The Budget Says Tobacco Control Is On Track. Reality Suggests Otherwise.

Buried deep within the Australian Government’s 2026-27 Budget papers is a brief section on tobacco control that most Australians will never read. It contains a simple conclusion that policymakers appear comfortable repeating: Australia’s tobacco control strategy is “on track.” According to the Department of Health, progress continues toward the long-standing objective of reducing daily smoking prevalence to below 5 per cent through smoking and nicotine cessation and prevention activities. On paper, it sounds like a success story. In reality, it raises a much more uncomfortable question. On track according to whom?

Outside the carefully controlled world of budget performance indicators, Australia is confronting one of the most significant disruptions to its tobacco and nicotine market in modern history. Legal tobacco sales have fallen dramatically. Tobacco excise revenue is falling short of government forecasts by billions of dollars. The illicit tobacco market has expanded into a multi-billion-dollar industry. Organised crime groups are fighting for control of black-market supply chains. Tobacco stores are being targeted with firebombings and extortion. Illegal disposable vapes remain widely available despite some of the toughest restrictions in the world. Yet none of these developments appears to have prompted any meaningful reassessment of the broader policy framework. Instead, the budget papers read as though Australia is still operating in the tobacco control environment of a decade ago, when policymakers could reasonably assume that declining legal tobacco sales automatically reflected declining nicotine demand.

The most striking feature of the tobacco control section is not what it contains but what it omits. Success continues to be measured almost entirely through smoking prevalence targets and cessation activities. The target remains unchanged. Reduce smoking rates below 5 per cent. The result is reported as “on track.” But there is little evidence of any serious attempt to understand what is happening across the wider nicotine market. Policymakers appear content to measure activity within the legal system while paying remarkably little attention to what is occurring outside it.

This matters because people do not simply stop wanting nicotine, after all, governments raise taxes, impose restrictions or announce public health campaigns. Demand does not disappear simply because policymakers would prefer it to. When legal products become increasingly inaccessible, unaffordable or difficult to obtain, consumers often seek alternatives. That is not a controversial observation. It is one of the most basic principles of human behaviour and market economics. Yet the budget papers largely ignore the possibility that substantial amounts of nicotine consumption may have shifted into illicit channels rather than disappeared altogether.

If millions of cigarettes are now being purchased outside the legal market, if illegal tobacco is replacing legal tobacco and if consumers are increasingly sourcing nicotine products through unregulated supply chains, then policymakers should be asking whether traditional measures are still capturing the full picture. Instead, the budget projects confidence that existing indicators continue to tell the entire story. It is a remarkable assumption at a time when the legal market and the illicit market appear to be moving in opposite directions.

Equally revealing is the language used throughout the tobacco control section. Smoking cessation and nicotine cessation are repeatedly presented as though they are identical objectives. At first glance, this may appear insignificant, but it reflects a profound shift in the philosophy underpinning Australian tobacco policy. Historically, tobacco control was focused on reducing the death and disease caused by smoking. The primary concern was combustion. It was the smoke, tar, carbon monoxide and thousands of toxic chemicals produced by burning tobacco that drove the enormous health burden associated with smoking. Nicotine was recognised as addictive, but it was not considered the primary cause of smoking-related cancers, cardiovascular disease or respiratory illness.

Increasingly, however, Australian policy appears to treat nicotine itself as the problem regardless of how it is consumed. That distinction matters because it changes how success and failure are defined. A smoker who completely abandons cigarettes and switches to a regulated nicotine vape may dramatically reduce their exposure to the toxic by-products of combustion. In many countries, that outcome would be viewed as a major public health success because smoking-related risk has been substantially reduced. Under Australia’s current framework, however, that same individual may still be viewed as a policy failure because nicotine use continues. The objective subtly shifts from reducing harm to eliminating nicotine.

This helps explain why there is virtually no discussion of tobacco harm reduction within the budget papers. There is no serious consideration of whether regulated lower-risk nicotine products might contribute to reducing smoking prevalence. There is no examination of international approaches that have incorporated harm reduction into broader tobacco control strategies. There is no indication that policymakers have considered whether current restrictions on vaping may be contributing to the growth of illicit markets. There is no suggestion that the possibility of unintended consequences is even under review.

Instead, the budget projects a sense of certainty that the existing strategy remains correct and should continue largely unchanged. The assumptions appear fixed. Reduce smoking. Reduce nicotine use. Increase cessation. Strengthen enforcement. Measure prevalence. Report progress. The possibility that the policy framework itself may need adjustment is almost absent.

What makes this particularly striking is that many of the most significant developments in Australia’s nicotine landscape have occurred outside the framework being measured. The rapid growth of illicit tobacco, the emergence of extensive illegal vape supply chains, the increasing involvement of organised crime and the collapse of legal excise collections are not peripheral issues. They are central developments that should inform any serious assessment of policy effectiveness. Yet they barely feature in the performance measures used to determine whether tobacco control remains “on track.”

The budget, therefore, creates the impression of a policy framework that is increasingly focused on measuring progress against its own objectives while avoiding broader questions about real-world outcomes. It measures movement toward targets, but it does not appear to ask whether those targets are capturing the most important developments occurring in the market. It measures legal activity while paying relatively little attention to illegal activity. It measures prevalence while giving limited consideration to displacement. It measures compliance while saying very little about adaptation.

Perhaps the most important question raised by the budget is one that policymakers seem reluctant to confront. What if nicotine demand has not disappeared at all? What if significant numbers of consumers have simply migrated into illicit tobacco markets, illicit vaping markets and unregulated supply chains? What if apparent successes within the legal market are being offset by developments occurring outside it? What if declining legal sales no longer provide a reliable picture of overall consumption patterns?

These are not hypothetical concerns. They are precisely the questions that should be asked when governments are losing billions in excise revenue, when organised crime is expanding its influence and when illegal products remain widely available despite extensive enforcement efforts. Yet there is little evidence within the budget papers that such questions are receiving serious attention.

The tobacco control sections of the 2026-27 Budget ultimately read as though Australia is still operating within a policy environment that no longer exists. The documents project confidence that smoking prevalence continues to decline, that existing strategies remain effective, and that progress toward a sub-5 per cent smoking rate remains achievable. What they do not acknowledge is the possibility that the nicotine market itself has fundamentally changed. Demand may not have disappeared. It may simply have moved beyond the reach of the systems being measured.

For critics of Australia’s current approach, this is the central weakness revealed by the budget. It continues to measure success largely within the legal market while paying remarkably little attention to what is happening outside it. The official narrative suggests steady progress. The real-world market increasingly suggests something more complicated. And if policymakers continue focusing on the indicators they expect to improve while ignoring the consequences emerging elsewhere, the gap between official reporting and reality may continue to widen.

A policy can be on track according to its performance measures while simultaneously drifting further away from its intended outcomes. The 2026-27 Budget may have unintentionally demonstrated exactly how that can happen.