Guest Post: Australia’s tobacco tax collapse offers a stark warning for the NZ Treasury
A guest post by Rohan Pike:
The latest Australian Budget reveals a simple and uncomfortable truth: the black market for cigarettes is growing faster than anyone in Canberra predicted. This is a stark warning for New Zealand.
In just one year, the Australian Government has received 46% less tobacco excise and a massive $12.5 billion dollar drop ($16.5 to $4.1) in the last 6 years. Revenue has fallen off a cliff. It is a clear signal that policy interventions are being outpaced by criminal activity, and that the illicit tobacco market is accelerating.
The same dynamics that have fuelled this crisis in Australia exist in New Zealand as well: high excise, limited enforcement, and fragmented responses. These are precisely the conditions that allow illicit markets to take hold and scale quickly.
New Zealand has seen a 21% reduction in tobacco excise takings in the last three years and if that fall had been accompanied by a drop in smoking rates that would be welcome. Unfortunately, excise takings are falling but smoking rates are not (nor is the average daily consumption). This is clear evidence of a growing illicit market.
The criminal actors fuelling that market are undermining New Zealand’s commendable tobacco control efforts established over the last 20 years and putting your smokefree ambitions at serious risk. In short, the market is being flooded by cheap cigarettes.
The rise in violence in Australia has been the inevitable consequence of a criminal market out of control. But we also now see a rise in smoking rates across the country due to the widespread availability of cheap tobacco. If a similar pattern were to be repeated in New Zealand it would, at best, delay, or at worst, end your “smokefree” goals and reverse years of effective tobacco control.
New Zealand is now approaching the tipping point when tobacco control becomes uncontrolled. While the creation of a new Action Group and the recent increase to funding for Customs are both welcome developments to combat the illicit trade, now is the time to turn these policy announcements into focussed, coordinated and sustained action.
New Zealand still has time to get ahead of this. But the window is closing.
By Rohan Pike, former Australian detective
About Rohan Pike:
Rohan Pike is a former Australian detective with decades of experience investigating serious and organised crime. During his career with the Australian Federal Police and Australian Border Force, he led and advised on major operations targeting transnational crime, including the illicit tobacco trade.
Rohan is now an independent consultant and commentator on organised crime and illicit markets.
He regularly provides expert analysis to media, policymakers and industry on border security, criminal networks and emerging illicit trade threats.
For more information, visit www.pikeconsulting.com.au




