On July 1, Australia’s new tobacco regulations will come into effect, including health warnings on cigarettes, mirroring Canada’s policy. Photo credit: Health Canada.
Despite a booming and increasingly unmanageable black market, Australia remains committed to its hardline tobacco and vaping policies. On June 4, treasurer Jim Chalmers ruled out lowering the tobacco excise, dismissing a suggestion from the New South Wales premier that reduced prices could help curb the country’s rising levels of illegal tobacco. At A$1.40 (US$ 0.91) per cigarette, Australia imposes one of the highest tobacco taxes in the world. A standard pack of 20 cigarettes now costs around A$40 (US$26). Yet, despite repeated tax hikes, government revenue from tobacco is projected to fall to A$7.4 billion this year—less than half of its A$16.3 billion peak in 2020.
On July 1, new tobacco regulations announced in October 2024 will come fully into effect. These include bans on flavors and additives that mask the taste of tobacco, prohibitions on descriptors that imply reduced harm, limits on pack sizes (maximum 20 cigarettes), and new health warnings. In addition to updates to Australia's plain packaging—which has been in place since 2012—health warnings will now also appear directly on cigarettes, mirroring Canada’s recent policy.
While such rules are comparable to those in many other countries, Australia’s approach to reduced-risk products has been significantly more restrictive. Disposable vape imports were banned in January 2024, followed by a broader prohibition on all vape imports without a license or permit in March. Since October 2024, vapes can only be legally purchased in pharmacies, and only in tobacco, mint, or menthol flavors.
This dual-track approach—stringent regulation of tobacco and near-prohibition of vape products—has created a vast and rapidly growing illicit market, with mounting public health risks and rising criminal activity. Organized crime syndicates now play a dominant role in the illicit tobacco trade, controlling everything from illegal cultivation and manufacturing to importation, distribution, and sales.
In 2023, industry surveys estimated that more than 23.5% of tobacco consumption in Australia was illicit. The Australian Tax Office put the figure at 14.3% for 2022, but more recent data suggest illicit consumption has risen to between 25-40%. The illicit cigarette market is now valued at between A$3 billion-5 billion annually. This is compounded by an estimated A$2 billion illicit vape market, with approximately 95% of nicotine vape users obtaining their products through illegal channels.
While Australia has recently launched major crackdowns—including the seizure of illicit vape products valued at A$600 million in 2024—, approximately half of all illicit tobacco is believed to enter the market undetected. Enforcement is managed at the federal level by the Therapeutic Goods Administration, in cooperation with the Australian Border Force and state and territory health and police agencies. Despite increased investment—an additional A$156 million was allocated in the 2025–26 federal budget to fight illicit tobacco, on top of A$188 million committed in the previous cycle—, authorities are overwhelmed by the scale of the problem.
Australia is often hailed as a global leader in tobacco control. Yet the unintended consequences of its harsh policies raise serious questions about whether the country is truly on the right path to achieving its goal of becoming smoke-free by 2030. A study published earlier this year in Addiction compared Australia’s restrictive, medicalized approach to vaping with New Zealand’s more pragmatic model. It found that from 2016 to 2023, New Zealand’s adult daily smoking rate declined twice as fast as Australia’s—dropping by 10% annually (from 14.5% to 6.8%), compared to Australia’s decrease of 32% over the same period (from 12.2% to 8.3%). The study linked these differing outcomes directly to vaping adoption rates in the two countries.