Key Takeaways
- Dr Nick Coatsworth, former deputy chief medical officer, argues that Australia’s tobacco excise policy has created a multibillion‑dollar illicit market controlled by organised crime.
- He proposes cutting the excise to 2019 levels, lowering the tax per cigarette from $1.51 to $0.80 and a pack price from > $50 to ≈ $30.
- Current estimates show up to 60 % of cigarettes sold in Australia are black‑market products, linked to over 200 firebombings, shootings, murders and a terror attack.
- Coatsworth stresses that public health must be balanced with rule of law, fiscal responsibility and public trust, warning that a narrow focus on smoking reduction ignores wider social harms.
- Revenue from any future tax increase should be earmarked for law‑enforcement, smoking‑cessation programs and a national lung‑cancer screening initiative.
- Public‑health organisations (PHA, AMA, Heart Foundation, Cancer Council) oppose the cut, estimating a 50 % excise reduction would hand multinational tobacco firms ≈ $2.3 billion yearly and argue only the tobacco industry would benefit.
- The Illicit Tobacco and E‑cigarette Commissioner and the Australian Border Force see no evidence that an excise cut would dismantle organised crime’s grip, while the Police Federation supports a temporary cut to curb demand while supply chains are targeted.
- Treasury forecasts show tobacco excise revenue falling from $16 billion in 2020 to a projected $2.1 billion by 2030, underscoring the fiscal impact of the illicit market.
Background on Dr Nick Coatsworth’s Position
Dr Nick Coatsworth, who served as Australia’s deputy chief medical officer during the COVID‑19 pandemic, is set to testify before a Senate inquiry on the tobacco crisis. He has become a prominent voice calling for a reassessment of tobacco‑tax policy, arguing that the current excise regime has produced unintended criminal consequences. His stance follows a history of criticising pandemic‑related lockdowns and border closures, positioning him as a medical expert willing to challenge prevailing public‑health orthodoxy when broader societal impacts are at stake.
The Illicit Tobacco Problem in Australia
Australia now hosts one of the world’s most lucrative markets for illegal tobacco, with up to 60 % of cigarettes sold originating from black‑market sources. This underground trade fuels organised crime, resulting in more than 200 firebombings, a series of shootings and murders, the death of an innocent woman, and even a terror attack. Coatsworth describes the situation as a “whole‑of‑government policy failure,” asserting that the pursuit of smoking reduction has detached public health from the realities of crime, taxation, and community safety.
Excise Levels and Projected Revenue Decline
The federal government’s tobacco excise has risen sharply over recent years, pushing the legal price of a packet beyond $50. Coatsworth advocates rolling the excise back to 2019 levels, which would cut the tax per cigarette from $1.51 to $0.80 and reduce a pack price to roughly $30. Treasury forecasts illustrate the fiscal strain: excise revenue is expected to drop from $16 billion in 2020 to $4.1 billion in 2025‑26—a $1.3 billion decline in just five months—and further to $2.1 billion by 2030. This trajectory reflects both declining legal sales and the migration of consumers to illicit sources.
Public‑Health Success Versus Unintended Harm
While acknowledging past tobacco‑control measures as a “genuine public health success,” Coatsworth points out that recent surveys indicate smoking rates are rising again. He argues that the policy has “lost its way” by focusing narrowly on reducing consumption while ignoring the surge in criminal activity, loss of tax revenue, and erosion of public trust. For him, any public‑health objective must be pursued alongside commitments to the rule of law, fiscal responsibility, and realistic policy assessment.
Balancing Health Objectives with Law‑Enforcement Needs
Coatsworth contends that health advice is merely one input into broader public policy; experts in disease and addiction may not fully grasp organised‑crime dynamics, border enforcement, taxation elasticity, retail displacement, youth black markets, civil liberties, or institutional trust. He therefore recommends that any additional tax revenue generated from a revised excise be directed toward law‑enforcement efforts, expanded smoking‑cessation programs, and a national lung‑cancer screening initiative—linking fiscal gains directly to mitigating the harms caused by the illicit market.
Opposition from Public‑Health Advocacy Groups
Major public‑health bodies—including the Public Health Association of Australia, the Australian Medical Association, the National Heart Foundation, and the Cancer Council—strongly oppose the excise cut. They warn that lowering taxes would constitute a “perverse and unacceptable giveaway” to the tobacco industry, estimating that a 50 % reduction in customs duties would hand multinational firms an annual windfall of roughly $2.3 billion. These groups argue that the only true beneficiaries of such a move would be the tobacco companies themselves, not public health or safety.
Industry Perspective and Market Predictions
Representatives from Philip Morris International told the inquiry that excise rates had already reached a “tipping point” in 2019‑2020, pushing smokers away from legal retailers and toward the illicit trade. They warned that, without narrowing the price gap, legal cigarette supply could become untenable by 2030. Public‑health leaders countered that the industry’s testimony is part of a long‑running campaign to secure cheaper cigarettes, asserting that any excise reduction would primarily enrich tobacco corporations rather than reduce smoking prevalence.
Law‑Enforcement Views on Tax Policy
The Illicit Tobacco and E‑cigarette Commissioner stated there is no evidence that cutting the excise would weaken organised crime’s hold on the market. The Australian Border Force has called for demand‑reduction measures but stopped short of endorsing an excise cut, noting that such a move would contradict current government policy. Conversely, the Police Federation of Australia urged the inquiry to consider a temporary excise reduction to curb demand in the black market while authorities focus on dismantling illicit supply chains—a compromise approach aimed at immediate impact without abandoning long‑term enforcement goals.
Fiscal Implications and Policy Recommendations
Coatsworth’s proposal ties fiscal reform to concrete public‑health investments: redirecting excise revenue toward policing the illegal tobacco trade, expanding cessation services, and funding lung‑cancer screening could simultaneously address the criminal epidemic and improve health outcomes. By aligning tax policy with law‑enforcement priorities and health‑care spending, the government could mitigate the revenue losses projected for the coming decade while restoring public confidence in both health and safety institutions. The Senate inquiry will weigh these competing arguments as it decides whether Australia’s tobacco‑tax strategy requires a fundamental recalibration.
