Australia’s smoking rates fell for decades. But that’s changed – and here’s why

As Australia’s top thinkers on organised crime gathered in Canberra this week, one topic hijacked the conversation: what to do about Australia’s worsening illicit tobacco problem.

Experts fear the booming black market trade, which has funnelled billions of dollars into the hands of criminal syndicates, is driving up smoking rates for the first time in decades, reversing years of public health policy that had placed Australia among the countries with the lowest rates in the world.

Speaking at the Australian Institute of Criminology’s 2026 conference on transnational serious and organised crime this week, University of Queensland researcher Cheneal Puljevic said a recent survey showed people who had previously quit smoking because of the cost were returning to the habit.

“We also know that many people who are vaping have now switched to tobacco because vapes are harder to get and more expensive, and that is also a policy failure,” Puljevic said.

Figures from the National Drug Strategy Household survey, which track smoking prevalence rates in Australia, aren’t due to be published until the end of the year, but tobacco control advocates and researchers fear they will show a hike in the number of smokers for the first time. Smoking is responsible for 66 preventable deaths every day, according to Australian National University data.

“I will be delighted and relieved if that doesn’t come through in the data,” Becky Freeman, a senior lecturer in public health at the University of Sydney, said.

Anecdotal evidence suggests cheap illicit cigarettes are already pushing Australia’s smoking rates up among young people. Roy Morgan data released last year shows the use of illicit tobacco has shot up since 2020, particularly among young adults aged 18 to 24. This same age cohort also recorded an uptick in smoking and vaping since September 2024.

Wastewater testing results also indicate nicotine use has increased, although those results also include vaping and other forms of nicotine consumption including replacement products like sprays, gum or patches.

Products like the slim, Korean Esse cigarettes are particularly popular among young people, who now see smoking as being cool again. Some are even collecting novelty lighters and cigarette cases.

Dr James Martin, associate professor in criminology at Deakin University, said research suggested black market nicotine now constitutes roughly 40 per cent of the country’s illicit drug economy and is worth more than cannabis, cocaine, heroin and ecstasy combined. The government estimates Australia has about 40,000 tobacco retailers.

“That is obviously bad news for law enforcement, community, safety, and a tremendous gift to organised crime. It also represents a massive new front in the war on drugs,” Martin said.

Martin has repeatedly called for the tobacco excise to be lowered to reduce the size of the black market, which has been linked to more than 200 firebombings, extortions and murders.

The notion of lowering taxes has divided researchers, law enforcement and health advocates.

The day after the AIC conference, the government held a restricted access symposium in Canberra attended by tobacco-control advocates, law enforcement agencies and researchers, to discuss the subject further, as violence linked to the ruthless turf war reignites in Victoria.

At the symposium, Assistant Minister for Customs Julian Hill conceded high taxes on tobacco products had contributed to the explosion of the black market and said denying it would be “nonsensical”. Hill also floated the idea of shutting down tobacconists so that cigarettes could only be sold in places like supermarkets.

It marked a departure from previous government rhetoric that the flourishing illicit trade was being driven by an oversupply of counterfeit cigarettes in the Middle East and other parts of Asia, a statement that ignored assessments by multiple law enforcement, intelligence and industry sources that Australia’s taxation policy was responsible for creating the “investment capital” for the growth of organised crime.

Hill maintained the advice to the government was that “no reasonable level of excise reduction … would make any material difference to the ubiquitous illicit supply chains and distribution networks operated by organised crime”.

However, analysis by Oxford Economics released earlier this year warned that without a reduction in excise, revenue from tobacco could fall to just $1.5 billion, with 90 per cent of all cigarettes likely to be bought on the black market.

It found reducing excise rates to their 2019 level, which would cut the price of a pack of cigarettes by a third, would stabilise the legal cigarette market.

Freeman said no one in public health was calling for a tax increase on tobacco products, but entering into a price war with organised crime wasn’t an option.

“The only reason I support tax increases is if they work to reduce smoking. And I think we can all agree in the current environment, putting the price up further is not going to bring smoking rates down,” she said.

Three-month closures of tobacco retailers caught selling illicit products in Queensland have shown some early success restricting supply. But organised crime players are adaptable, and they are already looking for ways to bypass the regulations, including by pinning posters to trees outside closed down convenience stores advertising home delivery services.

An underworld source speaking on the condition of anonymity said similar closure powers announced by the Victorian government last weekend came “a little too late” to reduce such a deeply entrenched and profitable market.

“It will turn into social media deliveries and pop-up vans,” the source said.

As one smoker interviewed by Puljevic put it: “People just don’t give a f—. They’re like: ‘Oh, well, tobacco is cheap’. We’ll keep buying it, and we’ll keep smoking.”

Be the first to know when major news happens. Sign up for breaking news alerts on email or turn on notifications in the app.