Queensland Legal Cigarette Sales Surge Following Crackdown on Illegal Shops

Legal cigarette sales rose sharply in Queensland after the state gained stronger powers to shut illegal shops, while the national market remained flat at the same time.

The state's sales rose 55 per cent in the first month after new enforcement laws took effect in November and remained 40 to 45 per cent above previous levels for the following six months, according to data from major supermarkets and other retailers provided to the Illicit Tobacco and E-cigarette Commissioner.

Calls to Quitline also more than doubled in the 10 days following major enforcement operations, which suggested the crackdown may be encouraging some smokers to quit.

Queensland's intensified crackdown on illegal cigarettes, nicotine pouches and vapes is expected to generate $89 million in additional tobacco excise revenue and a further $11 million in GST gains over two years.

This would cover and potentially exceed the enforcements costs.

Labor has rejected calls to dramatically reduce the excise on tobacco, while the Coalition and One Nation have pledged to slash the tax by 75 per cent and 80 per cent respectively.

It is understood the federal government is focusing on the Queensland enforcement data to push back on the pro-cut rhetoric from NSW and encourage Victoria, which has been slower in its enforcement that other states, to ramp up its own crackdown.

Crackdown 'making it harder' for criminals

Assistant Minister for Customs Julian Hill said the Queensland results showed strong laws and enforcement, along with work between governments, was "helping turn the tide" on Australia's illicit tobacco trade.

"This really reinforces the critical importance and urgency of the states and territories shutting the shops as it has an immediate impact," he said.

"Queensland's results, building on South Australia's pioneering approach, show that sustained street-level enforcement can disrupt illegal markets and drive consumers back to legitimate products."

Mr Hill said organised crime groups had treated illicit tobacco as a "low-risk, high-profit enterprise for too long".

"Those days are coming to an end," he said.

"We are making it harder for criminals to operate, harder for illicit products to reach consumers, and harder for organised crime to profit."

Mr Hill said every Australian could "play their part" by reporting suspicious illicit tobacco retail activity to Borderwatch or Crimestoppers.

Enforcement success in Queensland

Queensland Health has issued more than 300 closure orders since November last year, which has contributed to more than 1,000 illicit tobacco shops shuttered across Australia.

The state is using licensing regimes, closure orders, landlord penalties and resourcing for street level enforcement to target illegal retailers.

New laws that took effect late last year gave Queensland Health the power to shut shops for up to 90 days without a court order, while landlords who knowingly leased premises to illicit tobacco and vape operators face fines of up to $161,300 and 12 months imprisonment.

A recent 10-day Operation Major enforcement blitz resulted in 148 stores issued with three-month closure orders.

Authorities also seized more than 11.8 million cigarettes, 1.7 tonnes of loose tobacco, 87,000 vapes, 4.2 litres of vaping liquid and 270,000 nicotine pouches with a collective estimated street value of $15.7 million.

Coalition, states question approach

The Coalition had vowed to cut the tobacco excise by 80 per cent if elected, dropping the price of a standard pack from between $40 and $50 to about $16 to $26.

One Nation wants to slash the tax on cigarettes by 75 per cent and freeze indexation for three years.

Opposition Leader Angus Taylor said a dramatic price reduction would smash the thriving black market, alongside a $200 million law enforcement "surge".

The federal government has committed more than $365 million to enforcement action since coming in to office.

Coalition policy would also legalise, regulate and tax vapes and nicotine pouches for adults.

Parliamentary Budget Office modelling found the Coalition's policy would increase tax revenue by about $8 billion over four years, about double current forecasts.

One Nation leader Pauline Hanson said bringing legal prices close to those on the black market was the best way to "cut off the cash for organised crime".

The government had been critical of any plan to cut the excise, with Social Services Minister Tanya Plibersek claiming it would "kill people".

But Monash MP Mary Aldred, who co-chaired an internal Coalition task force on illegal tobacco, said violence linked to the black market, including firebombings, was "killing people right now".

Violent arson attacks and turf wars had been particularly prevalent in Victoria where laws allowing illicit tobacco stores to be shut down came into effect in September, months after the state government had flagged a crackdown.

In New South Wales, Labor Premier Chris Minns had argued cutting the tax could help tackle illegal tobacco, warning a reliance on law enforcement could divert police from domestic violence and organised crime.

After the federal budget in May, he called for an "urgent change" to the tobacco excise.

"I don't believe that it's working as a matter of tax or health policy,' he told the Sydney Morning Herald at the time.

"My real concern is that it's lumping state police departments with the implications of organised crime benefiting from the current regime."