Speaker 1: From Schwartz Media. I'm Daniel James. This is seven AM.
Speaker 1: Smoking rates in Australia have plummeted. We now have some
Speaker 1: of the lowest in the developed world. But behind the
Speaker 1: public health success, something far darker is unfolding. A violent
Speaker 1: black market has taken hold, one fueled by extortion, fire
Speaker 1: bombings and murder. And it's all happening under the banner
Speaker 1: of Australia's so called tobacco wars. Today Associate editor for
Speaker 1: the Saturday Paper, Martin Mackenzie Murray on how a public
Speaker 1: health victory created the conditions for a deadly turf war
Speaker 1: and the innercent victim caught in the middle. It's Wednesday,
Speaker 1: May seven. Marty. You've been looking into the case of
Speaker 1: Katie Tangy. Can you tell me about who she is
Speaker 1: and what happened to her?
Speaker 2: So she was a young Melbourne woman, twenty seven and
Speaker 2: she was house setting for her brother who was overseas
Speaker 2: on his honeymoon earlier this year in January. And she
Speaker 2: had gone to bed one evening on the sixteenth and
Speaker 2: a little after two clock two men arrived. We know
Speaker 2: this through CCTV footage.
Speaker 3: Investigators say moments before an explosion inside the property. Two
Speaker 3: people got out of this suv parked nearby, pouring an
Speaker 3: accelerant on the.
Speaker 2: Home, and a little after two o clock, Katie made
Speaker 2: a desperate coll to triple zero. She was trapped in
Speaker 2: the house.
Speaker 3: Firefighters raised to the Truggennighter home around two am and
Speaker 3: desperately searched inside, but the intensity of this blaze was
Speaker 3: so extreme they had to retreat, and in the light
Speaker 3: of day came the confirmation the twenty seven year old
Speaker 3: woman who was looking after her brother's home while he's
Speaker 3: on his honey had been killed.
Speaker 2: It's difficult to I think overstate the obscenity of her death,
Speaker 2: and I know for a fact that it's haunted several
Speaker 2: first responders and the police that are now investigating her death.
Speaker 1: So what's known about who did this to her?
Speaker 2: So police have been deliberately or tactically vague on motivation,
Speaker 2: but they have been very clear that they believe that
Speaker 2: this was a part of the tobacco wars, and have
Speaker 2: been equally clear and emphatic that Katie Tangi was an
Speaker 2: entirely innocent bystander, that she had nothing to do with
Speaker 2: the illicit tobacco market, and the working theory is that
Speaker 2: these arsonists and killers got the wrong address.
Speaker 1: So tell me more about the so called tobacco wars
Speaker 1: and how you became interested in reporting on them.
Speaker 2: Yeah, so it's something that's become kind of inescapable. From
Speaker 2: about it year ago, I noticed when I went out
Speaker 2: to pubs, I saw people smoking Manchester cigarettes or the
Speaker 2: South Korean brand essays. And it was really conspicuous because
Speaker 2: many years ago, under the Gillide government, we passed planned
Speaker 2: packaging laws and so different types of cigarettes and different
Speaker 2: types of tobacco products were indistinguishable. But so aggressively have
Speaker 2: cigarettes been taxed that it's reached a point where they've
Speaker 2: become prohibitively expensive, and for those who are unlikely, unwilling,
Speaker 2: incapable of quitting, they are pushed into a black market.
Speaker 2: It became kind of very common knowledge amongst smokers where
Speaker 2: you could go to get these really cheap packs of cigarettes,
Speaker 2: and it became such that this market for all cigarettes
Speaker 2: became a billion dollar industry, billions plural, and excited the
Speaker 2: rivalries between organized crime families who were just laying for
Speaker 2: the monopolization of a really lucrative black market. The second
Speaker 2: part is this extensive campaign of extortion of small businesses,
Speaker 2: often kind of mum and dad businesses, tobacconists. And so
Speaker 2: what will happen What has happened extensively across Victoria for
Speaker 2: the last two years are that shop owners will receive
Speaker 2: a visit from gangsters and they will say, we want
Speaker 2: you to stock under the counter our goods, that is
Speaker 2: illicit cigarettes that have been trafficked and if you don't
Speaker 2: sell them, terrible things will happen.
Speaker 1: So these illegal cigarettes have taken off because cigarettes have
Speaker 1: become so expensive. So can you just describe to me
Speaker 1: how we got to this point.
Speaker 2: Yeah, tobacco has always attracted a special tax forever, but
Speaker 2: in the decade twenty ten to twenty nineteen it was
Speaker 2: subject to super aggressive and successive tax.
Speaker 3: Well smikers to be whacked with big cigarette price.
Speaker 1: Rises for the next four years to.
Speaker 3: Help balance the budgets and create a healthier nation.
Speaker 2: So in twenty ten there was a twenty five percent
Speaker 2: tax increase applied to cigarettes, and then in the years
Speaker 2: between twenty thirteen and twenty twenty there was an annual
Speaker 2: increase of twelve point five percent.
Speaker 3: A policy release today would see the tobacco excise rise
Speaker 3: by twelve and a half percent each year until twenty twenty.
Speaker 2: The result of that meant that your average packet of
Speaker 2: cigarettes went from about thirteen dollars to more like fifty dollars.
Speaker 1: This was always.
Speaker 2: Justified by the government as a public health measure to.
Speaker 4: Protect people from taking it up and additional support for
Speaker 4: current and former smokers to look after their health.
Speaker 2: And Mike Butler, the Health Minister, has said something a
Speaker 2: couple of years ago like an expense of cigarette is
Speaker 2: an unattractive cigarette.
Speaker 4: Because we know that a higher priced cigarette is a
Speaker 4: more unattractive cigarette.
Speaker 2: The idea was very simple. The more expensive cigarettes are,
Speaker 2: the fewer people will smoke them. But there was always
Speaker 2: a problem.
Speaker 4: With that.
Speaker 1: Coming up after the break. The real reason smoking rates
Speaker 1: are dropping. Well, Marty, you've been investigating how the cost
Speaker 1: of cigarettes has sparked a turf war at Australian cities.
Speaker 1: We've been told that taxing the hell out of cigarettes
Speaker 1: means less people will smoke them, and that's why we've
Speaker 1: seen such a decline in smoking here. So is that true? So?
Speaker 1: Sure enough?
Speaker 2: I spoke to a criminologist from Deacon University, James Martin,
Speaker 2: who specializes in black markets, and he says we have
Speaker 2: an abundance of for a wealth of public data about
Speaker 2: smoking rates in Australia over recent decades. And he says
Speaker 2: it's an interesting comparison to make between the first decade
Speaker 2: of the century twousand to twenty ten and the second
Speaker 2: decade twenty eleven to about twenty twenty, which, as I
Speaker 2: just described, was one marked by really significant taxation increases
Speaker 2: on cigarettes. And he says there's no statistically meaningful difference
Speaker 2: between those two decades, one marked by light taxation, the
Speaker 2: other marked by really severe taxation. There's no statistically meaningful
Speaker 2: difference in declining smoking rants. What is significant now is
Speaker 2: that in the last few years, since twenty nineteen, we
Speaker 2: have in Australia experienced the sharpest decline in public smoking
Speaker 2: rants in decades. It's gone from eleven point six percent
Speaker 2: of daily smokers to eight point eight percent, which is
Speaker 2: an internationally very low number. But in those years twenty
Speaker 2: nineteen to twenty twenty three, little changed, certainly little in
Speaker 2: the taxation environment. What did change was the emergence of vaping,
Speaker 2: and James Martin is of the belief that it's beyond
Speaker 2: a coincidence that what we can attribute to that decline
Speaker 2: in smoking rates is not taxation, which has now encouraged
Speaker 2: a black market because prices have become prohibitive. What is
Speaker 2: significant is the emergence and introduction of vaping.
Speaker 1: So what you're saying is that vaping has more to
Speaker 1: do with lowering smoking rates than the taxes. Correct, But
Speaker 1: there is a line between the rising prices and rising crime.
Speaker 1: Is that a fair comparison to make? Absolutely?
Speaker 2: I kind of must have been warning about this for
Speaker 2: a long, long long time, and it's not an arcane
Speaker 2: or difficult concept to grasp that if you increase the
Speaker 2: price of something, you may change behavior, but you will
Speaker 2: also never eradicate demand for that product, and you will
Speaker 2: encourage a flourishing black market for it. And that's precisely
Speaker 2: what we've said. You can't tax things infinitely. There becomes
Speaker 2: a point where you get perverse outcomes. And in this case,
Speaker 2: the revenue that tobacco indexation created was enormous. So until
Speaker 2: kind of recently, the taxation on cigarettes was the fourth
Speaker 2: largest source of revenue for the federal government. That's now
Speaker 2: slipped to about seventh. That's a loss of billions of dollars,
Speaker 2: and that loss isn't mostly attributable to those declining smoking
Speaker 2: rates that I just spoke of. It's attributable to the
Speaker 2: fact that people are buying their cigarettes illegally, and so
Speaker 2: the government's not receiving any tax from those packs of
Speaker 2: cigarettes or cartons of cigarettes that are brought on the
Speaker 2: black market.
Speaker 1: So what does this tell you, Marti about how the
Speaker 1: tobacco walls should be addressed and what will happen if
Speaker 1: they aren't handled properly.
Speaker 2: I think one thing that's very distinctive about Australia is
Speaker 2: a formal or official treatment of vaping. There is a
Speaker 2: conspicuous hostility to vaping relative to say New Zealand or
Speaker 2: the United Kingdom or Sweden would be another example. Our
Speaker 2: formal attitude to vaping is really suspicious and really hostile,
Speaker 2: and it makes us quite different. It makes us an
Speaker 2: outlier compared to kind of comparable countries. Another point that
Speaker 2: Stephen Hamilton, who's an Australian economist at George Washington University
Speaker 2: in the States, made to me is that if you
Speaker 2: want to combat the black market that is so obviously
Speaker 2: flourishing and flourishing violently, then you need to immediately reduce
Speaker 2: the taxation on cigarettes to levels that they were ten
Speaker 2: or fifteen years ago.
Speaker 1: Has the government intimated that they will go down that
Speaker 1: path at all?
Speaker 2: Oh? Absolutely not no, and people would be outraged by it.
Speaker 2: But I think given the public indifference to kind of
Speaker 2: punitive taxation of cigarettes, it is completely unthinkable to me
Speaker 2: that the government would would entertain such a change, and
Speaker 2: instead they will talk about this as a police matter.
Speaker 2: And whilst policing has a role in this, really it
Speaker 2: is our public health policy and taxation policy that has
Speaker 2: encouraged this black market. But I think for as long
Speaker 2: as cigarettes remain for many prohibitively expensive, the size and
Speaker 2: the lucrativeness, the attraction of illicit tobacco will remain and
Speaker 2: will have a large and violently enforced black market.
Speaker 1: Marty, thank you so much for your time. Thanks Daniel.
Speaker 1: Also in the news today, the government says it will
Speaker 1: stand up for the Australian screen industry. After US President
Speaker 1: Donald Trump promised to one hundred percent tariff on films
Speaker 1: made outside the United States, he called out other countries
Speaker 1: offering incentives, saying it was a concerted effort to attract
Speaker 1: American film production to their shores and described it as
Speaker 1: a national security threat. Messaging and Propaganda Arts Minister Tony
Speaker 1: Burke says he's spoken with Screen in Australia about the statement,
Speaker 1: and Foreign Minister Penny Wong says Trump has expressed a
Speaker 1: willingness to engage with film studios on the issue. And
Speaker 1: Israel's security cabinet has approved a plan to escalate its
Speaker 1: military campaign in Gaza, including the full capture of the
Speaker 1: territory and an indefinite presence there. The plan also involved
Speaker 1: a displacement of hundreds of thousands of policitians to southern Gaza,
Speaker 1: is to be implemented gradually. The UN says the plan
Speaker 1: will lead to countless small civilians being killed and the
Speaker 1: further destruction of Gaza. I'm Daniel James seven am will
Speaker 1: be back tomorrow