The Australian Criminal Intelligence Commission’s Adam Meyer addressed a parliamentary inquiry into illegal tobacco, highlighting the immense pressure on law enforcement resources due to a booming illicit trade. Police are running out of room to store seized illegal cigarettes and vapes, with secure facilities at full capacity and destruction costs becoming prohibitive.
Storage and Destruction Challenges
The Australian Federal Police (AFP) has been spending up to $13 per kilogram for vape destruction, with some products requiring manual dismantling of cartridges, batteries, and heating elements. Destroying a standard 550kg pallet can cost over $7,150. AFP officials told the inquiry that storage facilities across Australia are at capacity, and the high cost of destroying illegal stocks is putting major pressure on law enforcement efforts.
“For large-scale seizures, these costs quickly become prohibitive, underscoring the increasing pressure on law enforcement resources and the need for more efficient, innovative storage and destruction solutions,” the AFP stated. They noted opportunities to reshape roles and responsibilities of commonwealth agencies handling seizure, storage, movement, and destruction of tobacco and other drugs, as current drug storage facilities are full and expanding them is costly.
Scale of the Illicit Trade
The Illicit Tobacco and E-cigarette Commissioner reported that since 2016, Australia has seized approximately 2.66 billion illegal cigarettes, along with 510 tonnes of loose leaf tobacco and 7.5 million e-cigarette products. Despite these seizures, the illegal industry is growing rapidly. The illicit tobacco trade has cost the federal budget $6 billion in lost excise in less than six months. In December, the government’s mid-year budget update forecast tobacco excise would raise about $5.5 billion in 2025-26, but by last week’s federal budget, that figure had dropped to $4.1 billion. Treasury expects it to fall to $2.1 billion by mid-2030.
Criminal Networks and Money Laundering
A hearing in Canberra on Monday revealed that criminal gangs are using money laundering systems to handle billions in profits from illegal cigarettes, including converting dirty cash into cryptocurrency to evade police. Profits from illegal tobacco are also fuelling broader criminal activity, such as drug trafficking, firearms offences, assaults, corruption, and worker exploitation. Since 2023, more than 200 firebombings and three deaths have been linked to the illegal trade.
Anthony Helmond, manager for law enforcement at financial watchdog Austrac, said banks are reporting remittance providers and privately owned ATMs being used to move funds for illegal tobacco stock. “These are ATMs that are not affiliated with banks, that can be leased and used by individuals or businesses. Often the proceeds can be placed back into those machines,” he said. Some banks have closed at least 1,000 accounts believed to be linked to the illegal tobacco trade.
Political and Industry Responses
Guardian Australia revealed the inquiry held a secret hearing for Philip Morris executives, breaking over 15 years of precedent under Australia’s participation in a World Health Organization agreement. Company representatives appeared in secret, and their names were withheld from public transcripts.
Independent MP Monique Ryan has introduced a private member’s bill to create new illegal tobacco offences and ban political donations from tobacco manufacturers. The Labor and Liberal parties no longer accept donations from big tobacco, but the Nationals have no such ban. “The tobacco industry’s current push for a 50% cut in tobacco customs duty is an influence campaign worth potentially $2.3 billion annually to the three major multinationals,” Ryan said. “When commercial actors of that scale are able to make political donations, the risk of policy capture is obvious.”
