# Inside the Aussie tobacco wars: Rohan Pike Pt. 1

An episode of [I Catch Killers with Gary Jubelin](https://invisiblenetwork.ai/podcast/1506667049), 16 May 2026, 58 min.

Audio: https://p.podderapp.com/2544644999/traffic.omny.fm/d/clips/2fb3740d-3436-44af-8cc0-a91900716aa5/5bc8c2ed-b718-4f44-beb3-ac2a005246cc/16f97a2e-fcd7-4534-99e1-b4490069d812/audio.mp3?utm_source=Podcast&in_playlist=786928c3-10c1-4cef-a7bf-ac2a005246d0

A decade ago, Australian Border Force Tobacco Strike Team leader Rohan Pike issued a stark warning: skyrocketing tobacco excises would unleash organised crime and fuel a dangerous illicit market. Today, his prediction has become reality - firebombings terrorise suburban streets, borders are breached daily, and innocent people are being murdered as a result of the multi-billion-dollar black market. In this episode of I Catch Killers, Rohan takes us inside Australia's self-inflicted tobacco wars, revealing how violent crime syndicates smuggle millions of illicit tobacco products into the country every day, why current enforcement strategies are failing, and what it will take to stop this rapidly escalating crisis before more lives are lost. See omnystudio.com/listener for privacy information.

## Transcript

[0:01] Speaker 1: The public has had a long held fascination with detectives.
[0:05] Speaker 1: Detective sy aside of life the average person is never
[0:08] Speaker 1: exposed to. I spent thirty four years as a cop.
[0:11] Speaker 1: For twenty five of those years I was catching killers.
[0:14] Speaker 1: That's what I did for a living. I was a
[0:16] Speaker 1: homicide detective. I'm no longer just interviewing bad guys. Instead,
[0:20] Speaker 1: I'm taking the public into the world in which I operated.
[0:23] Speaker 1: The guests I talk to each week have amazing stories
[0:26] Speaker 1: from all sides of the law. The interviews are raw
[0:28] Speaker 1: and honest, just like the people I talk to. Some
[0:31] Speaker 1: of the content and language might be confronting. That's because
[0:34] Speaker 1: no one who comes into contact with crime is left unchanged.
[0:38] Speaker 1: Join me now as I take you into this world.
[0:46] Speaker 1: A century ago, the United States grand experiment with alcohol
[0:50] Speaker 1: prohibition didn't just fail. At birthed and era of organized crime, bootlegging,
[0:55] Speaker 1: and unprecedented violence. Fast forward to today and the Peers
[1:00] Speaker 1: Australia is going down the exact same path with its
[1:04] Speaker 1: tobacco exercise tax. The government has inadvertently sparked a brutal
[1:09] Speaker 1: gangland conflict featuring arson, fire bombings, and even murder. Today
[1:15] Speaker 1: we're diving deep into the Australian tobacco Wars with former
[1:19] Speaker 1: AFP detective Rowan Pike, who is one of Australia's leading
[1:23] Speaker 1: experts on this alarming issue. Rowan Pike, Welcome to I
[1:28] Speaker 1: Catch Killers.
[1:29] Speaker 2: Good to be here, Gary, Well.
[1:31] Speaker 1: Very topical what we want to talk about because you
[1:34] Speaker 1: can't escape it in the media, the tobacco wars.
[1:38] Speaker 3: Yeah, no, it's fallen in my lap a bit. I
[1:41] Speaker 3: saw it coming about ten years ago and now everyone
[1:44] Speaker 3: knows about it, so it gives me plenty to talk about.
[1:48] Speaker 1: Well I've met in our conversations that we've had before
[1:51] Speaker 1: the podcast, but also having a look and getting a
[1:54] Speaker 1: deeper understanding of it. I'm a little bit confused. It
[1:57] Speaker 1: seems like a fiscal issue that's been hiding behind the
[2:00] Speaker 1: health issue that's turned into a crime issue.
[2:03] Speaker 3: Yes, well it's a bit of all of those things.
[2:07] Speaker 3: I mean, the main problem is that the government doesn't
[2:10] Speaker 3: understand exactly what has caused it and loads to admit
[2:16] Speaker 3: that their policy has caused it and they've made a mistake.
[2:19] Speaker 3: And really that's the first step in order to fix it,
[2:22] Speaker 3: as to say sorry, we were wrong and let's go
[2:25] Speaker 3: down another path. But they're not quite at that point yet.
[2:28] Speaker 1: Well, there's plenty of layers to it. Can you just
[2:30] Speaker 1: give our listeners just an understanding. We see the tobacco walls,
[2:35] Speaker 1: and it's usually when those shop's been set alight, or
[2:37] Speaker 1: there's a drive by shooting, or there's even been murders
[2:40] Speaker 1: that have flowed on from the so called tobacco walls.
[2:44] Speaker 1: Can you just give us an overview of what we're
[2:46] Speaker 1: talking about there.
[2:47] Speaker 3: Yeah, Well, the violence is really a byproduct of the
[2:51] Speaker 3: crime type itself, so it's been growing really exponentially the
[2:56] Speaker 3: last five years. But elicit tobacco has been a thing
[2:59] Speaker 3: for about over thirty years, but at a much lower
[3:02] Speaker 3: level and at a level that no one really cared about.
[3:05] Speaker 3: But the last five years it's really come to the
[3:07] Speaker 3: four In the last three years, the fire bombings have started,
[3:11] Speaker 3: and that's because other criminal syndicates have wanted to muscle
[3:15] Speaker 3: in on the business, saying that it's an easy way
[3:19] Speaker 3: to make a high profit, and that's what criminal syndicates
[3:23] Speaker 3: are after. At the end of the day, it doesn't
[3:25] Speaker 3: matter really what the commodity is, but in this case
[3:27] Speaker 3: it's tobacco. So whereas the previous syndicates were just happily
[3:33] Speaker 3: going along, making lots of money, but flying under the
[3:37] Speaker 3: radar that now new syndicates entering the Fray have upset
[3:42] Speaker 3: the balance wanting to take over. It's just an old
[3:44] Speaker 3: fashioned turf war and that's where the violence has come.
[3:47] Speaker 3: But with the violence obviously has come an understanding from
[3:52] Speaker 3: the public and the government to some extent just how big.
[3:55] Speaker 2: The problem is.
[3:56] Speaker 3: So there was always a problem, but now they've really
[3:59] Speaker 3: brought attention to themselves.
[4:01] Speaker 1: Well, you can't really hide it when the premises have
[4:03] Speaker 1: been burnt down and different things. I suppose it's the
[4:06] Speaker 1: nature of the criminal world, as you and I would
[4:09] Speaker 1: both know that risk versus reward, and in this area
[4:14] Speaker 1: the rewards were very high for people that wanted to
[4:16] Speaker 1: get into the illicit tobacco trade.
[4:19] Speaker 3: Yeah, the rewards have been huge. I think there's a
[4:23] Speaker 3: stat saying that you can fill a container of cigarettes
[4:26] Speaker 3: over in the Middle East for two hundred and fifty
[4:28] Speaker 3: thousand dollars and you can sell it for ten million
[4:30] Speaker 3: dollars in Australia. So that's forty to one profit, which
[4:34] Speaker 3: is more than the other drugs that are more commonly
[4:38] Speaker 3: associated with high profit margins and making lots of money,
[4:41] Speaker 3: so it doesn't matter to them if they have some
[4:44] Speaker 3: of those seas at the border. They could have thirty
[4:48] Speaker 3: of them seized in their own and they're still making
[4:50] Speaker 3: money on the next one. Of course, we don't seaz
[4:52] Speaker 3: thirty in a row. We sees perhaps a quarter on
[4:55] Speaker 3: a good day. And when they can just bombar the border,
[4:59] Speaker 3: it's going to get through. So one of the failures
[5:01] Speaker 3: of our system, one of the vulnerabilities has been a
[5:04] Speaker 3: lack of domestic enforcement post border. So there's been an
[5:08] Speaker 3: unrealistic expectation on the border force they're just going to
[5:11] Speaker 3: stop everything, which has never been the case. But once
[5:14] Speaker 3: it gets through the border and smuggled in, there's really
[5:18] Speaker 3: been It's been open slather. There's been no one there
[5:20] Speaker 3: to stop it, and that's why people see shops popping
[5:24] Speaker 3: up everywhere around their suburbs.
[5:27] Speaker 1: Okay, just in the most simplistic view of what's occurred here,
[5:31] Speaker 1: we've got the government have come in as a health
[5:33] Speaker 1: initiative increasing the tax on cigarettes. Cigarettes are sold across
[5:39] Speaker 1: the counter at regular stores. They've increased the tax. The
[5:44] Speaker 1: organized crime or the criminal gangs have seen an opportunity
[5:47] Speaker 1: here Hey, we can if we could get these in
[5:50] Speaker 1: without going through getting them taxed, there's profit to be
[5:53] Speaker 1: made if we sold them under the counter, and the
[5:56] Speaker 1: profits have been very profitable. Obviously, I suppose the risk
[6:01] Speaker 1: is lower, like if you're bringing drugs in to make
[6:04] Speaker 1: a massive profit, you get caught and you might be
[6:06] Speaker 1: behind bars for the rest of your life. Not so much.
[6:08] Speaker 1: The crimes look lesser scale very much.
[6:12] Speaker 3: Yeah, the courts don't really appreciate the seriousness and the
[6:16] Speaker 3: consequences of tobacco crime, which are many and varied, including
[6:21] Speaker 3: obviously just increasing the power and the resource of these
[6:24] Speaker 3: organized crime groups hand over fist. But no, they're not
[6:28] Speaker 3: treated the same in the courts. And of course the
[6:31] Speaker 3: penalties themselves of these crimes haven't matched the drug penalties,
[6:36] Speaker 3: so that's slowly changing. So it's they're becoming the government's
[6:43] Speaker 3: increasing the penalties and obviously seeing them as more serious,
[6:46] Speaker 3: but it's the courts sort of lag behind. So there's
[6:50] Speaker 3: hardly anyone goes to jail for these sort of crimes.
[6:53] Speaker 3: And when you're making millions, it's worth the attempt.
[6:57] Speaker 1: Okay, without encouraging people, you can see the action attraction
[7:01] Speaker 1: to it for the criminal elements, and I suppose the
[7:04] Speaker 1: flow on the fact that my sense of it is
[7:06] Speaker 1: that you've got rival syndicates now competing against hence the
[7:10] Speaker 1: fire bombings strived by shootings. But there's even been situations
[7:14] Speaker 1: where people have been murdered as a result of what's occurred.
[7:18] Speaker 3: Yeah, there's been about five murders and there was one
[7:21] Speaker 3: innocent victim in Melbourne where there was a fire bombing
[7:23] Speaker 3: of a house which was just a wrong premises. I
[7:29] Speaker 3: was a lady at home by herself couldn't get out,
[7:31] Speaker 3: which is a tragedy. But it's been incredibly lucky that
[7:34] Speaker 3: there hasn't been more. They well, there's been close to
[7:37] Speaker 3: three hundred fire bombings around Australia. Some of them were
[7:42] Speaker 3: under flats during in the middle of the night. Some
[7:45] Speaker 3: of them were under even a nightclub where there were
[7:48] Speaker 3: three hundred people dancing above.
[7:50] Speaker 2: So if that fire.
[7:51] Speaker 3: Had got out of hand, that anything could have happened.
[7:53] Speaker 3: So we've been very lucky that there's only been a
[7:56] Speaker 3: few a handful of deaths as a relation to this.
[8:00] Speaker 1: It's a nature of organized crime. Like people often think, well,
[8:03] Speaker 1: it's just crooks fighting amongst crooks, But yeah, in my
[8:07] Speaker 1: observation throughout my career. Innocent people always get caught up
[8:10] Speaker 1: in it, or do eventually get caught up in it.
[8:12] Speaker 3: Yeah, that's right, And yeah there is a theory you know,
[8:17] Speaker 3: that's not so bad that crooks are just dealing with themselves,
[8:20] Speaker 3: but it does spill out into the general public and
[8:23] Speaker 3: it just gives also the impression to the public that
[8:25] Speaker 3: law and orders out of control. Yeah, that's sort of
[8:28] Speaker 3: general degradation of society. When you see twenty illsted stores
[8:33] Speaker 3: on a street and you just go, what's going on here?
[8:35] Speaker 3: This is just basically fronts for organized crime making money
[8:40] Speaker 3: hand over fist, and how we're letting them.
[8:43] Speaker 2: Get away with this.
[8:44] Speaker 3: So but you obviously the state police have stepped in
[8:49] Speaker 3: where people and property are at risk. Yeah, as is
[8:55] Speaker 3: their role. But yeah, there's bigger causes that are continuing
[9:00] Speaker 3: to fuel this market and keep it going.
[9:03] Speaker 1: Well, I've thrown you in the deep end and listeners
[9:06] Speaker 1: are probably thinking, why all the questions to you about
[9:08] Speaker 1: the tobacco. Well, let's talk a little bit about yourself
[9:12] Speaker 1: so people understand why you are. When I wanted to
[9:15] Speaker 1: discuss this, I looked around and I'd put you up there.
[9:18] Speaker 1: It was one of the foremost experts on this illicit
[9:21] Speaker 1: trade in the tobacco walls. Tell us a little bit
[9:24] Speaker 1: about your background.
[9:26] Speaker 3: I started in the Federal police in ninety one. You
[9:30] Speaker 3: just start off in some small jobs that went for
[9:32] Speaker 3: a few years before I got an opportunity to learn
[9:35] Speaker 3: Vietnamese for a year at the RAF School of Languages,
[9:39] Speaker 3: and that you might remember that there was a heavy
[9:42] Speaker 3: Vietnamese heroin interest in importations during the nineties and heroin
[9:48] Speaker 3: was sort of a bit out of control. But following that,
[9:51] Speaker 3: I joined an Asian focused task force with a national
[9:55] Speaker 3: crime authority for three years. That brought me up to
[10:00] Speaker 3: and that was sort of mainly drug related. After that,
[10:03] Speaker 3: I joined a money laundering sort of team, and my
[10:06] Speaker 3: interest in fraud, of which this sort of tobacco crime
[10:10] Speaker 3: basically is at its core. It piqued my interest in
[10:14] Speaker 3: fraud and following the money and I did a tobacco
[10:17] Speaker 3: job with a federal place back in two thousand. That
[10:20] Speaker 3: was they had diverted one hundred million cigarettes to the
[10:26] Speaker 3: domestic market, which was supposed to be duty free. It
[10:28] Speaker 3: was pretty clever the way they disguised it, but back
[10:33] Speaker 3: then the excise was only twenty cents per stick, so
[10:36] Speaker 3: the size of that crime was only twenty million. Had
[10:40] Speaker 3: that same crime happened now it's one hundred and fifty million,
[10:43] Speaker 3: So that's the excis has gone up seven and a
[10:45] Speaker 3: half times since then. Then, that sort of the success
[10:49] Speaker 3: of that job, and there were about ten or twelve
[10:51] Speaker 3: crooks went to jail for that. Success of that got
[10:53] Speaker 3: me a job in Pakistan.
[10:55] Speaker 2: I went there.
[10:55] Speaker 3: For three years as the senior liaison officer, looking after
[11:01] Speaker 3: eleven or twelve countries around that region, India, all the stands,
[11:05] Speaker 3: Sri Lanka, Nepal.
[11:07] Speaker 1: Fascinating time.
[11:08] Speaker 2: Yeah, it was a.
[11:09] Speaker 3: Great time, and of course the AFP's got people all
[11:12] Speaker 3: over the world. I think there was about thirty three
[11:15] Speaker 3: liaison posts at that time. I don't think I had
[11:18] Speaker 3: the most luxurious spot of the network, but.
[11:22] Speaker 1: It was what time period was that two thousand started
[11:28] Speaker 1: long after September eleven, then, yeah, there was a big
[11:30] Speaker 1: going on.
[11:32] Speaker 3: Obviously there was a war that just started next door
[11:35] Speaker 3: in Afghanistan and Al Qaeda were running right Osama lived
[11:41] Speaker 3: just up the road. Unbeknowns to anyone at the time.
[11:43] Speaker 1: Now that that would have been a story for any
[11:46] Speaker 1: good catch law enforcement if you could have.
[11:49] Speaker 3: Yeah, well, Karla Sheik Muhammad, the number three in al
[11:52] Speaker 3: Qaeda was caught a week after I got there in
[11:55] Speaker 3: January two thousand and three, so I claimed that one.
[11:59] Speaker 2: Despite have nothing to do with.
[12:01] Speaker 3: But there was an Australian, g had Jack Thomas, who
[12:06] Speaker 3: was arrested by the Pakistanis for allegedly associating with al
[12:11] Speaker 3: Qaeda at the time.
[12:13] Speaker 1: Gihad Jack. I remember that that was one of the
[12:17] Speaker 1: first times, was it.
[12:18] Speaker 3: Yeah, I think he was the first Australian to be
[12:22] Speaker 3: arrested for terrorism related stuff over there, And yes, I
[12:27] Speaker 3: had to deal with him and getting access to him,
[12:29] Speaker 3: and in Australiana, I thought he wanted to interview him
[12:32] Speaker 3: pursue it to our laws, but that didn't really hold
[12:36] Speaker 3: much sway in Pakistan. So that went on for a while,
[12:40] Speaker 3: and he eventually came back to Australia and because he
[12:43] Speaker 3: wasn't interviewed under Australian type conditions, that interview was thrown
[12:49] Speaker 3: out and he eventually got off the charges, so he
[12:53] Speaker 3: carries on. He ended up delivering milk to the AFP
[12:56] Speaker 3: cafe not long after that.
[12:58] Speaker 2: Which was a.
[13:00] Speaker 1: Concerned It was a bit of a.
[13:02] Speaker 3: Punch in the face with a large truck would pull
[13:04] Speaker 3: up outside our cafe, but with him driving, but not
[13:08] Speaker 3: to where we moved on. But there was plenty going
[13:11] Speaker 3: on in Pakistan. It was a really challenging time.
[13:14] Speaker 1: Akay. Once you left the AFP, you ended up Australian
[13:19] Speaker 1: Border Force as well. Yeah.
[13:21] Speaker 3: Well, the Border Force came into being on the first
[13:24] Speaker 3: of July twenty fifteen, had sort of changed their name
[13:27] Speaker 3: from Customs and then it went to Austrai Customs and
[13:31] Speaker 3: Border Protection and then.
[13:32] Speaker 2: Finally to the Border Force.
[13:34] Speaker 3: And a friend of mine was there and wanted me
[13:36] Speaker 3: to come over to help them set up an organized
[13:40] Speaker 3: crime branch and I was happy to do so. And
[13:42] Speaker 3: when I got there, I told them that I'd like
[13:45] Speaker 3: to look at tobacco elicit that, yeah, because I had
[13:50] Speaker 3: an inkling that there was a thing and the government
[13:54] Speaker 3: had just ramped up the excise in twenty ten twenty
[13:58] Speaker 3: five percent and that's sort of a I heard of
[14:00] Speaker 3: the greapevine that that had triggered quite a bit of
[14:03] Speaker 3: smuggling of tobacco across the border, and no one was
[14:06] Speaker 3: really looking at it. And it was partially the ABF's
[14:10] Speaker 3: responsibility to do so so I started a little team
[14:14] Speaker 3: just focused on tobacco. Of course, when you focus on
[14:16] Speaker 3: a commodity, you become you develop expertise.
[14:20] Speaker 1: And an expert.
[14:21] Speaker 3: Yeah, and our team it was like shooting fish in
[14:25] Speaker 3: a barrel. There was so much of it and had
[14:27] Speaker 3: gone undetected until then. And so my team became a
[14:30] Speaker 3: larger team. And then one day the Commissioner went on
[14:33] Speaker 3: TV and said we've got a tobacco strike team, which
[14:37] Speaker 3: was very kind of him, and that became my team.
[14:42] Speaker 3: And then I realized that we were out of our
[14:44] Speaker 3: depth given the international links and not the organized crime links,
[14:49] Speaker 3: and recommended that it move into a task for situation,
[14:52] Speaker 3: which it eventually did, and yeah, we're still dealing with
[14:55] Speaker 3: those problems today. So that team notified the government as
[15:00] Speaker 3: to how big the problem was and that they should
[15:03] Speaker 3: respond in kind with a proper enforcement response, and those
[15:07] Speaker 3: sort of warnings went unheeded for quite a long time.
[15:10] Speaker 1: So an extensive experience in law enforcement. I think you
[15:14] Speaker 1: retired from the AFPA as a detective superintendent was that there.
[15:17] Speaker 3: I was a detective sergeant technically, but I did act
[15:21] Speaker 3: in a superintendent role for eight years. But they would
[15:24] Speaker 3: never give me the actual stroke.
[15:27] Speaker 1: Sorry, I'm laughing. That brings me back to some times
[15:30] Speaker 1: i'd put in the report, and you know police reports,
[15:33] Speaker 1: you have to direct it to the people that goes
[15:35] Speaker 1: to and I think in one report I directed that
[15:38] Speaker 1: there was eight acting different ranks. These a reluctant still
[15:42] Speaker 1: point people in positions, but just do the work.
[15:45] Speaker 3: And yeah, no, they were happy for me to do
[15:47] Speaker 3: the work at that level, but not happy to give
[15:51] Speaker 3: me the actual rank. Perhaps I didn't play the game
[15:53] Speaker 3: quite well enough, but never mind. I just was pretty
[15:56] Speaker 3: coen on catching crooks and I enjoyed doing that for
[15:59] Speaker 3: my six years I was in it.
[16:01] Speaker 1: Well, I can assure you're in a safe place here
[16:03] Speaker 1: that I catch killers. Thank you that don't play the game.
[16:07] Speaker 1: It's just a game. To give a sense of your expertise.
[16:11] Speaker 1: Besides the operational experience you had in that era, You've
[16:16] Speaker 1: also provided submissions about elictied tobacco to federal and state
[16:19] Speaker 1: parliament inquiries, numerous overseas inquiries including Hong Kong, the UK,
[16:25] Speaker 1: the Philippines, two more, Singapore, and established an enlisted trade
[16:29] Speaker 1: task force in Papuo and New Guinea. So when I'm
[16:33] Speaker 1: sitting here talking to you, about illicit tobacco. You have
[16:37] Speaker 1: a wealth of experience.
[16:39] Speaker 2: Yeah, I've been well.
[16:40] Speaker 3: After I left the Border Force, I've continued to focus
[16:44] Speaker 3: on it and I've actually obviously expanded my knowledge about
[16:47] Speaker 3: it and educated myself right around the world about the problem.
[16:51] Speaker 2: And while you're in the job, you've.
[16:53] Speaker 3: More focused and your job is really to catch crooks
[16:57] Speaker 3: and lock people up. When you able to step back
[17:01] Speaker 3: from that, you realize that prevention is better than cure
[17:04] Speaker 3: and you start looking at what some of the causes
[17:07] Speaker 3: of this, and perhaps some time spent dealing with those
[17:11] Speaker 3: would be would be better use of public funds. So
[17:15] Speaker 3: I've really learned pretty much from go to wo about
[17:19] Speaker 3: aliceat tobacco in that time. And you mentioned some international
[17:23] Speaker 3: things I've done. But yeah, Australia's situations are so bad
[17:27] Speaker 3: that we are the best example of what not to
[17:30] Speaker 3: do in Australia. So that's given me some opportunities to
[17:34] Speaker 3: go overseas and help advise some governments not to follow
[17:39] Speaker 3: Australia's example.
[17:40] Speaker 1: It's interesting you say that when you stepped away from
[17:44] Speaker 1: policing locking up the bad guys and then you look
[17:46] Speaker 1: at the problem in a broader escape. I suppose the
[17:50] Speaker 1: way of describing it and realizing that you can't the
[17:53] Speaker 1: rest your way out of some situations and prevention is
[17:57] Speaker 1: the better option.
[17:58] Speaker 2: Yeah.
[17:59] Speaker 3: No, that's definitely true, and it's true of a number
[18:02] Speaker 3: of crime types. And so it sort of concerns me
[18:05] Speaker 3: that our government now is really putting all their eggs
[18:08] Speaker 3: in an enforcement basket and refusing to accept that their
[18:12] Speaker 3: policy is wrong, it's failed in all respects, and that
[18:18] Speaker 3: the problem is actually with enforcement and that if only
[18:22] Speaker 3: enforcement had cracked down earlier, then we wouldn't have the
[18:25] Speaker 3: troubles that we're having. And that's not true and never
[18:30] Speaker 3: has been, and so as a result, we're just continuing
[18:33] Speaker 3: on down the same failed path.
[18:35] Speaker 1: At the moment, let's wind it back for what the
[18:39] Speaker 1: original intent of the tobacco control policies were. When did
[18:43] Speaker 1: they come in and what was the original intent, because
[18:46] Speaker 1: I'm sure when the policies came in the government wasn't saying, oh,
[18:49] Speaker 1: this will be cool, stir up organized crime and everything else.
[18:53] Speaker 1: What was the actually intent? Why did they decide to
[18:56] Speaker 1: tax tobacco.
[18:59] Speaker 3: Obviously to reduce the smoking rate. And it all started
[19:03] Speaker 3: with a convention that we signed in two thousand and
[19:06] Speaker 3: three with a World Health or Organization which had a
[19:09] Speaker 3: number of clauses in it designed to stop people smoking
[19:15] Speaker 3: or discourage people from smoking. One of those clauses touched
[19:19] Speaker 3: on taxation, Article six, which said that countries could consider
[19:26] Speaker 3: raising taxes as appropriate in order to discourage people from smoking,
[19:33] Speaker 3: and Australia has taken that invitation and run with it exponentially.
[19:38] Speaker 3: It's probably, i would argue the point that we haven't
[19:41] Speaker 3: raised them appropriately. We've raised them recklessly to a point
[19:46] Speaker 3: that's by far the highest in the world, and probably
[19:50] Speaker 3: health authorities are very proud of that fact. What goes
[19:54] Speaker 3: unmentioned is that in that same convention that we signed,
[19:57] Speaker 3: Article fifteen says that you should increase your enforcement efforts
[20:03] Speaker 3: in order to prevent elicit to backact because they knew
[20:06] Speaker 3: that some of these measures would be an invitation for
[20:09] Speaker 3: organized crime to come in. And Australia ignored that, mostly
[20:12] Speaker 3: because it's the Health Department that controls out tobacco control policy,
[20:17] Speaker 3: that runs it, that sign that document, and they've got
[20:20] Speaker 3: no expertise or experience with law enforcement, so they've just
[20:24] Speaker 3: simply ignored that. And we didn't ramp up enforcement in
[20:29] Speaker 3: order to match the raising excise, So they raised the excise.
[20:34] Speaker 3: They just thought it was an honor system that people
[20:38] Speaker 3: would abide by that, and a lot of our customs
[20:42] Speaker 3: excise collection is based on an honor system, so that
[20:47] Speaker 3: everyone's just going to do the right thing. Of course
[20:51] Speaker 3: they haven't. And it became sort of supercharged in twenty
[20:55] Speaker 3: ten with the Nicola Roxon was the Health minister at
[20:59] Speaker 3: the time. She got a report the year before saying
[21:03] Speaker 3: let's just ramp up exercise rapidly, which she did from
[21:07] Speaker 3: the next year to at twenty five percent, which was
[21:10] Speaker 3: the first major rise. It had been only going up
[21:13] Speaker 3: at sort of CPI inflation before then, and since then
[21:18] Speaker 3: it's gone up in various incrementals ten percent, five percents
[21:22] Speaker 3: plus the inflation. And yeah, so from when I was
[21:26] Speaker 3: in the border force in twenty fifteen, it was fifty
[21:29] Speaker 3: cents a stick and now it's a dollar fifty three.
[21:31] Speaker 3: That was a tax per stick in twenty fifteen, eighty
[21:35] Speaker 3: ten years ago, and that it's three times that. So
[21:38] Speaker 3: that is the vulnerability and our inability to enforce that
[21:43] Speaker 3: and collect that excise. That's the vulnerability that criminals have.
[21:48] Speaker 1: Just exploited, j exploited could have we had a warning.
[21:52] Speaker 1: I remember very early in my policing career, early days
[21:56] Speaker 1: in detectives. So we're talking in the in the nineties
[21:58] Speaker 1: or Pollino were a truck that was bringing a truckload
[22:02] Speaker 1: of cigarettes from Queensland to New South Wales because the
[22:04] Speaker 1: states had different taxation and that was tax evasion there.
[22:10] Speaker 1: So we would before bought in nationally, we would have
[22:13] Speaker 1: seen in states how it impacted potentially.
[22:17] Speaker 2: Yeah.
[22:18] Speaker 3: No, it's classic fraud methodology where they're trying to, as
[22:22] Speaker 3: you say, exploit a vulnerability and the process just not
[22:27] Speaker 3: pay what's due in exis. Back then there were state taxes,
[22:32] Speaker 3: but that sort of I think that died out in
[22:35] Speaker 3: the late nineties and it just became.
[22:37] Speaker 2: A federal thing.
[22:38] Speaker 3: So the problem was that we've got federal policy, federal taxes,
[22:42] Speaker 3: but the consequences are played out at a state level. So,
[22:46] Speaker 3: as I say, when these products got through the border
[22:48] Speaker 3: and all of the focus was on the ABF and
[22:52] Speaker 3: the customs to stop them. Once that failed, people like
[22:55] Speaker 3: state place were not interested in tidying up the mess
[22:59] Speaker 3: that the federal government had coursed. So there was this
[23:01] Speaker 3: disconnect between the federal policy and their ability to enforce
[23:06] Speaker 3: it and collect that money. So back in two thousand
[23:10] Speaker 3: and twenty, I think the exercise we collected was sixteen
[23:14] Speaker 3: and a half billion, and this year it's going to
[23:17] Speaker 3: be five.
[23:18] Speaker 1: Sixteen and a half biing from a legally imported from
[23:23] Speaker 1: Arka products. Yes, and the tax on it sixteen b
[23:26] Speaker 1: and in two twenty and now it's gone down.
[23:29] Speaker 3: Yeah, six years later as now that's five billion. So
[23:33] Speaker 3: that's not It'd be great if two thirds of people
[23:35] Speaker 3: had stopped smoking, that's the purpose of it. But that's
[23:39] Speaker 3: not the case. All those two people have gone over
[23:42] Speaker 3: to the illicit market and funding an organized crime, not
[23:47] Speaker 3: funding the government.
[23:48] Speaker 1: Well, I suppose the basis of what they bought it in.
[23:53] Speaker 1: No one could argue with the logic of from a
[23:55] Speaker 1: health issue making clearly and no one can argue the
[23:59] Speaker 1: case it's not good for you. Okay, we're going to
[24:02] Speaker 1: increase the tax and that's going to make it harder
[24:05] Speaker 1: for people to buy it, but not really open their
[24:07] Speaker 1: eyes up to the black market that would come into play.
[24:10] Speaker 3: Yeah. No, I mean, as I say again, the Health
[24:14] Speaker 3: Department were not the word is naive, ignorant to the
[24:19] Speaker 3: fact that the black market would come into play. They
[24:22] Speaker 3: based their policy on a fallacy that there are only
[24:25] Speaker 3: two options when you raise the price, that people would
[24:29] Speaker 3: pay it and pay the tax or quit, and there
[24:32] Speaker 3: was easily available third option by an illicit market, which which.
[24:39] Speaker 1: Steered people towards well, I suppose they bought in from memory.
[24:43] Speaker 1: We used to advertise cigarettes, which they stopped that. Then
[24:47] Speaker 1: that packaging on cigarettes it's a health hazard. And then
[24:51] Speaker 1: I think they took that for with the pictures of
[24:54] Speaker 1: the medical outcomes from smoking. So they've tried that, but
[24:58] Speaker 1: I understand what you're saying. Health department think, well, it's
[25:01] Speaker 1: the real people will buy by it.
[25:03] Speaker 3: But yeah, no, they've brought in a thousand regulations about
[25:07] Speaker 3: what to constrain the legal market, but the illegal market
[25:12] Speaker 3: just ignores all of that and has colored packaging, doesn't
[25:17] Speaker 3: have health warnings, just does whatever they like, and they've
[25:20] Speaker 3: been getting away with it.
[25:21] Speaker 1: Is the illegal market to the quality of the product
[25:24] Speaker 1: that comes in is that of concern? I know, if
[25:27] Speaker 1: we reference the drugs dance parties or whatever. If there's
[25:33] Speaker 1: a crackdown, they're worried about the quality of the drugs
[25:35] Speaker 1: coming in. There would be no control with the illegal market.
[25:39] Speaker 1: The quality of the nickeoteam that's coming in.
[25:42] Speaker 2: Yeah, no, that's right.
[25:43] Speaker 3: They're not as high quality or quality assured as the
[25:47] Speaker 3: legal product, but they're not so bad as to dissuade
[25:53] Speaker 3: people from going over there. So they might taste worse,
[25:57] Speaker 3: they're not their favorite brand, but when they're four or
[26:01] Speaker 3: five times less than the legal product, they can look
[26:05] Speaker 3: past that. And of course a person who has decided
[26:09] Speaker 3: to make the choice to smoke, knowing the risks of cancer.
[26:13] Speaker 2: And everything is take at the start with, they're a.
[26:15] Speaker 3: Wrist tagger and they're just going to look at another
[26:17] Speaker 3: pack of smokes and say, well, how bad can they be?
[26:21] Speaker 3: Sort of thing, So they yeah, that hasn't dissuaded them
[26:25] Speaker 3: from moving.
[26:25] Speaker 1: Over And then you've got the breaking it down. So
[26:29] Speaker 1: legal cigarettes manufactured overseas imported to Australia but not going
[26:33] Speaker 1: through customs, so they're not incurring the XIS tax on it.
[26:38] Speaker 1: Then the local corner store that's got cigarettes they're selling them,
[26:43] Speaker 1: they would take a cut for what they're selling. The
[26:45] Speaker 1: people that got them there would take a cut for
[26:49] Speaker 1: getting them the products, so there's a lot of profit
[26:52] Speaker 1: to be made.
[26:53] Speaker 3: Yeah, well they're saving thirty five bucks a packet and
[26:56] Speaker 3: not paying the tax. So a lot of people can
[26:59] Speaker 3: get a clip the supply chain to make up for that,
[27:02] Speaker 3: and yeah, they're significantly cheaper.
[27:05] Speaker 1: And I would imagine people and it comes down to
[27:07] Speaker 1: this too, that they're looking at it, well, I'm not
[27:10] Speaker 1: dealing drugs. I'm not a drug dealer. I'm evading tax
[27:13] Speaker 1: from the Australian government. Which seems to be a national
[27:16] Speaker 1: pastime of everyone. How can you avoid paying taxes? So
[27:21] Speaker 1: I suppose they could justify it in their own minds too.
[27:24] Speaker 3: Yeah, well everyone's able to justify it at the moment
[27:27] Speaker 3: because they've just decided customers and shopkeepers I'm in shopkeepers
[27:31] Speaker 3: just don't want to go out of business, which many
[27:34] Speaker 3: have who've wanted to do the legal thing and just
[27:36] Speaker 3: been priced out of the market because it's unfair and unbalanced.
[27:40] Speaker 3: But the consumers themselves, I mean, there was a time
[27:43] Speaker 3: where there was a cry for them to heed the
[27:48] Speaker 3: fact that they're funding organized crime and they should feel
[27:51] Speaker 3: guilty about that and so on. But they just think
[27:54] Speaker 3: that's an unfair tax. They said, you know, you've it's
[27:57] Speaker 3: just gone too far. And there was some loyalty towards
[28:01] Speaker 3: the law and Australias are generally Laura binding, and there
[28:05] Speaker 3: was also a loyalty to the brands that they liked.
[28:09] Speaker 3: But as I say, come about twenty twenty, people just
[28:12] Speaker 3: got sick of all that and said, yeah, no, you're
[28:14] Speaker 3: sort of taking the piss and government and we feel
[28:19] Speaker 3: no shame in moving over the illicit market because it's
[28:22] Speaker 3: four or five times cheaper.
[28:23] Speaker 2: So that's what we'll do.
[28:25] Speaker 1: I can't help but think back to prohibition in the US.
[28:29] Speaker 1: We in the twenties thirties, so I think it was
[28:32] Speaker 1: where organized crime flourished, trying to put just banned something outright?
[28:38] Speaker 1: Is there elements of that in this situation.
[28:41] Speaker 3: It's virtually exactly the same. You've got the Pearl clutches
[28:45] Speaker 3: and the Health Department wanting to just ban stuff, and
[28:49] Speaker 3: just there's a disconnect between their ideological goals and the
[28:54] Speaker 3: enforcement realities. So they just don't understand that it's unenforceable
[28:59] Speaker 3: the bands they're talking about. So what we have is
[29:02] Speaker 3: a virtual prohibition by price with cigarettes. We've also we've
[29:06] Speaker 3: got a virtual prohibition of vapes by accessibility, with the
[29:12] Speaker 3: hurdles that you have to jump through to get your
[29:13] Speaker 3: hands on a vape that's another issue we might come
[29:16] Speaker 3: to that.
[29:17] Speaker 1: Want to talk about that, because it's a sort of
[29:19] Speaker 1: flow on it is that we talked about that later.
[29:22] Speaker 3: It's related, But no, it's a definite pseudo prohibition policy.
[29:28] Speaker 3: And they, as I said, they've put all our eggs
[29:31] Speaker 3: in the basket of enforcement, which is unreasonable and not
[29:35] Speaker 3: going to work. Whereas and even the Customs Minister just
[29:39] Speaker 3: the other day talked about al Capone and I think
[29:42] Speaker 3: he's bought him up. He's brought him up a few
[29:44] Speaker 3: times that he was caught with the taxation policy, and
[29:48] Speaker 3: you know, I think he fancies himself as a bit
[29:50] Speaker 3: of an elliot and as the customs minister and that
[29:54] Speaker 3: you know, we just put this band of people together
[29:57] Speaker 3: and we just go round everyone up. But bod he
[30:00] Speaker 3: fails to remember and learn from history was that that
[30:05] Speaker 3: only came under control when they repealed it. So they
[30:08] Speaker 3: repealed that whole prohibition policy and ended up legalizing alcohol,
[30:13] Speaker 3: which was what everyone wanted and there was a massive
[30:16] Speaker 3: market for it, and they realized they couldn't enforce it.
[30:18] Speaker 3: So we haven't got to that point yet, which is
[30:21] Speaker 3: just common sense. And you would think that we would
[30:23] Speaker 3: have had that over the last one hundred years, but.
[30:27] Speaker 1: No past behavior predicts future behavior exacts. As I said
[30:33] Speaker 1: at the start or earlier on that, you've done a
[30:35] Speaker 1: lot of submissions and you're currently put in a submission
[30:39] Speaker 1: to the Senate inquiry. I just want to read out
[30:41] Speaker 1: a quote from the submission that might give you give
[30:44] Speaker 1: our listeners an understanding of your position. So just I'll
[30:48] Speaker 1: read this out and then we can talk about that.
[30:50] Speaker 1: Australia's tobacco control policy faces a critical juncture. While designed
[30:54] Speaker 1: to reduce smoking prevalence and improve public health, current settings
[30:58] Speaker 1: at producing outcomes increasingly misaligned with these objectives. The illicit
[31:03] Speaker 1: tobacco market now represents the overwhelming majority of consumption, criminal
[31:08] Speaker 1: groups control supply chains, tobacco exercise revenue has collapsed to
[31:12] Speaker 1: approximately one third of its level six years ago. Smoking
[31:15] Speaker 1: rates are increasing, and communities across Australia are experiencing violence
[31:20] Speaker 1: and intimidation linked to organized crime activity in this sector.
[31:24] Speaker 1: I read that, and I've got the sense that you're
[31:26] Speaker 1: not in favor of the way that we're approaching it.
[31:28] Speaker 1: But like breaking there's a lot to break down in that.
[31:31] Speaker 1: The talk is through some of the comments there.
[31:35] Speaker 3: Yeah, no that's probably comments that have built up of
[31:40] Speaker 3: ten years of frustration where the government continue to go
[31:44] Speaker 3: down this path and there's nothing about our tobacco control
[31:49] Speaker 3: policy like they mean, well yeah, and we're all on
[31:53] Speaker 3: the same page, which is bizarre becas I don't want
[31:56] Speaker 3: anyone to smoke. I've never smoked. Yeah, I think it's
[31:58] Speaker 3: a ridiculous habit. But however, I'm not naive enough to
[32:03] Speaker 3: realize that people do like it and want to consume nicotine.
[32:06] Speaker 3: So but just the methodology that they want to use
[32:10] Speaker 3: and they think is right in order to reduce making
[32:13] Speaker 3: I disagree with. And you know a lot of other experts,
[32:17] Speaker 3: criminologious economists, even premiers of New South Wales, have got
[32:23] Speaker 3: different views on what we should do about fixing this problem.
[32:27] Speaker 3: But how they don't see some of those consequences and
[32:32] Speaker 3: that what they've done has caused them it's sort of
[32:36] Speaker 3: beyond me at the moment.
[32:38] Speaker 1: It's really frustrating with these inquiries. Is there any and
[32:42] Speaker 1: it's hard for politicians to admit they're going down the wrong,
[32:46] Speaker 1: wrong path, but is there any Do you think it
[32:48] Speaker 1: will get to the point where people go, Okay, well
[32:51] Speaker 1: this ain't working, or are we falling into the trap
[32:54] Speaker 1: of let's increase the penalties, let's go harder, let's arrest
[32:59] Speaker 1: our way out of this, we'll stop this.
[33:01] Speaker 3: Yeah, well that's the path we're going down at the moment,
[33:03] Speaker 3: the arrest of the way out of it, which, as
[33:05] Speaker 3: you say, has never worked. I feel that this has
[33:10] Speaker 3: been a really slow moving crime type where it's taken
[33:13] Speaker 3: people ages to understand that it's a thing. It's a
[33:16] Speaker 3: huge thing, even though there was another parliamentary inquiry ten
[33:21] Speaker 3: years ago that told the government that it was a
[33:23] Speaker 3: big thing, and they disregarded that and didn't implement the
[33:27] Speaker 3: recommendations from that inquiry. So we've got another one on now.
[33:31] Speaker 3: We'll see what happens with that. But I suspect that
[33:34] Speaker 3: they won't admit that it's wrong. And I think we're
[33:38] Speaker 3: just going through a phase of legislative experimentation where again
[33:44] Speaker 3: the health authorities are in control of this. They're not
[33:47] Speaker 3: law enforcement experts, but they're controlling the law enforcement direction.
[33:52] Speaker 3: But yeah, as I say, I think they'll go down
[33:55] Speaker 3: this path. They'll ramp up penalties, some people will go
[33:59] Speaker 3: to but there'll be more people.
[34:01] Speaker 2: What it does.
[34:01] Speaker 3: While there's a market for nicotine there's going to be
[34:04] Speaker 3: criminals willing to provide it to them. So it might
[34:08] Speaker 3: take a year, might take two, might take three years,
[34:10] Speaker 3: and they go and say, yeah, this isn't really working.
[34:13] Speaker 1: I think the hard part here too, and you touched
[34:16] Speaker 1: on it, and I support that view that the consumers,
[34:21] Speaker 1: the people who are going in to buy the behind
[34:24] Speaker 1: the counter tobacco products, are thinking, well, it's just tax evasion, Like,
[34:28] Speaker 1: it's not this crime that shocks people's senses. The people
[34:32] Speaker 1: that are doing it, the criminals that are doing it
[34:34] Speaker 1: at various levels, because I understand that it's a chain
[34:38] Speaker 1: that has to go through. Well, you know, we're ripping
[34:41] Speaker 1: the government off tax so I can understand that that's
[34:44] Speaker 1: a hard crime to fight when you've got the general population.
[34:47] Speaker 1: And if a friend of mine said, I've bought some
[34:50] Speaker 1: cigarettes and behind the counter, I'll be honest, I wouldn't
[34:54] Speaker 1: think the thought wouldn't cross my mind. You can't do that.
[34:56] Speaker 1: That's illegal. It's just oh yeah, whatever, tax evasion. Yeah,
[35:02] Speaker 1: it's a hard battle to try and shut down.
[35:04] Speaker 2: Yeah, now it is.
[35:05] Speaker 3: It's a hard sell. And I mean the state police
[35:08] Speaker 3: are the ones who are most resourced and have the
[35:11] Speaker 3: right powers and expertise to shut down organize crime. But
[35:16] Speaker 3: it's a hard sell for them because they've had a
[35:18] Speaker 3: thousand other crimes that they have been focusing on and
[35:23] Speaker 3: should focus on. And they're rightly saying, well, which crimes
[35:26] Speaker 3: do you want us to drop and resources do you
[35:28] Speaker 3: want us to move from what they're already doing into
[35:33] Speaker 3: this new thing, which basically is only it's been self
[35:36] Speaker 3: inflicted on us by the federal government. So perhaps you
[35:40] Speaker 3: guys can step up and look after that one. But
[35:42] Speaker 3: so there's been this reluctance of state police to get involved,
[35:47] Speaker 3: and I appreciate that, and that's fair enough.
[35:49] Speaker 1: Well, I look at the resources that would go into it,
[35:52] Speaker 1: and there's a lot of crimes that the public would
[35:55] Speaker 1: be more outraged by that they want police attention. So
[35:58] Speaker 1: I can imagine that balancing act because sources are limited,
[36:01] Speaker 1: that balancing act of where you channel your resources. And
[36:04] Speaker 1: I'm also mindful what you said. We're thinking the problem
[36:08] Speaker 1: should be at the border, don't let these cigarettes come in,
[36:11] Speaker 1: and then we wouldn't have to place it at the
[36:13] Speaker 1: state level. But that's not necessarily the way it works.
[36:17] Speaker 2: Is it.
[36:18] Speaker 3: No, it's not the way it works. So I think
[36:19] Speaker 3: the Commissioner went to US Senate estimates a couple of
[36:22] Speaker 3: years ago and said, we stopped twenty five percent. So
[36:25] Speaker 3: I think the Border Force stopped about four and a
[36:27] Speaker 3: half billion dollars worth of tobacco last year. And if
[36:32] Speaker 3: twenty five percent's right, then that's an awful lot has
[36:34] Speaker 3: got through and it is an awful it's a huge market.
[36:38] Speaker 3: And yeah, their settings right at the moment. In order
[36:42] Speaker 3: to constrain that.
[36:44] Speaker 1: Can you talk us through just break it down on
[36:47] Speaker 1: a large scale where we talked about the local person
[36:50] Speaker 1: that owns the corner the store that's getting his illegal
[36:53] Speaker 1: tobacco selling it to his customers behind the counter. Just
[36:57] Speaker 1: talk us through how the operation works and the big
[37:00] Speaker 1: players that come into it that make their money cigarettes.
[37:04] Speaker 1: Where do they manufactured, how do they get them across
[37:07] Speaker 1: to Australia, how do they try to ship them in
[37:09] Speaker 1: and avoid avoid customs? And then what happens once they
[37:13] Speaker 1: arrive here and who profits from them?
[37:17] Speaker 3: Do you want to whiteboard listen tobacco one A one? Well, first,
[37:21] Speaker 3: there's there's three main components to a list of tobacco.
[37:25] Speaker 3: One is the pre manufactured products overseas and our most
[37:29] Speaker 3: popular brand is Manchester which is made in Dubai predominantly,
[37:33] Speaker 3: and Double Happiness comes out of China. So there are
[37:36] Speaker 3: two biggest brands. There's a variety of other ones as well.
[37:39] Speaker 3: I noticed Bens and Hedges is a fake one from
[37:42] Speaker 3: the UK is hitting the streets.
[37:45] Speaker 2: Quite hard at the moment.
[37:46] Speaker 3: But they are manufactured for any market and they packed
[37:51] Speaker 3: into containers and then they and.
[37:54] Speaker 1: Are they doing anything wrong in their jurisdiction. So that's
[37:57] Speaker 1: that's all legitimate. That's a business that they're not hiding
[38:00] Speaker 1: from them. Not it's not a drug den where they're
[38:02] Speaker 1: manufacturing the legal drugs. That's a legitimate business.
[38:05] Speaker 3: It is they know where they're going to end up.
[38:08] Speaker 3: There are some Manchester cigarettes that are actually manufactured in
[38:13] Speaker 3: Australian plane packaging, again as a means to disguise them
[38:18] Speaker 3: once they get under the shelves from perhaps any inspectors,
[38:21] Speaker 3: if any inspectors were coming around to look at them.
[38:23] Speaker 3: But just plain old fashioned smuggling of containers that they
[38:28] Speaker 3: change the names of the products that on the manifest
[38:30] Speaker 3: they change the roots so as to distract customs from
[38:37] Speaker 3: their origins. Come through Singapore, come through Malaysia.
[38:42] Speaker 1: Big shipping, not like a drug run or with a
[38:46] Speaker 1: bag full of illegal cigarettes.
[38:49] Speaker 3: So whereas you can just dump a bag of cocaine
[38:51] Speaker 3: ownership and that's quite a high profit in one small bag,
[38:55] Speaker 3: you need the volume of cigarettes because they're so light,
[39:00] Speaker 3: you need actually a whole container to make it worthwhile.
[39:02] Speaker 3: So there's about ten million cigarettes in the container. And
[39:05] Speaker 3: as I say, you bombard the border, the Australian Border
[39:09] Speaker 3: Force seizes six million cigarettes a day, which sounds a lot.
[39:14] Speaker 3: It is a lot, but it's again it's only scratching
[39:18] Speaker 3: the surface of what gets through. And the cigarettes are
[39:21] Speaker 3: one thing. There's another element where raw tobacco is also
[39:26] Speaker 3: smuggled in, so that comes from other places such as
[39:29] Speaker 3: the Middle East and Indonesia. The Philippines or also involved
[39:34] Speaker 3: in some of that manufacturer. And once the raw tobacco
[39:37] Speaker 3: comes in, then it goes to sort of backyard factories
[39:40] Speaker 3: that have got cigarette making machines that can turn that
[39:44] Speaker 3: raw product into a cigarette with a filter. I'm told
[39:47] Speaker 3: that those products are not very high quality at all, right,
[39:51] Speaker 3: and then you've also got some steel crops being grown
[39:55] Speaker 3: in Australia, even though licenses for those went out of
[39:59] Speaker 3: business about fifteen years ago. The expertise in how to
[40:03] Speaker 3: grow them and where to grow them. In Australia is
[40:05] Speaker 3: a big place.
[40:06] Speaker 2: It's hard.
[40:07] Speaker 1: So is this a lot when you say a crop
[40:09] Speaker 1: you're not allowed to grow tobacco here.
[40:11] Speaker 3: No, we used to have a manufacturing industry in Australia
[40:15] Speaker 3: and it was cultivated predominantly in Myrtleford in Victoria, but
[40:19] Speaker 3: also up in Mareba in Queensland. But there was the
[40:23] Speaker 3: term chop chop, which is uniquely Australia, that came from
[40:27] Speaker 3: some of these crops out of Myrtleford literally falling off
[40:30] Speaker 3: the back of trucks into criminals vans who would go
[40:35] Speaker 3: to a backyard of western suburbs of Melbourne and chop
[40:40] Speaker 3: it with a shredding machine into smokeable sized tobacco. And
[40:44] Speaker 3: hence the term chop chop originated from there. So there's
[40:48] Speaker 3: still some of that going on. It's very hard to
[40:51] Speaker 3: find crops in Australia. It's a big place. So that's
[40:54] Speaker 3: another method of trying of avoiding pain the excise on it.
[40:58] Speaker 3: But I don't know whether it's the modern laziness that
[41:02] Speaker 3: people just like the pre made cigarettes. So that's come
[41:05] Speaker 3: to prominence and it's probably the largest proportion of the
[41:08] Speaker 3: illicit market.
[41:09] Speaker 2: As the pre made ones.
[41:10] Speaker 3: We're a little bit fortunate at the moment that mister
[41:13] Speaker 3: Trump has started war in the Middle East.
[41:16] Speaker 2: Because that straight of hor Moves.
[41:18] Speaker 3: That's currently closed is one of the main trafficking routes
[41:24] Speaker 3: of this product coming out i Du Bay. So there's
[41:27] Speaker 3: a little bit of a delay or a supply stoppage
[41:31] Speaker 3: of the Manchester cigarettes at the moment.
[41:33] Speaker 1: So they land in the country and they just get
[41:37] Speaker 1: through customs in that they're not checking every container that
[41:40] Speaker 1: comes in and they work on the basis well, if
[41:44] Speaker 1: they catch twenty five percent of it, we still make
[41:46] Speaker 1: a shitlader the money with the ones that get through,
[41:48] Speaker 1: so they just take the hit for the container that's found.
[41:52] Speaker 1: Then what happens to the cigarettes from.
[41:54] Speaker 3: There, Well, there's just a massive distribution chain, so they'll
[41:58] Speaker 3: go to warehouses and then there'll be orders come in
[42:01] Speaker 3: and they will be distributed right around Australia in vans.
[42:05] Speaker 2: There's been vans.
[42:06] Speaker 3: Pulled over on all the highways of Australia going over
[42:10] Speaker 3: the knull board at w A and so on, all
[42:13] Speaker 3: the way down.
[42:13] Speaker 2: To the retail level.
[42:16] Speaker 3: And these criminal syndicates often put their own people in stores,
[42:21] Speaker 3: or open up news stores, or try to encourage older
[42:26] Speaker 3: family owned businesses or milk baths to sell their product.
[42:30] Speaker 1: So is that where the majority of the legal products
[42:33] Speaker 1: are sold? You see these pop up tobacco stores, the
[42:37] Speaker 1: little corner stores, and is that where most of the
[42:40] Speaker 1: products are being sold?
[42:41] Speaker 3: Yeah, you know it is. And it's just embarrassing because
[42:44] Speaker 3: they're so obvious. You know, you don't have heroin stores,
[42:48] Speaker 3: you don't have cocaine stores that sell that have a
[42:51] Speaker 3: big sign up the front saying I'm selling cocaine You've got,
[42:54] Speaker 3: But yeah, I've got tobacco stores that are selling illegal
[42:56] Speaker 3: product virtually openly.
[42:58] Speaker 2: Now.
[42:58] Speaker 3: It used to be under the cover and all a
[43:00] Speaker 3: secretive and black plastic, and it's more blatant than that.
[43:04] Speaker 3: Now it's just.
[43:05] Speaker 1: Everywhere a little bit naive here. But with the tobacco stores,
[43:10] Speaker 1: the ones that sign up tobacco store, they're still selling
[43:14] Speaker 1: on the surface. And we're generalizing here, but they're still
[43:18] Speaker 1: selling on the surface legitimate products that have gone through
[43:21] Speaker 1: the bean taxed.
[43:22] Speaker 3: And yeah, they'll have a component of their store or
[43:27] Speaker 3: a cabinet that will have the legitimate products. Yet probably
[43:31] Speaker 3: some of them will there's that's a dying breed of
[43:35] Speaker 3: selling legal product, and the ones who want to sell
[43:39] Speaker 3: purely legal product, bless their heart, they have taken ahead
[43:45] Speaker 3: of eighty or more percent of their profits.
[43:47] Speaker 1: Yeah. I saw something you featured on at the Four
[43:50] Speaker 1: Corners report, and people running legitimate stores just can't compete
[43:55] Speaker 1: with the illegal stores.
[43:56] Speaker 2: No.
[43:56] Speaker 3: So it's sort of saying a death of quite a
[43:58] Speaker 3: lot of milk bars because that did make up a
[44:01] Speaker 3: significant component of their profit. And it's more of a
[44:05] Speaker 3: worry in the country regions because you know, there might
[44:09] Speaker 3: be a town that's got one general store and their
[44:13] Speaker 3: profit margin and the people that they employ and the
[44:16] Speaker 3: sponsorships that they had out based a lot on the
[44:19] Speaker 3: cigarette sales, which are now gone to the illicit guy
[44:22] Speaker 3: down the street.
[44:23] Speaker 2: So I feel for those people.
[44:25] Speaker 1: Look and people just on that. People might argue, well,
[44:28] Speaker 1: you know, we shouldn't be selling these things, but yeah,
[44:31] Speaker 1: the world's not perfect. Yeah, and people they want tobacco though,
[44:36] Speaker 1: they will buy tobacco.
[44:37] Speaker 2: Yeah.
[44:38] Speaker 3: So yeah, and we did well, we got the smoking
[44:41] Speaker 3: rate down to about eight percent, but these people want
[44:44] Speaker 3: the smoking rate to be zero, and so we're giving
[44:47] Speaker 3: up the good result in order to strive for a
[44:50] Speaker 3: perfect result, and that's where we've got ourselves into trouble
[44:55] Speaker 3: because it's just gone pair shape.
[44:56] Speaker 1: Now is it pushing back to I think in the
[44:58] Speaker 1: submission you said smoking rates are increasing in communities across
[45:03] Speaker 1: Australia and experience, yeah.
[45:05] Speaker 3: Yeah, it's definitely increasing. Bizarrely, Australia only measures our smoking
[45:11] Speaker 3: rate officially once every four years, which, considering that's the
[45:15] Speaker 3: real bottom line of our tobacco control policy, we think
[45:18] Speaker 3: that we take more interest in it. But anecdotally and
[45:21] Speaker 3: from all sorts of other sources, the Western Australian government
[45:26] Speaker 3: has has measured it and seen it go from ten
[45:28] Speaker 3: percent to twelve percent. Roy Morgan did a survey last
[45:32] Speaker 3: year and saw a twenty to thirty percent increase in kids.
[45:37] Speaker 3: And that's because they've got access now to cigarettes at
[45:41] Speaker 3: prices that they haven't seen since last century. So you
[45:45] Speaker 3: can get a ten dollar pack of cigarettes everywhere, So
[45:47] Speaker 3: that's actually now an encouragement, not a discouragement for them.
[45:52] Speaker 3: And I was just talking to a teacher just the
[45:55] Speaker 3: other night and she said that a third of her
[45:57] Speaker 3: class there is a high school now smoke, and ten
[46:00] Speaker 3: years ago none of them did. So you just talked
[46:04] Speaker 3: around the streets and you just see it more and
[46:07] Speaker 3: more becoming air popular thing. Whether it's got to do
[46:10] Speaker 3: with seemingly cool because Hollywood chose it or whatever. But
[46:17] Speaker 3: obviously it's because of the access to cheaper tobacco that
[46:20] Speaker 3: it's allowed kids to move back into this market, which
[46:23] Speaker 3: is a tragedy.
[46:24] Speaker 2: Yeah.
[46:24] Speaker 1: So a policy start off with all good intentions. That's
[46:28] Speaker 1: the way it's playing out is it's not working.
[46:32] Speaker 2: I'm saying it nicely.
[46:33] Speaker 1: Okay, who are the players in their legal market? There
[46:37] Speaker 1: was some big kingpings in it to start with, wasn't it.
[46:40] Speaker 1: Can you name them? Have they've been convicted of it?
[46:44] Speaker 2: Well? I think so.
[46:45] Speaker 3: There's Victoria is often seen as the heartland, yeah, sort
[46:50] Speaker 3: of ground zero over listed tobacco, and as I say
[46:52] Speaker 3: for the chop chop which often was thirty years ago
[46:56] Speaker 3: as manufactured in Victoria primarily and back then we had
[47:00] Speaker 3: a couple of families, large family groups who controlled the
[47:03] Speaker 3: market did it quietly, agreed with each other on what
[47:08] Speaker 3: regions they were going to control, and that went along
[47:11] Speaker 3: for a long time. But as the excise increased and
[47:15] Speaker 3: the profitability of it increased, then more and more people
[47:20] Speaker 3: became interested, and there were some opportunists stepped in. There
[47:25] Speaker 3: was some a little bit more organized who then realized
[47:28] Speaker 3: that the best way of distributing their product was through
[47:31] Speaker 3: these shops, so they would buy four or five ten
[47:34] Speaker 3: shops and able to get their product out to the market.
[47:36] Speaker 3: So that started to creep in five to ten years ago.
[47:41] Speaker 3: But what really upset the Apple CoA and that's sort
[47:43] Speaker 3: of Victoria and the rest of Australia just leave Sydney
[47:46] Speaker 3: to one side for the minute. But then about five
[47:50] Speaker 3: years ago we had kaz Hammad who was arrested for
[47:53] Speaker 3: heroin trafficking, did eight years in jail and then was
[47:58] Speaker 3: deported back to ira and from there decided he was
[48:02] Speaker 3: going to set his sights on the tobacco industry. So
[48:06] Speaker 3: he and largely Iraqi following Iraqi Australian following, got very
[48:13] Speaker 3: organized and decided to take over that market in Melbourne
[48:18] Speaker 3: and did say through threats and intimidation and violence, and
[48:21] Speaker 3: hence the murders that started three years ago and the
[48:25] Speaker 3: fire bombings, and that was his effort to take over
[48:31] Speaker 3: the market, which he did reasonably successfully. He then expanded
[48:35] Speaker 3: his remit to the other states, through South Australia, wa Queensland,
[48:40] Speaker 3: even regional New South Wales, and he sort of got
[48:44] Speaker 3: to Sydney and pulled up a bit because there are
[48:47] Speaker 3: already very strong organized crime groups in Sydney, including the
[48:51] Speaker 3: Middle Eastern ones, including Asian ones, including the Fijian one,
[48:56] Speaker 3: who were previously focused on drugs. But I've decided to
[49:01] Speaker 3: diversify their interests and I've moved into tobacco because as
[49:05] Speaker 3: we've said, it's a high.
[49:05] Speaker 1: Profit and I'm mainly from my observations, doesn't appear that
[49:10] Speaker 1: we've had the conflict up here in Sydney on what
[49:14] Speaker 1: they have it in Melbourne. And we're talking hundreds of
[49:16] Speaker 1: tobacco stores subject to us and attacks down there. But
[49:21] Speaker 1: you're saying this is because Sydney's got their own control.
[49:25] Speaker 1: But it is organized crime. This is this is what
[49:27] Speaker 1: organized crime is about.
[49:29] Speaker 3: It's a huge market. It's just as prevalent. The followers,
[49:32] Speaker 3: as I say, are a bit of a distraction, So
[49:35] Speaker 3: they're just a symptom of a huge organized crime.
[49:38] Speaker 1: Mark because they don't come in and fire bomb a
[49:40] Speaker 1: place until they've already gone to the place and say hey,
[49:43] Speaker 1: I want you doing this, or you don't open up here, or.
[49:48] Speaker 3: If those groups strike an agreement to just stick to
[49:53] Speaker 3: their own patch and happily make money without wanting to
[49:56] Speaker 3: expand into someone else's territory, then that activity would keep
[50:01] Speaker 3: flying under the radar and.
[50:03] Speaker 2: Law enforcement authorities.
[50:05] Speaker 3: At New South Welles police don't have to concern themselves
[50:08] Speaker 3: with people or property being threatened. But the crime continues,
[50:15] Speaker 3: so the sales go on, the smokers get their cheap cigarettes,
[50:18] Speaker 3: and the federal government misses out on their exercise, and
[50:21] Speaker 3: those crime groups get more powerful and are well funded
[50:28] Speaker 3: and allows them to expand their repertoire into other things.
[50:31] Speaker 3: So that's what's happened in Sydney and the kash Hammirds
[50:35] Speaker 3: of the world. Who was actually arrested not that long
[50:38] Speaker 3: ago in Iraq, but that doesn't seem to have stemmed
[50:41] Speaker 3: the float. He's coming to an agreement here.
[50:45] Speaker 1: The Katie Tangey is that that's a twenty seven year
[50:49] Speaker 1: old woman that was killed a deliberate fire bombing.
[50:52] Speaker 3: Yeah, so that was a fire bombing of a mistaken
[50:55] Speaker 3: identity I think of an address, but just an example
[50:58] Speaker 3: of violence out of control and these are some of
[51:03] Speaker 3: the consequences.
[51:04] Speaker 1: Now, well, I'm looking at it, just the ones that
[51:06] Speaker 1: I've picked up that have been linked. And there's Sam
[51:10] Speaker 1: the punisher, Abdul Rahman shot dead in his car and
[51:14] Speaker 1: they think that was a flow on effect from the
[51:17] Speaker 1: tobacco walls. A few others. It's scary.
[51:21] Speaker 3: There was a shooting in a shop here in Sydney, yeah,
[51:23] Speaker 3: which is in a tobacconist and it was clearly related.
[51:28] Speaker 3: There's talk of ripoffs of several million dollars worth of
[51:33] Speaker 3: tobacco that one of the crime groups here did against
[51:37] Speaker 3: another crime group and there's been payback for that. So
[51:42] Speaker 3: there's some fairly nasty incidents going on in the background.
[51:46] Speaker 1: Well, I can say, and I think you attest to this,
[51:49] Speaker 1: that we've organized crime when it does raise its head
[51:52] Speaker 1: to the public see the results of it. There's a
[51:54] Speaker 1: shitload that's gone on before it's got to the point
[51:57] Speaker 1: where it's escalated into the public. I'm sure there's been
[52:00] Speaker 1: a lot of abductions, violence, threats, intimidation, stand overs, shootings,
[52:05] Speaker 1: all sorts of things that would have been part of this.
[52:08] Speaker 3: That's right, But I mean the violence, as I say,
[52:10] Speaker 3: is a symptom. So it's not a sign of success.
[52:15] Speaker 3: If we dampen down. I mean, it's obviously one of
[52:17] Speaker 3: the KPIs of state police to prevent violence and stop violence,
[52:22] Speaker 3: and it'd be great if that all goes away. But
[52:25] Speaker 3: it's not a sign that the illicit market has stopped
[52:28] Speaker 3: or has been suppressed in any way. It's just that
[52:31] Speaker 3: the criminals have decided not to bring attention to themselves
[52:35] Speaker 3: and blowing each other up.
[52:36] Speaker 1: What sort of profits are we talking about these guys
[52:39] Speaker 1: are doing, just in a general sense, the magnitude of it,
[52:42] Speaker 1: when you're talking bions of dollars of tax that we've lost. Yeah,
[52:45] Speaker 1: what sort of profit the bad guys making out of this?
[52:48] Speaker 3: Oh, it's in the billions. So I mean, obviously a
[52:51] Speaker 3: black market's hard to fully estimate, but the ACIC put
[52:56] Speaker 3: a figure on a six point nine billion that has
[52:59] Speaker 3: gone to profit that's going to organize crime.
[53:03] Speaker 2: So that's that's a lot of money.
[53:06] Speaker 1: My eyes are spinning.
[53:08] Speaker 3: Six point nine billion, okay, And I mean it's a
[53:12] Speaker 3: bigger problem than all the other drugs. I mean, a
[53:15] Speaker 3: criminologist says this offering Melbourne that the cocaine, heroine, meth,
[53:21] Speaker 3: tobacco is bigger than all of them put together.
[53:23] Speaker 1: In the mart in the profit.
[53:24] Speaker 2: Yeah, in the profit.
[53:25] Speaker 1: Yeah, okay, now that that's profit that has been well
[53:29] Speaker 1: it could have been taxed. I'm sure the bad guys
[53:31] Speaker 1: aren't spending on the hospitals, roads and the education.
[53:34] Speaker 3: I wouldn't think so they're probably spending another well they
[53:38] Speaker 3: do like driving around in luxury cars and so on.
[53:42] Speaker 1: Well, an organized crime, it can supply of weapons, It
[53:45] Speaker 1: can lead to all sorts of sinister things.
[53:48] Speaker 3: Yeah, well, it leads to sort of a corruption of
[53:50] Speaker 3: the whole process. So it's the corrupting the border. They
[53:54] Speaker 3: once they get a window at the border by corrupting
[53:59] Speaker 3: sort officials, then they can anything else can come in
[54:02] Speaker 3: through that window. So yeah, it you know, it destroys
[54:08] Speaker 3: law and order across the board.
[54:09] Speaker 1: Other countries experiencing this, Other countries that you know, have
[54:14] Speaker 1: dug themselves a whole, like.
[54:15] Speaker 3: We have, not as bad as what we have. But
[54:18] Speaker 3: there is alicit tobacco in every country, because every country
[54:22] Speaker 3: has followed that convention in order to raise excises. But
[54:26] Speaker 3: as I say, not to the extent that we have
[54:28] Speaker 3: in Europe. The countries are mainly about a quarter of
[54:31] Speaker 3: the exercise rate that we have. Right so whereas we've
[54:35] Speaker 3: got a dollar fifty three, they've got less than fifty
[54:37] Speaker 3: cents a stick over there, but even then that still
[54:40] Speaker 3: encourages crime to undercut that. But there's Australia's illicit rate
[54:47] Speaker 3: I and police sources estimated been about eighty percent of
[54:51] Speaker 3: the tobacco market elicit. Yeah, so they control virtually the
[54:57] Speaker 3: entire market of illicit There's no other country that it's
[55:02] Speaker 3: up about eighty percent in the world. New Zealand also
[55:05] Speaker 3: got a high excise rate, but they've got some other
[55:07] Speaker 3: preventative measures that stopping them going too high there. But
[55:11] Speaker 3: there illicit rate is creeping up and it's around thirty
[55:14] Speaker 3: percent now over there.
[55:15] Speaker 1: Okay, well, look we might take a break. The picture
[55:19] Speaker 1: that you've painted is pretty grim, but I know you've
[55:22] Speaker 1: got thoughts on how we could turn this around, and
[55:25] Speaker 1: I'd like to like to talk about that. The magnitude
[55:28] Speaker 1: of what you're talking about's shocked me, and it's really
[55:32] Speaker 1: given a clear picture of what's going on. I see
[55:35] Speaker 1: the headlines of tobacco walls and think, oh yeah, but
[55:38] Speaker 1: and risk versus reward if they're making what was the
[55:42] Speaker 1: figure six point nine.
[55:43] Speaker 3: Six point nine, and that was from the that's the
[55:45] Speaker 3: Acic said, right, yeah.
[55:47] Speaker 1: Okay, for organized crime to be able to pocket that
[55:50] Speaker 1: sort of money is huge.
[55:52] Speaker 3: Yeah, it's a disgrace that we've allowed it to get
[55:56] Speaker 3: out of control to this level.
[55:58] Speaker 2: But I was going to take long.
[56:00] Speaker 1: And they're not going to go away just because a
[56:03] Speaker 1: couple of people are locked up. And I see and
[56:05] Speaker 1: I watch it where you see the fire bombings that
[56:08] Speaker 1: have been done. A lot of the times it's disposable
[56:11] Speaker 1: young guys. They're just outsourced. They're not going to get
[56:14] Speaker 1: their hands dirty the people running it and making the profit.
[56:17] Speaker 1: But we'll get these young idiots that'll.
[56:20] Speaker 3: Yeah, yeah, they don't even know who's task them. They're
[56:22] Speaker 3: just there's an app out. It's like crime tasker where
[56:26] Speaker 3: they just get off at five hundred dollars to blow
[56:28] Speaker 3: a place up, and they're more than happy.
[56:30] Speaker 1: To do that do it, and as you identify it,
[56:33] Speaker 1: if they blow the wrong place up, the results could
[56:36] Speaker 1: be devastating for people.
[56:39] Speaker 3: And there's all sorts of consequences for retailers, which I've
[56:42] Speaker 3: been intimately involved in in the last ten years, with
[56:46] Speaker 3: about their stores and their staff are terrorized and the
[56:50] Speaker 3: value of legitimate tobacco behind them. They could be sitting
[56:54] Speaker 3: in front of twenty or thirty thousand dollars with a stock,
[56:56] Speaker 3: and then other people come in to rob that they
[57:00] Speaker 3: can't get insurance on that.
[57:02] Speaker 1: It just I saw that that was like the insurance
[57:04] Speaker 1: premiums just skyrocket to the point where you can't afford
[57:08] Speaker 1: to have the store there.
[57:10] Speaker 3: Yeah, the insurance I mean in some places went five
[57:14] Speaker 3: times from forty thousand a year to two hundred thousand,
[57:16] Speaker 3: and it's just obviously not worth it. And yeah, many
[57:21] Speaker 3: shops and even supermarkets are coming to that point where
[57:24] Speaker 3: they don't want to stock tobacco.
[57:26] Speaker 2: It's just not worth their while for the consequences.
[57:29] Speaker 1: All right, Well, in part two, let's let's delve into
[57:32] Speaker 1: possible possible solutions. I also want to talk about your
[57:35] Speaker 1: time in Pakistan, because I think that would be fascinating
[57:38] Speaker 1: from a law enforcement point of view. It's not the
[57:41] Speaker 1: type of position you'd think you'd end up in, or
[57:44] Speaker 1: not the location you think you'd end up in when
[57:46] Speaker 1: you joined the AFP, I'm sure, but it's interesting stories.
[57:50] Speaker 1: And let's take a break and we'll be back for
[57:53] Speaker 1: a part two and we'll find the solution of this problem.
[57:55] Speaker 1: We'll got ourselves into at least try. He never in
[58:01] Speaker 1: that Dan could die in

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