Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I am pleased to rise this afternoon to speak on the Customs Amendment (Immediate Destruction of Illicit Tobacco) Bill 2019.

We need this bill because we in this nation have decided, correctly, that we want to crack down and reduce the consumption of tobacco. We know of the adverse health effects that it has upon the Australian population and the costs that it puts on our hospital and medical system. What we've done, in a bipartisan policy from both sides of this House, is decide to increase the retail price of cigarettes through increasing the excise and the duty. So the price of cigarettes in Australia is now the dearest in the world.

As an example: a pack of 20 Marlboros in Australia costs $27. For a smoker who has one a day—one packet at a day, that is—that's a cost of close to $10,000. However, that exact same packet that costs $27 in Australia costs the equivalent of $16.67 in the UK and $9.51 in the USA. In Vietnam, the packet of cigarettes that retails for $27 in Australia is available retail for the equivalent of A$1.47.

Going down this track has been good news for the budget. We've had smokers add an extra $12.5 billion a year to our government's bottom line. But in doing so, our history tells us that whenever you put high rates of duty and high rates of tax on something—when the government steps in like that does—you create a dangerous black market. And that's, unfortunately, what has happened. But we knew that.

I have just a few recent examples. Last week, Australian Border Force officers intercepted 670 kilograms of tobacco illegally shipped from China. It was rough-cut tobacco that was found in a shipment of floor tiles in a container that arrived on 30 August. The Australian Border Force says that an examination of the consignment revealed that 672 kilograms of tobacco was 'hidden inside boxes between layers of tiles', representing 'more than $800,000 evaded in duty and GST'. So the more we put the price of cigarettes up with the taxes, the more incentives we give to the black market and we give to criminals to get involved in this illicit trade, so we have to have the response from the policing end, and there is a significant issue with this.

A recent story from the Australian Financial Review reads:

Illegal tobacco sales are flourishing in suburban and rural shopping centres, outraging retailers and frustrating renewed government efforts to crack down on a trade estimated to cost taxpayers up to $3.8 billion a year.

A Weekend AFR investigation reveals well-stocked retail outlets offering a wide range of cheap illegal Asian and Middle Eastern and untaxed popular brands, such as Marlboro, selling for a fraction of the price they would in legal outlets.

I can vouch that in my electorate, I think in almost any suburb, I could go and find a retailer that is selling illegal product, and I'm sure that most of those here in this chamber would be able to do exactly the same thing. That's why this legislation is necessary.

The Customs Act 1901 currently requires seized prohibited imports to be stored for a minimum of 30 days before destruction. This storage requirement, together with the legislative and administrative requirements for prohibited imports, impacts upon border operations and limits the ability of the government to regulate and manage illicit tobacco effectively. This bill will amend the Customs Act to empower the Comptroller-General of Customs to deal with seized tobacco in a manner that she or he considers appropriate, including immediate destruction of the goods. Similar controls already exist for other products, including seized psychoactive substances and prohibited serious drug alternatives. These amendments will improve the handling of seized illicit tobacco, resulting in effective regulation of tobacco permit conditions and enabling greater focus on targeting illicit tobacco. This bill will improve financial outcomes for the government and will enhance the implementation of new tobacco measures.

This simply can't be about revenue raising. The ultimate goal is to drive down the rates of smoking. Thankfully, we have the recent KPMG reports which show that under this government there has been a recent significant decline in smoking rates across the nation. The government is having success. Our policies are working, but we need to continue to look at the law-enforcement side to make sure we give our law-enforcement agencies the ability to crack down on these illegal syndicates that are continuing to exploit our laws, to exploit smokers and to engage in this illegal activity. Therefore I'm pleased to commend this bill to the House.

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