Introduction
5.1
The preceeding chapters have outlined the considerable steps taken so far by the Australian Government to reduce the size of the illicit tobacco market. However, evidence to the Parliamentary Joint Committee on Law Enforcement (committee) from all stakeholders indicates there is still more that could be done. This chapter will outline some of the initiatives put forward to the committee, and outline the committee’s recommendations for further action.
Focus of law enforcement
5.2
While there are very different perspectives in the ongoing debate around illicit tobacco, the common thread in evidence heard by the committee is that more needs to be done. This is demonstrated by evidence provided from, among others, the medical community, tobacco industry, government agencies and officials, researchers, and police officers. There is a clear need, in short, for more to be done to tackle the problem of illicit tobacco.
5.3
Submitters and witnesses cited common areas where there should be greater law enforcement efforts, such as:
domestic manufacturing, including supply-chains of materials and manufacturing equipment;
track and trace systems to help identify illicit products;
using the Tobacco Plain Packaging Act 2011 (TPP Act) to greater effectiveness; and
greater involvement of state and territory governments, particularly police, in the above.
5.4
These issues are explored in this chapter.
5.5
The Australian Medical Association (AMA) stressed the need to increase efforts to reduce the size of the illicit tobacco market, submitting that the 'lack of action around illicit tobacco has the potential to undermine Australia’s world leading stance on tobacco control.'
5.6
Imperial Tobacco Australia (Imperial Tobacco) stressed the need for greater focus on smaller-end criminal activity, and told the committee:
There needs to be more enforcement and more agile enforcement. We understand that the Illicit Tobacco Taskforce have been very effective, but their priority is on the big fish.
5.7
The Australian Border Force (ABF) agreed that their focus is primarily on criminal syndicates engaged in the importation of illicit tobacco on a large scale, 'because they are the ones who are making the enormous profits and they are often the serious organised criminal groups that we want to have a particular impact on.'
5.8
Transcrime, a research centre on transnational crime, submitted that only a small proportion of actors in the illicit tobacco market are reported by law enforcement agencies, estimated at approximately 7 per cent of actors. Transcrime argued this small number does not act as a sufficient deterrent to engaging in the illicit tobacco market.
5.9
The Police Federation of Australia (Police Federation) cited feedback from police officers that the legislation for illicit tobacco is convoluted and difficult to work with. The message from police officers, according to the Police Federation, is that 'When we actually do it—the search warrants and the Commonwealth laws—most of our cases are either falling apart or they take too long.'
Tobacco Plain Packaging Act
5.10
As outlined in chapter three, a number of submitters and witnesses expressed a view that the TPP Act was not being fully utilized as an effective mechanism to address illicit tobacco products. The Australian Federal Police (AFP), in particular, submitted that the TPP Act could be 'a very effective tool in the dismantling of distribution networks of smuggled tobacco products'; however, the AFP's referrals of serial TPP Act breaches to the Department of Health for investigation had not resulted in any prosecution.
5.11
The Department of Health pointed out that identifying illicit tobacco is not straightforward, as illicit tobacco can include both genuine products and counterfeits of genuine products that have evaded duty. Conversely, excise-paid tobacco products that are noncompliant with other regulations, such as the TPP Act, 'although illegal, are not regarded as illicit.'
5.12
The Department further noted that the purpose of investigations under the TPP Act, which are referred to as 'education visits', was not to identify illicit tobacco, but to identify compliance with the TPP Act, such as using the correct Pantone colours or fonts. Information gathered during an education visit is passed back to a Department of Health enforcement committee, who will consider, as part of its assessments for TPP Act compliance, whether or not to also refer the matter to the Illicit Tobacco Taskforce.
5.13
Further concerns were raised during the inquiry regarding the enforcement of the TPP Act. For example, some inquiry participants suggested that the Department of Health may not be the appropriate body to investigate illicit tobacco matters as it did not have a law enforcement background or search and seizure powers, and that there was not enough compliance monitoring or prosecution of offenders. For example, Philip Morris Limited (Philip Morris) argued that the Department of Health is 'not competent to understand the illicit, illegal side and enforcement requirements' of illicit tobacco.
5.14
The Department of Health informed the committee that it does not have a direct role in the law enforcement aspects of illicit tobacco:
The department is not directly responsible for regulation and compliance activities associated with illicit tobacco importation or supply. The crossover between the department's regulation of tobacco plain packaging and illicit tobacco regulation occurs where illicit tobacco is supplied or sold in packaging that does not meet the requirements of the Tobacco Plain Packaging Act. It is possible for an illicit product to be supplied in packaging that is compliant with all aspects of the Tobacco Plain Packaging Act. Where this is the case, the department has no authority to act under the Tobacco Plain Packaging Act.
5.15
The Department of Health further noted that it initiates compliance activities as a result of notifications of alleged noncompliance it receives from various sources. As outlined above, when the Department of Health assesses the notification as identifying risk of illicit tobacco behaviours, it makes a referral to the Illicit Tobacco Taskforce for investigation.
Committee view
5.16
The committee notes that some law enforcement agencies and members of the tobacco industry see Australia's tobacco plain packaging laws as a potentially useful tool in tackling the illicit tobacco market. However, the committee agrees with the view put forward by the Department of Health that these laws are not a suitable mechanism for addressing the problem of the illicit tobacco, and were never intended for this purpose.
5.17
The committee also concurs with the view of the Department of Health that it is not, and should not be considered, a lead agency in the fight to reduce the size of the illicit tobacco market. The Department of Health should continue to collaborate with relevant law enforcement agencies, and there may be opportunities to scale up their intelligence gathering and sharing capacities. However, illicit tobacco is primarily a law enforcement issue, albeit an issue that is a known negative outcome of the Australian Government's policies designed to achieve the health goal of reducing tobacco consumption in Australia. This is why the committee has recommended that the responsibility for illicit tobacco enforcement be transferred from the Department of Health to the Department of Home Affairs.
Illicit tobacco retail market
5.18
The committee heard from stakeholders who were concerned that there was not sufficient focus on actions against retailers of illicit tobacco. Imperial Tobacco submitted:
The most pressing area of policy reform is law enforcement at the retail level. It is our experience that there is only minimal enforcement and action taken against those retailers selling illicit products.
5.19
Imperial Tobacco informed the committee that they receive information from tobacconists regarding illicit tobacco sales via retail outlets such as, pop-up shops in a mall, which Imperial Tobacco then passes on to the relevant government agency. Imperial Tobacco reported that when no action is taken on the intelligence, the reporting person is discouraged and no longer reports similar incidents.
5.20
The Police Federation argued that in addition to the immediate effect of reducing the prevalence of illicit tobacco products, an increased law enforcement focus on retail sales of illicit tobacco 'has significant potential to provide intelligence which will be useful in the ongoing fight against serious and organised crime.'
5.21
Appearing before the committee in 2017, the then Department of Immigration Border Protection (DIBP) and the AFP advised that their principal focus was the crime syndicates responsible for smuggling illicit tobacco into Australia, as opposed to targeting individual retailers selling illicit tobacco.
5.22
At that time, the then DIBP told the committee:
Rather than targeting the retailers on an independent basis, we would much prefer to identify the syndicate that was bringing it in in much larger numbers.
5.23
The Australian Tax Office (ATO) submitted similarly that its key focus is to remove illicit tobacco at the source of the supply chain, which then removes the opportunity to reach consumers through retail suppliers.
5.24
However, by late 2019 the committee was informed that while these agencies, via the Illicit Tobacco Taskforce established in July 2018, focus on high-end criminality and large-scale importations, the Illicit Tobacco Taskforce has taken some action against retailers 'and will continue to do so where it's appropriate.' The ABF further told the committee:
Just to give you an example, we have taken some action, as a task force, against retailers in Bankstown, Bass Hill, Benalla, Kilmore, Seymour and Shepparton—so New South Wales and Victoria. We view the retail environment as part of the complex structure or tobacco continuum. It can't be separated out and it's not exclusive from the rest of the supply chain.
5.25
The Black Economy Taskforce, described in chapter two, discussed the need for greater efforts at the retail level, and recommended that 'the ATO [have] a visible presence at the retail level, which will be possible once the Government enacts the new illicit tobacco provisions.'
5.26
Rohan Pike Consulting submitted that a credible mechanism for deterrence could involve a range of punishments, such as prosecution, loss of licence or fines, but that the most important element was that ' [i]llicit tobacco sellers and buyers must believe that there is a real chance they will get caught and if they are caught, something will happen to them.'
5.27
British American Tobacco Australia (British American Tobacco)pointed to the lack of serious consequences for people selling illicit tobacco:
There was one story in the papers last week of a retailer in Shepparton who was raided for the fifth time. How is it possible that this person can five times within the space of 18 months, maybe two years, be busted selling illegal tobacco and be straight up opening again? It doesn't make sense.
5.28
British American Tobacco submitted that while the legislative reforms of 2018 have helped address the importation of illicit tobacco into Australia, 'without states and territories working with the Federal Government to address the retail availability of illicit tobacco these reforms risk being undermined.'
5.29
British American Tobacco pointed to comments by the ABF, which indicated that addressing retail sales of illicit tobacco is primarily an issue for state and territory governments, but that 'each of the local jurisdictions have limitations on their capability, and it's a decision for the states and territories as to how much effort they can put into local small shops that might be selling illicit tobacco.'
5.30
Philip Morris suggested that while the retail selling of tobacco is administered by states and territories, with most having enforcement powers under respective laws against selling illicit tobacco, in practice very little action is taken. Philip Morris did, however, point to recent law enforcement action taken by NSW and Victoria.
5.31
The issue of state and territory policing relating to illicit tobacco is discussed below.
State and territory governments
5.32
Two key issues were raised regarding state and territory government involvement in addressing illicit tobacco: first, the perceived lack of action being taken by police; and second, concerns with inadequacies or inconsistencies of state and territory legislation.
State and territory policing
5.33
The committee heard a great deal of evidence that the coordination of efforts to tackle illicit tobacco between Commonwealth and state and territory agencies faced many challenges, which impacted the effectiveness of overall efforts to reduce the size of the illicit tobacco market.
5.34
The ABF informed the committee that operations requiring other law enforcement partners—state, territory and Commonwealth can be impacted by the different priorities of those partner agencies.
5.35
Imperial Tobacco recommended a more coordinated approach from Commonwealth and state governments, alongside 'better education of State and Territory enforcement officers about identifying illicit tobacco at retailers and using the enforcement powers already at their disposal.'
5.36
The Police Federation submitted that it considers the illicit tobacco market 'a matter of major national concern for Australian police forces' and that combating illicit tobacco is an excellent example of where Commonwealth-state cooperation could be improved, particularly in providing training to state and territory police.
5.37
The Police Federation submitted that 'the key task is to increase engagement with state/territory police forces, particularly in front line policing.' However, the Police Federation stressed that placing additional responsibilities in the hands of state and territory police will not have any impact on the illicit tobacco market, unless there is also greater clarity on the role they are expected to play and additional resources and training provided by the Commonwealth.
5.38
The Police Federation provided detailed recommendations on establishing—or further enhancing existing—licence regimes throughout the entire supply chain, that are linked to the Commonwealth-level import licence system. Such as licence-regime would include the following aspects:
Penalties and offences should be aligned with newly strengthened Commonwealth provisions.
State/territory police or relevant agencies can issue infringement notices for licence breaches.
Revenue from infringement notices should be retained by the state/territory.
Additional funding for illicit tobacco operations should be provided by the Commonwealth, which gains almost all revenue from legal tobacco sales, and aligns with the Commonwealth health strategy.
Increased retail disruption will provide intelligence useful to address serious and organised crime.
5.39
The Police Federation submitted that the above approach would disrupt the point of sale of illicit products, be a major deterrent for potential new retailers of illicit tobacco, make local police intervention easier and less time consuming, and would be resourced by the licence infringements. The Police Federation recommended this matter be referred to a future Ministerial Council for Police and Emergency Management.
5.40
British American Tobacco also recommended the Commonwealth government should provide financial support to state and territory illicit tobacco policing efforts, and submitted:
Given the financial losses that the Commonwealth suffers as a result of illicit tobacco, the Government could consider an incentive scheme to encourage State and Territory Governments to address illicit tobacco at a retail level.
5.41
Dr John Coyne similarly recommended the Commonwealth government 'target the profits of market participation through such mechanisms as proceeds of crime legislation.'
5.42
British American Tobacco raised the additional issue of the online sales of illicit tobacco, some of which occurs on Australian websites. It recommended the Australian Government work with website operators to 'remove illicit tobacco listings and [shut] down those exclusively selling illicit tobacco.'
5.43
The committee recommends that the Department of Home Affairs develop a strategy for the use of monies from the proceeds of crime account to fund law enforcement operations of the Commonwealth and states and territories targeting illicit tobacco.
State and territory legislation
5.44
Philip Morris noted that although most states and territories have laws against the selling of illicit tobacco, 'very little action is taken' to enforce those laws. Philip Morris further noted that illicit tobacco legislation is unclear in some states, and recommended the Australian Government 'consider how to urge all State and Territory Governments to strengthen existing legislation around the retail selling of illicit tobacco and encourage law enforcement authorities to actively enforce that legislation.'
5.45
Imperial Tobacco echoed this view, recommending that state and territory legislation should be amended to insert 'strict liability offences for possession of or dealing with illicit tobacco, [and] search and seizure provisions (like those found in NSW) that specifically target illicit tobacco.'
5.46
British American Tobacco argued that the comprehensive reforms at the federal level risked being undermined if there is not a coordinated national tobacco control strategy, which would 'create alignment across agencies, in particular State and Territory agencies with Commonwealth agencies, to ensure that illicit activities are dealt with in a consistent manner.' British American Tobacco recommended the harmonisation of state and territory legislative provisions and also recommended that laws should ensure that 'police in any jurisdiction should be able to search for, seize and prosecute anyone dealing in illicit tobacco.'
5.47
The ABF submitted a similar view, stating:
Current state and territory legislation with regard to tobacco varies, in some cases considerably, between jurisdictions. This variance has an adverse impact on the ability of agencies to manage the flow of illicit tobacco and to communicate policy messaging on the risks posed by illicit tobacco and the penalties that apply.
5.48
The ABF submitted that this creates opportunities 'to establish greater consistency in state and territory health legislation across all jurisdictions.' The ABF further noted that while there have been very successful joint operations with other agencies that utilise the broader law enforcement powers of the ABF, partner agencies resources can sometimes be prioritised elsewhere, 'particularly if a case has no nexus between tobacco and serious and organised crime.'
Licensing
5.49
The Department of Health informed the committee that the licensing of retailers for tobacco products is required by most states and territories. The committee also heard recommendations from many submitters and witnesses that strengthening and expanding the tobacco licence regime presented an opportunity to make dealing in illicit tobacco much more difficult.
5.50
Dr Robert Preece, author of the Australian chapter of the World Bank report, Confronting Illicit Tobacco Trade: A Global Review of Country Experiences, told the committee he saw 'licensing as a very important part of administration [of tobacco].' Dr Preece went on to explain the benefits of a licencing system for tobacco products and manufacturing equipment that would require licence holders to meet certain requirements:
So when you're given a licence, the authority who issues it has a level of confidence that you are a lower risk, because you've been able to demonstrate that in the application process. That's done at each point in the supply chain.
5.51
Philip Morris made suggestions to more effectively regulate the supply chain, which could be incorporated into a licencing regime where tobacco manufacturers, wholesalers, distributors and transports would be required to conduct due diligence on their customers to include:
Verification of a customer’s legal right to trade in or purchase tobacco products;
An assessment of whether the volumes being purchased are consistent with the customer’s demand or sales;
A process for reporting suspicious transactions; and
A policy enabling business relationships to be reviewed and terminated when laws have been broken.
5.52
The Police Federation also argued for a linked licensing regime across jurisdictions that applied across the supply chain, from importers through to wholesale and retail sales. Penalties and offences should be aligned with current Commonwealth provisions, with breaches of licence to be dealt with by an infringement notice issued by state or territory police or the relevant agency. To ensure the ongoing sustainability of this approach, infringement revenue, the Police Federation proposed, should be retained by the state or territory. In addition, the Australian Government should develop a fund to finance the costs of illicit tobacco enforcement operations, with a focus on retail enforcement.
5.53
The Police Federation pointed out that this would be easy to implement, as police officers are already trained in how to administer licences for other areas, such as alcohol and driving:
Police officers know this extremely well. If you give us a set of policies, a set of procedures, we know what to look for. The retailer has to have a certain licence. There have to be certain procedures and processes. There have to be certain markings on the cigarettes. If that doesn't occur, not only can we issue you a ticket, we can confiscate the tobacco and put in more reports that go to the AFP and Border Force and then we have that intelligence base, as we said in our submission, with the NCIS as well.
5.54
The Police Federation further informed the committee this would largely negate the need for search warrants and matching state and territory legislation to commonwealth legislation with regards to illicit tobacco offences, as police officers would be empowered to enter premises to check licence conditions were being met, issue infringement notices and confiscate illicit products.
5.55
An additional benefit to a licence regime, according to the Police Federation, is that because all responsible parties must be registered on the licence this enhance intelligence-gathering opportunities, and at the same time make it harder for organised crime to use shopfronts for illicit tobacco sales.
5.56
Cancer Council Australia also made a number of recommendations regarding strengthening the licensing regime, and pointed to recommendations from the International Monetary Fund that measures for the control of tobacco taxes should include the following:
that only licensed and strictly controlled economic operators be involved at any stage of imports, production and distribution (including retail);
that legislation should define compulsory requirements, guarantees, safeguards and related controls under which tobacco products can be imported or produced and distributed;
that the license should include concrete physical, administrative and financial conditions, and adherence to these conditions must be regularly controlled and non-compliance severely penalized including by suspending or withdrawing the license;
that clear and complete records should be kept and information supplied seamlessly to the excise administration. The content and format of the records need to be defined by law and in the license;
that excise stamps with strong security features affixed to the packs of cigarettes (as proof of payment of excise) can facilitate the collection of excise taxes and controls, as well as audits and enforcement action at each state of distribution;
that internet sales be severely restricted and consideration be given to prohibiting them;
that all operators throughout the industry be legally bound to report suspicious cases;
that front-line border control offices be supported by appropriate intelligence, background support and services, guidance and supervision from management;
that mobile excise control units stopping vehicles and verifying the legality of excisable goods within the country are often useful;
that it is essential to gather information on both legal and illegal trade and production, movement import and export of tobacco products;
that the faster that standard control measures, on the basis of such intelligence, can be adjusted at every step from pre-arrival control to post-clearance audits, the greater the chances to minimise revenue loss.
Licensing of manufacturing equipment
5.57
As outlined in chapter two, there are many different kinds of illicit tobacco products, as well as many different sources. The market goes well beyond simply the sale of overseas manufactured cigarettes imported into Australia illegally. As outlined below, submitters pointed out this meant that law enforcement responses should go beyond border controls, to address the full variety of products and manufacturing materials throughout the supply chain.
5.58
Imperial Tobacco informed the committee that as manufactured cigarettes are only around half the total volume of illicit tobacco '[d]isrupting the supply chain from end to end is the only way to effectively deal with the problem.'
The ATO should use all resources at its disposal for this crackdown, including gathering intelligence about the location of glasshouses. The banks may be able to help in this regard. We were told that some have provided loans for the purchase of hydroponic equipment. While this has legitimate uses, we would expect the banks to be exercising due diligence in this area. To identify individuals and groups involved in the illicit tobacco trade, the ATO should seek out data about persons who procure large quantities of cigarette paper, hydroponic equipment and glasshouse components. This data could come from internet scraping and other sources.
5.59
Philip Morris argued that the supply of cigarette tubes, papers and filters, supports the illicit loose tobacco market and all these supplies should be licenced at the import level and monitored at the retail level.
5.60
Dr Preece also recommended that a licence system should go beyond tobacco products to cover equipment that could be used to manufacture illicit tobacco products:
It's not just cigarettes; the protocol is now raising the concept of licensing the actual manufacturing equipment. To produce, sell and import the actual equipment is important. When the manufacturing of cigarettes finished in Australia and those operations wound up, we had no idea what happened to the cigarette lines in those factories. Under a licensing regime, we'd know that they had moved from that factory, at BAT or Philip Morris, to that entity.
5.61
The committee received evidence suggesting that a licence regime would work well if implemented with a track and trace regime, described below, as the two systems would complement each other.
Committee view
5.62
The committee heard compelling evidence from a wide range of stakeholders that a nationally consistent licencing system for tobacco products and manufacturing supplies and equipment would be an important tool in the drive to reduce the size of the illicit tobacco market. The committee notes in particular the evidence from the Police Federation of Australia, that such a licence system would be very easily enforced by state and territory police as it would be similar to existing licencing schemes.
5.63
The committee further notes evidence that tackling retail sales of illicit tobacco products can provide valuable evidence and intelligence about illicit tobacco importation and other serious organised crimes.
5.64
The committee acknowledges that establishing a nationally consistent licencing regime for tobacco products would entail a great deal of effort and commitment, incuding from state and territory governments. Notwithstanding this, the committee sees licencing as a valuable idea worth exploring further.
5.65
The committee recommends the Australian Government explore options to develop a nationally consistent licencing regime for tobacco products, including tobacco product manufacturing supplies and equipment.
Track and trace regime
5.66
A track and trace regime requires tobacco products to include identifiers that enables them to monitored throughout the supply chain, and helps determine whether those products are diverted into illegal channels. Philip Morris submitted a definition of a track and trace regime as follows:
Tracking is the ability to monitor finished goods as they make their way down the supply chain from the point of manufacture.
Tracing is the ability to recreate the movement of packaged tobacco products back up the supply chain to a certain point.
5.67
Such a regime is a requirement of Article 8 of the World Health Organisation (WHO) Protocol to Eliminate Illicit Trade in Tobacco Products (Tobacco Trade Protocol), which was established to support the WHO Framework Convention on Tobacco Control (Tobacco Convention). Australia is signatory to the Tobacco Convention, but not the Tobacco Trade Protocol.
5.68
Philip Morris informed the committee there are a range of technologies which can be used in a globally coordinated track and trace regime:
[T]here are technologies that have been developed—everything from block chain to marketing packs, which, if they are applied across countries, better regulate the supply train and make tracking and tracing of tobacco products much more comprehensive. It's not something a country can do on its own.
5.69
Philip Morris noted that countries in Europe and elsewhere have signed the Tobacco Trade Protocol and the track and trace systems will be implemented over the next few years. Philip Morris estimated these measures will have a large impact on illicit tobacco in those regions.
5.70
Philip Morris and other members of the tobacco industry stated support for the implementation of an appropriate track and trace regime. However, it was also pointed out that the Tobacco Plain Packaging Regulations 2011 (TPP Regulations), as they currently stand, prevent implementation of this security feature.
5.71
Early in this inquiry, in 2016, the ATO informed the committee that it is conducting preliminary work on the use of track and trace technology.
5.72
Also in 2016, the Department of Health confirmed that the then current TPP Regulations would need to be amended to allow for a track and trace regime, as current restrictions on printing, such as a required colour palette, would prohibit the required markings for a trace and trace system. While there does seem to have been some amendments made to the TPP Regulations in 2018 in order to achieve compliance with the European Union requirements for a track and trace unique identifier to be placed on tobacco product packaging from May 2019, the amendment was subsequently repealed on 2 August 2019.
5.73
There is no further information available as to the progress of considering implementing a track and trace regime in Australia.
Tobacco Trade Protocol
5.74
As outlined in chapter one, the WHO 2018 Protocol to Eliminate Illicit Trade in Tobacco Products (Tobacco Protocol) seeks to eliminate 'all forms of illicit trade in tobacco products through a package of measures to be taken by countries acting in cooperation with each other'. As outlined above, one of the key provisions of the Tobacco Trade Protocol is the implementation of a track and trace regime, described above, for tobacco products.
5.75
Rohan Pike Consulting recommended that Australia sign, ratify and implement the WHO Tobacco Protocol, and argued the reasons Australia had not to date, was because the lead agency for tobacco control is the Department of Health, who do not have sufficient focus or understanding of the important law enforcement aspects of illicit tobacco. Rohan Pike Consulting further contended that the Department of Health has been reluctant 'to agree to using track and trace technology which is one of the requirements of the Protocol…despite the use of this technology being one of the recommendations of the Black Economy Taskforce and the Protocol allowing a 5-year grace period for countries to implement this clause.'
5.76
However, the Department of Health did not express objections to track an trace technology to the committee, and submitted the issue is still under consideration:
Under domestic arrangements, Australia is only able to accede to the Protocol once all necessary domestic laws are in place to implement obligations under the Protocol once it enters into force. For Australia to become a Party to the Protocol, legal and regulatory changes would be required to achieve full compliance.
The Department has commenced work on the domestic processes required to inform a decision on whether to accede to the Protocol.
5.77
Furthermore, as discussed in chapter three, the Department of Health has wholly acknowledged that its focus is on the health aspects of tobacco use, both licit and illicit, and it does not play a law enforcement role in the issue. The Department of Health has acknowledged that it plays a key role in ' coordinating whole of government responses to tobacco control issues at the international level, including, relevantly, the ongoing consideration of Australia’s accession to the [Tobacco Trade Protocol].'
5.78
Rohan Pike consulting further submitted that provisions within the Tobacco Trade Protocol relating to track and trace markings on packaging are already contained within article 15 of the Tobacco Convention, and that Australia 'has not acted on a number of these matters' and is 'failing to uphold its obligations under this Convention.'
5.79
Members of the tobacco industry were also supportive of Australia becoming signatory to the Tobacco Trade Protocol. Philip Morris told the committee that it would require Australia to adopt measures against illicit tobacco in conjunction with other countries:
That would then regularise the entire tobacco supply chain. So it is less about trying to swat at the flies at the border—although that is a very valuable activity—and more about regularising the global supply chain of tobacco products.
5.80
British American Tobacco submitted that while it supports the objectives of the Tobacco Trade Protocol, the goals would not be achieved if Australia signed it isolation from other countries and it would 'have no impact on reducing the transnational flow of illicit tobacco products into Australia.'
Committee view
5.81
Clearly, signing up to the Tobacco Trade Protocol is dependent upon Australia implementing an appropriate track and trace regime for tobacco products and manufacturing equipment and supplies. The committee considers that the various responsible departments have had considerable time to date in assessing whether or not this is feasible, or desirable as part of the Australian Governments' overarching goal of reducing all tobacco consumption.
5.82
The committee understands that this is not a simple question, and requires appropriately deep consideration of the issues. However, the committee believes that an appropriately designed track and trace system could be an important tool in tackling illicit tobacco.
5.83
The committee recommends the Department of Home Affairs work in collaboration with the relevant law enforcement agencies to provide definitive advice to the Australian Government on the implementation of a track and trace regime in Australia, and whether Australia should become signatory to the World Health Organisation Protocol to Eliminate Illicit Trade in Tobacco Products, provided it takes into account Australia’s unique circumstances.
National Illicit Tobacco Strategy
5.84
As outlined in chapter two, Australia currently has a National Tobacco Strategy 2012-2018 which is a subset of the National Drug Strategy 2017-2026. There was a strong and consistent recommendation from a range of submitters and witnesses that Australia should develop a National Illicit Tobacco Strategy, with some suggesting it could sit underneath the National Drug Strategy.
5.85
Philip Morris outlined that such a strategy 'would provide a clear roadmap for all governments (federal and state/territory), agencies, industry, and retailers to focus and coordinate actions, cooperation, education, and direction', and would allow states and territories to develop and share best practice.
5.86
British American Tobacco recommended developing a national illicit tobacco strategy, particularly to address concerns that 'when you have shared responsibility…sometimes that means there is no responsibility'. British American Tobacco pointed to the British illicit tobacco strategy as a successful policy, as it had allowed authorities to identify roles and responsibilities in a methodical, which subsequently increased prosecutions by 50 per cent.
5.87
Rohan Pike Consulting submitted that key reason for the lack of such a strategy is due to the 'failure of government policy agencies, led by the Department of Health, to understand the scope and nature of the issue'. Rohan Pike Consulting recommended a national strategy 'include plans to address the problem at all points along the supply chain including the point of sale' and this strategy should be developed by police forces as they are 'the only agencies with the most appropriate powers, knowledge and resources to comprehensively deal with this organised crime issue.' As outlined earlier, the Department of Health has stressed that its role in addressing illicit tobacco is on the health aspects only, and it is not the appropriate body to address the law enforcement aspects of illicit tobacco.
5.88
Philip Morris further submitted that raising public awareness about illicit trade and its consequences is key to tackling the demand for illicit tobacco. Philip Morris contended that many people buy illegal cigarettes with little knowledge that their money then helps fund organised criminal activity. Philip Morris recommended that any strategy to tackle the illicit tobacco trade must include informing consumers about the societal and financial impact of the illicit tobacco trade, as well as publicising seizures and the outcomes of prosecutions.
5.89
The then DIBP informed the committee in 2016 that it has an internal illicit tobacco strategy, but that the policy could not be published because of the confidential nature of the operational matters it contained.
5.90
More recently, in 2019 the ABF advised the committee that the establishment of the Illicit Tobacco Taskforce itself was in response to the recommendation of the Black Economy Taskforce to develop an innovative, whole-of-government strategy to combat the black economy.
5.91
The ABF further noted that that the Illicit Tobacco Taskforce was in the process of coordinating the development of a whole-of-government domestic law enforcement illicit tobacco strategy, and that it has engaged in productive collaboration with a number of agency stakeholders in its development of its internal domestic law enforcement strategy for illicit tobacco.
Information collection and sharing
5.92
Philip Morris recommended that to tackle illicit tobacco, the first step is to 'develop an understanding of the scope of the problem, its origin, and what is driving supply and demand.' Philip Morris contended that this approach should be done by 'improving the tobacco industry methodology and sharing learnings and available data for ABF and Australian Taxation Office efforts to develop a measure system for illicit trade,' while acknowledging that these research methodologies remain controversial in Australia.
5.93
Philip Morris further outlined that research should include 'information on trends, types of illicit tobacco, source countries, usage demographics, and sales channels.'
5.94
Philip Morris also informed the committee that while the NSW health department has been conducting enforcement activities at a retail level, the outcomes, such as convictions, fines or penalties are not shared. Philip Morris stated this meant they could not take complementary private action such as ceasing to trade legal tobacco products with people found to have been involved in the illicit tobacco market.
5.95
Transcrime recommended that law enforcement agencies should provide a publicly available date on their workloads and the functioning of the illicit tobacco market, including more information on convicted persons and the penalties imposed.
5.96
Rohan Pike Consulting submitted that 'government strategies seem to place an emphasis on seizure numbers without any serious analysis of whether their actions are actually reducing the problem itself or its related consequences.'
5.97
Cancer Council Australia also recommended better information collection and sharing as 'an essential pre-requisite for developing anti-fraud strategies and actions’. Such information would include the number of types of tobacco products sold by Australian retailers.
5.98
The Police Federation stressed the need for greater intelligence sharing, and argued this would be an additional outcome from a tobacco sales licencing system, where infringement notices would create a body of evidence:
…and then you start to get that trend. You start to realise: 'Hang on a minute. We've had five or six tickets down near Sutherland police station. Also, we've had 10 intel reports. There's a lot of dealing of illicit tobacco here.' Then we can start an investigation. We can call in Border Force and the AFP and start to have a multifaceted approach and get the illicit tobacco at its source.
5.99
The Police Federation further noted the role of the community in providing information about retails sales of illicit tobacco, and such information this is more likely to be passed on to local police.
Committee view
5.100
A compelling argument has been made by a number of stakeholders that a national illicit tobacco strategy—outlining the goals, responsibilities and broad tactics—is key to reducing the size of the illicit tobacco market. However, the committee is conscious that by their very nature, law enforcement strategies must remain largely confidential to ensure that criminal actors are not able to predict the actions that may be taken to undermine criminal activity.
5.101
The committee also notes the evidence from the Australian Border Force that it does have an existing illicit tobacco law enforcement strategy that has been developed in collaboration with key stakeholders and agencies. Notwithstanding this, the committee believes there is an opportunity for any strategy or policy of the Australian Border Force to be complemented by and aligned with the strategies and policies of other national, state or territory law enforcement agencies.
5.102
The committee recommends the development of a National Illicit Tobacco strategy, in conjunction with state and territory police forces, as a co‑ordinated, national law enforcement-led response that will:
outline the roles and responsibilities of all relevant stakeholders and agencies;
clearly articulate the actions and stratagems to be implemented;
include strategies for improved information and data collection and sharing; and
be published as a subset of the National Drug Strategy, while retaining confidentiality for operational material.
5.103
The committee recommends that as part of the development of a National Illicit Tobacco strategy, that state and territory legislation be aligned with the new Commonwealth offences and enhanced penalties, to address in the current law. In addition, a strategy for the introduction of infringement notices for point of sale enforcement be developed with the Commonwealth providing adequate resources for the development and implementation of this strategy