Tobacco Wars | Inside Australia’s out of control crime crisis

We're gonna move now.Tobacco wars out of control.Right in the back.In the back.Exploding onto our streets.

What the f***?

Generating billions in black market money.It's real.This is real.This is what they're after.Tons of illegal tobacco arriving by the container load every day.

That's not a fail.It's an epic fail.

And worst of all, it's a crime crisis the government created.

Police have stretched to the absolute limit and we just actually can't arrest our way out of this.It's a tough fight.

It's one of our most experienced law enforcement bosses deeply frustrated that we're losing the war on major organised crime across Australia.Good evening, I'm Michael Usher and welcome to Spotlight.Reporting tonight from Melbourne, ground zero in the ruthless trade of illegal tobacco.Well -intentioned policies on vapes and cigarette taxes have failed badly.Our borders are overwhelmed and billions in revenue is being lost as warfare spills onto suburban streets.There are solutions and law enforcement agencies are screaming for help, but the government seems to be turning a blind eye.

24 hours a day, seven days a week, our ports never stop.But stashed in the belly of those ships, hidden in giant steel containers, tonnes and tonnes of illegal tobacco.This is the front line of Australia's out -of -control war on black market nicotine.

Just last year alone, 2 .4 billion cigarettes, over 400 tonne of illicit tobacco leaf.That equates to about a 320 % increase on four years ago.We've already started to outstrip those numbers in the first two months of this year alone.

So that is going off the chart.It's just increasing all the time.

Significantly increasing.

Organised crime will stop at nothing to get their cheap cigarettes and vapes into those tobacconists that have sprung up on almost every street in Australia.

People selling heroin and cocaine don't have a shot front on every second street corner, but these people do.

You're saying it's a front for drug supply?

The people that are moving money and moving illicit tobacco are the same people moving illicit drugs.It's hardened, organised crime.So if you go to your local corner store and you buy illicit tobacco, you're funding an organised criminal syndicate.

You need to have a clap.Early morning, Sydney's western suburbs.We're riding with a heavily armed tactical police support team.Our target?a corner store.It's been under surveillance by the NSW Financial Crime Squad's arson unit.

They believe it could be a localised example of how illegal tobacco is hitting the streets.This is not a federal sting.Today's raid is one shop, one operator.This has been months in the planning.We're here now, are we?They're going in right now.

We'll go with them.Pete, come this way.We're going to move now.Right in the back.In the back.On this strip of suburban shops, there's been a war raging.

Four fire bombings in the space of just four months last year.It's all been headline news.

I want to speak to my lawyer.Mahmood, I'll talk to you in a sec. I want to speak to my lawyer.I'll get you.I want to speak to my lawyer.OK. I want to speak to my lawyer.You're a joke.

You're a joke.Yeah, love, you are a joke.

It's anything but a joke.Stand up and we'll bring you inside.So, get you off the street here and I'll explain things to you.Now, but I'll place you under arrest for the offences of large -scale list of tobacco possession, OK?Dealing with proceeds of crime.

No, that's not true.

OK.The full list of charges, well, here they are.Organising a criminal group activity, possessing more than 50 times the commercial quantity of tobacco, and knowingly dealing with the proceeds of crime with intent to conceal.

We're going to handcuff you to the front.You're going to be placed in a cage truck and taken to Cabramatta Police Station, OK?

There's nothing in the shop.I don't have any tobacco.There's nothing here.I don't sell tobacco.

OK.

So we executed a number of searches, up to a search warrant on this premises, on a storage location and a residential home a number of weeks ago.We found more than 700 ,000 illicit cigarettes, 250kg of illicit tobacco and other items.

I mean, they are saying, with the charges they put against you, that you are part of this multibillion -dollar problem in this state and this country, which is the explosion in illicit tobacco that is funnelling terrible money into organised crime and causing a lot of harm in society.Are you smart at that?All right, the police will interview you.You don't care?

I haven't done anything wrong.If I've done something wrong, then I've done something wrong, but I haven't done anything wrong.

It's just one shot.of the estimated 14 ,000 tobacconists and convenience stores around the country allegedly dealing in illegal tobacco and vapes.Nowhere more in the headlines than in Melbourne.

The fact that organised crime can distribute their products through thousands of shops in the street has become a national embarrassment.

The level of violence around the tobacco wars here in Victoria seems to have been the worst in Australia, doesn't it?

Yes, it has.This has been ground zero for most of that violence.

Yeah.Rowan Pike spent half a lifetime in law enforcement.24 years with the Australian Federal Police, then with Border Force.He says Melbourne has suffered the worst of the tobacco wars.We're talking a couple of hundred firebombings, are we?

We are at least 170 of tobacconists alone.Perhaps another 100 that are related, of related businesses.

Is this one here?

Yeah, that's one.

Yeah.So would they be, I mean, can we confidently say they'd be selling illegal tobacco in there right now?

Yeah, 100%.

Yeah.

So there are about 20 illegal tobacco shops just on this one street.

There doesn't seem to be a care that they are selling a highly illegal product in there.

No, they have no fear that anyone's coming through the door.

Rowan, as we try and understand the scale and the size of the problem that we're discussing here with illicit tobacco, how big and bad is it?

Well, it's multiple billion dollars in the marketplace.Obviously, it's very difficult to exactly estimate an illicit market by its very nature.It's secretive, but it's huge and it's getting bigger.

So multi, multi billions of dollars, six billion dollars plus flowing into organised crime in Australia.

Yeah, that's right.And we can see from the revenue figures from the government that they've lost $12 billion from its height of $16 billion in revenue six years ago.That's now down to four.So that money, unfortunately, is not because smokers have stopped smoking.It's because we've given up the market to organise crime.

A decade ago, Rowan officially warned the federal governmentorganised crime was moving into the illegal tobacco market in a big way.What did you warn them?

I warned them about the size of the market 10 years ago.It was larger than anyone had estimated and was growing.And I warned them that if they did not increase the enforcement response accordingly, that it would get out of control, and it has.We've been very keen to say that we've got world -leading policies.and they're stuck rigidly to those policies.Unfortunately, all we're leading the world in now is illicit rates, the illicit market and violence relating to tobacco.

Back in Sydney's Mount Pritchard, police will allege Mahmood Bhoomelam is just one player in the tobacco wars.It was his father who was kidnapped and held hostage, only to be arrested shortly after his rescue.

What have I done wrong?

Well, they will allege that you've got serious links to organised crime and a link to illicit tobacco at the very least.True.So how will you protest these charges, do you think?I've done nothing wrong, that's all I can say.You've done nothing wrong, but there seems to be a lot of bad news around your family.Your father was kidnapped, am I correct in saying that?

I don't know that I was kidnapped.Sorry, you don't know what?Stupid people do stupid things.That seems a strange answer.No one randomly kidnaps your dad.The firebombing's next door?

I haven't looked.

Son of my business, Simon.

The reality is that...violence follows this trade, this tobacco trade.The two shops here, what we've seen over the last 12 months or so is four firebombings in the shop next door.We've seen a kidnapping in this very premises here.We have four people in custody for the firebombings next door already.We have people in custody for the kidnapping and now this young man will be facing some charges in relation to the trade itself.

inside the war on our border.This is what they're after.Tons of illegal tobacco arriving by the container load every day.Record levels...We're starting to move now...

of illegal tobacco.It makes you emotional, doesn't it?Yeah.

How this black market crime was created by government failure.We tried to do the right thing, but it blew up in our faces.

How many illegal cigarettes do we have in front of us?

Michael, we've got well over 20 million cigarettes here.

20 million cigarettes boxed up right there.

Probably the equivalent of one day's worth of seizures.Could we have a look at some of them?

We definitely can.Just one day's haul at one container terminal, Sydney's Port Botany.Do we know where these have come from?These would have come out of Asia again.So it says it's baby furniture inside.It's anything but.

What you'll see here...

Manchester United Kingdom.

Manchester branded cigarettes, which is a brand that's legally able to be purchased here in Australia.

Right.According to Australian Border Force Deputy Commissioner Tim Fitzgerald, a tsunami of illegal tobacco and vapes is overpowering our border, especially our ports.I can't even count the number of boxes of these behind us here.It just goes back as far as the eye can see.

Yeah, well this particular consignment was around 8 .8 million sticks.So significant volume.You're probably talking close to a full 20 foot containers worth of cigarettes just in this one consignment.

And these are just the ones you've caught?

Yeah.

This is bad news for Australia.

It's really bad news.It's organised crime.And it does impact the everyday Australian.We've had instances where bonds and warehouses managers have been kidnapped because organised crime have gone in to collect their product that they think's cleared, and when it's not there because we've seized it, we've had individuals kidnapped and questioned as to where their products have gone.

Right now, the criminal networks are targeting Sydney.That's shifted from other Australian ports at the start of the year.For every container intercepted, it's estimated 20 or more get through.

I've got no doubt that's an attempt by organised crime to overwhelm us in this part of the country.So they're really throwing everything at you?Exactly right, here in Sydney.So that is going off the chart, it's just increasing all the time?Significantly increasing.That's the challenge that we face and the preparedness of organised crime to go to the extreme lengths to circumvent that.

controls at the border.

And let's not mess around with that.We are talking about high -level organised crime in Australia.

Correct.This isn't low -level players.When you've got organisations that can arrange the facilitation or attempted importation of hundreds of sea containers containing illicit tobacco, you are getting at that higher end of organised crime.

If we put dollar figures on this, we're talking about billions of dollars worth of lost revenue with these illegal cigarettes coming into the country.

Exactly right.People need to understand that they're not just restricting themselves to one lane being illicit tobacco.They're using the funds that they make from illicit tobacco to support other avenues of organised crime.Border control, drug importation, the trafficking of sex slaves, kidnappings.

Around 5 ,000 containers arrive at Sydney's terminal every day.I spend just one day here, as I'm doing, and the magnitude of Australia's illegal tobacco market becomes clear.Give me an idea of scale here, because the numbers are overwhelming.What are we dealing with here?How much illegal tobacco, how many illegal cigarettes are getting into the country?

You're talking about 92 million consignments of air and sea cargo coming across our border every year.So it's fair to say we don't get all the illicit tobacco that's attempted to be imported.I'm confident in recent times we're seizing a significant proportion, but it's not enough.

Is this a drug war?

Tobacco being a drug as such, I think it is.a war in terms of what we're facing and the sheer volume.

They'll press a button to say that they're clear and we can proceed with the x -ray.

This is the nerve centre at the ABF's Container Examination Facility at Port Botany.And it'll scan that full 40 -foot container?

Yep.

It's starting to move now.A suspicious load is being scanned.So this is a giant x -ray?

Yeah.

So down the bottom here on this black and white, we're starting to see what's inside it.

Yeah, that's the first container.

The scan is checked against the container's declared contents from China.The image analyst spots something odd.The back, it looks like what is consistent to be cigarettes.Thousands of them concealed behind legitimate cargo.So there it is.Yeah.

That's the illegal cargo picked up on X -ray.

That's right.And again, it's deliberate.attempt by this organised crime group to put the illicit product at the back of the container, make it difficult for us to get to.So we've x -rayed that particular container and we're thinking there's about four tonne of what we call loose -leaf tobacco in that container.

Rightio.

But here, there's more.So here is a seizure from about six days ago of the equivalent of eight tonne of loose -leaf tobacco.That's eight tonnes right here.Eight tonne of loose -leaf tobacco.

Rightio.

It's a daily event.So what you've got is your illicit tobacco.

Right in there.

Neatly packaged.Look at that.It's tobacco.Very strong smelling, obviously.You bet it is.

Yeah, really strong smell.And do you have any idea of what this is costing?Like, what would it have cost to have packaged in Asia versus what it's going to be sold for here?

You know, it can be as low as $30 a kilo.But when it comes to Australia, in terms of potential excise evasion, you start to get into the billions of dollars.

Is the importation of the leaf something new?

No, but it's significantly increasing.So January, February of this year alone, over 270 tonne of illicit loose leaf tobacco.70 % of that has come through where we're standing right now, this container examination facility in Sydney.

Earlier this year, Border Force discovered this cigarette manufacturing machine in Western Sydney, capable of turning loose leaf tobacco into nearly four million cigarettes a day.I think one of your officers just said they've just got to that illegal shipment in there now.Should we go and have a look at that?Yeah, definitely.

So you can see the start of it here.That'll be your illicit product in terms of that loose -leaf tobacco right there.So we've had to empty about a third of the container to get to it.

And how many tonnes in here do we think?

I'm thinking, from what's been seen on the X -ray image, we're probably looking at about four tonnes of illicit loose -leaf tobacco.

And there you have it.So that's it.That's it.That's the illegal tobacco.

Very similar packaging to what we were seeing before, just in smaller, larger boxes or larger packaging.just smaller boxes, but the exact same product.Very dried, loose -leaf tobacco.

This is off the streets for now, though, isn't it?This isn't going to get delivered.

No, it will not be getting delivered.

Another day, another four tonnes of illegal product seized.And so it goes without letter.Whatever Tim's Border Force teams miss, he knows will directly fuel the tobacco wars raging on Australian streets.In terms of the supply and where it's coming from overseas, is it a case of cutting the head off one snake and another emerges?

I think that certainly can be the case as we sit here right now.There are so many players in the illicit tobacco market and this traditional view where organised crime won't work with another organised crime group, it doesn't exist in this trade.

At the frontline, your good people at Border Force are going to keep on pulling the boxes out of those containers and try and find the illegal cigarettes and tobacco.

They work hard every single day, as you've evidenced from your visit here today.It's something that these guys see every single day.It's real.It's real.This is real.This is one day's worth of seizures, roughly, in terms of what we're seeing here in Sydney.

So the team are doing an amazing job.

Box by box, they'll keep looking.

That's it.And if that means box by box, they carry them out of a container, physically examine them, that's what they'll do.

Proud of them?Yep.That makes you emotional, doesn't it?Yeah.It's a tough fight.Next, defiant tobacconists.

You're meant to be closed.Shut down one day.They don't care.Open the next.You risk jail.This was billed as a major assault on the illegal tobacco market.

Operation Tempest 26.A shock and awe raid against illegal tobacconists around the country.We will rush to be closing your store today.A number were on New South Wales' central coast.Their illegal stock was seized.The man behind the counter may just be trying to do his job, but the health department doesn't want this shop operating at all.

Now, this tobacconist up here was shut down only a couple of days ago.He is meant to be closed for 90 days.We're told he's still open, so let's have a look.OK, I can see the notices on the window there that they've tried to peel off.Anyone there?G'day.

You're meant to be closed.I'm from 7 News Spotlight.You've got notices on your window that say you should be shut down for 90 days.Why are you still operating?Well, you tell me.Now you're shutting the door, but you're meant to be closed, mate.

You know that, don't you?Can you please leave?You risk jails.for six months by being open.Why have you taken the notice off the door here?This has been issued by health.

You've been legally shut down and you're not meant to be open.This would appear to be an open defiance of the law.They know that they're meant to be shut down for 90 days.They'vesix months in jail.They've taken the signs off the front and reopened.

At least 60 % of smokers and an incredible 95 % of vapors buy their cigarettes and vapes at illegal outlets.And here's why.This packet of legal cigarettes will cost you $50.$30 of that is excise tax.This illegal packet is $50.is $16, it costs the criminals as little as 30 cents to produce it.

And the vapes, well, there's not much difference in price, but to buy this legally, you have to go to a pharmacy and get the pharmacist's approval, versus walking into a tobacconist and getting these just about anywhere.

Average Australians walking into a tobacco shop and actually buying illicit tobacco.And I don't think the average Australian realises that they're actually funding organised crime.

Scott Weber is head of the Police Federation of Australia.He says his 60 ,000 members feel like they're fighting a losing battle.

At the moment, across Australia, we have a lack of policing resources.We're well over 7 ,000 police officers down.So what is our priority here?Do we deal with illicit tobacco or do we go to the domestic violence or stop the break and enter?At the moment, we are having to pick and choose.Police are stretched to the absolute limit and we just actually can't arrest our way out of this.

The tipping point of good policy becoming bad policy came after 2019, when the government pushed the excise to 70%, forcing a packet of cigarettes over $40.That forced the majority of Australian smokers not into quitting, but into illegal tobacco.

We are failing on health.We are failing in terms of tax policy.And we arefailing in terms of fighting organised crime.That's not a fail, it's an epic fail.

As far back as 2015, economist Chris Richardson gave evidence in parliamentary inquiries that excessive tobacco tax would create a criminal free -for -all.

We created an enormous gap that organised crime rushed into, gave people much, much cheaper alternatives, and then it all went wrong.

So you're saying government policy created a black market?

Yeah.This was our mistake.

I don't propose to be cutting taxes on cigarettes.I don't propose to be making cigarettes cheaper.

Let's be clear about the challenge.More than half of the tobacco market is now illicit.It's driven by serious and organised crime.It's everywhere.

Amber Shahita is the Federal Government's Tobacco Czar.Officially, she is the Illicit Tobacco and E -Cigarette Commissioner.Commissioner, there are many who say that it's not an organised crime problem and it's a policy failure issue.Do you agree with that?

It's not how I would frame it.And there's no shortage of opinions on every side of this issue.

Where did it go wrong?Can you track it?Because we had, I think it's fairly accepted, a global standard in tackling nicotine use in this country.Planned packaging, high taxes, regulated alternatives to the use of tobacco.We were held up as a bit of a gold standard.So what went wrong?

There's a lot of things that have driven this market.The abundance, the oversupply of cheap illicit product that has flooded the market.The ease of access.the different brands and styles and flavours that are available, it's not just one thing driving this market, there's multiple things.It will take time and coordination for criminal activity to take a downturn, and we've seen that in other issues that Australia has tackled before.

But it hasn't started yet.I mean, the criminal gangs are out of control in this area.

I wouldn't look at it in the way you framed the question.Definitely a lot of work is happening.It has started.There is an increase of seizures at the border.There is an increase in detections internationally before it reaches our border.

I mean, yes, making some progress, but it would seem to be, with all due respect, a drop in the ocean.2 .5 billion illegal cigarettes seized over four years, just since the start of the year, in the short few months.540 million cigarettes, a couple of hundred tonnes of loose -leaf tobacco.I don't think, fairly, the organised criminals are feeling the impact of the work that's been done that you're saying.

I think it's going to take time and coordinated effort.

Why don't we just take a larger, bigger, as some suggest, policy decision and say that the excise on tobacco is a failed policy.

The evidence in front of me and from talking to experts around the country, it's not clear to me that one single policy lever will be able to solve this issue.

So is it an entirely organised crime problem then?It's got nothing to do with policy failure.

We need to look at policy.We need to look at serious and organised crime.We need to look at demand.We need to look at what's happening in the global context.I think your questions keep trying to bring me back to the one thing and what I'm trying to say is this is a complex issue.There's not one way of looking at this.

The illegal tobacco commissioner makes the point that this is a complex problem.It's not just a policy fail problem.And they're not going to run the white flag at this stage.

It is complex, but to say that the thing that was the heart of creating that problem in the first place is the one thing we can't touch sets us up to fail.

When you smoke, you inhale over 4 ,000 chemicals.It's a toxic, poisonous mix of substances.

Veteran anti -smoking advocate Professor Simon Chapman strongly supports the government's current tobacco tax policy aimed at pricing smokers out of their addiction.

We knew from innumerable reports, World Bank, World Health Organisation, all of these bodies who weren't just health groups, were saying the surest way to get smoking down in whole populations is to put the tax up.Tobacco companies were all screaming blue murder for decades.Please don't put the tax up.It's going to affect our sales.

So why shouldn't the government at least address the issue of excise though?Are you adamant that that is not the case?The problem?

If you took all the excise away, every last cent of it, there would still be a large gap between the cost of a packet of untaxed legal cigarettes and the price that cigarettes are being sold on the black market.The tax strategy, reduce the tax or even eliminate the tax, is total, naive, la -la land stuff.

But something has to happen quickly, right?You could address excise, bring it down.

That would make a huge difference and would take some of the pressure off the law enforcement agencies who are currently playing whack -a -mole and making no impression into their distribution chains.

If any proof was needed of the failings of our current whack -a -mole approach to illegal tobacco outlets, it comes just aswe left that tobacconist that had reopened despite the shutdown order.You wouldn't believe it.15 minutes later, we drove by that same tobacconist, and he's open again.Mate, you're not meant to be open.You're in complete defiance.

Sorry, you go.That's not about you.Mate, you're breaking the law.Quite unbelievable.They don't care.Coming up...

Could free vapes be the answer?

We're not endorsing vaping because it's good for you.We're saying it's less likely to kill you.

The radical plan our government ignores.

We need to get people off the combustible tobacco smoke.

If Australia wants to look at a better way of doing things, we don't have to look too far.In fact, just across the ditch.Here in New Zealand, they've taken the opposite approach to government policy on tobacco and vapes.Vapes are readily available and tax on tobacco is capped.The results, well, in anyone's language, they've been dramatic.Smoking rates here are the third lowest in the world, much better than Australia's.

And while there is an illicit tobacco market, it is much smaller than ours.So how did they do it?And more importantly, why can't we?

When you tightly control a product and you don't have the ability to control an illicit market, you'll drive an organised crime network into that product.

As a senior minister in New Zealand's government, Casey Costello holds a trifecta of portfolios, customs, health and police.She manages her country's successful tobacco and nicotine policy.

You know, 50 % reduction in smoking rates from 2018 to 2024.That was a big change, considering how slow it was to that point.So vaping had played a part in getting adult smokers to stop smoking.

And if you all but ban them, like Australia's done, you saw that as a major problem.

When you tax cigarettes to the extent that they are very, very expensive, and you don't provide a less harmful option, you end up with the risk of an illicit market, and we could see the illicit market.

While Australia virtually bans vapes, they're restricted to pharmacies, in 2020 the New Zealand government decided to legalise them to combat its growing black market.So this is a convenience store just down the road from your parliament here.In this convenience store, what vapes can you buy?

A normal tobacconist and general store can sell a limited range of flavours of vapes.

It's interesting, as I stand here, there's a convenience store where you can buy a vape.Now, in Australia, I'd have to go to a pharmacy like this one here.Yeah, to get it.Talk to the pharmacist, get some sort of consultation and work out whether or not I'm allowed to have one or not.Yeah.What do you make of that scenario?

Well, this is the problem, and this is what I said right from the outset.If we had done that pathway, we would have handed a whole lot of money over to our gangs, because we're basically creating an illicit market for both vapes and tobacco.We were put under a lot of pressure to become a pharmacist prescription -only model.We're not giving this out because it's a health product.We're not endorsing vaping because it's good for you.We're saying it's less likely to kill you than smoking is, which kills two -thirds of those that are adult smokers.

And to that extent, the New Zealand Health Department hands out free vapes to addicted smokers to bring the smoking rate down and curb organised crime.

We have a range of flavours, so we have tobacco, mint, menthol and peach ice.

Michelle Lee is a stop smoking counsellor with the official Vapes to Quit program.

That should be fine.So I'm going to be providing you with eight weeks worth of pods, but I will be checking in with you whether there's a risk, a relapse though, to smoking, because obviously this is still safer than smoking.We don't want you to go back to the combustible product.

Michelle, you're doing something very different in this country that we don't do in Australia.You're actually giving vapes to addicted smokers.Why?

Well, it's all about, I think, really giving people the best chance of success.So we want to have a platter of options.We know the clinical trials indicate that using a vape is actually more superior to some of the other products that we have.So we can't really deny people that.We need to get people off the combustible tobacco smoke that is killing people.

New Zealand also has authorised vape stores.They're licensed like a bar.If you're under 18, you can't get in.The ingredients of the vape are strictly regulated and locally made.The products themselves are discreetly displayed.You can't see them from the street.

Gordon Otokulo is from New Zealand's biggest vape manufacturer.So is this an example here of, can I pull that out there?Absolutely.Okay.So because it's regulated, you know exactly what's in it.It meets the government standards and can be safely imported and sold.

Exactly.

Versus the Australian model, which has forced vapes underground into the black market and they are being brought into the country and we don't really know what's in them.

It could be anything.

Okay.Is that a dangerous situation in your view?Completely a dangerous situation to be in.If you took vapes out of the New Zealand market, what would happen to smoking rates here?Smoking rates definitely would increase.

We just did it casually at the start.

But we started buying our own.

Australia's vaping policy was well -intentioned to protect teens and stop big tobacco hooking them on new nicotine products.So in 2024, vapes were all but prohibited.Available only in pharmacies, and if you were under 18, you needed a doctor's script.It never sat well with experts like Dr Alex Wodak.

The most effective way of quitting smoking and the most popular way of quitting smoking worldwide is through vaping.We need to be calm and unemotional about this and just look at the evidence.There hasn't yet been a scientifically attributed death from vaping anywhere in the world.No one says they're 100 % safe, but they are much less dangerous than deadly cigarettes, which killed two out of every three long -term smokers.

True, however, there are questions over the long -term health effects of vaping and questions about the pharmacy -only model for selling vapes.

The problem is that the chemists don't want to sell vapes, and smokers don't want to go to a chemist to get their vapes, and the variety of vape devices available from chemists was too restricted.

On the subject of vapes then, I mean, we had a very firm government policy to ban them, to make them illegal.Did that work, or did that drive people to cheaper cigarettes?

It was a really important policy decision that was informed by parents and teachers and the broader community who know that vapes are unsafe for our kids.Illegal vapes and illicit tobacco are inextricably linked.We need to tackle the illegal activity without reversing or taking the brakes off what is an important public health measure to try and stop vapes being picked up by everyone and everyone.

Next, cash, cars and expensive homes.Catching the Mr Bigs behind illegal tobacco.

The people involved in this are involved in selling heroin to your children.

And the plan to shut down tobacconists for good.Something has to disrupt.We broke it.

It's up to us to fix it.

Besides the threat of violent crime, there are financial consequences that affect all of us.In the first six months of this year, the government lost nearly $1 .5 billion in tobacco tax.That's gone straight into the pockets of organised crime.Since 2020, $18 billion of tobacco revenue has been lost.That's money that could have been spent on hospitals, cancer research, domestic violence prevention gone, while crime gangs make obscene profits.

There isn't one single way in which they move that money.They're moving it in every way they can.We're seeing investments in Australian real estate, where people are parking the funds of illicit tobacco.

What sort of scale then, do you think?

It's tens of millions of dollars, if not hundreds of millions of dollars of Australian real estate.

Austrac's CEO, Brendan Thomas, and his financial detectives are chasing the black market money.They're doing busts and seizing loot and luxury proceeds, but it's the tip of a dirty iceberg.The pressure is also on the banks.Are the banks doing enough?

Yes, they are.They're starting to focus very hard on that.I wrote to 80 Australian banks, or 80 banks operating in Australia in November, and asked them to focus on how they were going to protect themselves from this illicit trade.So it is removing people out of the financial system.

Have they started doing that?

Yes they have.

So how many customers have been kicked out of the banks to your knowledge at this stage?At least a thousand.How do Australians need to change their mindset in regards to tobacconists?

People need to understand that they're funding organised crime, and people really need to understand the harm that causes, not just to the Australian community, but globally.

He's talking about international crime kingpins like Qasem Qaz Hamad, recently arrested in Iraq but believed to be still running the lion's share of Australia's illegal tobacco trade.

The people involved in this are involved in selling heroin to your children, they're involved in murders, they're involved in kidnappings, they're involved in extortion, they're involved in firebombings, they're involved in the illicit exploitation of children.They're as nasty as you could possibly get.

So that $15 packet of cigarettes?

It's all funding organised crime.

Meanwhile, the political mood is shifting.Even state Labor premiers are speaking against the federal government.

We're certainly worried about it as a government.We've thrown more resources at this in South Australia than any other jurisdiction, and it's yielding results.But that's also putting pressure on the suppliers, which is resulting in the sort of attacks that we're seeing.

And on Friday, New South Wales Premier Chris Mins was even harsher.

It's my view, and it might be a lonely view, that the excise on legal tobacco is in fact fuelling a black market that is infecting cities and states and regional communities and big cities across Australia.So I think we need to rethink.The excise is just too high.

And in the course of this story, Border Force, in a new government submission, broke ranks with official messaging.Enforcement alone, they say, will not deliver sustained reductions in illicit tobacco activity.That's in line with the Police Federation of Australia which has offered an excise solution.Am I right in suggesting that in your submission to the Senate, you've come up with an interesting way to look at this, and perhaps suggesting a reprieve in the tobacco excise?Yes.

Look, let's step back from the excise, not make that the focal point, and let's get control of the illicit tobacco.

So stop increasing it?Yes.Or bring it down?

I would suggest bring it down, because it's quite clear that you've made a pay point where most people aren't going to buy legal cigarettes, they're going to go to illicit tobacco.

Anti -tobacco advocate Professor Simon Chapman has a retail solution, shut down the tobacconists.

Radical solutions like deciding that we're going to say, right, in six months, 12 months from now, it will only be supermarkets who can sell cigarettes, is the sort of neutron bomb that needs to be let off.

That would be stunningly unfair to some tobacconists who are trying to do the right thing, the legal thing, and I get that.But we are now at a stage where we need to throw everything at this.And we haven't done that.

Something has to disrupt.

Yeah, we broke it.It's up to us to fix it.It is not going to get better on the path that we have taken.So yeah, we need to try some big stuff to dig ourselves out of this.The longer we wait, the more that organised crime are digging in with their defences around this stuff.Otherwise this battle, you know, is completely lost.

A footnote to this story, we checked in with New South Wales Health on that Central Coast tobacconist who'd been shut down.They tell us they've repeatedly tried to enforce the closure, but apparently not hard enough.We went back on Friday, and would you believe it, it was still open, still selling illegal tobacco.And as for Mahmoud Boumelham, the man arrested in Sydney's western suburbs, he'll face court next month.Thanks for watching tonight's episode of Spotlight.If you have a story you'd like us to investigate, please contact us at the address on screen.

I'm Michael Usher from Melbourne.Good night.