Why the illegal smoke shop isn’t the only busy business in town

POUND for pound, the busiest retail shop in Bass Coast today was a shop selling illicit tobacco and e-cigarettes.

People were pulling up in their cars out the front every couple of minutes, some coming out with a bulge in their pocket, others with brown paper bags, wrapped in a square shape indicating six to eight packs.

Why they’d need to hide it, who knows. No one is looking.

One bloke dropped a pack branded ‘Manchester United Kingdom Sapphire Blue – Premium American Blend’ in the bin on the footpath and then went inside.

They’re branded Manchester, United Kingdom and boast “premium American” tobacco but they’re made in the United Arab Emirates (UAE), go figure, and shipped here, effectively untroubled by the problems in the Strait of Hormuz or Australian customs.

But it stands to reason this shop, and others like it across Bass Coast and South Gippsland, would be busy.

According to the Illicit Tobacco and E-Cigarette Commissioner, Amber Shuhyta, organised crime groups earned between $4.1 billion and $6.9 billion in profit from this trade in the 2024-25 financial year.

It would be considerably more than that now as both their share of the market and the price of illicit cigarettes tracks ever upwards.

And now we hear, that quite apart from the Federal Government making a properly-resourced effort to stop organised crime from making their massive profits while killing people in the process, to finance their other nefarious activities, the government is actually helping them do it!

According to the News Corp Australia papers, the Herald-Sun, the Daily Telegraph and others, the biggest courier of illegal tobacco in the nation is Australia Post.

They quote Richard Colbeck, the Libera Senato for Tasmania, who has raised his concerns on several occasions in the parliament and at Senate Estimates Committee hearings.

“There is absolutely no question in my mind that Australia Post is the biggest courier of nicotine products in Australia,” said Senator Colbert.

“I’ve put that to them directly and they don’t argue. It really frustrates and confounds me,” he said.

The loophole being happily and lucratively abused by organised crime is that it’s against the law for Australia Post to open domestic parcels and search them, and they don’t have the scanning technology in any case.

Their chief executive Paul Graham has reportedly admitted it’s “virtually impossible” to detect parcels of illicit tobacco products and vapes.

Maybe he hasn’t heard about sniffer dogs!

As far back as December 2025, Senator Colbert questioned Mr Graham about the problem in the Senate’s Environment and Communications Legislation Committee.

“I want to go to another topic now, and that's illicit tobacco. My conversations with retailers and some of your franchisees, particularly at home in Tassie, would indicate that you are a very big courier of illicit tobacco, and I'm curious to understand how you're managing that. I reckon you're probably the biggest courier in the country. That's a problem for all of us. What is available to you to manage what is a huge problem for us all right now?” asked Senator Colbert.

Mr Graham: “If I may, I'll respond to the question in two parts. One is the international import of tobacco, which is the original source of where it comes from, and we have the facilities, that you would see on the TV show Border Force. Those are our facilities that do that. Border Force and AQIS have sophisticated scanning technology that captures a lot of that. We literally have mountains of illegal tobacco every month that get destroyed by Border Force on the import side of it. In relation to the domestic movement of it, I won't challenge your assertion that we are involved in that movement. The challenge we have is that it is almost impossible to detect, and we are not privy as to what the contents of packages are. It's not a requirement.”

Senator COLBECK: “That's what your franchisees tell me. They know where it comes from and they know who it's going to, but they don't know what's…”

Mr Graham: “Correct. Unless we physically open the product, which we're not allowed to by law. Again, we have worked very closely with Australian Federal Police and we have ongoing investigations. Indeed, we had one successful case in Queensland where we worked with them in an undercover operation to actually connect the sender to the receiver, and I think there were nine arrests in relation to that. I think that probably is the tip of the iceberg, unfortunately, but it is impossible for us to detect unless we were to put in very expensive machines to try to detect that. For a business that moves two billion parcels a year, that would be almost statistically impossible.”

Senator COLBECK: “I will give you a couple of examples that opened my eyes. In a small town in southern Tasmania, the IGA is now not seeing customers coming in to buy their smokes because those customers are all turning up at the post office down the road. The franchisee has got a whole new client base. It is common knowledge in town what's going on. Another retailer, also an IGA, has a franchise. Instead of their customers going to the cigarette counter, they know that they're going to the post office counter to pick up their parcels. Another business I visited was a pharmacy. They have a whole new customer base that they're not really all that comfortable with. They made a similar comment to what you made though, they know where it's coming from and know who it's going to. There are some common sources. You go on the websites and they quite happily give you an Australia Post tracking number. It's quite problematic.”

Mr Graham said that unless Australia Post invested in sophisticated scanning devices in 600 or 700 outlets their ability to detect the illicit tobacco and vapes “would be almost impossible”.

The comments bring sharply into focus the criticism of the inadequate level of government resourcing made by the Federal Member for Monash Mary Aldred, co-chair of the Coalition's new Illegal Tobacco Taskforce, at budget time.

“Every time this government refuses to rethink its failed excise strategy, organised crime gets richer,” said Ms Aldred.

“They were the biggest winners on budget night. The $14 million in state and territory funding announced on budget night is a drop in the ocean compared with the $6.9 billion in profits the illicit market is making.”

As well as organised crime making up to $6.9 billion annually, the government estimates it will lose billions in expected excise, money that not only went into general revenue but also helped to cover some of the health costs associated with smoking.

It’s a scandal that has also been highlighted by none other than British American Tobacco.

“Last week’s Federal Budget laid bare the scale of the Albanese Government’s failure on illicit tobacco, with collapsing excise revenue and an enforcement response completely out of step with the crisis unfolding across the country,” said BAT Australia.

“Budget papers revealed Treasury now expects tobacco excise revenue to collapse to just $2.1 billion by 2029-30 - the lowest collection this century - despite originally forecasting $16.8 billion over the same period. Public reporting also revealed a projected $77 billion excise shortfall across the forward estimates.

“At the same time, the Government continues insisting enforcement is the answer while allocating just $14 million across all states and territories for illicit tobacco enforcement - approximately $1.75 million each.

“That is not a serious response to a black market now estimated to be worth around $10 billion annually and linked to more than 285 fire-bombings nationwide.”

So, don’t expect the steady stream of smokers going into their illegal tobacco shop of choice, and increasingly to their local Australia Post franchisee, to slow down any time soon.