Australia’s illicit tobacco crisis has reopened doors long closed to Big Tobacco, as companies lobby for excise cuts and gain private access to political decision-makers.

With the rise in illicit tobacco sales in Australia, tobacco control policy has become a headline issue.

But while the debate over tobacco taxation has dominated public discussion in recent times, Big Tobacco has been lobbying tirelessly behind closed doors to unravel Australia’s strong public health policies. These efforts are the latest chapter in a long-running campaign to weaken tobacco control measures and protect industry interests – well preceding the rise in illicit tobacco.

The state of play – the tobacco wars and excise debate

Experts unequivocally agree that there has been a substantial growth in the illicit tobacco market in Australia. The report from the Illicit Tobacco and E-cigarette Commissioner released in 2024-25 estimated the size of the illicit tobacco market to now be around 50-60 per cent of Australian tobacco consumption. Among some groups this is likely higher, with one study showing 80 per cent of recent tobacco purchases among young adults were likely illicit.

Australia is losing approximately $7.7-11.8 billion annually in tobacco tax due to the illicit market.

With an estimated 40,000 tobacco retailers across the country, the lack of controls on where tobacco can be sold has contributed to a rapidly expanding illicit market, where organised crime networks have leveraged this widespread retail network for the supply of illicit products.

The debate on how to reduce the illicit tobacco crisis has largely centred around one policy: Tobacco excise. Some argue that a significant reduction of the tobacco excise is necessary to lower the price gap between illicit cigarettes, which can cost as low as $7-10 a pack, and regulated packs, which cost around $40 for a budget brand. Others, including public health researchers and health bodies, argue this would risk making both regulated and illicit tobacco products more affordable overall, which can increase smoking initiation and consumption.

Enforcement efforts are beginning to make a difference. In Victoria, new laws that came into effect in September allow regulators to close retailers selling illicit tobacco for 90 days. In the first two weeks, 48 stores were shut. While there are reports some retailers are changing tactics to evade detection, these closure orders are an important step towards reducing the visibility, availability and ease with which illicit tobacco products can be purchased.

Despite the growth in the illicit market share, the latest national smoking prevalence data indicates that smoking is at a record low, with 5.6 per cent of the population smoking daily. With the high cost of tobacco remaining the most common motivational factor behind reducing smoking, the debate over tobacco excise could have serious implications for public health.

The tobacco industry has for many decades lobbied governments not to raise tobacco taxes, or to roll them back. In Canada in the 1990s, tobacco companies received the largest criminal fines in Canadian history for their involvement in a large-scale smuggling scheme that helped drive the political case for tobacco tax cuts.

Against this backdrop of Australia’s illicit tobacco crisis, it is unsurprising that the industry is mobilising all available channels of influence in an effort to roll back effective control policies.

Secret meetings and hearings

For the first time in years, tobacco lobbying efforts have been getting traction and favour with political parties. One of the biggest concerns is the lack of transparency surrounding these activities. Tobacco companies were once excluded from policy debates, but they are now gaining private audiences with political leaders, away from public scrutiny.

In two Australian parliamentary inquiries this year, Philip Morris Limited was invited to give evidence in camera (privately): The Senate inquiry into the illegal tobacco trade in Australia in May, and the NSW Parliament illegal tobacco trade inquiry in February. The speakers’ list for both inquiries did not include PML as even appearing at the hearing.

PML’s testimonies to these inquiries were provided behind closed doors without the benefit of public scrutiny or critique of the evidence provided to the committee. It provided an opportunity for the tobacco company to directly lobby for a cut in the excise that will directly benefit its bottom line.

In 2023, independent Senator David Pocock raised concerns about tobacco industry lobbyists getting unescorted access to Parliament House through the orange parliamentary pass system, after he was approached by an uninvited tobacco lobbyist in his office. The parliamentary access pass system has since been overhauled, requiring lobbyists to register for a pass that must be signed by two MPs.

The revolving door of tobacco lobbyists

While lobbyists can no longer roam the halls of Parliament House unescorted at any time of the day, significant gaps remain in lobbying transparency. Federally, only third-party lobbyists (those working for lobbying firms and acting on behalf of another company) are required to register on the lobbyist register. This means that lobbyists employed by tobacco companies like PML and British American Tobacco do not need to register.

Lack of enforcement of Australia’s Code of Conduct has also meant that the revolving door is rampant – when individuals move between positions in government and industry – a widely recognised lobbying tactic that aims to share insider information, develop relationships with people of influence and establish quid pro quo contributions to industry. Our investigation into the revolving door of tobacco lobbyists found that almost half (48 per cent) of internal company lobbyists, and 55 per cent of third-party lobbyists representing the industry, had held government positions before or after working in the industry. Many of them had made the move within one year of working as a tobacco lobbyist.

Political donations from tobacco companies

Political donations have long been a mechanism of influence for the industry, having donated over $2.5 million to political parties since 1998-99. Labor was the first party to announce it would no longer accept tobacco company donations in 2004, with the Liberal Party following suit in 2013.

The Nationals and Liberal Democrats (now Libertarian Party) continue to receive tobacco industry donations. In 2024-25 the Nationals received $225,500 from two major tobacco companies, BAT and PML. One Nation received $30,000 in donations across 2018-19 from lobbying firm Strategic Political Counsel, which at the time was contracted to lobby for BAT to legalise the sale of e-cigarettes as consumer goods.

The Nationals argue that tobacco company donations do not influence their policy positions. Michael Kauter, who headed Strategic Political Counsel while it represented BAT, also denied that the donations to One Nation were connected to his lobbying work.

Nevertheless, the tobacco and vaping policy positions adopted by both One Nation and the Nationals align with those of the tobacco industry, with both parties vowing to drastically cut the excise and legalise the sale of vapes and nicotine pouches as consumer goods.

Protecting health policy from the vested interests of tobacco lobbyists

We are at a critical time in Australian tobacco control. Arguably, tobacco lobbyists have more access to policymakers than at any point in recent decades, and we are potentially seeing the outcomes play out in real time.

Major excise cuts of 75-80 per cent are being advanced as key election policies by One Nation and the Coalition.

If Australia is to preserve some of its most successful public health achievements, our obligation to protect policy from the vested interests of the tobacco industry has never been more important than it is now.

Dr Christina Watts is a research fellow at The Daffodil Centre, The University of Sydney

Republished from Pearls and Irritations