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How government greed lit an illegal tobacco inferno · The Front

• 0:03
  Speaker 1: From the Australian. Here's what's on the front. I'm Claire Harvey.
• 0:06
  Speaker 1: It's Monday, September eighth, twenty twenty five. Mushroom killer Aaron
• 0:13
  Speaker 1: Patterson will be sentenced on Monday for the murders of
• 0:16
  Speaker 1: three elderly relatives and the attempted murder of one man
• 0:19
  Speaker 1: at a family lunch in twenty twenty three. The sentencing
• 0:22
  Speaker 1: by Justice Christopher Beale will be broadcast live, in a
• 0:26
  Speaker 1: first for the Victorian Supreme Court. You can tune in
• 0:29
  Speaker 1: live at the Australian dot com do AU. China's interference
• 0:37
  Speaker 1: in Pacific Island politics has reached a new high, with
• 0:40
  Speaker 1: fresh allegations in The Australian Today about how Beijing ordered
• 0:44
  Speaker 1: a rogue Solomon Islands MP to be frozen out of
• 0:47
  Speaker 1: the government. That's after the Solomon signed a secretive security
• 0:51
  Speaker 1: pact with China.
• 0:52
  Speaker 2: That exclusive is live now.
• 0:59
  Speaker 1: Banks and a powerless to stop billions of dollars in
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  Speaker 1: black money from the illegal tobacco trade being sent to
• 1:05
  Speaker 1: overseas crime gangs. Within minutes of a pack of illegal
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  Speaker 1: cigarettes being sold at a tobacconist or convenience store on
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  Speaker 1: Australian streets, the money is transferred overseas. That's just one
• 1:17
  Speaker 1: element of a big investigation into the illegal tobacco trade
• 1:21
  Speaker 1: launching in the Australian today. The black market is booming
• 1:25
  Speaker 1: because of government moves meant to help people kick smoking. Today,
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  Speaker 1: How this policy mistake turned into a crime disaster and
• 1:34
  Speaker 1: can it all be unraveled. Sarah Eisen is a senior
• 1:41
  Speaker 1: political reporter with The Australian. Sarah, I was at the
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  Speaker 1: service station the other day and there was a trader
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  Speaker 1: in the queue in front of me. He bought a
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  Speaker 1: packet of cigarettes and two large bottles of water and
• 1:52
  Speaker 1: it was seventy dollars. That was without any petrol. Who
• 1:58
  Speaker 1: is paying for legal sea garettes anymore?
• 2:01
  Speaker 3: I had this same thought, Claire, what I was buying
• 2:03
  Speaker 3: a pack of cigarettes, not for myself, but because I
• 2:05
  Speaker 3: had bummed a few cigarettes off a mate, And I thought,
• 2:08
  Speaker 3: you know what, I actually want to want to do
• 2:10
  Speaker 3: this for a mate. It's going to help him out.
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  Speaker 3: It was back when you actually could still buy forty packs,
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  Speaker 3: which is broadly not even doable now, and I couldn't
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  Speaker 3: believe it. My eyes were popping out of my head. Basically,
• 2:20
  Speaker 3: as the guy behind the register said yep, that'd be
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  Speaker 3: one hundred bucks, and I could not believe it. Now
• 2:27
  Speaker 3: you might be listening to this and wondering if I've
• 2:29
  Speaker 3: been taking for a ride. I too, am still wondering that, but.
• 2:34
  Speaker 2: I hope your friend appreciate it. Yeah.
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  Speaker 3: I think my friend transferred me money very quickly when
• 2:38
  Speaker 3: he realized what I'd done. It is insane when you're
• 2:41
  Speaker 3: looking at just how much cigarettes have increased in price.
• 2:44
  Speaker 3: It's sort of fifty bucks twenty five bucks for some
• 2:47
  Speaker 3: twenty packs. It's insane when they used to be more
• 2:51
  Speaker 3: in their twenties, twenty dollars, thirty dollars sort of thing.
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  Speaker 3: And this has been a huge increase since twenty ten,
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  Speaker 3: when we first saw excises come in twenty five excise
• 3:00
  Speaker 3: at that time, and then every year they've just gone up.
• 3:03
  Speaker 3: We just had an eight percent increase on Monday, just
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  Speaker 3: bin and so you're just seeing consistently the price of
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  Speaker 3: cigarettes go up, while at the same time, on the
• 3:12
  Speaker 3: black market you can buy a cigarette packer for as
• 3:15
  Speaker 3: low as thirteen dollars for a twenty pack, so it's
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  Speaker 3: a huge discrepancy. Now that means that we're just seeing
• 3:22
  Speaker 3: a complete exodus of the legal market by consumers to
• 3:26
  Speaker 3: the black market.
• 3:28
  Speaker 1: Let's step back in time a little bit to the
• 3:30
  Speaker 1: Gillard government. Health Minister Nicola Roxton, to kind of global
• 3:34
  Speaker 1: acclaim from health professionals, introduced plane packaging legislation.
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  Speaker 3: This is the first, very courageous step that our Parliament
• 3:42
  Speaker 3: has taken to introduce plane packaging. We're going to be
• 3:45
  Speaker 3: the first country around the world to introduce it. And
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  Speaker 3: the first of January is the start date.
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  Speaker 1: That meant that cigarettes suddenly had to be packaged in
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  Speaker 1: ugly gray green packets that we've all seen, and they
• 3:57
  Speaker 1: had to be kept behind the counter.
• 3:58
  Speaker 2: It was a way to discourage people from smoking.
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  Speaker 3: Australia has scored a world first following the approval last
• 4:04
  Speaker 3: night of new laws to introduce plane packaging for cigarettes.
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  Speaker 1: And at the time it sort of seemed like the
• 4:10
  Speaker 1: government was being a bit selfless. It's like, look, we're
• 4:12
  Speaker 1: going to fall go some tax revenue here. We think
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  Speaker 1: that this will encourage people to stop smoking. That's good
• 4:17
  Speaker 1: for everybody because they don't then cost a huge amount
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  Speaker 1: of money in healthcare. How has it gone so wrong
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  Speaker 1: since then?
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  Speaker 3: It's just that increase of the excise you've just seen
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  Speaker 3: the difference between the price of allegal pack and an
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  Speaker 3: illegal pack just yawn, and then that be exploited by
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  Speaker 3: crime gangs. We've seen, of course, fire bombings across particularly Victoria.
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  Speaker 3: As you're seeing crime gangs see what is really a
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  Speaker 3: golden opportunity for them to import much cheaper cigarettes from
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  Speaker 3: overseas and sell them at a much lower rate. To
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  Speaker 3: the tune of five billion dollars a year is what
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  Speaker 3: that black market is now worth. It's just the money thing.
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  Speaker 3: And particularly we've heard those few words in the recent
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  Speaker 3: years of cost of living crisis. We've heard that again
• 5:01
  Speaker 3: and again over the last five years or so. So
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  Speaker 3: it's that price difference that is really pushing consumers to
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  Speaker 3: go to the black market. And we've gone from seeing
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  Speaker 3: you know, more than six billion dollars collected in taxes
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  Speaker 3: from the excise just five years ago to that figure
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  Speaker 3: being about seven billion in the last budget. So it's
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  Speaker 3: really hit a tipping point that some experts say we're
• 5:25
  Speaker 3: very close to never being able to reverse. Some say
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  Speaker 3: it's already too late. So it's a really really huge issue.
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  Speaker 1: Tipping point is a great phrase because the excise reaches
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  Speaker 1: a point where it is just ridiculous to be paying
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  Speaker 1: one hundred dollars or fifty dollars for a packet of cigarettes.
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  Speaker 1: And then what's happened on the other side is that
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  Speaker 1: the barrier to buying something on the black market has
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  Speaker 1: gone down because presumably the shame or the scariness of
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  Speaker 1: buying something from a black market seller isn't that big,
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  Speaker 1: when in fact, the black market seller is a convenience
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  Speaker 1: to it.
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  Speaker 3: Absolutely. It's not someone in a parking lot, it's not
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  Speaker 3: someone dodgy, it's not someone who even makes you feel
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  Speaker 3: like you're doing the wrong thing. These are convenience stores.
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  Speaker 3: And you see states trying to figure out how to
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  Speaker 3: tackle this problem in different ways. Queensland and New South
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  Speaker 3: Wales recently have tried to say to landlords, if we
• 6:14
  Speaker 3: find that in your building there are people running convenience
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  Speaker 3: stores that are selling these black market products, you will
• 6:21
  Speaker 3: be fined, you will be pinked. The problem with that
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  Speaker 3: is that we're seeing all this haphazard legislation across the country,
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  Speaker 3: not a unified response. So when Queensland introduces some laws,
• 6:31
  Speaker 3: New South Wales quickly goes, oh my goodness, if they
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  Speaker 3: do that, we're going to have this huge influx of
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  Speaker 3: black market operators into our state, and so you're seeing
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  Speaker 3: legislation at different rates. You're seeing, as I said, fire
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  Speaker 3: bombing in different cities where you have crime gangs fighting
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  Speaker 3: for control over this lucrative market, and then broadly a
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  Speaker 3: normalization of buying black market cigarettes across the consumer base
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  Speaker 3: because it's just becoming so common, mostly due to that
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  Speaker 3: huge discrepancy in costs between black market and legal cigarettes.
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  Speaker 1: The fact that organized crime has taken an interest in
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  Speaker 1: this business opportunity is a big part of the issue, right,
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  Speaker 1: Like you can't really expect a landlord to take on
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  Speaker 1: whichever crime gang it is who happens to be selling
• 7:19
  Speaker 1: cigarettes in his or her apartment building. So who is
• 7:23
  Speaker 1: actually profiting from this illegal trade?
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  Speaker 3: Now? Well, yeah, you have these big crime gangs. You
• 7:27
  Speaker 3: have names like kaz Hamad, and people would know of
• 7:30
  Speaker 3: this big crime boss in Melbourne, most recently because he
• 7:34
  Speaker 3: was allegedly involved in the firebombing of the synagogue in
• 7:38
  Speaker 3: Melbourne and that was orchestrated by Iran. Police have declared
• 7:41
  Speaker 3: a fire bombing attack on the Israel Synagogue in Melbourne
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  Speaker 3: Southeast last week as a likely terrorist incident. Our world
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  Speaker 3: class agencies will provide all the support necessary to find
• 7:53
  Speaker 3: the perpetrators.
• 7:54
  Speaker 4: And ensure they face the full force of the law.
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  Speaker 3: So you're seeing even some links between these crime bosses
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  Speaker 3: are being propped up through black market cigarettes and terror
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  Speaker 3: attacks and foreign actors. It just gets bigger and bigger
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  Speaker 3: and bigger. And what we're hearing from cops is that
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  Speaker 3: what started as one of the biggest health issues facing
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  Speaker 3: the country regarding smoking and smoking rates and the health
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  Speaker 3: burden because of that, is quickly turning into the biggest
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  Speaker 3: crime issue that the country has ever.
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  Speaker 1: Faced coming up. So is smoking actually going down? That's
• 8:33
  Speaker 1: after the break so Sarah, Now practically cigarettes are cheaper
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  Speaker 1: than they've been in decades and it's not scary for
• 8:51
  Speaker 1: me to go and buy some from a convenience store
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  Speaker 1: that's selling them illegally. Has that undermined the health reform?
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  Speaker 2: Here? Are smoking rates now not going down anymore? Suppose?
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  Speaker 3: It's hard to say because a lot of the rates
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  Speaker 3: that we do broadly see is based off what is
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  Speaker 3: being legally bought and reported, right, So that's a difficult
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  Speaker 3: thing to keep track of. There's plenty of data that
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  Speaker 3: government's good point to showing the legal purchase of cigarettes
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  Speaker 3: going down, and so the prevalence of smoking must be
• 9:22
  Speaker 3: going down, whereas tracking illegal smoking or smoking through illegal
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  Speaker 3: means this black market much much more difficult to track.
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  Speaker 3: Roy morgan survey was anonymized. It was really widespread and
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  Speaker 3: from its point of view, from Roy Morgan's point of view,
• 9:37
  Speaker 3: based on the people who responded, and again it was anonymized,
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  Speaker 3: was the key thing there. Smoking rates that have now
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  Speaker 3: remained static over the past decade, so we've seen any
• 9:46
  Speaker 3: gains that could have been made due to the maybe
• 9:49
  Speaker 3: smaller increases in costs per packet now reversed because of
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  Speaker 3: people having a different place to go and to buy
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  Speaker 3: those cheaper packs of cigarettes.
• 10:02
  Speaker 1: Big Tobacco's role is very interesting in this. Of course,
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  Speaker 1: they fought very hard to resist the plane packaging legislation
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  Speaker 1: and their argument at the time was we're very happy
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  Speaker 1: for people to give up smoking.
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  Speaker 2: Of course we support that, but the.
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  Speaker 1: Risk is here that illegal operators will come in and
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  Speaker 1: create a black market.
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  Speaker 2: That has now come true.
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  Speaker 1: In the meantime, the tobacco firms have pivoted their business
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  Speaker 1: model to vapes and are very actively pushing those.
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  Speaker 2: How do they fit in now that we're in this
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  Speaker 2: diabolical situation.
• 10:33
  Speaker 3: Yeah, I think you've described that well. It almost feels
• 10:36
  Speaker 3: like a boy who Cried Wolf situation. The huge tobacco condomerates.
• 10:39
  Speaker 3: We're saying for years, don't regulate us too hard, don't
• 10:42
  Speaker 3: make our product too expensive, or you're going to create
• 10:45
  Speaker 3: a black market, which is a convenient excuse or argument.
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  Speaker 3: It's come to fruition, which is interesting. But at the
• 10:51
  Speaker 3: same time you have also seen the proliferation of as
• 10:55
  Speaker 3: you said, that second range of products of the vapes.
• 10:58
  Speaker 3: In Australia, we've been trying to keep up with the
• 11:00
  Speaker 3: proliferation of vapes, particularly with how many kids are taking
• 11:04
  Speaker 3: up vapes and what to do there, and that's being
• 11:06
  Speaker 3: treated almost as a separate policy because of how much
• 11:10
  Speaker 3: children have been attracted to those bubblegum flavors and so on.
• 11:13
  Speaker 4: The federal government will introduce tough new vaping legislation today.
• 11:17
  Speaker 4: The new laws would see pharmacies become the sole trader
• 11:20
  Speaker 4: of products in a bid to tackle the rapid rise
• 11:23
  Speaker 4: in vaping among young people.
• 11:25
  Speaker 3: So the government has been focusing on vapes quite a lot.
• 11:28
  Speaker 3: We've probably seen them talked about much more in recent
• 11:31
  Speaker 3: years up until maybe this year compared to analog cigarettes
• 11:36
  Speaker 3: as you'd call them. But now we're really exciting to
• 11:39
  Speaker 3: see the cigarette problem come back into the debate in
• 11:42
  Speaker 3: a big way, because, particularly in March, there was this
• 11:46
  Speaker 3: huge moment where you saw just how much less was
• 11:49
  Speaker 3: being collected through the tobacco Excise and that moment was
• 11:54
  Speaker 3: really an eye opener for governments which have been focused
• 11:57
  Speaker 3: really really hard on the vapes inarticular to looking at
• 12:01
  Speaker 3: the whole system again because of what seems like an
• 12:04
  Speaker 3: exodus of consumers outside of the legal markets and really
• 12:08
  Speaker 3: flocking to the black market for analog cigarettes.
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  Speaker 2: Can this be unraveled now in a policy sense, can
• 12:13
  Speaker 2: the government do anything to fix this situation?
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  Speaker 3: The government is being called upon by some state premiers,
• 12:19
  Speaker 3: New South Wales' Premier Chris Mins specifically to pause the excise. Essentially,
• 12:25
  Speaker 3: this policy is what is creating the problem to at
• 12:28
  Speaker 3: least some degree. A lot of people are saying please stop.
• 12:31
  Speaker 3: It is really the message stop increasing them at this rate.
• 12:35
  Speaker 1: Here's something you probably thought the premier would never say
• 12:38
  Speaker 1: cigarettes should be cheaper. He's not encouraging smoking, but he
• 12:42
  Speaker 1: is fed up battling the boom in illegal tobacco. Chris
• 12:45
  Speaker 1: Mins says, as it stands, police are being taken off
• 12:48
  Speaker 1: major investigations to crack down on tobacco crime.
• 12:52
  Speaker 2: The current situation is intolerable.
• 12:54
  Speaker 1: The massive increase has exploded the illicit tobacco marketplace.
• 13:00
  Speaker 3: The government has not agreed to that or seemed even
• 13:03
  Speaker 3: very open to having that conversation. Now it would be
• 13:05
  Speaker 3: almost political kryptonite to, let's say, reverse an excise, to pause, though,
• 13:11
  Speaker 3: I mean, it's something that people are wanting just to
• 13:14
  Speaker 3: feel like we're not pouring fuel on a fire. Outside
• 13:18
  Speaker 3: of that, though, Queensland is also calling for the federal
• 13:21
  Speaker 3: government to do more. But in their case, they feel
• 13:24
  Speaker 3: like our borders are just not being patrolled and protected
• 13:26
  Speaker 3: enough by the Australian Border Force, which is a federal
• 13:29
  Speaker 3: government responsibility, and so they want way more money, resources,
• 13:34
  Speaker 3: funding put into that particular measure. The federal government will
• 13:39
  Speaker 3: point to the fact that they've put in three to
• 13:41
  Speaker 3: four hundred million in the past few years into things
• 13:44
  Speaker 3: like the ABF and policing and so on. But you
• 13:47
  Speaker 3: have experts who point out that for a five billion
• 13:50
  Speaker 3: dollar a year black market, that is a drop in
• 13:53
  Speaker 3: the bucket, and that is simply not going to address
• 13:56
  Speaker 3: the problem. And so for the more pessimistic of those
• 14:00
  Speaker 3: out there, there's definitely a sense of this is now
• 14:02
  Speaker 3: too late. There's no putting the journey back in the bottle.
• 14:05
  Speaker 3: Those who think there might still be something we can
• 14:07
  Speaker 3: do when we pause the exercise or do other things
• 14:09
  Speaker 3: like that are still warning that we're getting very close
• 14:12
  Speaker 3: to that point of no return.
• 14:15
  Speaker 2: Sarah Eisen is a senior political reporter with The Australian.
• 14:18
  Speaker 2: Thanks Sarah, cheers.
• 14:24
  Speaker 1: You can read this investigation, led by Sarah and our
• 14:27
  Speaker 1: reporter Muhammad Alpharez, right now at the Australian dot com
• 14:31
  Speaker 1: dot au