Misa Han
August 23, 2017
AFR
The convenience industry says there is no law enforcement agencies to crack down on illegal tobacco retailing on the “street level”, as the specific funding for the Australian Border Force’s tobacco strike team is expected to discontinue at the end of this financial year.
Jeff Rogut, executive director of Australasian Association of Convenience Stores, said it was difficult to get law enforcement agencies to crack down on illegal tobacco retailing on the “street level”, which hurts the business of convenience stores that sell legal tobacco.
AACS is an industry body that represents convenience stores, including BP, Caltex and 7-Eleven and their suppliers, which includes tobacco companies. On average, more than a third of a convenience store’s sales comes from legal tobacco sales.
Mr Rogut said illicit tobacco was very common and easy to buy, recalling how he approached a cigarette seller at a Sunday market and was able to buy 100 cigarettes for $30.
“We can’t get any of the regulators to act at the street level. Local councils are not interested and the police don’t have the people or the resources,” he said.
It comes after The Australian Financial Review revealed on Monday that regulators are sitting on a confidential list of nearly 350 illegal tobacco shops, costing taxpayers billions of dollars a year in lost revenue.
Last year’s budget papers showed the government allocated a budget of $7.7 million over the 2017 and 2018 financial years to expand the Department of Immigration’s tobacco strike team.
Then immigration minister Peter Dutton said the additional funding would be used to establish two new specialist investigation teams made up of 14 people.
However, beyond the 2018 financial year, there is no specific budget allocated to fund the tobacco strike team. On Tuesday, the Department of Immigration and Border Protection said the strike force had achieved “record results”, with more than 100 people charged in the past two years.
An Immigration Department spokeswoman said a dedicated tobacco strike team was established in 2015 and additional funding was provided to triple its size.
“The ABF will continue to prioritise and dedicate resources to illicit tobacco enforcement. The department does not comment on future budget considerations,” she said.
A Philip Morris spokesman said the tobacco strike team had prevented $38 in lost duties for every dollar invested in the strike team.
“Continued investment in combating the illegal trade in tobacco products will deprive criminal networks of the revenue streams they use to fund their criminal activities,” he said.
A British American Tobacco spokesman said while funding allocations were a matter for the government, a national anti-illegal tobacco strategy was needed to crack down on the criminal threat.
“When the government announced funding for the Tobacco Strike Team, they also promised legislative change to increase the range of enforcement options. Nearly 18 months later we are still waiting and the problem is getting worse,” he said.
Independent think tank Australian Strategic Policy Institute’s John Coyne said it was “fairly common practice” within law enforcement agencies to introduce new policy proposals and later roll them into business as usual.
“It doesn’t mean the end to the taskforce. It shouldn’t be automatically read as the end of the taskforce and the message is coming out of the government illegal tobacco remains a high priority,” Dr Coyne said.
However, former leader of Australian Border Force’s tobacco strike team, Rohan Pike, said in his submission to the parliamentary inquiry into illicit tobacco the government “must be willing to invest a substantial sum to ensure the expected tax receipts from tobacco are realised”.
He said in the UK, the relevant enforcement agency, Her Majesty’s Revenue and Customs, had sought additional funding on the basis they could return £37 for every pound of additional funding.
The lack of crackdown on illegal tobacco at the retail level means it is up to the big tobacco companies to conduct covert surveillance on retailers and boycott illegal tobacco retailers where necessary.
However, in June the competition regulator, the Australian Competition and Consumer Commission, refused to allow Phillip Morris, British American Tobacco and Imperial Tobacco authorisation to work together to boycott illegal tobacco retailers and wholesalers.
On Wednesday, ACCC said there were are a “number of enforcement and regulatory bodies responsible for enforcing legislation prohibiting illicit tobacco products” and the authorisation would give the tobacco companies a “quasi-regulatory role”.
However, the lack of funding for the Border Force’s dedicated illegal tobacco strike team beyond this financial year and the lack of law agency enforcement at retail level raised questions about ACCC’s position.
ACCC said the joint action by the tobacco companies was “likely to have limited effectiveness in reducing the sales of illicit tobacco”.
Together, the three companies supply well over 90 per cent of the market for tobacco products in Australia, including all of the major brands, ACCC said.
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