Australia’s battle to reduce smoking is facing a new and unexpected challenge: the rapid growth of the illegal tobacco market.

New Australian Bureau of Statistics estimates suggest that around 80 per cent of nicotine consumed in Australia now comes from illicit sources. The figures are based largely on wastewater data and do not mean that 80 per cent of cigarettes smoked are illegal.

Legal tobacco consumption has fallen sharply over the past decade, with rising tobacco taxes contributing to a significant decline in sales. However, researchers say part of the demand appears to have shifted towards cheaper illegal tobacco products.

The scale of the black market is creating major challenges for authorities. Australia’s Illicit Tobacco and E-cigarette Commissioner estimates that tobacco excise and duty evasion cost the country up to A$11.8 billion in the 2024–25 financial year.

Authorities are intensifying enforcement. Australian Border Force seized more than 2.66 billion illegal cigarettes last year, compared with 480 million in 2016. States have also introduced tougher penalties, closed suspected illegal tobacco shops and increased policing.

But there is disagreement over what should happen next.

Some economists and politicians argue that Australia’s high tobacco excise is pushing consumers towards organised crime and that tax reductions should be considered. Others, including public health experts, warn that lowering tobacco taxes could increase smoking and undermine decades of tobacco-control policies.

The debate extends beyond cigarettes, with illegal vaping products and other nicotine products also contributing to the growing black market.

Experts broadly agree on one point: Australia needs a coordinated national response. But whether the solution is tougher enforcement, changes to tobacco taxes, greater access to alternatives, or stronger public-health measures remains fiercely contested.

presents more than a tobacco-control challenge. It is also a growing battle involving public health, lost tax revenue, organised crime and the effectiveness of government policy.