Inside Australia’s Black Market Tobacco Crisis

In the early 1930s, the Australian government lost a war against emus, and its present war, this time on tobacco, is heading the same way. Excessive taxation in the name of public health has backfired in extraordinary fashion, helping create a massive black market in tobacco products. This has led to an effective transfer to criminal gangs of billions of dollars of revenue previously earned by the legal tobacco industry, and a corresponding significant drop in excise tax revenue collected by the government, unprecedented violence between those gangs as they scrap over money and territory, and, to top it all off, an increase in the consumption of tobacco and nicotine.

The tobacco wars, as this gang-related violence has been called, may attract the headlines, but they are downstream of the government’s public policy failures. Indeed, the government should also be considered one of the belligerents in the fighting—and it urgently needs to rethink its strategy.

The government’s approach so far is emblematic of Australia’s regnant style of governing, which might be called technocratic wowserism. It is, essentially, a determination to use law and policy for the purported moral improvement of the public, rather than to support their established customs and ways of life. In recent years, this moralistic tendency, ever-present in this most utilitarian of countries, has run rampant, with increasingly perverse results.

The story of how Australia came to have a gang war over a product as commonplace as tobacco is therefore broadly instructive about the decline of this once prosperous and happy country.