Australians are spending less to consume more nicotine as the illegal tobacco trade explodes, according to new data from the Australian Bureau of Statistics (ABS). The analysis, released on Wednesday, shows that the amount of nicotine consumed across the country soared by 40% between 2017 and 2025, while population growth rose by just 14%.
Shift to illegal products
The ABS attributes this growth to a surge in illegal tobacco and increases in e-cigarettes and other nicotine products. In 2017, only 12% of total tobacco consumed came from illicit sources. By 2025, that figure had jumped to 80%. This dramatic shift has resulted in the dollar value of household spending on cigarettes dropping to levels similar to those seen in 2016, despite the cost of legal cigarettes tripling over the same period. The price of illegal tobacco products has remained relatively constant.
First estimates on illegal tobacco
The release marks the first time the ABS has provided estimates on illegal tobacco consumption, after developing methods to assess how the economic impact of the trade would be treated in Australia's national accounts. The estimates, assisted by nicotine metabolite concentrations detected in wastewater samples, are experimental and subject to change.
New South Wales health minister Ryan Park described the data as 'unsurprising,' pointing to a 'growing disparity between the cost in legal and illicit tobacco, created by the federal government's tobacco excise.' He noted that during one of the toughest cost-of-living challenges in living memory, excise-free products become increasingly attractive, creating a public health failure that forces states to dedicate more resources to licensing, enforcement, and healthcare.
Budget impact and policy debate
Last year, revenue from high taxes on legal tobacco fell to its lowest level in 14 years, creating a $6.9 billion hole in the federal budget as the illegal market boomed. This has sparked debate among public health and criminology experts over whether to lower the excise to reduce criminal incentive or maintain it with increased law enforcement.
NSW Premier Chris Minns has called for an overhaul of the tobacco excise, arguing it is no longer effective as a tax or health policy. In May, his government introduced a new penalty for landlords of shops selling illegal tobacco, part of a suite of reforms including a new offence for possessing a commercial quantity of illicit tobacco, carrying a maximum penalty of over $1.5 million and seven years in prison. In Victoria, those found selling illicit tobacco face fines of up to $370,000 or up to 15 years in jail.
