3.1
This chapter explores the causes of the illicit tobacco market, and outlines the roles and responsibilities that various federal, state and territory government agencies have in setting and implementing policy responses to tobacco consumption in Australia.
Tobacco control policies impact on illicit market
3.2
As outlined in chapter one, Australia's approach to tobacco control focuses on reducing the affordability of tobacco through increase rates of taxation, as well as measures to limit the marketing of tobacco products, such as plain packaging.
3.3
Submitters and witnesses, and in particular the Police Federation of Australia, manufacturers and retailers of tobacco products, argued that policies designed to limit the consumption of tobacco have the negative consequence of driving consumers to the illicit tobacco market. These issues are discussed below.
Excise tobacco policy
3.4
Submitters from the tobacco industry have claimed that increased costs do not reduce total smoking rates. British American Tobacco submitted that '[d]espite these continued excise increases Australia’s smoking rate has not fallen significantly in recent years'. Imperial Tobacco Australia (Imperial Tobacco) submitted:
The concept that curtailing supply automatically cancels demand is both logically and factually absurd…If prohibition in the modern era were successful, there would be no marijuana use, no heroin, no methamphetamines and, more obviously, no underage use of alcohol.
3.5
Cancer Council Victoria informed the committee of research directly linking taxation increases with reduced smoking rates:
The Centre for Behavioural Research in Cancer, at Cancer Council Victoria, has just had published in The Lancet journal an article that demonstrates a substantial reduction in smoking prevalence associated with the 2010 and 2013–16 tax increases. Our estimate is that 25 per cent fewer Australians are smoking as a result of those tax increases, or from the beginning of that period to 2017, and that at least half of that reduction in the number of smokers can be attributed to those tax increases. That is something like 900,000 Australians who aren't smoking. Given that half of all smokers who continue to smoke long-term will die prematurely, that represents a significant reduction in the burden of smoking related disease in Australia.
3.6
The Department of Health acknowledged that lowering tobacco consumption rates was slowing, but stated this is because 'once you start getting to lower smoking rates, every percentage gained becomes harder from there…and that's why we can't take our foot off the pedal in relation to tobacco consumption.'
Increased excise and the role of price in driving the illicit tobacco market
3.7
The committee heard widely differing views on whether increases in tobacco taxation impacted the size of the illicit tobacco market.
3.8
Tobacco industry submissions argue that taxation-based tobacco control policies are explicitly driving the illicit tobacco market as people seek to avoid higher prices. Imperial Tobacco argued that increased taxes on tobacco products 'result in higher prices, driving down trading and, ultimately, movement of consumers to the illicit market'. Further, it asserted that '[i]ncreasing tobacco excise continues to increase the value of excise evaded, as well as creating [a] stronger incentive for organised groups trading in illicit tobacco products due to the high profit margins'.
3.9
Submitters with a law enforcement perspective, for example the Police Federation of Australia, also agreed that that the high rates of tax on tobacco products creates incentives for people to engage in the illicit tobacco market due to the high profits to be made. It was further recognised that excise increases may drive more demand for cheaper alternatives, and this in turn may increase potential profit margins for criminal actors involved in the illicit tobacco market.
3.10
This view has also been expressed by some parts of the Australian Government. The explanatory memorandum to a 2018 legislative amendment stated:
Higher excise and excise-equivalent customs duty rates for tobacco improve the health of Australians by discouraging tobacco consumption and reducing their exposure to tobacco products. However, they significantly increase the risk of illicit tobacco being produced or manufactured domestically, or imported into Australia. This is particularly the case given the increase in tobacco excise and excise-equivalent customs duty rates following the 2016–17 and 2017–18 Budget measures.
3.11
Rohan Pike Consulting disagreed with the view that taxation did not impact illicit tobacco markets, but at the same time argued that this was an anticipated consequence of tobacco control policies. Rohan Pike Consulting submitted that the WHO Protocol to Eliminate Illicit Trade in Tobacco Products was developed in response to the recognition that 'matters agreed in the [Framework Convention on Tobacco Control] would consequently bring about a rise in excise avoiding criminal activity'.
3.12
Transcrime submitted that tobacco control policies are a balancing act between the desired outcome of reduced tobacco consumption versus the consequence of somewhat increased illicit tobacco use, and stated 'if the illicit tobacco trade is to be reduced, it is necessary to understand the trade-off between regulation of the legal markets and the impact that regulation has on the illicit ones.'
3.13
Dr Robert Preece, the author of a WHO study on illicit tobacco, informed the committee that the relationship between increases in illicit tobacco and higher taxation was not a simple case of cause and effect:
[I]t's really quite a complex mix of factors. If you were to put the excise rate up and then build appropriate controls around it, there may be no effect at all…It's quite a complex matrix, and if you tick a certain number of boxes, yes, you'll have an illicit problem, but if you don't it should be okay.
3.14
The Australian Medical Association (AMA) expressed caution in relation to the impact of price on demand for illicit tobacco. The AMA agreed with the argument that 'an increase in price may initially increase demand for cheaper tobacco products'; however:
…appropriate monitoring and action by government should reduce the amount of illicit tobacco that is available. Increased price, in the absence of cheaper illicit tobacco, will encourage smokers to quit, and deter non‑smokers from taking up smoking.
3.15
The AMA argued against using illicit tobacco consumption as an argument against price-based tobacco control policies. The AMA submitted 'the detection of illegal importation should not be used as evidence to weaken Australia’s position in relation to tobacco control measures'. The AMA went on to recommend that 'appropriate monitoring and action by government should reduce the amount of illicit tobacco that is available'.
3.16
Furthermore, Cancer Council Australia argued that public policy issues around tobacco control and illicit tobacco should be made by 'consensus among independent experts and authorities who have no commercial stake in an outcome'.
3.17
To address concerns that increased taxes would strengthen demand for illicit tobacco, with the release of the 2016–17 Federal Budget, the Australian Government announced that existing penalties for tobacco related offences would be strengthened. Further, the government announced reforms to the Customs Act and Excise Act 'to provide enforcement officers with access to tiered offences and appropriate penalties, increasing the range of enforcement options available for illicit tobacco offences'.
Tobacco Plain Packaging
3.18
Tobacco plain packaging is a key part of the Australian Government's approach to reduce the consumption rates of tobacco products. Submitters from the tobacco industry and retailers have linked the issue of plain packaging with illicit tobacco, arguing that the removal of branding has caused customers to make tobacco selections based only on price. However, evidence from the Department of Health indicates that plain packaging has had no impact on illicit tobacco. This issue is discussed below.
3.19
The Tobacco Plain Packaging Act (TPP Act) came into effect in 2012. The Act:
…prohibit[ed] the use of all tobacco industry logos, brand imagery, colours and promotional text on the retail packaging of tobacco products. It allow[ed] for the use of a brand and variant name in a standard colour, position, font size and style. The Bill mandate[d] that retail packaging of tobacco products be a standard drab dark brown colour, with the exception of health warnings, the brand and variant name and any other relevant legislative requirements.
3.20
Under the TPP Act, it is an offence 'to sell, supply, purchase, package or manufacture tobacco products in retail packaging that does not comply with the requirements of the [Act]'. Offences apply to manufacturers, packagers, wholesalers, distributors and retailers of tobacco products in Australia; however, a 'person who buys non-compliant products for personal use would not commit an offence, although a salesperson might'. The Department of Health is responsible for enforcing the TPP Act.
3.21
During the course of the inquiry, retailers and tobacco industry representatives expressed concerns about the impact of tobacco plain packaging on illicit tobacco.
3.22
British American Tobacco informed the committee that plain packaging has eliminated the point of difference between tobacco products and, coupled with excise increases, there has been a 'substantial down-trading including into the illicit segment'. British American Tobacco reported that since the TPP Act was implemented, there has been an increase in the reported amount of illicit tobacco use in Australia, from 11.5 per cent of total consumption in 2012 to 14.3 per cent in 2015. British American Tobacco argued that, due to plain packaging, smugglers and counterfeiters had started to produce counterfeit and contraband plain packaged products.
3.23
The Alliance of Australian Retailers (AAR) informed the committee increased illicit tobacco sales were a cumulative effect of plain packaging and price increases, where the combination of price increases and removal of specific branding caused customers to elect to 'economise on their choice of products'. The ARA added that in a recent national survey 25 per cent of respondents said 'illicit tobacco sales have increased in their neighbourhoods since the introduction of plain packaging and three successive tobacco excise tax increases since 2012'.
3.24
According to the Australasian Association of Convenience Stores, plain packaging has meant that consumers are driven by price and that 'brands have been substantially devalued'. An 'extension of this consumer purchasing behavioural shift,' it explained, 'is that consumers are increasingly looking at cheaper alternatives including illicit products'.
3.25
The Australasian Association of Convenience Stores added:
… the recent excessive price hikes through excise increases and restriction initiatives by government such as plain packaging have stimulated the growth of robberies in stores targeting tobacco, importantly, as well as the growth of illicit and cheap tobacco. Despite what any of the health lobbyists claim, it has done very little to improve the health of Australians.
3.26
The impact of plain packaging on the illicit tobacco market was questioned by other submitters. For example, the then Department of Immigration and Border Protection (DIBP) now the Department of Home Affairs, reported that the Australian Border Force (ABF) had only made a single detection of counterfeit plain packaged tobacco since the measure was introduced. In addition, the ABF stated that it 'has seen no discernible impact on the illicit tobacco trade as a result of the introduction of plain packaging'.
3.27
The Department of Health advised that the focus should remain on the goal of the TPP Act, which is to reduce tobacco consumption. The Department told the committee:
After the introduction of tobacco plain packaging from 1 December 2012 and in the following years, we did see very significant drops in tobacco consumption, followed by a very significant drop in smoking prevalence. I believe that was between 2010–13. That's what I mean: we got a significant drop. The idea is then at least make sure that you maintain the drop or ideally go down even further.
3.28
A number of concerns were raised about enforcement and the prosecution of those who do not comply with the TPP Act. This is discussed in chapter four.
Committee view
3.29
The committee believes that price-based tobacco control policies have resulted in many people reducing or ceasing to use tobacco products, however, it is clear that a smaller, growing number of tobacco users have responded to those policies by entering the cheaper illicit tobacco market.
3.30
This means that to some extent, the illicit tobacco market is caused by Australia's health policy towards tobacco. The committee agrees that price-based incentives are a powerful lever to reduce smoking rates. However, policymakers need to be clear-eyed about the flow-on effects of that health policy. This starts by recognising that health policy settings have created a law enforcement problem—but this is a problem that should be addressed not by changing health policy settings, but rather by strengthening and refocusing law enforcement approaches and techniques.
Illicit tobacco: a health issue or a crime issue?
3.31
A long-standing debate in discussing illicit tobacco is whether it should be viewed primarily as a health or criminal issue, which in turn impacts the policy response taken to tackle the issue.
3.32
The Department of Health has responsibility for reducing tobacco consumption in Australia, but appears to draw the line when that tobacco becomes illicit. It submitted that 'illicit tobacco is primarily a revenue evasion matter that attracts significant penalties'.
3.33
Transcrime argued that this approach limits the effectiveness of tobacco control, submitting:
Regulators continue to deal with health issues, while leaving it to law enforcement agencies to deal with crime. This is a division of labour that cannot work; both are reciprocally linked. Adopting an approach aimed at the reduction of opportunities and the consequent preventive policies will reduce this trade-off, maximizing health and minimizing crime at a cost less than that of the current division of labour policies.
3.34
The Australian Government approach appears to have shifted during the course of this inquiry to develop an approach that deals with illicit tobacco primarily as a criminal issue, often with organised crime links.
Organised crime
3.35
Evidence to the committee demonstrated the links between the illicit tobacco supply chain and organised crime. The Australian Criminal Intelligence Commission (ACIC), in its report Organised Crime in Australia 2017, reported that 'serious and organised crime remains entrenched in the illicit tobacco market, both through the illegal importation…and through the local production'.
3.36
Criminal organisations are involved in all aspects of the illicit tobacco supply chain, from sourcing raw tobacco products, through to production, packaging and distribution. Those groups can also utilise people who act as intermediaries, who source tobacco products from manufacturers, liaise with criminal groups to determine trade routes, and manage risk to ensure products are delivered successfully.
3.37
The ABF informed the committee that organised criminal networks involved in illicit tobacco operate similarly to those involved in the importation of other contraband products, such as narcotics. These criminal organisations:
…have access to a global network of tobacco-smuggling facilitators who can arrange and tailor the placement of commercial quantities of tobacco to accommodate various smuggling methodologies, such as into free trade zones. They actively seek to infiltrate and exploit unscrupulous members of the international supply chain, including those working as customs brokers and freight forwarders in Australia. They launder money to disguise funds for the purchase of tobacco and to legitimise the proceeds of their criminal profits. So, at a general level, the way they look, the way they behave, is very similar to those who might be involved in the importation of drugs, and in some cases they may be one and the same.
3.38
The nature of the illicit tobacco market has many similarities with the illicit drug market, involving international and domestic aspects that are controlled by organised crime. The key difference between the illicit tobacco and illicit drug markets is that illicit drugs are illegal, while illicit tobacco offences are predominantly pursued as the evasion of taxes by fraud.
3.39
The Australian Taxation Office (ATO) submitted that the illicit tobacco market is primarily supplied by organised criminal syndicates. The Australian Federal Police (AFP) noted that the 'profits generated from illicit tobacco provide funding to other criminal activities'.
3.40
According to the then DIBP, there are three types of offenders:
organised criminal groups that use established smuggling mechanisms to trade in a range of illicit commodities;
commercial enterprises that engage in the import and trade of illicit tobacco; and
opportunists who smuggle tobacco primarily for personal use.
3.41
The then DIBP also added 'that there are people engaged in the legitimate tobacco supply chain who facilitate the illicit trade in tobacco, such as customs brokerage companies and freight forwarding firms'. The Australian Commission for Law Enforcement Integrity went further to state 'the trafficking of illicit tobacco—among a range of other licit and illicit commodities—can be associated with public sector corruption'.
3.42
Organised criminal groups, with links to Asia and the Middle East, are the primary facilitators of the illicit tobacco trade in Australia. Outlaw motorcycle gangs (OMCGs), on the other hand, have 'some crossover, but, in terms of OMCGs having a primary focus on the importation of [illicit] tobacco, [the DIBP] have not seen that to date'.
Low risk, high profit
3.43
There was a general consensus amongst submitters that the trade in illicit tobacco was attractive as it is seen as a low risk, high profit venture. A number of government agencies, as explained below, also emphasised that criminal groups view illicit tobacco as an attractive commodity because of its low risk when compared with the importation of other illicit commodities like firearms and drugs.
3.44
The ACIC's Organised Crime in Australia 2015 report states that '[o]rganised crime remains entrenched within the illegal tobacco market in Australia. It continues to perceive involvement in this market as a low risk, high profit enterprise'. The report warns that it is 'highly likely that the illegal tobacco market will remain attractive for serious and organised crime groups because of the very large profits that can be made with very low risk'.
3.45
The ACIC noted that, as a result of the low risk, high reward nature of the illicit tobacco market, 'the funding from the sale of illicit tobacco can then be reinvested into other types of crime, such as illicit drugs' creating an 'intermix at that higher level'. The ACIC added that organised crime's involvement in illicit tobacco is opportunistic because 'if there is a dollar to be made then they will target that market'.
3.46
The AFP made a similar assessment of the risk/reward imbalance:
…where you have a high profit margin, where you have a good return and potentially a low risk, organised crime will seek out any venture to make good money. And we have seen that throughout Australian law enforcement history. You just have to go back to the docks. If you look at some of the major criminal investigations we have done in terms of specific crime families over the years, they have been involved in multiple elements of criminality and quite often covered in legitimate businesses, be they importations of fruit or whatever.
3.47
The ABF agreed with this view and said the 'profitability for trading in illicit tobacco is very, very high, particularly compared to other commodities when you also take into account the risk. There are significant profits and small risks'. The ABF further stated that there is 'a perception out there with criminals that the risk of getting caught and/or receiving a significant sentence if they are caught is much lower than if they were involved in something like narcotic trafficking'.
3.48
The tobacco industry estimated that criminal organisations make a profit if as few as one out of three shipping containers of illicit tobacco enter Australia undetected. British American Tobacco added that it believes the ratio is more, depending from where criminal groups sourced the tobacco product. If, for example, the tobacco product was sourced from the Middle East, then only one container out of 20 would be need to enter Australia undetected to turn a profit. Imperial Tobacco submitted that organised crime is 'effectively the fourth biggest player in the Australian [tobacco] market.'
3.49
Criminal organisations are driven by the 'financial incentive to source a product in a lower-priced market and transport, distribute and sell it in a higher-priced market… that includes international movements'. The significant profits criminal organisations are capable of earning through illicit tobacco trade often outweighs the risks, which largely involve fines and imprisonment. A large number of submitters to the inquiry commented on this risk/reward imbalance and the need for legislators to address this issue. For example, the then DIBP's Customs and Industry Policy Division stated that:
…criminals see trade in illicit tobacco as low-risk high-reward, and the illicit tobacco trade has serious criminal implications. There are clear links between tobacco smuggling and smuggling of other commodities. Trade in tobacco or illicit tobacco is used to launder money, and tobacco smuggling funds more serious criminal activity.
3.50
Additionally, Dr John Coyne, then Head of the Border Security Program at the Australian Strategic Policy Institute, submitted that people who purchase tobacco in the illicit tobacco market do not necessarily recognise this as organised crime and this view is supported by the enforcement regime approach (at time of submission in January 2016) to view illicit tobacco offences as a regulatory misdemeanour and not a crime.
Agency roles and responsibilities
3.51
Tackling illicit tobacco is a task that involves all levels of government in Australia. The Commonwealth's responsibilities for illicit tobacco largely relate to tax and border offences, as well as laws relating to the packaging of tobacco products and any relevant Commonwealth criminal offences. The states and territories are responsible for licencing and enforcing the sale of tobacco and any state or territory laws in relation to tobacco consumption, with some local councils being delegated inspection duties under these acts.
3.52
The Department of Health, currently the lead agency in relation to tobacco control policies, acknowledged that agencies take a different focus in relation to tackling illicit tobacco:
[T]he outcome for us is to make sure people are healthy and not smoking. The outcome for other agencies is different. It may be in relation to revenue related issues in excise and duty evasion. We all have a common interest in making sure it doesn't happen, but we come at it from different angles.
3.53
At the start of this inquiry in 2015, the committee heard a near universal message that government agencies were not doing enough to tackle the issue of the illicit tobacco market:
The illicit tobacco market in Australia is flourishing due to a range of influences. Chief among these is the lack of coordinated enforcement response. When combined with progressive tax rises and no appropriate policy guidance, a low risk/high reward crime environment has been created that is being increasingly exploited by organised crime and other opportunists.
3.54
Other submitters, such as the Police Federation of Australia, stressed the importance of tackling the illicit tobacco trade due to the risk that the profits and experiences from engaging in illicit tobacco trade were then used to fund and facilitate other more serious crimes.
3.55
The Australian Government has significantly stepped up efforts to address illicit tobacco, with a number of recent legislative, policy and practice amendments which have addressed many of the issues of concern that were raised in past evidence to this inquiry. Many of these changes were driven by the findings of the Black Economy Taskforce, which are outlined in chapter four.
Individual Commonwealth agency responsibilities on illicit tobacco
3.56
The Department of Health has lead policy responsibility for health-related aspects of tobacco control, including Australian implementation of the WHO Framework Convention on Tobacco Control (Tobacco convention).
3.57
Operationally, the Department of Health does not directly regulate or undertake compliance activities relating to illicit tobacco. The Department of Health has powers under the Tobacco Plain Packaging Act 2011 to act where tobacco is sold or supplied in packaging that does not meet the requirements of plain packaging legislation—often meaning it is illicit. However, the Department has delegated its compliance and enforcement activities to authorised officers of the National Measurement Institute.
3.58
The Department of Health provided clarity to the committee on where its focus lies in relation to illicit tobacco:
Although the department takes a significant interest in illicit tobacco and the market drivers that influence illicit trade, it does so from a health perspective, because our interest is ensuring consumers are provided with the full suite of government strategies to reduce smoking prevalence and tobacco consumption in Australia.
3.59
The ATO is responsible for detecting and seizing tobacco illegally grown in Australia. As a member of the multi-agency Illicit Tobacco Taskforce (discussed further below), the ATO's role is to:
help support the removal of the wealth from organised crime syndicates, including through tax audit and civil debt recovery, where appropriate;
execute ATO warrant powers on Illicit Tobacco Taskforce endorsed operations in respect to organised crime syndicates identified domestic crops, plant and machinery; and
play a key role in the collection, analysis and dissemination of illicit tobacco intelligence.
3.60
Home Affairs serves an important role in whole-of-government activity by leading operational and regulatory initiatives to tackle the illicit tobacco trade, managing the tobacco excise equivalent goods regime in partnership with the ATO, and supporting national health outcomes.
3.61
The ABF, an agency within Home Affairs, has primary responsibility for law enforcement efforts to tackle illicit tobacco. The ABF has responsibility for 'combatting the importation of illicit tobacco into Australia, maintaining Australia’s supply chain integrity, and managing the collection of duties and taxes on legitimate tobacco imported into Australia.' The ABF informed the committee it does not have a view on how much tobacco should be sold, but acknowledged that working to reduce the illicit tobacco market aids the 'preservation of tobacco national health outcomes'
Table 3.1: Total weight of illicit tobacco seized
|
|
|
|
|
147.20 tonnes
|
356.19 tonnes
|
406.45 tonnes
|
Source: Home Affairs Annual Report 201718
3.62
The Australian Competition and Consumer Commission is responsible for enforcing three product safety-related tobacco regulations, the most important of which relates to mandatory information standards for the health warning labelling of tobacco products.
3.63
In tackling the criminal aspects of illicit tobacco, the Australian Federal Police, the Australian Criminal Intelligence Commission, the Australian Transaction Reports and Analysis Centre (AUSTRAC) and state and territory police work together to combine 'skills, intelligence and investigative resources with respect to illicit tobacco importation and cultivation'. Additionally, the Treasury and the Attorney-General's Department are also involved in the regulation of tobacco products.
3.64
There are a number of fora in which these agencies and other stakeholders consult and collaborate on issues relating to illicit tobacco, including:
Inter-Departmental Committee on Tobacco Control
Illicit Tobacco Task Force
National Drug Strategy Committee (including issue specific working groups)
National Expert Reference Group on Tobacco
Tobacco Policy Officers Group
Illicit Tobacco Industry Group
3.65
The then DIBP advised the committee that there is no lack of connectedness between the agencies that work on illicit tobacco matters. DIBP felt all agencies:
…work very well together at a Commonwealth level and, where there are opportunities to do so…share intelligence and other information with state and territory authorities to enhance their ability to regulate and prosecute relevant offences at a state and territory level.
Table 3.2: Australian Government roles and responsibilities in addressing Illicit Tobacco
|
|
|
|
Department of Health
Tobacco Plain Packaging Act 2011 (TPP Act) and Regulations
Tobacco Advertising Prohibition Act 1992 (TAP Act) and Regulations
|
The Department of Health does not directly regulate, or undertake compliance activities relating to illicit tobacco.
The Department has powers to act where illicit tobacco is sold or supplied in packaging that does not meet the requirements of the legislation. The Department has delegated compliance and enforcement activities to authorised officers of the National Measurement Institute.
The Department has lead policy responsibility for health related issues of tobacco control including implementation of the World Health Organization Framework Convention on Tobacco Control (Tobacco convention) including on illicit tobacco.
|
|
Home Affairs
|
Home Affairs leads operational and regulatory initiatives to tackle the illicit tobacco trade, managing the tobacco excise equivalent goods regime in partnership with the ATO, and supporting national health outcomes.
|
|
Australian Border Force
|
The ABF is responsible for operational activities at the Australian border, including investigation, compliance and enforcement functions for tobacco.
Illicit tobacco is a priority operational focus for the ABF. The ABF leads a multi-agency Illicit Tobacco Taskforce that targets and prosecutes the most serious and organised elements of the illicit tobacco trade, including their global supply chains. The Illicit Tobacco Taskforce applies an intelligence informed approach to identify, disrupt and dismantle organised criminal groups engaged in the supply of illicit tobacco.
|
|
Australian Taxation Office
|
Criminal law treatments – Illicit tobacco investigations.
|
|
Australian Competition and Consumer Commission (ACCC)
|
The ACCC is responsible for enforcing three product safety-related tobacco regulations:
tobacco health warnings, reduced fire risk cigarettes and the ban on smokeless tobacco products, including oral snuff and chewing tobacco.
|
3.66
Australian Government agencies also interact with the tobacco industry in tackling illicit tobacco. This is discussed at the end of this chapter.
Collaboration between agencies
3.67
The Department of Health advised the committee it 'has adopted a Whole of Government approach to the development and implementation of tobacco control policies, underpinned by a strong collaborative process of cooperative engagement with numerous Commonwealth, state and territory stakeholder agencies.' These agencies include Home Affairs, the ATO, AFP, ACIC, ACCC, and state and territory police.
3.68
The Department of Health provided further details on the key collaboration fora, which include the:
Inter-Departmental Committee on Tobacco Control
Illicit Tobacco Task Force
National Drug Strategy Committee (including issue specific working groups)
National Expert Reference Group on Tobacco
Tobacco Policy Officers Group
Interdepartmental Committee on Tobacco Control
3.69
Evidence to this inquiry received in 2017 cited the Interdepartmental Committee on Tobacco Control (Tobacco Committee) as 'a senior executive forum to endorse, drive and deliver a coordinated whole of government approach to Australia's implementation of the [Tobacco convention]'. An element of the Tobacco Committee's focus, within the context of Australia's overall tobacco control policy, is consideration of 'measures relating to the reduction of the supply of tobacco including tackling illicit trade in tobacco products'.
3.70
The Tobacco Committee was chaired by the Department of Health. At its first and only meeting, on 22 September 2016, representatives from the following agencies attended (in addition to the Department of Health):
Therapeutic Goods Administration (TGA);
ATO (appearing on behalf of the Treasury);
Department of Communications and the Arts;
Department of Foreign Affairs and Trade (DFAT); and
3.71
Other invitees included the Attorney-General's Department, the AFP, the ACIC, the Treasury, and the Department of the Prime Minister and Cabinet. The primary purpose of this meeting was to inform a whole of government position in preparation for the Conference of the Parties to the Tobacco Convention's Protocol to Eliminate Illicit Trade in Tobacco.
3.72
The Department of Health said the Tobacco Committee is one of the:
…key mechanisms that we can use to work with and across government in relation to tobacco control in the broad. As part of our terms of reference, it certainly includes discussing and making recommendations in relation to measures for the reduction of demand for tobacco products, measures relating to the reduction of the supply of tobacco, including tackling illicit trade in tobacco products.
3.73
Rohan Pike Consulting submitted that having the Department of Health as the agency responsible for the Tobacco Convention is not appropriate because 'Article 15 refers specifically to illicit tobacco which is a law enforcement issue and the Department of Health…lacks the expertise to fully comprehend and implement these clauses.'
3.74
The Department of Health advised:
The [Department of Health] does not have a central role on policy and criminal matters in relation to the evasion of revenue. The Department does, however, work with other agencies including those in the states and territories on multi-sector issues relating to tobacco control, including illicit tobacco in a collaborative and cooperative manner…There are officers with relevant experience and expertise working on both tobacco treaty and enforcement matters in the Department.
Illicit Tobacco Taskforce
3.75
On 1 July 2018, the multi-agency Illicit Tobacco Taskforce was established to protect Commonwealth revenue by proactively targeting, disrupting and dismantling serious actors and organised crime syndicates that deal in illicit tobacco. The ABF-led taskforce draws on the expertise and capabilities of the ABF and Department of Home Affairs, the ACIC, AUSTRAC, the Commonwealth Director of Public Prosecutions and the ATO.
3.76
As a multi-agency taskforce, the Illicit Tobacco Taskforce protects Commonwealth revenue by utilising a range of options and legislative powers at its disposal to effectively target, disrupt and dismantle serious actors and organised crime syndicates that deal in illicit tobacco. The Illicit Tobacco Taskforce works across multiple jurisdictions by engaging with 'state government agencies, state law enforcement, and international partners to provide a holistic approach to the trade of illicit tobacco onshore and offshore.'
3.77
The Illicit Tobacco Taskforce replaced the ABF Tobacco Strike Team, which focused on the identification and dismantling of criminal groups involved in illicit tobacco. It had limitations as an ABF-only unit, because the ABF did not include the ability to 'to investigate the most serious organised crime groups and it is these well-entrenched syndicates who are controlling the vast majority of the illicit tobacco market'.
Illicit Tobacco Industry Advisory Group
3.78
Australian Government agencies also collaborate with the tobacco industry via the Illicit Tobacco Industry Advisory Group (ITIG advisory group), which is comprised of representatives of government, tobacco suppliers and tobacco retailers. The ITIG is chaired by the ABF, who told the committee:
The ITIG provides industry members and government representatives with the opportunity to share information about the illicit tobacco environment, including tobacco trade flows, supply chain security and, of course, the illicit tobacco market, and to work together on measures looking at the problem of illicit tobacco.
3.79
The purpose of the ITIG is to provide 'a forum for industry members and government representatives to share industry information on illicit tobacco' within the parameters of Article 5.3 of the Tobacco Convention. The ITIG meets twice yearly or more frequently if required. Brief summaries of the advisory group's meetings are available on the Home Affairs website.
3.80
The ABF discussed the Tobacco Convention requirement to protect tobacco control policies from influence of the tobacco industry:
This requirement obliges us to ensure that the tobacco industry does not have influence over public policy with relation to tobacco control. Within this framework, the ITIG fosters a relationship between industry and government, which forms an important element of our approach to addressing the challenge of illicit tobacco. In particular, it provides the ABF with insights that complement the information that we source through our intelligence and investigation networks.
Committee view
3.81
It is clear that the issue of illicit tobacco is primarily one of law enforcement. Addressing illicit tobacco, as with any other illicit activity, requires law enforcement strategies, developed by law enforcement agencies with expertise in this area.
3.82
The committee believes that the grey-area in which illicit tobacco policies and approaches have been developed to date have contributed to a situation where Australia has not been as effective in stamping out illicit tobacco as we could have been. The Committee believes there is an opportunity to improve the results of Australia’s efforts to stamp out illicit tobacco by making it clear that illicit tobacco enforcement is a law enforcement matter rather than a health matter.
3.83
The committee recommends that all aspects of illicit tobacco enforcement be removed from the portfolio responsibility of the Department of Health and transferred to the Department of Home Affairs.