It's a very lucrative enterprise for organised crime to make very quick money.
So, this column alone contains up to three million sticks of cigarettes
and that equates to around two million dollars worth of lost revenue in tax.
We need to stop this problem because it gets out of control.
The retailers know what they're doing, they know they're selling something illegal.
And the consumers of them know that they're buying something illegal.
It tastes pretty shit actually.
Again, it's just worth it for the price.
When it comes to controlling tobacco, the world looks to Australia.
For anyone who has lost someone to smoking, this one's for you.
Australia's highest court has upheld the world's toughest anti-tobacco advertising laws.
Every cigarette is doing you damage.
These new Winfields are 40 cents.
That's about the price you should be paying for a good smoke.
Today it's really the poster child of preventative medicine.
No country in the world, has got smoking down as far as we have.
But some are now questioning whether Australia's tobacco controls are having an unintended side effect.
I'm Leanne Cook, I live in Tasmania
I'm a mum and a grandmother.
Been smoking for about 25 years.
I think I started smoking black market tobacco
about two and a half, three years ago
I was approached in a pub, asked if I was interested and of course I was, given the prices.
Yeah, it's called 'chop chop'.
It's very unprocessed, just the dry shrivelled up leaves in a plastic bag.
It doesn't taste particularly nice, a lot of the time.
You do get used to it but you put up with what you do, I suppose.
I don't know who I'm dealing with a lot of the time.
But the price is so much cheaper
and you do find a lot of the time they also deal in other things.
Tasmania has the second highest smoking rates in the country
after the Northern Territory.
We have hit this dead spot now
with one in five Tasmanians in the adult population smoking.
And as high as 33% of young people smoking.
The Tasmanian Government is currently looking at proposals
to raise the legal smoking age from 18 to as high as 25.
We know nearly 100% of people pick up tobacco before the age of 25 and become addicted.
Tobacco is a killer.
And it's killing Tasmanians at higher rates than the rest of Australia.
Oh, a nanny state's putting it really nicely.
Uh, we're being bullied and they're going to make you listen whether you want to or not.
And it shouldn't be like that.
The prices have gone so ridiculously high
that black market tobacco would be about 50% of the price.
So it's so much more affordable.
Australia has the highest priced cigarettes in the world.
Since 2013, tobacco excise has increased 12.5% each year.
Last year alone, the tax office collected just under $9 billion from cigarettes.
I think you can contribute the increase in taxes to increase in detection.
The tax on tobacco is in excess of $500 per kilo.
And then when you add GST on top of that it's -
you get quite a marked advantage
by not paying that, when you import those goods.
I think organised crime have identified it as an area where they can make a lot of money.
We take it very seriously as an organisation.
In 2015, the federal government set up the tobacco strike team.
The announcement followed Australia's largest tobacco seizure.
Raids on shipments from Indonesia to Sydney netted
70 tonnes of tobacco worth $40 million dollars
All cargo coming into the country is screened and risk-assessed.
We're able to x-ray up to 80 feet of containers
so the image analyst will compare what's been declared with the image
and they'll make an assessment as to whether or not
what they're seeing is a true reflection of what's been reported.
So the trend at the moment, is that we're getting a lot more consignments through
but smaller quantities of tobacco and cigarettes.
This particular consignment was declared as ceramic cups
but once you can see, we put it through the cabinet x-ray
pretty transparent it's pretty open - it's obviously not cups.
There's the tobacco there.
The last few years, I think we've detected over 1400 tonnes through sea cargo.
A lot of loose leaf tobacco comes through from Asia
a lot of the rolled cigarettes come from the Middle East and China.
In a 20 foot sea container, you can fit about five to six tonnes of illicit product.
And in the 40 footers, up to ten, eleven tonnes.
And if you take one container out, the importers lose a lot of money in one hit
so I think they're learning the lesson and spread their risk by importing smaller packages
through air cargo and air mail.
We realised we had a problem with tobacco coming through the mail
when about 18 months ago, we picked up over 18
forty-foot container loads. So all this area here was full of tobacco.
We get over a 1,000 detections a week.
Means about $3.5 million dollars worth of duty and taxes evaded.
Once we find something, the importer is notified.
And notified of the duty and taxes to be paid, only 10% of the tobacco invoices get paid.
Which means basically 90% is trying to get away without paying their duties and taxes.
Uh, not normally. They'll lose their money by what they paid for it during the importation.
I think people see it as a, more of a tax dodge, they think it's just a financial crime.
We believe the people who are importing tobacco, aren't only importing tobacco
they're also involved in narcotics, and other prohibited imports.
It's just another product that they can make money from.
I got one in six customers, they're asking for the cigarettes.
For the black market cigarettes.
Under the counter, they call it.
Andreas has worked in the tobacco industry for the past 25 years.
He says black market operators are now undercutting his prices by as much as 50%.
And making huge profits.
Say if we make here, about $1 a packet
The black market they're going to make $10 a packet.
Of course they're going to go start selling the illegal cigarettes because that's the profit.
So, I just picked these up this week.
Two box of a hundy (100).
My name's Matia and I've been smoking black market tobacco on and off for maybe four years now.
The tobacco comes in pre-made cigarettes in a box
like the things you might see in a tobacco shop.
In different strengths, different filters.
You can buy a box of 100 for $35.
Black market tobacco is quite easy to get to, providing you know someone who smokes it
or someone who can get it for you.
It's just a matter of asking them if they trust you or if they trust someone that you knowy - you're in.
We buy three boxes.
One's for our grandparents, one's for me and one's for my mum.
More people would buy it if they knew how easy it was to buy it, and how much cheaper it was.
The illegal tobacco problem in Australia
is currently a very big one
and it's near record levels
and it costs the government and taxpayers $1.4 billion a year.
Governments are robbed of at least $US 40 billion each year.
For several years now, the tobacco industry has been lobbying
governments to crack down on their black market competitors.
We try and do as much as we can.
We also have covert operations which are run by ex-police detectives
and we do around 3,000 covert purchases across the country, on a yearly basis.
Last month, The Feed was invited to go undercover on one of these covert operations.
Once of our producers posed as a buyer, at a number of tobacco retailers in a Melbourne suburb.
In a small supermarket, we ask for the same cigarettes that Martia has been smoking.
That's $60 for 250 grams of uncut tobacco.
Great, thank you.
Over the next hour, we're able to purchase illicit tobacco from six shops.
It's dark, but it smokes good.
As well as chop chop, many of these shops sell what are called 'illicit whites'
cigarettes made overseas, and smuggled in for the black market.
When it comes to these, one brand stands out.
Made in the United Arab Emirates, Manchester is Australia's most popular illegal cigarette.
Late last year, authorities busted a Sydney smuggling ring
as they tried to import nine million of these cigarettes into Australia.
Despite those arrests, the critics say black market cigarettes are still getting in.
Unfortunately there's no enforcement at the retail level, at the moment.
The Department of Health can fine a retailer $365 000 for one illegal pack.
We've not seen one fine of that magnitude or at all, since plain packaging was introduced
and that was three years.
In a statement, the Health Department told The Feed:
Last year, a KPMG report paid for by the tobacco industry claimed nearly 15% of all tobacco smoked
in Australia, came from the black market.
And this illegal market now, with the 15% market share of all tobacco in the country
that's a big chunk, and we see them as a competitor.
But the figure of 15% is hotly debated.
We note that report, but we don't necessarily agree that the figure is quite that high.
You think about that, one in seven cigarettes
with all the availability we see in supermarkets, petrol stations
and newsagents, corner shops, are they pulling our leg that it's one in seven
are not buying their product there, they're buying it through dodgy brothers.
Professor Simon Chapman was one of the architects of Australia's plain packaging legislation.
He says, he doubts the motives behind the tobacco industry's push against the black market.
The stand out thing that the tobacco industry are frightened about, is price rises that they can't control.
So, price rises driven by tax rises.
There is a black market in every country
but it is much, much lower than the tobacco companies are wanting us to believe.
We run a legal company, we pay 70 cents in every dollar to the government for every pack that we sell. These guys aren't.
They're buying packs for 20 cents, illegally smuggling them in and selling them for up to $12.
And putting all of that money in their pocket, and then funding other criminal activity with it.
This month, a parliamentary enquiry will begin looking at how big a problem
black market tobacco really is, and what the authorities can do to stop it.
In September, the price of legal tobacco will rise again on the back of another 12.5% increase.
I expect our tobacco importations will always be a problem for the Australian Border Force.
Because the sheer amount of duty and GST payable on tobacco.
I think it's a two way street, if tax is so high, almost ridiculously high people are forced to go onto something else.
I've never met a smoker who wanted their children to grow up and become a smoker.
The single biggest influence on falling consumption is price.
I'm not expecting sympathy, I don't think any smoker is expecting sympathy
but we do need to be treated fairly.
Eventually I will have to stop smoking, but not without a fight.