Full Breakdown
Australia’s Illicit Nicotine Market Swells to 80 % of Consumption, ABS Finds
6/3/2026, 10:55:19 PM
Core Findings
The Australian Bureau of Statistics (ABS) released its first experimental estimate of the nation’s illicit nicotine market, showing that 80 % of cigarettes, vapes and other nicotine products consumed in 2025 originated from illegal sources. Overall nicotine consumption rose by almost 40 % between 2017 and 2025, while household spending on legal tobacco fell sharply as legal prices tripled after repeated excise hikes.
Background & Policy Context
Since 2010 the federal government has increased tobacco excise rates annually, raising the tax component to A$1.52 per stick (over 80 % of a pack’s price). Plain-packaging reforms were introduced the same year. The steep price growth has been cited as a driver of the black market, which now supplies the majority of nicotine products. Earlier government-commissioned estimates placed illicit market share at 60 % of cigarettes and vapes, a lower figure than the ABS’s broader scope that includes nicotine-replacement therapies and pouches.
Data & Statistics
- Illicit share of total nicotine consumption: 12 % (2017) -> 80 % (2025).
- Total nicotine consumption (all forms) increased ? 40 % over the same period.
- Legal cigarette pack price: > A$50; illicit pack price: ? A$25.
- Treasury cut projected excise revenue by A$8 billion over the next five years.
- Estimated excise evasion: A$7.7 billion–A$11.8 billion.
- Border seizures rose from 480 million illicit cigarettes in 2016 to 2.66 billion in 2025.
Official Statements & Responses
- Treasurer Jim Chalmers expressed scepticism about lowering excise rates, arguing that a reduction would not achieve the intended public-health outcomes.
- Assistant Customs Minister Julian Hill rejected excise cuts, stating the “excise argument simply doesn’t stand up to scrutiny.”
- NSW Health Minister Ryan Park linked the surge to “a growing disparity between the cost in legal and illicit tobacco, created by the federal government’s tobacco excise.”
- NSW Premier Chris Minns called for an overhaul of the excise system, describing it as ineffective as a tax or health policy tool.
- New penalties were introduced for landlords of premises selling illegal tobacco, with offences carrying fines up to A$1.5 million and imprisonment of up to seven years; Victoria added penalties of up to A$370,000 and 15 years jail.
Criticism & Opposition
- James Martin, criminologist at Deakin University, labelled the findings “absolutely staggering” and described the situation as a “massive policy failure” requiring a radical rethink.
- Mary Aldred, federal Liberal MP and chair of the Coalition’s Illegal Tobacco Taskforce, warned that the Albanese government’s policy “has become a gift to organised crime, wrapped in plain packaging,” and highlighted rising smoking rates and community violence linked to the black market.
- Some public-health experts argue that lowering excise could reduce criminal incentives, while others maintain that high taxes are essential for smoking-prevention goals.
Conflicting Reports & Gaps
- The ABS estimate (80 % illicit share) differs from the Illicit Tobacco and E-cigarette Commissioner’s 2025 report, which placed illicit cigarettes and vapes at ? 60 % of the market.
- The ABS methodology relies on wastewater-based nicotine metabolite analysis, described as experimental and subject to future refinement. No independent verification of the figures is currently available.
Verbatim Quotes
- “As we face one of the toughest cost-of-living challenges in living memory I can only see excise-free products become more and more attractive,” — Ryan Park, NSW Health Minister
- “The Albanese Government’s tobacco policy has become a gift to organised crime, wrapped in plain packaging,” — Mary Aldred, Federal Liberal MP
- “These numbers put it in the most stark terms possible.” — James Martin, Deakin University criminologist
- “The excise argument simply doesn’t stand up to scrutiny.” — Julian Hill, Assistant Customs Minister
- “The increase was underpinned by a large rise in illicit cigarettes as well as increases in e-cigarettes and other nicotine products.” — Australian Bureau of Statistics
What’s Next
The federal and state governments are expanding enforcement measures, including harsher penalties for retailers and landlords, increased border seizures, and the appointment of an Illicit Tobacco and E-cigarette Commissioner. Legislative reforms to adjust excise rates remain under debate, with the Treasury’s revised revenue forecasts influencing future budgetary planning.
