Four in five smokes are illegal, but the black market has finally shrunk, after a record 730 tonnes was seized in three months

Australia’s illegal tobacco trade has stopped growing and started to shrink, the federal government said on Sunday, releasing new estimates from the Illicit Tobacco and E-cigarette Commissioner.

The commissioner puts the black market at 5,893 tonnes, down from a peak of 5,972 tonnes last year. The lower end of its estimate is 4,453 tonnes, which would mean the market has contracted by almost a quarter. The estimate draws on wastewater testing for combustible nicotine and national household survey data.

It is the first fall after five years in which the illegal market grew by an average of 22.6% a year.

Assistant Minister for Customs Julian Hill said enforcement and public health measures were “reversing years of growth”. His message to the trade’s operators: “we’re coming after you and your profits.”

How big has the black market become?

Very big. Australian Bureau of Statistics figures show up to four in five nicotine products smoked in Australia are now illegal. The illicit share of nicotine use, including vapes and loose-leaf tobacco, rose from 12% in 2017 to 80% in 2025.

The gap in price explains why. A legal pack now costs more than $50; an illegal one sells for between $10 and $20.

What has changed?

Mostly, the volume being stopped. Border Force seized a record 730 tonnes in July to September, and federal figures show tobacco seizures at the border running about 50% above the same period last year, with vape interceptions up nearly 20%.

Inland, a National Disruption Group of 31 federal, state and territory agencies has run more than 600 operations since it was set up last October. It has seized 24 million illicit cigarettes and 3.6 tonnes of loose-leaf tobacco, identified more than $45 million in evaded duty, and closed 1,300 stores. Foreign partners have made 340 referrals that led to seizures.

The states matter too. Queensland and South Australia have been shutting illegal shops, as has New South Wales; Victoria, where a long-running war between tobacco crime groups has brought repeated firebombings of shops, only began closing stores in September. Hill said he wanted a bigger impact as other states follow.

Is the crackdown really working?

The commissioner says it has a narrower, more accurate range than before because of new data sources, but the range is still wide: the real fall could be anywhere from 79 tonnes to more than 1,400. Even at the low end of the estimate, more than 4,400 tonnes of illegal tobacco is still being sold in Australia each year.

University researchers in public health and criminology have warned that an enforcement-only approach risks repeating the failures of the war on drugs.

Who pays for this?

Every legal smoker, and every taxpayer. Each tonne sold on the black market is excise the Commonwealth does not collect, which is why the size of the trade has become a budget question as much as a policing one. Daily smoking, meanwhile, is at a record low of 5.8% of adults.

What do the other parties want?

A tax cut. The Coalition proposes cutting tobacco excise by 80% and One Nation by 75%, arguing it would remove the black market’s margin. The Coalition has also suggested legalising and taxing vapes and nicotine pouches. New South Wales Labor Premier Chris Minns has also called for lower tobacco taxes.

The federal government rejects that, saying cutting excise to compete with criminals would reverse decades of public health gains.

Is this only an Australian problem?

No. New Zealand Customs says Australia’s multi-agency model is shaping its own response to the illegal trade across the Tasman.