NSW TO CRACK DOWN ON TOBACCO RETAILERS SELLING UNDER-THE-COUNTER CIGARETTES, IN BID TO CURB BLACK MARKET

Have you ever walked past an empty shell of a shop — claiming to be a tobacconist — and wondered how it’s making any money?

There are said to be thousands of them across the country, from tiny towns to big cities, and many appear to close almost as quickly as they open.

These shops are the most visible sign of a flourishing black market, controlled by organised criminals who are illegally importing cigarettes in vast quantities and selling them tax-free to smokers.

In New South Wales, the government is well aware of this growing illicit trade — particularly in rural and regional communities — but it has no idea how many retailers are in on it.

Part of the reason is the lack of red tape.

Anyone who wants to open a cigarette shop in the state just needs an ABN and must then notify NSW Health to obtain a Tobacco Retailer Notification number (TRN).

In the past four years, the number of tobacco stores registered in NSW has surged from 14,500 to 19,500, as the black market has exploded.

But after a concerted campaign from legitimate retailers, dodgy operators have been put on notice. 

NSW Health Minister Ryan Park will today unveil long-awaited changes to the state’s retail laws, including a new licensing regime for tobacco stores and a big increase in fines for those caught selling under-the-counter cigarettes and vapes.

The laws will bring NSW into line with the other states and it’s something that “should have happened already”, says Mr Park, who concedes the parliament is now playing catch-up.

“This is an issue that has got in front of, if we’re all honest, legislators over many years,” Mr Park said.

“We’ve got to get on top of this.”

Under the proposed changes:

• Anyone selling tobacco products will be forced to pass a fit-and-proper test and pay an annual license fee;
• Penalties for trading without a license will increase to $44,000 for individuals and $220,000 for corporations;
• Penalties for selling illegal cigarettes will more than double to $22,000 for individuals and $110,000 for corporations; and 
• The number of NSW health enforcement officers will double to 28.
  

“We’re not saying this is going to solve every problem overnight, but this is one of the most significant reforms in over a decade in relation to tobacco and licensing, and one that will make a difference,” Mr Park said.

NSW is the last state to either introduce, or commit to introducing, a licensing regime specifically for tobacco retailers.

It’s seen as a vital step towards quantifying the size of the black market, and ultimately controlling the supply chain.

Black market costing budget billions and sending retailers broke

Smoking rates have largely flatlined at around 10 per cent of the adult population in recent years, though they remain highest in regional areas and among First Nations Australians and low income earners.

As cigarettes have become more and more expensive, there’s growing evidence to suggest that smokers are shifting to the black market, where a pack of 25s is typically about half the price of the legitimate version.

The Illicit Tobacco Taskforce has seen a massive increase in the amount of illegal tobacco being imported.

In 2018, the taskforce seized and destroyed 400 million cigarette sticks and last year, that number increased to 1.4 billion.

Not only is it costing the federal budget billions of dollars in lost excise revenue, but legitimate retailers have been sounding the alarm, watching as their profits plummet.

People living in remote areas more likely to be daily smokers

The proportion of people who say they smoke daily has dropped in cities, inner and outer regional areas — but not in remote or very remote areas.

Theo Foukkare, CEO of the Australian Association of Convenience Stores (AACS), has described the announcement as a “step in the right direction”, adding the introduction of a fit-and-proper test will “identify the good from the bad actors”.

However, Mr Foukkare said the fines were still not big enough and expressed disappointment that NSW would be leaving health officials in charge of enforcement rather than handing that responsibility to police or a dedicated taskforce.

“The announced fines are a step forward, but they’re simply not strong enough,” he said.

“If NSW really wants to tackle the illicit tobacco trade, it’s time to match South Australia’s tougher penalties and enforcement, which start at $1 million.

“Our frontline retailers need higher penalties and stronger enforcement measures like in South Australia, not just half-measures, to protect their businesses, families and communities from the organised crime element of the tobacco wars.”

NSW ‘extremely worried’ about the tobacco wars engulfing Victoria

The announcement comes in the midst of a deepening turf war in Victoria that’s seen rival gangs, vying for control of the black market, torch 105 tobacco stores in the past 18 months.

The so-called tobacco wars appear to be spreading across the border into South Australia, where 17 stores have been firebombed.

Mr Foukkare said if NSW doesn’t “snuff out the problem now”, with higher penalties and tougher enforcement, “it will be left holding the match while other states stamp out the tobacco wars”.

This week, a tobacconist in Ballina, on the Northern Rivers, was gutted by fire in a suspected ram raid attack.

In August, a suspicious fire broke out at another tobacco shop in Ettalong on the Central Coast, a day after it was vandalised.

Mr Park said he was “extremely worried” about the firebombings across the border but believed his proposed changes would help keep the violence away.

“Every politician regardless of their political persuasion should be very concerned about what they’re seeing south of the border, of course we’re very concerned,” Mr Park said.

“One of the reasons I’ve been adamant that a regulated licensing regime in place is to try and curtail that kind of organised crime that’s infiltrating the market.

“We don’t want it here in NSW.”

The AACS retail members sell legal tobacco products. It receives membership fees from more than 100 suppliers, of which, three are tobacco companies.  

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