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Chapter 1: What is the main topic discussed in this episode?
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Ready?
And good morning.
This is the Daily Aus.
This is the Daily Aus.
This is the Daily Aus.
Oh, now it makes sense.
MUSIC
Good morning and welcome to The Daily Oz. It's Wednesday the 10th of June. I'm Emma Gillespie. I'm Billie Fitzsimons. Australia is one of the most expensive places in the world to buy cigarettes with a standard pack now costing about $60.
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Chapter 2: Why is Australia facing an illegal tobacco boom?
Yeah. And so it basically means that cigarettes are just becoming a form of an illegal drug that people are just fully buying illegally.
Yeah. But in many cases, people might not realise they're buying them illegally because this is one of those crimes that's happening in broad daylight, I guess. You know, it's not happening in dark alleyways. People aren't meeting up with a dealer to buy a carton of cigarettes.
Oh, that's definitely how I'm imagining people are buying it.
They're buying them in vape stores, tobacconists, retail spaces, convenience stores, corner stores, you know, proper retail venues that look legit from the outside. But, you know, when you get in, you realise, oh, That was only $30. But last week I bought it somewhere else and it was $60.
It's kind of weird. So what is the difference between a legal cigarette and an illegal cigarette and how do you know which one you're buying?
So it all comes down to basically how that cigarette got into Australia and landed on a retail shelf in the first place. So when you import tobacco products into Australia legally, you have to comply with a whole suite of laws and regulations, and that includes having a permit. So the Australian Border Force will issue approved tobacco importers this special permit.
Permit-holding importers have to pay lots of customs and duties, these taxes. So before they are allowed to sell their product here in Australia, they have to fork out significant duties. Products also have to adhere to really strict packaging rules.
We've spoken about this a lot at the Daily Oz, you know, not only do those packets themselves have to be blank, they have to have health warnings, but individual sticks of cigarettes also now have health warnings on them. So there's all of these really key regulations that the tobacco industry is subjected to through legal channels.
But I guess the key difference between legal versus illegal, illegal cigarettes are much cheaper. They are often sold in brightly coloured packets in this sort of original packaging that you might see in other countries around the world. They are often smuggled in, sold by unlicensed suppliers, haven't been subjected to those taxes and duties.
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Chapter 3: How much of Australia's tobacco is bought on the black market?
But we know consumption is up. And so that leaves us with this unavoidable kind of difficult truth that the black market is offering a cheaper product. They're readily available products. And that's where Australians are shifting.
So when you buy an $80 packet of cigarettes. Probably more like $60 to $65 for like a $20, $25 pack. You can tell that I haven't gone to a convenience store and bought a packet of cigarettes lately and I promise it's not because I'm turning to the black market.
I don't know this because I'm buying any cigarettes. This is just from my research.
Okay, but when you are buying a $60 or $65 packet of cigarettes, about 75% of that is taxes.
Pretty much, yep. GST, excise, duties and imports. You might buy that same packet of cigarettes for 75% cheaper, someone else in the world.
Yeah. I mean, when you look at the numbers, it does kind of make sense why, especially in a cost of living crisis, why people are turning to the black market as potentially dangerous as that could be because it's unregulated. I want to get to the local black market and what it actually looks like. But first, here is a quick message from today's sponsor. All right, quick pause.
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So, Em, the black market in Australia, you've said that it's kind of under disguise. Like people might not even know that they're buying from the black market. Yeah. So what does that actually look like? Like do the people selling it know that they are doing it illegally? Well, yeah.
We presume, right? The retailers who are doing deals with these companies organised crime syndicates. Many of them are large international networks operating across a bunch of different illegal black markets. Retailers are doing deals with them to avoid paying those government duties and taxes. In New South Wales alone, there are new licensing rules that mean
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Chapter 4: What distinguishes legal cigarettes from illegal ones?
it wouldn't put a dent in it. He says that illegal tobacco products would still be cheaper. That's because you can still manufacture them illegally overseas for about a dollar a packet, and that that would not be enough to really move the dial on this. Even at a zero tax situation, legal cigarettes would still likely be more expensive.
I see. So he's saying that even if we removed the tax, the illegal tobacco market will still continue to exist at the large scale that it's currently existing.
Exactly. And that feeds us into the second side or the other side of this argument that, you then it needs to come down to, according to the argument, enforcement and dismantling these syndicates. So that means a lot more investment in law enforcement federally and at a state level. That means not just money but actual resources, technology, manpower to dismantle distribution networks.
And we're seeing state governments take their own approach with this. The South Australian government just this week announced $3 million in funding to boost up its enforcement efforts. In that state alone, there were nearly a thousand inspections in the two years to May that resulted in nearly 300 closure orders.
So when you think about the statistics there, that's what more than a third of retailers who were investigated by the South Australian government reported. were found to be doing the wrong thing and were ordered to shut down. Victoria has also made news this week on this front. It's introducing legislation to give authorities more powers to shut down businesses doing illegal trade.
We've seen some further crackdowns in New South Wales over the past year, you know, harsher fines, imprisonment terms for retailers doing the wrong thing. But ultimately the approach on this argument is, you know, about cracking down at every point of the syndicates, you know, from overseas manufacturing to importing to retail and, you know, everything in between.
So it sounds like the state governments are really focusing on enforcement when it comes to the illegal cigarettes already being in their state and being sold in their state. But the federal government, I guess if I think about the kind of enforcement they can do, they're in charge of Australia's borders and the shipments into Australia. And so are they doing more on the enforcement level there?
Yeah. Well, that's a really good point because ultimately it is at the borders and it is up to the Australian border force to monitor, regulate and try to tackle this channel of cigarettes that are coming into the country. There is an ongoing parliamentary inquiry that is looking into all of this.
So far, that's heard from representatives from the tobacco industry, health experts, law enforcement experts. There is really a big question mark over what to do. No one can seem to really agree on how to tackle this situation. And meanwhile, it just keeps getting worse. To date, though, the government has spent hundreds of millions of dollars on enforcement and compliance efforts.
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