Tobacco and Vapes: Regulate, Don’t Ban

Two prohibition policies running at once handed the nicotine market to organised crime. The party’s position is to take it back: cut the legal price, licence the trade, set enforceable standards, publish every chemical, and return the crop and the manufacturing to Australians.

1. The numbers

• $8 billion was written out of the tobacco excise forward estimates in the May 2026 Budget, across the five years to 2029–30.
• Tobacco excise collected about $16 billion in 2019–20. The 2026–27 Budget forecasts $3.56 billion, and $2.14 billion by 2029–30.
• The 2025–26 forecast fell to $4.1 billion — $1.3 billion below the mid-year update issued five months earlier.
• Excise is $1.52829 per cigarette, or $30.57 on a packet of twenty. In March 2020 it was $18.99.
• Excise is more than 80 per cent of the retail price of a legal packet. Legal packets sell for $40 to $65. Illegal packets sell for $11 to $25.
• The quantity of nicotine consumed in Australia rose almost 40 per cent between 2017 and 2025. Population grew 14 per cent over the same period.
• Illegal supply accounted for 12 per cent of nicotine consumption in 2017 and about 80 per cent in 2025 (Australian Bureau of Statistics, experimental estimates).
• The Australian Taxation Office estimates illicit tobacco at about 25 per cent of the market in 2023–24, up from 8 per cent in 2018–19.
• The Commonwealth's own budget commentary puts the illegal share of the tobacco market at more than half.
• Daily smoking was 5.6 per cent of Australians aged 14 and over in 2025, down from 8.3 per cent in 2022–23 (Australian Institute of Health and Welfare).
• Recent illicit tobacco use among people who smoke rose from 16.7 per cent to 34 per cent between 2022–23 and 2025.
• Current vaping among Australians aged 14 and over was 2.5 per cent in 2019, 7.0 per cent in 2022–23 and 6 per cent in 2025. Daily use is 3.6 per cent.
• Those vaping figures are self-reported. The party's position is that they are a floor, not a measure — section 5.1.
• From 24 July 2026 there is no lawful pathway for a consumer to buy or import nicotine pouches in Australia, with or without a prescription.
• About 215 arson attacks on tobacco and vape retailers have been recorded nationally since March 2023. One woman has died.
• Victoria's Taskforce Lunar has made more than 100 arrests and searched more than 200 stores.
• Convenience store tobacco sales fell 28.8 per cent in value in 2025 — more than $750 million in one year, and about $1.6 billion over three years.
• Tobacco was more than 40 per cent of convenience store sales in 2020. It is now under a fifth.
• The Illicit Tobacco and E-cigarette Commissioner estimates illicit product at 50 to 60 per cent of the tobacco trade, diverting up to $11.8 billion in excise.
• Australian tobacco growing ceased after the February 2006 harvest, when 143 licensed growers accepted a buy-out. The last crop covered about 1,400 hectares with a farm-gate value of $27 million.
• The Commonwealth has committed more than $200 million to illicit tobacco enforcement, including $156.7 million in the previous Budget.
• The 2026–27 Budget added $14 million, for transporting, storing and destroying seized product.

2. The stake

The illegal nicotine trade in Australia is now a criminal industry of a size that changes what the country is dealing with. Victoria Police attribute the firebombing campaign to a conflict between Middle Eastern organised crime groups and outlaw motorcycle gangs competing for control of the market. Youths are recruited to set the fires.

The first attack was in March 2023, in Melbourne's northern suburbs. There were about fifty by the end of that year. The national count is now around 215, most of them in Melbourne and its growth corridors — the longest-running arson campaign in Victorian history. Queensland's Taskforce Masher has linked a dozen attacks from Mount Isa to Townsville and the south-east.

A 27-year-old woman died when her house was set alight. The gang had targeted the wrong address.

The revenue is what makes the violence rational. A margin of tens of dollars a packet, on a product that moves in shipping containers and sells over a counter, is worth fighting for. Enforcement intelligence is consistent that the syndicates running it are diversified criminal businesses and that tobacco profits fund the rest of their operations.

Every untaxed packet is a payment to those networks. The customers are not making a political choice. They are buying the cheapest product in the street, which government policy arranged for the criminal to supply.

The entrenchment is the risk. A criminal industry earning at this scale for a decade buys lawyers, premises, logistics and protection, and it does not withdraw when the arbitrage narrows. It has to be removed while removing it is still possible.

3. What was tried

Two separate prohibition strategies, running at the same time.

Tobacco: price. Excise per twenty-pack rose from about $8 in 2010 to about $30 in 2025 in real terms. A one-off 25 per cent increase landed in April 2010, followed by 12.5 per cent annual increases from 2013 to 2020, indexation switched from the consumer price index to average weekly earnings in 2014, and three further 5 per cent annual increases began in September 2023. Between September 2015 and September 2025 the excise on cigarettes rose 2.8-fold and on loose tobacco 3.6-fold.

Vapes: availability. Disposable vape imports were banned from 1 January 2024. From 1 July 2024 all vapes, with or without nicotine, could be sold only through pharmacies, and advertising was prohibited. From 1 October 2024 adults could buy products at 20 mg/mL or less from participating pharmacies without a prescription; anything stronger, and anyone under 18, requires one. Pharmacy stock is limited to tobacco and mint or menthol flavours. Australia is the only country in the world using a pharmacy-only model.

Pouches: prohibition. Nicotine pouches were reclassified as prescription-only in January 2026, and from 24 July 2026 the Therapeutic Goods Administration closed every remaining pathway — personal importation, the Special Access Scheme, authorised prescribers and pharmacy compounding. There is now no lawful way for a consumer to obtain them at all. The TGA's own advice notes that many are made in unregulated facilities, may contain unknown contaminants, and carry labels that may not be accurate.

All three policies were aimed at the legal market, and all three worked on it. Legal tobacco sales halved. Retail vape sales ended. Pouches went from a growing consumer category to a prohibited one.

4. The revenue

Excise revenue peaked at about $16 billion in 2019–20 and has fallen every year since, while the rate has risen every six months.

The 2026–27 Budget forecasts $3.56 billion, about $500 million below the previous year, and projects $2.14 billion by 2029–30. The 2025–26 forecast came in at $4.1 billion, $1.3 billion below the figure published five months earlier in the mid-year update. Total excise and customs receipts were revised down $813.5 million for 2026–27 and $5.4 billion over five years, with tobacco the main contributor.

The e61 Institute measured the relationship directly: between 2020 and 2025 excise rates rose by just under 50 per cent while revenue fell by $8.5 billion. Some of that fall is fewer smokers, which is the policy working. The rest is substitution to untaxed product, which is the policy failing.

A tax that rises while its revenue falls is no longer a tax on the activity. It is a subsidy to whoever supplies the activity without paying it.

Against $8 billion written out of the estimates, the 2026–27 Budget added $14 million for enforcement — specifically for transporting, storing and destroying seized product.

5. The market

Four estimates of the illegal share are on the record, and they differ because they measure different things.

The ABS figure is the most recent and rests on the least contestable method. It measures nicotine metabolites in wastewater — what Australians actually consumed, not what they told a surveyor — combined with the collapse in household spending on legal product back to 2016 levels. Total nicotine consumption rose almost 40 per cent between 2017 and 2025 against 14 per cent population growth.

The price gap explains all of it. Tax alone on a legal packet is $30.57. Illegal packets sell for $11 to $25.

Two official datasets disagree about what happened to use, and the memo states both. The ABS finds total nicotine consumption up 40 per cent. The Australian Institute of Health and Welfare's 2025 household survey finds daily smoking at a record low of 5.6 per cent, down from 8.3 per cent, and vaping stable at 3.6 per cent daily.

The reconciliation is in the ABS report itself: wastewater measures total nicotine but cannot identify which product it came from, and cannot distinguish more users from existing users consuming more. Nicotine salts have lowered the pH of vapour and made much higher doses tolerable. Fewer users each consuming more is consistent with both findings.

Nothing in that dispute affects the policy question. Both datasets agree the supply has moved. The AIHW's own figure is that recent illicit tobacco use among people who smoke doubled in three years, from 16.7 to 34 per cent, and that 22.6 per cent bought branded product with no plain packaging or health warnings in the previous three months.

5.1 The figure the party challenges

The vaping prevalence figures above come from a household survey. Every respondent is describing conduct that is now supplied almost entirely through an illegal channel, and the figures are what people were willing to state.

Sovereign Australia's position is that the household survey measures what people report, not what they consume, and that the reported vaping figures should be treated as a floor. Three facts support treating them that way.

• The objective series points the other way. Wastewater metabolites carry no reporting step. They show total nicotine up almost 40 per cent since 2017 against 14 per cent population growth, and illegal supply at about 80 per cent.
• The legal channel does not account for the product being used. Pharmacy-only supply is a narrow channel with limited flavours and concentrations. The overwhelming majority of vaping product in Australia is bought outside it.
• The survey cannot separate products. The wastewater series cannot identify which product the nicotine came from, and the survey cannot verify what respondents say. Neither instrument was built to measure a market this large operating illegally.

The counter-argument is on the record and is stated here. Using or possessing a vape is not an offence — the offences attach to commercial supply, import and sale — and buyers are not prosecuted, so a respondent to an anonymous survey is not admitting to a crime. Where self-reported nicotine use has been validated against blood cotinine, agreement has been close. Under-reporting is therefore a hypothesis, not an established finding.

What follows from that is a measurement obligation, not an assumption. The party's position is that the Commonwealth should fund product-specific measurement — wastewater analysis capable of distinguishing cigarettes, vapes and pouches, published quarterly and reconciled against seizure, import and retail-sales data — so that the size of the market is a known figure rather than a contested one. A country cannot regulate a market it refuses to measure.

None of the policy in this memo depends on which estimate is closer. Every instrument on the record — survey, tax gap, enforcement intelligence and wastewater — agrees that supply has moved to criminals.

6. Demand does not disappear

The Australian who smokes at $50 a packet did not stop when the price reached $50. They changed supplier. That is the finding the last decade produced, and it is the finding the policy has to be built on.

Government does not decide whether Australians consume nicotine. It decides who sells it to them, under what conditions, and whether anyone can be held responsible for what is in it. Australian policy has spent thirty years on the first question, which it cannot control, and has surrendered the second, which it can.

The surrender has three costs. The revenue is gone. The product is unregulated and untested. And the profit funds organised crime.

Vaping shows the same mechanism inside two years. Retail sale was closed and supply moved to importers with no obligation to anyone — no ingredient list, no batch testing, no accountability, no recall. Black-market product has been found containing diacetyl, associated with serious lung disease, diethylene glycol, and heavy metals, at nicotine concentrations well above the label.

7. The case against a price cut

The strongest objection to cutting the excise is arithmetic, and it has to be answered rather than dismissed.

Reverting to the March 2020 rate would take $11.58 off a packet: a $42 legal packet becomes $30.42, against an illegal packet at $15. The gap narrows and does not close. Closing it on price alone means surrendering almost the entire excise, and assumes manufacturers and retailers pass every cent through instead of taking the margin themselves.

Three further objections carry weight:

• Equity runs the other way. Tobacco is 2.5 per cent of consumption expenditure for the poorest households and 0.6 per cent for the richest.
• Youth uptake is price-sensitive. Cheap product is more affordable to people who are not yet addicted than to people who are.
• The public health position is enforcement plus demand reduction. Cancer Council Australia calls for a crackdown on illegal supply and scaled-up cessation campaigns, explicitly not tax cuts.

Three points answer them.

Price is not proposed as the whole policy. It removes the margin that makes enforcement futile; sections 9 and 10 do the rest. Enforcement at current margins replaces a shut network within weeks, because the profit is worth the risk. At a narrowed margin, the same enforcement finishes the trade.

Nor is the choice between a high excise and a low one. It is between an excise collected on most of the market and an excise collected on a fifth of it. A moderate rate on a restored legal market raises more than a punitive rate on a collapsed one, and the collapsed portion pays nothing.

Two mechanical objections remain, and the design answers both. An excise cut can be taken as margin by manufacturers and retailers instead of reaching the shelf, which is why the rate is legislated as a share of the retail price and monitored against a published price series rather than left to the market. And syndicates with sunk logistics can discount to hold share, which is why price is paired with licensing, premises closure and supply-chain enforcement instead of being used alone.

On price sensitivity: the price-sensitive consumer already has a cheap product. It costs $11 to $25, contains whatever the manufacturer put in it, and is sold by someone who does not check identification. The comparison is not between an expensive legal packet and abstinence. It is between an expensive legal packet and a cheap criminal one.

The party's position is also not the most radical on offer. Richard Holden of the University of New South Wales has called for the excise to be cut to zero for as long as it takes, arguing that incremental cuts will not work and that enforcement alone cannot succeed against a market this size. Deakin University criminologist James Martin has called for the tax to be abolished.

The New South Wales Premier has repeatedly called for significant cuts. Oxford Economics recommends an excise reset combined with stronger enforcement. The Treasurer's position is that he is not convinced a cut would make a difference.

8. Regulate, don't ban

The party's position on nicotine is unchanged: it is harmful, it is addictive, and fewer Australians using it is a good outcome. The question this memo answers is who supplies the Australians who use it anyway.

Excise reset. The rate is set so that a legal packet costs approximately half what it costs today.

Legislated as a share of retail price. The rate sits in the Act as a percentage, not in a formula that moves twice a year without a vote.

Frozen for ten years. No automatic indexation. Parliament changes the rate or it does not change. Certainty is what allows a legal retailer and a domestic grower to invest, and it is what removes the annual widening of the arbitrage that created this market.

The scope is every legal nicotine product. Cigarettes, cigars and other tobacco products, vaping products, pouches and heated tobacco are brought under one licensing and standards regime rather than three separate prohibitions.

Measurement is funded. Product-specific wastewater analysis published quarterly and reconciled against seizure, import and sales data, so the market is measured rather than estimated.

Revenue funds education. Australia's smoking decline began with education and cultural change decades before excise was used as the primary instrument. Sustained public campaigns, school programmes and free cessation support are funded from revenue the current settings no longer collect.

The design principle: the legal product must be the cheapest, safest and most convenient way for an adult to buy nicotine in Australia. Every element below follows from that.

9. Licensing, the supply chain and the premises

Once the margin narrows, enforcement stops being an endless replacement exercise. The effort goes to four places, and to none of them is the consumer relevant.

• Importers, manufacturers, wholesalers and distributors. The offence sits with the people moving container loads for profit. No Australian should be prosecuted for what they consume.
• The retail licence. Every outlet selling tobacco or vaping products holds a licence with enforceable conditions. Sell illicit stock and the licence goes, with it the right to trade at that site.
• The premises. Closure powers for shops repeatedly caught trading illicit product, and accountability for landlords who knowingly lease to them.
• Joined-up agencies. Australian Border Force, state police, the Australian Taxation Office and state licensing regulators working the same operators from shared data. The syndicates are national.

The excise is a federal instrument. Licensing, inspection, compliance resourcing, closure powers and penalties are held by the states, and can be used now without waiting for Canberra.

10. Vapes and nicotine products: legal, licensed, and a standard with teeth

Sale to adults aged 18 and over, through licensed retailers, with physical identification verified at the counter as a condition of the licence. The same model applies to every nicotine product an adult can lawfully buy: vaping products, nicotine pouches and other oral nicotine products, and heated-tobacco products.

Pouches are the clearest test of the principle. They contain no tobacco, are not combusted, and are sold openly off the shelf in the United Kingdom and much of Europe. Australia has moved them from prescription-only to no lawful pathway at all, which does not remove the product — it removes the label, the concentration limit, the testing and the age check, and hands the category to the same importers already supplying illegal vapes.

Every product sold must meet an Australian standard:

• Maximum nicotine concentration set by product type.
• A prohibited-substances list including diacetyl, diethylene glycol and heavy metal compounds.
• Full ingredient disclosure.
• Child-resistant closures on liquids.
• Batch testing by an accredited Australian laboratory before the product reaches a shelf.

The standard is a licence condition, not an aspiration. A non-compliant product cannot be sold, and a retailer who sells one loses the licence.

Traceability is the argument that settles it. A legal batch has a number, a manufacturer and a distribution record. If it is contaminated it can be recalled from every shelf in the country and the people who bought it can be told. There is no batch number on a vape from a shipping container, no record of who sold it, and no way to reach the people using it.

A ban hands the product to people with no obligation to anyone. A standard puts a regulator, an accredited laboratory and a licensed retailer between the manufacturer and the customer.

One honest note on the record so far. Youth vaping has fallen since the 2024 reforms: use among 14 to 17 year olds went from 18 per cent in early 2023 to 15 per cent in 2025, never-vaped rose from 82 to 85 per cent, and never-smoked reached a record 94 per cent. The reforms are not claimed here to have increased youth vaping.

What they did not do is control the product. An unregulated vape remains available to any teenager from a shop that does not ask for identification. An age check at a licensed counter, with a licence at risk, is a stronger protection than a pharmacy requirement most users bypass.

11. A cleaner product: disclosure and the Australian Growers Standard

A manufactured cigarette is not simply tobacco. The leaf is grown with synthetic pesticides and treated after harvest, then processed with additives — humectants, casings, flavour compounds, burn accelerants, and agents that alter how nicotine is absorbed. None of it appears on the pack.

The Australian Tobacco Growers Standard, developed with the CSIRO, growers and independent researchers: certified organic soil management, no synthetic pesticides or herbicides, no post-harvest chemical treatment, no processing additives outside an approved natural list, and full ingredient disclosure on the pack. One ingredient, and a label that says so.

Disclosure applies to every tobacco and nicotine product sold in Australia — cigarettes, cigars, pipe and rolling tobacco, heated-tobacco products, vaping liquids and pouches — domestic or imported, from every manufacturer, with no exemption for commercial confidentiality. It covers the whole chain:

• Grown — every agricultural chemical applied to the crop, including pesticides, herbicides, fungicides and growth regulators, and any post-harvest chemical treatment.
• Processed — every additive used in manufacture, named and quantified, including any pH or ammonia agent that alters nicotine absorption.
• Published — in a public register any Australian, researcher or journalist can search, with the pack carrying the list and a link to the full entry.

Disclosure is a condition of sale. A product whose contents are not disclosed cannot be imported and cannot be sold.

This is the same rule the party applies to the food supply: if it is applied to a crop or added to a product, it is recorded, and the record is public. It serves a health interest, because people can see what they are consuming; an environmental interest, because chemical use on Australian land becomes measurable; and a market interest, because a grower who does it cleanly can prove it.

The limit, stated plainly. This does not make smoking safe. Combustion produces carcinogens however the leaf was grown, and nicotine is addictive however it was processed. An adult who smokes is accepting a health risk. What no adult should have to accept is a risk compounded by a chemical load added without their knowledge. Removing that load is a real improvement and is not a clean bill of health.

Disclosure is information, not endorsement. Knowing what is in a cigarette does not make it safe. It does mean the decision belongs to the person making it.

12. Another crop, another income

Tobacco was an Australian farm industry for a century and a half. Growing began in the Upper Ovens Valley in the 1870s and the district ran 3,394 hectares at its 1980 peak, producing about 16,000 tonnes of leaf a year — by the 1970s roughly 38 per cent of national output from Myrtleford alone. Quotas cut the area to 1,240 hectares by 1994.

The industry closed after the February 2006 harvest. Two major buyers withdrew, and 143 licensed growers voted to accept a Commonwealth and industry buy-out. The last 1,400 hectares carried a farm-gate value of $27 million, the only sales floor and processing plant in the country was in Myrtleford, and every kilogram was sold domestically. Australia now imports the leaf in every legal cigarette it sells, and the illegal ones.

Australian tobacco was regarded internationally as mild and clean. By the time the industry wound up, 90 per cent of the world's tobacco fields were in poorer countries, growing under regulation Australian growers do not control and Australian consumers cannot see.

12.1 What a crop is worth to a farm

A farm business is as resilient as the number of things it can sell. Diversification is not an aspiration in agriculture; it is the mechanism that carries a family through a bad season in one commodity.

Every crop on the restricted list is a rotation unavailable, a shed unused for part of the year, and an income stream that goes to a grower in another country. Tobacco is a high-value row crop that suits a wide range of climates given the right soil and warm conditions, and it was grown here on river-valley country in the Ovens, King and Kiewa valleys.

The restriction is not agronomic. Australian growers were competitive on quality and lost the market to imported leaf and a buy-out, not to climate or soil. Nothing about the country's capacity to grow the crop changed in 2006.

Sovereign Australia's position: licensed tobacco cultivation returns under the Australian Growers Standard, with the licence conditional on the standard and the leaf sold into a regulated domestic market. The standard is high, the market is open, and what to plant is the farmer's decision.

12.2 The value is added here

Australia's standing habit is to grow something, ship it out raw, and buy it back finished. The leaf is the start of the value chain, not the end of it.

• From the leaf — cigarettes, and also cigars and cigarillos, pipe blends, rolling tobacco and heated-tobacco products, each a separate market with separate customers and a different price point.
• Cigars — hand-made, with the value in the leaf, the curing, the grading and the roll rather than a factory line.
• Provenance — small-batch regional blends, single-district leaf and named-vintage cigars carry the premium Australian wine, beef and coffee already command overseas.
• Oral and heated products — nicotine pouches and heated-tobacco consumables are manufactured goods with a specification. Under a standard they are made here to it; under prohibition they are imported outside it.
• E-liquid — nicotine extraction for legal vaping products runs off the same farms, so the vaping market is supplied from an Australian paddock rather than a container.
• Devices and consumables — a standard that mandates nicotine limits, prohibited substances, child-resistant closures and accredited batch testing is a manufacturing specification. Australian firms can build to it; an offshore supplier selling into a black market has no reason to.
• Testing and compliance — accredited laboratories, batch certification, packaging and labelling, and register administration are all work performed here.
• The processing — a sales floor, a curing and grading operation and a manufacturing plant employ people in the district that grows the crop, which is where the 2006 closure did its damage.

Cigars are the clearest case of value that cannot be automated offshore. The work is manual, the price is set by provenance and grading, and a single district's crop is worth more as named cigars than as bulk leaf. It is the highest-value use of the same hectare.

The vaping supply chain is the clearest case of a market Australia supplies entirely from overseas. Every legal vape and every illegal one is imported. A legislated standard creates a domestic product specification where none exists, and the firms that meet it are small manufacturers, not multinationals.

12.3 The shop that follows the law

The retailer who complies is the one currently losing. Convenience store tobacco sales fell 28.8 per cent in value during 2025 alone — more than $750 million in a single year — and the category has shed about $1.6 billion over three years. Tobacco was more than 40 per cent of convenience sales in 2020 and is now under a fifth. Total channel value fell 3.9 per cent to $9.88 billion.

Both major supermarkets reported their tobacco sales halving in twelve months, the sharpest fall on record. Ritchies Stores estimates illicit product at around 55 per cent of all tobacco sold. The Illicit Tobacco and E-cigarette Commissioner puts the illegal share at 50 to 60 per cent of the trade, diverting up to $11.8 billion in excise.

That trade did not disappear. It moved to shops that opened for the purpose, sell little over the counter, and make their money underneath it.

The damage is not only commercial. A single firebombing in Victoria damaged around ten neighbouring businesses that had nothing to do with the trade. Legitimate operators have faced years of violence, intimidation and extortion.

Enforcement is beginning to reach the premises: New South Wales inspectors closed 66 stores in the first fifteen months of that state's closure powers, and seized more than 16.2 million cigarettes and about 215,000 illegal vaping goods across roughly 1,700 inspections in 2025. Closure powers work. They do not restore the legal retailer's trade, because the customer only returns when the legal price is competitive.

Under this policy the licensed small business is the channel. A restored legal market at a competitive price returns turnover and foot traffic to the corner store, the newsagent and the licensed vape retailer, and the licence itself becomes an asset worth protecting.

12.4 Rebuild before closing the border

The long-term position is a sovereign industry supplied by Australian farms and factories, protected by tariff on imported leaf and finished product.

The tariff phases in as domestic supply comes online. Imposing it against a supply base that does not yet exist would raise the price of legal product while the gap is unfilled, and hand the criminal market the difference. The sequence is: cut the excise, licence the growers, build the processing, close the border as the crop comes in.

13. Productivity, opportunity and the safety net

This is a standing Sovereign Australia position, and it applies well beyond tobacco.

A social safety net is paid for out of production. Every restriction that closes a lawful market removes work, removes tax, and removes the revenue the safety net depends on — then the cost of the resulting unemployment lands on the same budget. Prohibition of a product people continue to buy does this twice: it deletes the legal industry and funds a criminal one out of the same transaction.

The party's method is to grow the base rather than cut what it funds. Open the lawful markets, set the standard high, licence the operators, and let Australians do the work. A licensed grower, a regional processor, a compliant manufacturer, an accredited laboratory and a shopkeeper with a licence worth keeping are all taxpayers, and their output is what a pension, a hospital and a disability payment are drawn from.

That is the trade this memo describes. The Commonwealth recovers a tax base it has lost, organised crime loses an industry, farmers gain a crop, small businesses gain a category back, and none of it requires reducing support to anyone.

14. What this is not

It is not encouragement to smoke or vape.

It is not a softening on minors. Sale to anyone under 18 remains prohibited, with identification checked at every counter and the retailer's licence at stake — more protection than an unlicensed shop has ever offered.

It is not a favour to multinational tobacco. The standard is Australian, the disclosure obligation admits no commercial-confidence exemption, and companies that will not source and manufacture here can leave the market.

It is not a claim that a cheaper legal product is a safe product.

15. Summary

Excise revenue has fallen from about $16 billion to a forecast $3.56 billion while the rate rose every six months. Around 80 per cent of the nicotine Australians consume comes from illegal supply. There have been about 215 arson attacks on retailers since 2023 and one death. The Commonwealth's answer this year was $14 million.

Australians who use nicotine are funding organised crime because government made the criminal the cheapest seller in the street. Demand did not disappear when the price rose or when the shelves were cleared; the supply changed hands.

Sovereign Australia's position is to take it back. Cut the legal price so the criminal margin goes. Licence every seller and enforce against importers and distributors, never the consumer. Legalise vaping under an Australian standard with prohibited compounds, accredited batch testing and recall.

Require every chemical used to grow and manufacture a tobacco product to be published, and set an Australian growing standard for a cleaner product than the one on the shelf now. Licence tobacco cultivation again — another crop, another income — and add the value here, in the districts that grow it.

The safety net is paid for out of production. Prohibition of a product people keep buying deletes the legal industry and funds a criminal one from the same transaction. Opening the market, setting the standard and licensing the operators widens the base that pays for the pension, the hospital and the disability payment, without reducing what any of them receive.

Regulate, don't ban.

16. Sources

1. Commonwealth of Australia, Budget 2026–27 (May 2026) — tobacco excise forecast $3.56 billion for 2026–27 and $2.14 billion by 2029–30; the $8 billion downward revision across the five years to 2029–30; the 2025–26 forecast of $4.1 billion, $1.3 billion below the mid-year update; total excise and customs revised down $813.5 million for 2026–27 and $5.4 billion over five years; $14 million for transport, storage and disposal of seized product; sections 1, 4 and 15.
2. Australian Bureau of Statistics, Household consumption of illicit tobacco and nicotine products (3 June 2026) — nicotine consumption up almost 40 per cent 2017 to 2025 against 14 per cent population growth; illicit share of tobacco consumption 12 per cent in 2017 to 80 per cent in 2025; the stated limitations that wastewater cannot identify the product source and cannot distinguish more users from higher consumption per user; sections 1, 5 and 5.1.
3. Australian Institute of Health and Welfare, National Drug Strategy Household Survey 2025: Tobacco, e-cigarettes and other nicotine insights (17 July 2026) — daily smoking 5.6 per cent of people aged 14 and over, down from 8.3 per cent in 2022–23 and 19.5 per cent in 2001; never-smoked 68.7 per cent; daily e-cigarette use 3.6 per cent; recent illicit tobacco use among people who smoke 34 per cent, up from 16.7 per cent; 22.6 per cent purchasing branded illicit tobacco in the previous three months; sections 1, 5 and 10.
4. Australian Taxation Office, tobacco tax gap estimates — illicit tobacco approximately 25 per cent of the market in 2023–24, up from 8 per cent in 2018–19; total market of about 7,104 tonnes in 2023–24, down 43 per cent from 2018–19; excise of $1.52829 per cigarette from 3 March 2026; sections 1 and 5. 5. e61 Institute (Vass and Clyne), Chop, chop: Time to cut tobacco excise rates? (December 2025) — excise rates up just under 50 per cent between 2020 and 2025 while revenue fell $8.5 billion; excise per twenty-pack from about $8 in 2010 to $30 in 2025 in real terms; excise at around three quarters of the retail price; tobacco at 2.5 per cent of consumption expenditure for the poorest households against 0.6 per cent for the richest; sections 3, 4 and 7.
5. Excise Tariff Act 1921 and Australian Taxation Office excise rate schedules — the indexation basis, the switch from consumer price index to average weekly ordinary time earnings in March 2014, the 25 per cent increase of April 2010, the 12.5 per cent annual increases 2013 to 2020, and the three 5 per cent annual increases from 1 September 2023; section 3.
6. Victoria Police, Taskforce Lunar statements, and contemporaneous reporting — the arson campaign from March 2023, approximately fifty attacks by the end of that year and a national count of about 215; more than 100 arrests and more than 200 store searches; attribution to a conflict between Middle Eastern organised crime groups and outlaw motorcycle gangs with youths recruited as offenders; the death of a 27-year-old woman in an arson attack on the wrong address; sections 1 and 2.
7. Queensland Police Service, Taskforce Masher — a dozen arson attacks linked to the illicit tobacco trade from Mount Isa to Townsville and south-east Queensland; section 2.
8. Therapeutic Goods Administration, Nicotine pouches (July 2026) — reclassification to prescription-only in January 2026 and the closure of every lawful consumer pathway from 24 July 2026, including personal importation, the Special Access Scheme, authorised prescribers and pharmacy compounding; the regulator's statement that many products are made in unregulated facilities, may contain unknown contaminants and may carry inaccurate labels; sections 1, 3 and 10.
9. Therapeutic Goods Administration and Department of Health, Disability and Ageing — the disposable vape import ban from 1 January 2024; pharmacy-only supply of all vaping goods from 1 July 2024 with an advertising prohibition; over-the-counter access for adults at 20 mg/mL or less from 1 October 2024 with prescriptions required above that concentration and for people under 18; the tobacco, mint and menthol flavour restriction and packaging and device standards; section 3.
10. Cancer Council Australia and University of Sydney, Generation Vape Wave 8 (July 2025) and Turning the Tide on NSW Teen Vaping (March 2026) — vaping among 14 to 17 year olds from 18 per cent in early 2023 to 15 per cent in 2025; never-vaped from 82 to 85 per cent; never-smoked at a record 94 per cent; Snapchat as a purchase channel from about 10 per cent in February 2024 to 4 per cent in April 2025; section 10.
11. Cancer Council Australia media statement (June 2026) — the position that the response to the ABS estimates is enforcement and scaled-up demand reduction rather than tax cuts, and the warning that the estimates will be used to justify weakening tobacco control; section 7.
12. Published validation research on self-reported nicotine use against serum cotinine measurement — close agreement between self-report and biochemical markers in large population surveys, with discrepancy of approximately 1 per cent of adult respondents; cited in section 5.1 as the counter-argument to survey under-reporting.
13. Chapman, S., published analysis (July 2026) — the reconciliation of the wastewater and survey findings through higher nicotine consumption per user, and the role of nicotine salts in lowering vapour pH and enabling higher doses; section 5.
14. Menadue (ed.), published analysis (May 2026) — the arithmetic that reverting to the March 2020 excise rate reduces a $42 packet by $11.58 to $30.42 against an illegal packet at about $15, and the pass-through assumption a cut requires; section 7.
15. Holden, R. (University of New South Wales), public commentary (June 2026) — the case for reducing the excise to zero for as long as required, on the grounds that incremental cuts are insufficient and enforcement alone cannot succeed at this market size; section 7.
16. Martin, J. (Deakin University), public commentary (June 2026) — the assessment of the ABS estimates as a major policy failure requiring a fundamental change of approach, and the case for abolishing the tobacco excise; sections 5 and 7.
17. Oxford Economics, Reset excise and strengthen enforcement to cut illicit tobacco (April 2026) — the combined excise reset and enforcement recommendation; section 7.
18. Reported statements of the Treasurer of the Commonwealth (May 2026) — the position that a cut to the excise is not accepted as effective, and that the intended cause of falling collections is cessation rather than criminal supply; section 7.
19. Macquarie University, The Lighthouse (June 2026), and reported respiratory medicine commentary — legal packet prices of $45 to $65 against illicit packets at $11 to $25; contamination risks in illicitly grown and stored leaf, including fungal contamination from improper drying; sections 1 and 5.
20. Sovereign Australia, Tobacco and Vapes policy (op-tobacco-vapes) and The Australian New Deal federal platform §2.7 — the excise reset, the ten-year rate freeze, supply-chain and licence-based enforcement, premises closure powers, the Australian Tobacco Growers Standard, the universal disclosure obligation and public register, the vaping standard and 18-plus licensed retail model, the crop and value-add programme, and the phased tariff; sections 8 to 14.
21. Alpine Shire and Myrtleford district industry records, and contemporaneous reporting — tobacco growing in the Upper Ovens Valley from the 1870s; the 1980 peak of 3,394 hectares and about 16,000 tonnes of leaf a year; roughly 38 per cent of national output from the district by the 1970s; quotas reducing the area to 1,240 hectares by 1994; closure after the February 2006 harvest following the withdrawal of two major buyers and a vote by 143 licensed growers to accept a Commonwealth and industry buy-out; the final 1,400 hectares at a farm-gate value of $27 million; the sole Australian sales floor and processing plant located at Myrtleford; all production sold domestically; 90 per cent of world tobacco area located in lower-income countries by 2006; section 12.
22. Australian Association of Convenience Stores and Convenience Measures Australia, 2025 State of the Industry report (March 2026) — convenience channel value down 3.9 per cent to $9.88 billion; tobacco sales down 28.8 per cent in value in 2025, a loss of more than $750 million in one year and about $1.6 billion over three years; tobacco from more than 40 per cent of channel sales in 2020 to under one fifth; the impact of a single firebombing on around ten neighbouring businesses; sections 1 and 12.
23. Illicit Tobacco and E-cigarette Commissioner, and reported Senate estimates evidence (May 2026) — illicit product at 50 to 60 per cent of the tobacco trade and up to $11.8 billion in excise diverted; sections 1, 5 and 12.
24. Ritchies Stores and SPAR Australia, reported retailer statements — illicit product estimated at around 55 per cent of all tobacco sold, and organised supply chains displacing sales from legitimate stores; The Conversation (March 2026) — both major supermarkets reporting tobacco sales halving in twelve months and the Australian Taxation Office estimate of a net revenue loss above $3 billion in 2023–24; section 12.
25. NSW Health (February 2026) — 66 stores closed under the state's closure powers since November 2025; approximately 1,700 retailer inspections during 2025 with more than 16.2 million cigarettes, over 2,650 kilograms of other illicit tobacco products and about 215,000 illegal vaping goods seized; 22 prosecutions finalised with $784,700 in fines; section 12.
26. Sovereign Australia, Farmers 1st and Environment policies — the residue monitoring, agricultural chemical review and labelling principle applied here to tobacco; section 11.