Combatting Illicit Tobacco Bill 2026 explained

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Combatting Illicit Tobacco Bill 2026 explained

The Combatting Illicit Tobacco Bill 2026 is a government bill from the Home Affairs portfolio that would amend multiple Commonwealth Acts to combat the illicit tobacco trade. It would increase penalties for illicit tobacco offences, enable telecommunications interception warrants for illicit tobacco investigations, and expand the Proceeds of Crime Act 2002 framework for confiscating criminal assets, including streamlined unexplained wealth orders. Introduced in the House of Representatives on 26 March 2026, the bill was debated on 14 May, 4 June and 22 June 2026; on 19 August 2026 the Leader of the House declared it stands referred to the Federation Chamber for further consideration. The bill passed both Houses of Parliament on 20 August 2026 and now awaits Royal Assent.

This is a federal system guide. State constitutions, parliaments and local-government laws can allocate comparable functions differently.

The useful question is not only “what is the rule?” but also “who administers it, which document controls it, and when might it change?” That distinction prevents an accurate general explanation from becoming wrong advice in a particular election, chamber or policy setting.

Evidence review

The illicit tobacco problem in Australia

Illicit tobacco — tobacco grown, manufactured or imported into Australia without customs or excise duties being paid — has become a significant law enforcement and public revenue challenge. While a legal pack of 20 cigarettes in Australia typically costs over $40 due to the tobacco excise, illicit packs can sell for as little as $10. The Parliamentary Library's Bills Digest notes that in the 2024-25 financial year alone, between $7.7 billion and $11.8 billion of government revenue was lost to the illicit tobacco trade.

The growing illicit market has been accompanied by violent attacks as criminal syndicates compete for market control. According to the Illegal Tobacco and E-cigarette Commissioner, its growth has been accompanied by highly visible incidents of violence. Federal authorities seized 2.6 billion cigarettes in the most recent financial year — triple the amount seized four years earlier — yet the government has acknowledged it cannot solve the problem at the border alone.

The tobacco excise, which increases twice annually and currently adds $1.53 per tobacco stick, has been identified by some law enforcement figures as contributing to the growth of the illicit market. NSW Police Deputy Commissioner David Hudson and economist Chris Richardson have both noted the connection between high excise rates and the black market. Treasurer Jim Chalmers has rejected industry calls for a reduction, saying 'we don't believe a tobacco tax cut ... will fix the problem.'

Evidence review

What the bill proposes to change

As introduced, the bill contains three schedules amending multiple Commonwealth Acts. Schedule 1 amends the Customs Act 1901, Excise Act 1901, Taxation Administration Act 1953 and Taxation Administration Regulations 2017 to increase criminal and civil penalties for offences relating to the importation, possession, buying, selling, supply, production or manufacture of illicit tobacco. Increasing these penalties would also enable law enforcement to use broader investigatory powers, including computer access and surveillance capabilities under the Surveillance Devices Act 2004, which are only available for offences carrying certain penalty thresholds.

Schedule 2 amends the Telecommunications (Interception and Access) Act 1979 to include illicit tobacco-related offences within the definition of 'serious offence'. This is a significant expansion — it would allow law enforcement and intelligence agencies to apply for telecommunications interception warrants for the purpose of investigating illicit tobacco activities, the same powers currently available for serious crimes such as drug trafficking and terrorism.

Schedule 3 amends the Proceeds of Crime Act 2002 in seven parts: additional grounds for non-publication orders, a new search warrant framework including person search warrants, examination orders where no restraining order is in force, information sharing with other Commonwealth authorities, equitable sharing arrangements for jurisdictions that have signed the Intergovernmental Agreement on the National Cooperative Scheme on Unexplained Wealth, removal of the preliminary unexplained wealth order step, and postal or electronic service of documents.

Evidence review

Unexplained wealth orders and proceeds of crime

A central feature of the bill is the streamlining of unexplained wealth orders. Under the Proceeds of Crime Act 2002, a court must currently make a preliminary unexplained wealth order before considering an application for a full order. This two-step process has been criticised by law enforcement as cumbersome and slow; the bill would remove the preliminary step, allowing authorities to apply directly for an unexplained wealth order.

Unexplained wealth orders require a person to demonstrate that their wealth was lawfully acquired. If they cannot do so, the assets may be confiscated by the state. These orders are particularly relevant to organised crime figures who may not have been convicted of a specific offence but whose assets appear disproportionate to their declared income. The bill would also enable jurisdictions that have signed the Intergovernmental Agreement on the National Cooperative Scheme on Unexplained Wealth to participate in equitable sharing arrangements, so proceeds confiscated under Commonwealth law can be shared with cooperating states and territories.

Evidence review

Parliamentary scrutiny and proposed amendments

Two parliamentary committees have scrutinised the bill. The Senate Standing Committee for the Scrutiny of Bills raised concerns on 6 May 2026 (Scrutiny Digest 6 of 2026) about significant penalty increases, privacy impacts and expanded search warrant powers. The Parliamentary Joint Committee on Human Rights reported on 7 May 2026 (Report 5 of 2026), raising human rights compatibility concerns.

During the second reading debate, proposed amendments were circulated. The bill page lists a second reading amendment by Monique Ryan MP, a second reading amendment by Andrew Hastie MP, and a detail amendment by crossbench MP Sophie Scamps. The detail of these amendments is not set out on the bill page.

According to the bill page, the bill was introduced and read a first time on 26 March 2026, with the second reading moved the same day. The second reading debate took place on 14 May, 4 June and 22 June 2026. On 19 August 2026 the Leader of the House, Mr Burke, declared that, unless otherwise ordered, the bill stands referred to the Federation Chamber for further consideration immediately. The bill remains before the House and has not proceeded to a vote on the second reading.

Evidence review

Chamber record cross-check — 19 August 2026

The chamber record for this review is House Live Minutes (Draft Minutes) No. 77 of Wednesday 19 August 2026 (chamber record id 5128c19bb4457226). Under item 4, 'Bills declared referred to Federation Chamber', the Leader of the House, Mr Burke, declared that, unless otherwise ordered, the Combatting Illicit Tobacco Bill 2026 stands referred to the Federation Chamber for further consideration immediately. The same declaration referred three other bills — Australia's Foreign Relations (State and Territory Arrangements), Counter-Terrorism Legislation Amendment and Passenger Movement Charge Amendment — to the Federation Chamber at the adjournment of the second reading debate on each.

House Live Minutes are a draft working record of proceedings, subject to revision, and are not final Hansard; the official record of the House is the Votes and Proceedings. Referral is a procedural step: the bill's second reading consideration continues in that chamber rather than the main chamber. It does not mean the bill has passed the House, and the bill has not been enacted.

Evidence review

How the bill fits into broader tobacco control policy

The bill takes a law enforcement-focused approach to the illicit tobacco problem, targeting the supply side rather than demand through excise policy. It sits alongside the government's tobacco control strategy, which includes twice-annual excise increases designed to make tobacco less affordable and reduce smoking rates over the long term.

The Bills Digest notes decades of research showing that 'significantly increasing the excise tax and price of tobacco products is the single most consistently effective tool for reducing tobacco use.' However, it also acknowledges the emerging tension between public health objectives and the unintended consequence of a growing black market that funds organised crime. The government's choice of stronger penalties and enforcement powers over an excise adjustment reflects its view that the health benefits of high tobacco prices outweigh the criminal market distortion.

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