Tax, Ban, or Reform? Australia’s Tobacco Policy at a Tipping Point

Australia’s tobacco success story is now unraveling. Without reform, well-meaning policies risk fueling crime, misinformation, and preventable disease.

Diane Caruana

June 25, 2025

Australia’s tobacco control policies have long been hailed as among the world’s hashest. Through plain packaging, high excise taxes, public education campaigns, and strict marketing regulations, the country had driven smoking rates down over the past two decades. However, this success has now brought Australia to a crucial policy juncture. Experts have been warning that the country’s aggressive approach to tobacco and nicotine control—especially its near-total ban on retail vape sales—is now undoubtedly doing more harm than good.

Recent critiques from criminologist Dr. James Martin of Deakin University and epidemiologist Dr. Edward Jegasothy of the University of Sydney, highlight a growing concern: Australia’s current policies, while well-intentioned, are beginning to mirror the unintended consequences of failed drug prohibition strategies. Published in the Harm Reduction Journal, their analysis argues that the combination of unaffordable legal cigarettes and tight restrictions on safer nicotine alternatives is fueling a thriving black market—one that brings with it increased criminal activity, violence, and public health risks.

The war on nicotine fuels the black market

The numbers support this concern. Tobacco excise has more than tripled over the past decade, with a single packet of cigarettes now costing around $40—$28 of which is tax. While this pricing structure initially succeeded in deterring smoking, economists now say the strategy has reached a breaking point. Illicit tobacco is filling the void left by unaffordable legal products, with recent figures showing that nearly 20% of all tobacco consumed in Australia is smuggled or illegally produced.

Australian Border Force data paints a troubling picture. From 2019–20 to 2022–23, intercepted illicit tobacco surged from 600 million to 2.6 billion cigarettes, coinciding with rising violence linked to black market operations. Despite these warnings, the federal government continues to pursue a rigid excise policy, planning further increases through 2026. Revenue, meanwhile, is plummeting—tobacco excise earnings are forecast to drop to $7.4 billion this year, the lowest in more than a decade.

Against this backdrop, Martin and Jegasothy advocate for a pivot to a harm reduction model. They propose temporarily freezing or even reducing tobacco excise, while simultaneously broadening access to regulated vaping products—tools that deliver nicotine without combustion, the primary cause of smoking-related disease. They also call for better public education around these alternatives to empower consumers with accurate, science-based information.

Smokers are paying the price for medical misinformation

Part of the inefficacy of Australia’s presciption model, has been boiling down to the unfortunate fact that many local physicians are not willing to prescribe the products.

Such a shift is particularly urgent given the growing global recognition that nicotine, while addictive, is not the main cause of smoking-related illness. It is the act of burning tobacco—and inhaling the resulting toxins—that causes cancers, heart disease, and chronic lung conditions. Yet surveys of healthcare professionals reveal that many still mistakenly associate nicotine with cancer, perpetuating fear and confusion around less harmful products like e-cigarettes, nicotine pouches, and heated tobacco.

This misinformation has serious consequences. When doctors misunderstand nicotine, they are less likely to recommend reduced-risk products to patients who might benefit from them. Without proper guidance, smokers may avoid safer alternatives and continue using combustible tobacco, increasing their risk of disease and death.

Moreover, in the case of Australia, having misinformed physicians is all the more dangerous, given the current prescription only model whereby consumers can only purchase vapes via a doctor’s presciption. In fact, part of the inefficacy of Australia’s presciption model, has been boiling down to the unfortunate fact that many local physicians are not willing to prescribe the products.

Opposition to harm reduction persists. Public health advocates such as Dr. Becky Freeman argue that deregulating vaping without solid data is reversing decades of progress. She supports the current model of limiting vape sales to pharmacies and stresses the importance of preventing youth uptake. Yet even Freeman acknowledges the challenge of controlling supply in the face of rising black market activity.

Rethinking tobacco control with compassion and science

In reality, Australia now faces a stark policy choice: double down on enforcement-heavy, high-tax strategies that may fuel illegal trade and public distrust, or embrace a balanced approach that differentiates between combustible tobacco and safer nicotine delivery systems. Countries like the UK, Sweden and New Zealand, which allow regulated vape sales and have seen corresponding declines in smoking rates, offer compelling examples of the latter.

The debate over nicotine policy is no longer just about ideology—it is about public health outcomes. Differentiating between smoking and vaping, between combustion and harm reduction, is essential. By embracing a science-informed, compassionate approach that recognises the role of safer alternatives, Australia could protect its hard-won progress while reducing smoking-related harms even further.

In the end, choosing harm reduction isn’t a concession. It’s a pragmatic, humane strategy to meet people where they are, reduce health risks, and dismantle the black market that thrives on outdated policies. For Australia, the future of tobacco control depends on this shift.