Criminal gangs move in
THE underbelly of North Queensland’s illegal tobacco trade has been exposed with two businesswomen lifting the lid on the “organised crime” setting up shop in Townsville.
The under-the-counter trade, in which shops sell tobacco brought into the country or grown illegally, is damaging North Queensland’s legal tobacconists, and cost the Australian government more than $900m last year alone.
A tobacco industry insider told the Bulletin the illicit tobacco trade was run by bikie gangs, and was more profitable, and far less risky than the standard drug trade. With legal business owners being threatened, and some owners considering their future in the industry, the two business owners say it is time the state government stepped in.
But it’s not as easy as a Queensland Police crackdown, with the sale of the illicit tobacco not technically illegal in Queensland.
When it comes to sales, a 20 pack costs a legal retailer about $25 due to the excise and GST, and sells for about $29.50.
However, the sale of a similar 20 pack obtained illegally could cost the consumer $20, with a source suggesting the illegal business could make as much as $18 on the sale. In 2021-22, the Australian Taxation Office – which is part of the taskforce against illegal tobacco trade – seized 78,000kg of tobacco, including 3,248,267 cigarettes, with a value of $127m. Only one conviction was recorded in that year.
In 2019-2020, it was estimated Australia lost $909m in lost excise revenue from the illegal sale of tobacco – with that cash channelled into organised crime.
Such is the fear of the organised crime gangs running the illegal tobacco trade, the two legal shop owners would not be named, concerned for their wellbeing.
Jane*, a North Queensland woman in the tobacco industry, said while the importation of chop was illegal, the sale of it in Queensland was not necessarily against the law.
A raid on a shop selling illicit tobacco requires multiple federal government departments, including the ATO, Border Force, the federal Department of Health, the Department of Weights and Measures, the Australian Federal Police and Queensland Police.
But because the fines for the sale of illicit tobacco are so low, authorities usually target warehouses or large-scale operations.
Jane said the shops that sell illicit tobacco were opening everywhere, with a handful popping up in Townsville, Mackay and Cairns.
“In the last three months, we have had four illicit shops open – three in Townsville and one in Mackay,” Jane said.
The owner of multiple legal tobacconists said the laws needed to change in Queensland to protect the business owners doing the right thing.
“This actually sends small business to the wall,” Jane said.
She added that in some Brisbane stores, owners were down to 45 per cent of trade due to the sale of illicit tobacco.
Another Townsville tobacconist, Kerry* said they were doing the right thing by the government.
“Whereas these companies are opening up and they’re selling all the illicit stuff, and they're not paying anything to the government,” Kerry said.
She said after nearly two decades in the industry, the illicit trade could wipe her business out.
“This is my superannuation, this is my life, this is everything … that I’ve got,” Kerry said.
For Jane, it was not about the money but protecting her staff and her business.
“Most of our staff live week to week,” she said. “They’re waiting for their next pay cheque. So it was about the money and protecting our business, but now, for me, it is more the principle.”
The pair said there were about 150 people who work in the tobacco industry, excluding major retailers like Woolworths and Coles, in Townsville.
They said if the illegal trade continues, businesses could be forced to reduce staff, or in some cases close. “We could probably ride it out for six months,” Jane said.
“There are a lot of little shops out there that say they won’t survive.
“How is Australia, how is the government, allowing this to happen? This is serious, organised crime.”
*Names changed to protect sources.