by Pippa Starr
26 March 2025
Australia’s War on Nicotine Has Backfired—The Black Market Is Winning, and We’re All Paying the Price!
When governments chase ideology over evidence, it’s the public who pays the price. And today, Australians are footing a colossal bill — $31 billion and counting — for a failed war on nicotine led by Prime Minister Anthony Albanese and Health Minister Mark Butler.
In a bid to drive down smoking rates, the Albanese government doubled down on tobacco excise hikes and bans on legal vaping products, promoting itself as a global leader in tobacco control.
Instead, it has lost control entirely.
The result? A booming black market, a budget crisis, and an empowered criminal underworld, all while everyday Australians suffer from reduced access to safer nicotine alternatives.
"This is a policy war that’s fueling crime, not health!"
Australia now boasts some of the harshest nicotine laws in the world. Legal access to vaping is almost impossible without a prescription. Tobacco prices have soared above $50 per pack, courtesy of yearly 5% excise hikes. These measures were designed to reduce nicotine use and boost public health.
But like the ill-fated War on Drugs, this “war on nicotine” has only driven demand underground. And that underground is now run by violent, organised crime syndicates.
According to criminologist Dr James Martin from Deakin University and Ed Jegasothy from the University Of Sydney faculty of medicine and health, this policy model has backfired spectacularly.
Their March 2025 study, published in the Harm Reduction Journal, lays bare the consequences:
Over 200 arson attacks, linked to criminal turf wars over illicit tobacco.
A $5 billion collapse in tobacco excise revenue in just one year.
Illicit vapes now the second-largest illegal drug market after cannabis in Australia.
And the health warnings and plain packaging meant to deter smoking? Illicit cigarettes sold for $15 a pack skip those entirely, a massive step backward for tobacco control!
There's A Budget Black Hole No One Wants to Talk About!
Last night’s 2025 Federal Budget confirmed what many in public health and economics feared: a $6.9 billion downgrade in expected tobacco excise revenue over the next five years. In just three months, 2024-25 projections alone dropped by $1.3 billion.
This is no blip. It’s a direct result of failed policy.
Jegasothy’s graph, shared widely on social media (link), illustrates how every government forecast since 2018 has overestimated revenue, because it failed to factor in the mass exodus to the black market.
Total projected losses? $31 billion in foregone tobacco revenue, with $24 billion directly linked to the illicit market, largely concentrated in Victoria’s growing “tobacco wars.”
From Policy to Scandal: Where Did the Money Go?
In a stunning revelation yesterday, Senator James Paterson exposed that the Labor Party received $11.5 million in donations from the CFMEU, a union now mired in allegations of criminal links to Victoria’s black market tobacco trade.
The CFMEU’s Victorian branch was placed under administration in 2024 amid serious allegations, prompting Premier Jacinta Allan to suspend its construction division from the state Labor Party. This same union is widely believed to have deep ties to the criminal groups now dominating the illegal nicotine trade.
This raises a disturbing question: Has Labor’s crackdown on nicotine inadvertently protected the interests of its donors?
At the very least, it suggests a gross conflict of interest between public health policy and party politics.
A Public Health Opportunity Squandered
The tragedy is that all of this could have been avoided. Vaping is significantly less harmful than smoking and is recognised as a key smoking cessation aid by Cancer Research UK, the Royal College of Physicians, and the UK NHS. But Australia chose prohibition over regulation. Health Minsister Mark Butler chose an open table to previously called out and failing NGO's and slammed the door shut on tobacco harm reduction experts who saw the current crisis coming many years ago, yet were denied by this mumpsimus government!
Instead of allowing adult smokers access to regulated nicotine vapes, as in the UK, and New Zealand, where smoking rates have fallen way faster than Australia, forced them into the arms of criminals.
Meanwhile, Sweden offers a striking counterpoint. With legal access to snus and vaping, and cigarettes priced at just AU$12 per pack, Sweden has achieved a 5% smoking rate — the lowest in the EU — without sparking a black market bonanza.
"The Way Forward: Evidence, Not Ideology!"
Labor’s nicotine policies have failed on every level:
Public health: By pushing adult vapers to unregulated products and back to smoking, harm reduction efforts have been undermined.
Fiscal responsibility: Billions in tax revenue lost.
Law and order: Criminal networks now control vast swaths of the nicotine trade.
Political integrity: Serious questions remain about donations from entities linked to the illicit trade.
As Dr Martin and Dr Jegasothy argue, it’s time to shift away from prohibitionist ideology and toward a risk-proportionate, harm-reduction model. That means:
Regulating vapes as adult consumer products, not outlawing them.
Taxing nicotine products based on harm, lower taxes on safer alternatives, higher on deadly combustibles.
Enforcement focused on genuine crime, not adult consumers trying to quit smoking.
"This Is A Crisis of the Government’s Own Making"
The Albanese government has not just mismanaged nicotine policy, it has handed billions to criminals, and left a $31 billion crater in the federal budget.
We are witnessing a textbook case of policy failure with real-world consequences: lost lives, lost revenue, and rising violence.
It’s time for honesty, evidence-based reform, and a government willing to put public health above politics. Because right now, the black market is winning, and Australians are losing.