There are three tobacconists in a strip of no more than a dozen shops on the same side of a street in Melbourne’s west. Earlier this year, someone reached between the metal bars protecting one shop, smashed the front window and flung a molotov cocktail inside.
Eight days later, a driver rammed the security screen at a second store and tried to set it alight before fleeing. A jerry can was left on the street as if in homage to the failed arson.
Such fires at such stores have occurred on high streets across Victoria over the past 18 months. In most cases, the businesses are still trading, neon signs flashing and customers coming and going.
There is no indication they were so recently embroiled in a fight between organised crime groups that is threatening one of Australia’s signature public health achievements: reducing the rate of smoking. Arson attacks across four states have left the federal government in a particularly invidious position: wedged between underworld figures and big tobacco companies.
While the firebombings – of which there have been more than 120 since the start of last year – have captured attention, there has been little consideration of how the problem of illicit tobacco built over the past decade during a time Australia was becoming a world leader in restricting tobacco use.
Nearly 30 people were contacted for this story. None suggested maintaining the status quo.
Many acknowledged the bind the government was in: if it blinks on the excise for legal tobacco and make the illicit market less valuable, it would probably improve the bottom line for multinational tobacco companies.
Illegal cigarettes are about half the price of legal cigarettes and are widely available, but not from shadowy figures on street corners or from shady websites on the dark web. Instead, according to police, they are often sold from shopfronts that are rapidly expanding in number throughout the country.
These factors make it less likely that smoking addicts will be encouraged to quit, growing the black market that has sparked what police believe is a turf war between organised crime groups.
At the same time, legal vapes previously promoted as way to cut tobacco use have become heavily restricted, despite those products often being sold illegally from the very same shops.
“It’s a really difficult place that the country is currently in,” says Kathryn Steadman, an associate professor from the University of Queensland.
“Tobacco is such an awful thing, it’s so detrimental to public health.
“Anybody who wants to stamp out tobacco doesn’t necessarily think [the current approach] is the best way to go, but we work within that framework.”
John Coyne, the head of strategic policing and law enforcement at the Australian Strategic Policy Institute, says public health experts and enforcement agencies agreed about the ideal outcome but were failing to make it happen.
“There have been unintended consequences of this policy,” he says. “It is no longer working so we need to adjust that.”
Where there’s smoke
In 2011, as Australia was being lauded for being the first country in the world to introduce plain packaging restrictions for cigarettes, a man who would also shake up the tobacco market was sentenced to another stint in prison.
Kazem Hamad was 27, had spent much of adolescence in rough suburbs in Melbourne’s outer north, and had known little but crime and hardship since birth.
His father was a political activist against the Saddam Hussein regime and was imprisoned in Iraq from 1984 until 1992, according to court material seen by Guardian Australia. One of his brothers died in the country before the family fled, travelling through Jordan and Syria until they were accepted as refugees in Australia.
Hamad arrived in Australia aged 14, and lasted only a year at school, as he struggled with English.
A court heard in 2010 that he had “a turbulent and traumatic early history”, and a forensic and clinical psychologist who prepared a report on him found that as a child during the Gulf War he saw mutilated bodies.
“While being initially traumatised by these experiences … it seems that he became increasingly inured to violence and conflict as a result of these childhood experiences,” the psychologist found.
In 2014, Hamad was charged as part of an Australian federal police investigation into heroin trafficking.
“Mixing with unsavoury characters led you into drug use and antisocial behaviour, which is reflected throughout your extensive prior criminal history,” a judge found in sentencing him for those offences in 2019.
He was deported to Iraq after completing his sentence in 2023, joining an increasingly large number of Australian organised crime figures based offshore.
Multiple law enforcement sources confirmed Hamad was thought of as an influential figure in the underworld, with a loyal and ruthless crew.
But, previously, he was not thought of a mastermind. He was the sort of person who involved himself in other people’s drug importations rather than organising them himself, and favoured ripping off people he thought of as weak, or using younger more expendable offenders to conduct rudimentary but potentially lucrative crimes, rather than planning more elaborate offending.
This included running crews of armed robbers who targeted service stations and other businesses selling cigarettes, and then on-selling these stolen products to other retailers.
Meanwhile, the government excise on a single cigarette went from 34c in 2011 to $1.37 – representing a leap of more than $20 on a pack of 20 cigarettes.
This measure, and others, pushed smoking rates to historic lows.
But it had also made the illicit market incredibly lucrative.
There is also the question of how, exactly, to define the success of the government’s measures. In some ways, this is because of a glut of information, and in others it is because there is a paucity.
Take smoking rates: the health department said in a statement that it analyses this using data from the Australian Bureau of Statistics’s (ABS) National Health Survey (NHS) and the Australian Institute of Health and Welfare National Drug Strategy Household survey (NDSHS).
“There has been a consistent long-term decline in smoking prevalence over the last two decades, however, there has been an increase in vaping prevalence in more recent years, particularly among young people,” it said.
Indeed, daily smoking rates have fallen from 12.8% in 2013 to 8.3% in 2022-23, according to the NDSHS. However, the survey also found that 3.5% of the population have taken up daily vaping in that time.
This suggests that up to 12% of the population now either smokes tobacco or vapes on a daily basis – close to where the country was at with smoking more than a decade ago.
The most recent NHS survey, conducted by the ABS in 2022, suggests 10.6% of Australians smoke and 3% vape on a daily basis. A small percentage of that cohort does both.
Cycle of violence
Graham Banks, a Victoria police detective inspector who leads Taskforce Lunar in investigating alleged arson attacks believed to be linked to the illicit market, says organised crime groups started investing in tobacconists more than a decade ago.
“They made a lot of money, and the value of each of those stores has grown as the excise has grown, and then the introduction of vapes is another significant stream of revenue,” he says.
In March last year, he says, a group of people involved in the illicit tobacco trade met to discuss business. The agenda was to set a price for their product by forming a “commission” or cartel to control the illicit market and ensure everyone took a fair cut.
Banks alleges the meeting featured a national leader of an outlaw motorcycle gang, a “significant family within Middle Eastern organised crime” who had extensive dealings with illicit tobacco themselves, and other “pretty serious parties”. There were no more than six people present.
Each store was capable of making about $20,000 a week, Banks says, or more than $1m a year.
“Their view was to try and holistically control the market, we think, and that created … friction straight away.”
Police believe the person it created most friction with was Hamad, who refused to reach any agreement.
Hamad, 40, instead set about trying to cut his rivals off at the knees by forcing store owners to sell to him, pay him a cut, sell his illegal product, or a combination of the three, police believe. If the owner resisted, the store would be firebombed.
That sparked waves of retaliation.
“The history of violence is there, and known and understood,” Banks says. “Violence has been the key to it, and when you operate on a grey market, there’s a vulnerability to them [store owners].
“And when you’re the biggest gorilla in the room, people become subservient to you.”
It is a cycle that shows no obvious sign of breaking.
The violence has spread to other states, sometimes as an extension of the Victorian conflict, other times in apparent copycat attacks.
Guardian Australia asked every state and territory police force how many arson attacks on tobacco shops had occurred in their jurisdictions since the start of last year, and what measures, if any, they were taking regarding illicit tobacco.
New South Wales police declined to comment, saying a government information public access request would have to be lodged for information.
South Australia police confirmed that as of 8 October it had six fires, all of which had occurred this year. It has launched a taskforce to investigate the issue.
Western Australia police referred to a media statement published in June, but otherwise did not comment, but several arson attacks have been publicly reported in the past year.
There were no arson attacks in Tasmania and the ACT, and the Northern Territory and Queensland police forces either did not respond or failed to answer the question, but there have been several reported attacks in Queensland, mostly in the south-east.
Banks believes the violence won’t stop while there are still shops to fight for.
“While the shopfronts exist, and there’s an ability to seek to control them, there will be a conflict,” he says.
“The parties that are in conflict are just not the type that are going to cede control to the other party.
“We’ll make arrests … but there’s so many significant players involved that it will just be seen as an opportunity by others when those people are taken out.”
There is no shortage of government agencies closely monitoring how the fight against illicit tobacco plays out. This thicket of regulatory responsibility may have, in fact, contributed to the problem.
The health, taxation and home affairs departments all have oversight of some part of the issue, and bodies within these departments even more specific focuses: the Australian Border Force, within Home Affairs, leads the illicit tobacco taskforce; the Therapeutic Goods Administration, within health, looks after vape restrictions.
“It’s a classic case of siloed policy,” says Coyne from ASPI.
“Law enforcement, health, border force, taxation revenue … every single person involved has the right idea and the right ambitions but the collective policy result is undesirable.”
These bodies, however, do not outwardly appear ready to pull the lever on pausing, or even cutting, excises.
Michael Outram, the ABF commissioner, was asked at the National Press Club last month about how to tackle illicit tobacco and whether lowering the price of legal smokes would solve the problem.
He said he favoured “more closely aligning” the efforts of federal bodies and state authorities to crack down on the issue.
Outram acknowledged the ATO estimated that about 17% of the tobacco market was illicit, a value of about $2.8bn, but said he was “ill-equipped” to comment on tax policies.
However, the government itself has struggled to comprehend the size of the tobacco market.
Federal budgets have regularly overestimated the total revenues to be derived from the tobacco excise – often by several billion dollars each year. This is despite regular increases to the excise rate.
In July, tobacco company Philip Morris, which has its own commercial interest in a crackdown on the trade, told a Victorian inquiry it believed the tobacco black market was considerably larger than has been estimated by the ATO.
Instead, it said, the illicit market “accounts for over 28.6% of overall tobacco sales in Australia”.
Meanwhile, a Therapeutic Goods Administration report examined by a Senate inquiry this year heard that as many as 97% of users were estimated to be buying their vapes from the black market, estimating the trade to be “worth well over $400m million annually”.
‘We need a tough cop on the beat’
There is also the not insignificant issue of how contested the academic and public health space is, largely because of the decades of lobbying done by big tobacco that has morphed into a multiheaded beast spruiking everything from the benefits of vaping to the interests of small business owners selling legal tobacco.
It appears, however, there is no shortage of information available about what exactly governments can do to tackle the issue.
In a submission earlier this year to the Senate committee regarding vaping reforms, the Police Federation of Australia’s chief executive, Scott Weber, noted it was the fourth time he had made such a submission or given evidence regarding illegal tobacco or vapes in the past five years.
If there is a common thread among the various bodies, it is that there is a need for greater enforcement; something that even public health experts who spoke to the Guardian acknowledged was necessary, despite it impinging on some of their other values.
Banks, the Victorian detective, says his taskforce has lobbied the Insurance Council of Australia to ratchet up pressure on landlords who lease their buildings to tobacconists, and he is focusing on investigations into syndicate kingpins, while continuing to prosecute lower-level offenders involved in the arsons themselves.
“I don’t think there’s an insurer in the world saying they’re happy to be insuring a place that’s selling illicit goods and subject to extortion and arson attacks,” he says.
The shadow health minister, Anne Ruston, would not comment on whether the Coalition would adjust the excise, saying instead it would commit $250m to fund an illegal tobacco and vaping taskforce led by the Australian federal police and the Australian Border Force.
“It is clear that we need a tough cop on the beat,” she said.
Another complicating factor, one that cannot be determined by parliamentary committees or police taskforces, is understanding whether those who buy illegal cigarettes are troubled by the carnage they are funding.
Banks says one man with links to the illicit market had been killed in the past 18 months, and police had warned others that the involvement in the trade had put their lives at risk.
But in places such as the hardscrabble outer-north of Melbourne, in the suburbs where Hamad and his crew used to run amok, those who cannot shake their addictions are unlikely to spend double for the same fix.
“It’s a lower-class, a working-class issue, smoking,” says Leila Alloush, the chief executive of Victorian Arabic Social Services, based in Broadmeadows.
“People are limited and cannot afford expensive cigarettes. They’re addicted, so that’s their option, illegal ones.
“It’s not a nice option, but that’s what they can afford.”
