Retail NZ warns not addressing illegal tobacco will undercut efforts to reduce smoking. Photo / NZME
Retail NZ warns “time is running out” to address the growth of the illicit tobacco market as it urges the Government to establish a new taskforce to improve New Zealand’s “fragmented and ineffective” approach to the illegal product.
The organisation, which represents a number of retailers nationwide, has today released a report arguing for a multi-agency taskforce, funded by ring-fenced tobacco excise tax, to align the response from Customs, health, police and Inland Revenue.
It also calls for a mandatory licensing regime for all tobacco wholesalers and retailers, while increasing investment in detection tools at the border.
Associate Health Minister Casey Costello, also the Customs Minister, is welcoming Retail NZ’s report and said she recently instructed officials from the referenced agencies to assess how they could work in a more co-ordinated fashion.
The report begins with a declaration concerning Retail NZ’s membership, which included tobacco manufacturers British American Tobacco, Philip Morris International and Imperial Brands, alongside retailers who sold tobacco.
It states the report was “researched and written independently by Retail NZ staff”.
“No tobacco manufacturer has funded, commissioned, or directed this work, nor has any manufacturer reviewed or approved its content prior to publication.”
A significant portion of the report describes the scale of and response to the illicit tobacco market in Australia, citing concerns the illicit product could hold a 75% market share across the ditch.
It compares Australia with New Zealand’s experience, condemning New Zealand’s “sluggish” response to illicit tobacco, criticising penalties as “too lenient” and claiming efforts to reduce smoking were being jeopardised.
“While fiscal and security risks are serious, the most immediate danger of the illicit trade is its power to dismantle New Zealand’s primary anti-smoking strategy: using price to drive cessation.”
The report includes estimates of illicit tobacco market share over the years, claiming it had grown from about 3.3% in 2010 to as high as 27% in 2024, noting the latter figure was produced in an industry-funded survey that had been criticised for data inconsistencies.
Central to the report is a case study of a retail outlet in an Auckland community shopping precinct selling cigarette packs for $13 each; less than the $35-$50 current 20-packs are worth.
“Our contact on the ground described the store as a regional destination for illicit tobacco, drawing purchasers from outside the community and jeopardising the viability of legitimate small businesses,” the report says.
“The operators did not appear to request ID verification, and our contact was concerned that young people were able to purchase cigarettes.”
After reporting the operators to health, police and customs officials, the complainant was reportedly left “frustrated” because of the “fragmented and ineffective” response.
The report claims health officials were able to remove illegal street signage but weren’t empowered to seize illegal product or shut the business, Customs couldn’t act because the product had made it through the border and police didn’t respond as it was not a “high-priority task” given “competing pressures”.
“The jurisdictional confusion on display in this Auckland suburb points to an enforcement structure that isn’t responsive to the growing challenge of the illicit tobacco trade.”
The report concludes by warning the Government of the risks of inaction.
“If left unaddressed, this trade will continue to dismantle the public health benefits of the country’s Smokefree commitment, reduce the tax base, and invite the same organised criminal violence currently destabilising Australian communities into New Zealand.”
In a statement, Costello said she had instructed health, police and customs officials in recent weeks to investigate how the agencies could collaborate more effectively.
“I’ve got health officials currently working on a cabinet paper to have a regulatory regime that better supports our health objectives, as in stopping people smoking, and that recognises the problems of the illicit market.
“The reality is it’s a lot harder to drive people towards cheaper, safer products when they can get their hands on cheap cigarettes.
“This report is welcome and timely – I agree with them that time is running out to stay ahead of the issue of illicit tobacco and organised crime.”
Adam Pearse is the Deputy Political Editor and part of the NZ Herald’s Press Gallery team based at Parliament in Wellington. He has worked for NZME since 2018, reporting for the Northern Advocate in Whangārei and the Herald in Auckland.