The data that destroys the idea that Australians are quitting smoking

Up to four in five cigarettes smoked in Australia are illegal, as new evidence dragged from the nation’s sewers reveals that decades of campaigning to reduce smoking rates has failed.

The Australian Bureau of Statistics has for the first time quantified how the illicit tobacco trade now dominates the nation’s cigarette market by using experimental testing of nicotine concentration in wastewater.

According to the data released on Wednesday, illicit nicotine products – including cigarettes, e-cigarettes, vapes and loose-leaf tobacco – comprised 80 per cent of consumption in Australia in 2025, up from 12 per cent in 2017.

Nicotine consumption grew 40 per cent in the same period, with most of the jump in the last four years. The population grew 14 per cent in that time, while tobacco taxes soared by a third.

The federal government, along with the states and territories, is spending more than $300 million on combatting the illicit tobacco trade, which has soared since the turn of the decade. Tax revenues have collapsed while violence connected to the illegal trade has surged.

In last month’s budget, Treasurer Jim Chalmers was again forced to write down expected tobacco excise collections. Between 2025-26 and 2029-30, the government now expects to collect $15.4 billion in excise, compared to $27.3 billion it had forecast for the same period in last year’s budget. Since the start of the decade, tobacco excise has collected more than $65 billion.

Wednesday’s data showed household spending on tobacco dropped back to 2016 levels after peaking at the end of 2020 even as tobacco consumption rose, indicating a shift towards cheaper illicit sources.

Annual tobacco excise increases have driven up legal tobacco prices, which have tripled since December 2016, the report said. Illicit product prices have remained relatively steady.

The ABS data suggests a bigger problem than revealed in the research from the government’s illicit tobacco and e-cigarette commissioner in December, which estimated half of tobacco was illegal.

The bureau’s report takes in all nicotine products, including nicotine patches, while the tobacco tsar’s report isolated cigarettes and vapes.

Assistant Minister for Customs Julian Hill said while the methodologies differed and data was taken over different periods, the bureau’s findings broadly reflected the commissioner’s inaugural report.

He said since late 2025 a crackdown by Border Force had seized more than 1000 tonnes of illicit tobacco, while illegal shops had been shut down across the country by state authorities.

“While the government has always acknowledged that the illicit trade might grow before it declines, there is very early evidence suggesting that in states such as Queensland with strong closure powers and landlord penalties, nicotine users return to the legal market when the sleazy illegal shops have been forced shut,” he said.

“The government will not surrender our nation’s health policy to organised criminals or Big Tobacco who just want to see a new generation of Australians hooked on nicotine.”

Liberal MP Mary Aldred, who co-chairs the Coalition’s illegal tobacco taskforce, said the bureau’s figures confirmed that current tobacco policy was no longer working as an effective public health measure.

“The ABS report completely destroys the idea Australians are simply quitting smoking,” she said.

“This stopped being a moral purity debate when businesses started getting firebombed and workers started being threatened.”

Lachlan Vass, research manager for independent think tank e61, said the ABS data on top of the write-down in tobacco excise in last month’s budget proved the government had to both cut tobacco taxes and lift compliance measures against the illicit trade.

“Concern and hesitation around cutting the tobacco excise needs to account for the fact that 80 per cent of consumption now pays zero excise, and faces vastly lower prices,” he said.

“This works strongly against public health goals. And while cutting the excise may benefit ‘big tobacco’, the current approach is benefiting ‘big crime’.”

Deakin University criminology senior lecturer James Martin said law enforcement could not suppress such a big illicit market alone.

“This should prompt a radical rethink of the neo-prohibitionist policies that have gotten us into this mess,” he said.