Let’s not copy Australia

Dr Ruth Bonita writes:

How worried should we be about reports of a growing illicit tobacco market in Aotearoa New Zealand? We don’t yet know the extent of this market but it’s estimated to be 5-10 percent of the tobacco market, and we should take it seriously enough to avoid ending up like Australia, where it’s estimated that more than half of the total tobacco market and more than 90 percent of vapes come from illicit sources.

Australia is a disaster in terms of the black market.

Recent research showed that almost two thirds of 18-24 year olds who smoke report using illicit tobacco.

Getting them into the criminal system young!

This distribution points to how illicit markets develop; illicit tobacco is driven primarily by price. When legal cigarettes become expensive, the black-market grows. The growth of illegal cigarette sales is a rational, although unwelcome, response to rising prices. 

Many New Zealand smokers are switching to vaping – a smoke-free nicotine product – which are widely available, well-regulated and relatively affordable. Readers don’t need reminding, but I’ll say it anyway: it’s the smoke from burning tobacco at very high temperatures that kills people, not – as far as we know – the nicotine. These smoke-free alternatives to cigarettes provide a legal substitute for those who would otherwise continue to smoke. 

The direct implications for illicit trade are obvious. Where there are affordable and safer alternatives there will be less demand for illicit tobacco.  

A legal less lethal alternative is much preferable to the illegal lethal black market in tobacco.

This matters. A 2026 paper published in the Society for the Study of Addiction suggests that Australia has in effect lost control of its tobacco and nicotine market. The combination of very high tobacco taxes and highly restricted access to vaping has contributed to a large and growing illicit market. 

The authors conclude: “Punitive taxes on cigarettes and restricted access to lower-risk nicotine products have diverted Australians who use nicotine into illicit markets and may also have increased cigarette smoking among young people.”

By contrast, they note that New Zealand has seen faster declines in smoking alongside a smaller illicit market under a more permissive and controlled regulatory approach to vaping. 

NZ is doing it right. Australis is not.