high-reward venture, the sale of illicit tobacco is rapidly becoming one of the most lucrative criminal enterprises, second only to illegal drugs in benefitting organized crime.
In light of the evident rise in illicit tobacco consumption correlated with the increasing prices of legal products, some advocate for reevaluating tobacco taxes as a potential solution. However, the federal government remains resistant to any changes in tobacco taxation, with Assistant Minister for Customs Julian Hill declaring that reducing excise does not hold up to scrutiny.
