A coalition of 15 health organisations, including the Cancer Council and the Heart Foundation, has accused the tobacco industry of exploiting fears of the illicit market to push for major cuts to government excise, warning that this could undo decades of progress in reducing smoking rates in Australia.
The warning comes amid a parliamentary inquiry into booming illicit sales, which drew controversy after it was revealed that the committee held a secret hearing for Philip Morris executives, ending more than 15 years of precedent under Australia’s participation in a World Health Organization (WHO) agreement on tobacco control.
Executives from the cigarette manufacturer warned that illegal cigarettes would wipe out legal products in Australia by 2030 and called for a cut to the tobacco excise to undermine criminal business models. Company representatives appeared in secret at the first committee hearing, and their names were withheld from public transcripts.
However, the health group rubbished these claims, calling them a “dog whistle.” “The industry is now using the rise of illicit tobacco to reshape public debate and to push for lower taxes,” the group said. “But illicit tobacco is primarily an enforcement and health issue, not a tax one.”
“Even if we were to cut the tobacco tax altogether, illicit products would remain cheaper, while legal tobacco would become more affordable, tobacco industry profits would skyrocket and smoking rates would increase, undoing decades of progress,” they added.
The WHO Framework Convention on Tobacco Control requires public officials to protect health policy from interference from the tobacco industry and associated interests. Australia’s health department guidance suggests that Australian public officials, including MPs, should only interact with executives and lobbyists from tobacco manufacturers “when and to the extent strictly necessary” to effectively regulate smoking.
The coalition has written an open letter in the lead-up to the committee’s second hearing, which will include testimony from the Australian Criminal Intelligence Commission, Australian Federal Police, the Department of Health, and the Australian Taxation Office. The letter says Australia’s success in tobacco control is fragile and must reject attempts by the tobacco lobby to regain influence over public health policy.
It calls for the government to enforce transparency and protection against tobacco industry interference, and to maintain tobacco levies, advertising restrictions, and public education campaigns. The decision by the Coalition-chaired committee to allow Philip Morris to give evidence in secret was described as “deeply concerning.”
“Giving a tobacco giant this platform undermines Australia’s obligations under the WHO Framework, which is designed to protect policymaking from tobacco industry interference,” the letter states. “These safeguards exist for a reason – tobacco company profits depend on products that still kill 66 Australians every day.”
Smoking kills 24,000 Australians each year and is Australia’s leading cause of preventable death, with one in five cancer deaths attributed to tobacco use. Research from the Public Health Association of Australia suggests that any lowering of the excise rate would hand manufacturers billions of dollars. A 50% cut would be worth an estimated $2.3 billion to tobacco companies.
Already, the surge in the illegal trade has caused a $6 billion hit to the federal budget in less than six months. In the Albanese government’s mid-year budget update in December, tobacco excise was expected to raise about $5.5 billion in 2025-26. By the time of last week’s federal budget, that figure had dropped to $4.1 billion. Treasury expects it to fall to $2.1 billion by mid-2030.
