FOUKKARE, Mr Theo, Chief Executive Officer, Australian Association of Convenience Stores STIRLING, Mr Martin, Chief Executive Officer, Master Grocers Australia CHAIR: Welcome. Thank you for taking the time to come and speak with the committee today. I understand that information on parliamentary privilege and the protection of witnesses and evidence has been provided to you and is available from the secretariat. I can see here that we have an opening statement. Are you happy for that to be tabled? Mr Foukkare : If I could go through it, that would be appreciated. CHAIR: Certainly. Please proceed. Mr Foukkare : Firstly, thank you, Chair and senators and committee, for the opportunity to present at this hearing. AACS is a non-profit member based organisation representing retailers who operate more than 7,500 convenience stores across Australia, selling legal and regulated tobacco products in accordance with all Commonwealth and state laws. Our industry employs approximately 80,000 frontline staff. We also represent more than 120 supplier members across all shop categories, including the three major tobacco suppliers. Our organisation is funded through an open and publicly available membership subscription model. All members pay an annual membership fee. The retailers I represent today have lost more than $2.5 billion in legal tobacco sales over the last five years. In 2025 alone, our industry lost $750 million in legal tobacco sales. Those figures are staggering, but the financial impact is only one part of the story. I want to talk about the people too often forgotten in this debate. Not politicians, not bureaucrats, not industry groups—I'm talking about our 80,000 frontline retail workers. Young workers, women, students, migrants, people working long shifts to support their families, people who should feel safe going to work every day. Right now, many of them do not, and that is the real human cost of this illegal tobacco crisis. We are now dealing with a full-scale crime crisis created by a black market that has become extraordinarily profitable under the failed excise policy. Organised crime groups are terrorising legitimate retailers and ordinary workers in suburban Australia. One of our members in Sydney who operates six stores was approached by criminals demanding they sell illicit tobacco and pay protection money. They refused. In response, organised crime opened an illegal tobacco store directly next door to attempt to destroy their business. Workers now get to the store every day wondering whether there will be threats, aggression or intimidation and whether the business will survive. Another member operating 30 stores in regional Victoria experienced an armed robbery in broad daylight. Offenders carrying edged weapons entered the store while customers and staff were inside, stealing legal tobacco products to feed the illegal market. Imagine being a young casual worker standing behind that counter wondering if you're going to make it home safely. Those workers still talk about that incident today. Another retailer from a national network was personally handed a note demanding protection money. This occurred at multiple stores. As a result, they now employ full-time security guards simply to protect their staff. Let that sink in. Some convenience stores in Australia are now hiring security guards for frontline retail workers because they're being intimidated by organised crime groups. The emotional toll on workers is enormous. Staff are afraid to work night shifts. Parents are asking their children not to work evenings. Employees are suffering anxiety following violent incidents and threats. These are ordinary Australians simply trying to earn a living, yet they are being caught in the middle of what has become a nicotine war. What frustrates us most from a member perspective is that the situation was entirely predictable. Treasury has warned excessive tobacco excise would fuel the illicit trade. Law enforcement have warned organised crime was aggressively moving into the market. Retailers, including me and many others, have repeatedly warned governments since 2012 that violence and criminal activity were escalating, yet they ignored it. When legal smokes cost $45 a pack and the equivalent is sold for a fraction of the price, organised crime moves in. Today, criminal networks are estimated to control a nicotine black market worth around $10 billion. Government figures suggest illicit tobacco accounts for around 60 per cent, and 95 per cent of the illicit nicotine vaping market. That money is not funding essential services, it's funding organised crime, while workers and legitimate businesses pay the price. I do want to acknowledge New South Wales Premier Chris Minns for openly recognising the role of excessive excise and its role in fuelling the black market. This is no longer simply a health debate. It's a community safety issue; it's a workplace safety issue; and increasingly it's a national enforcement issue. And if people want to attack anyone calling for excise reduction as somehow representing the tobacco industry, then I would ask them: are you accusing the New South Wales Premier of representing the tobacco industry too? Or are you accusing the Australian Border Force of representing the tobacco industry when they say, 'We can't enforce this problem away'? At some point, the federal government needs to stop pretending that this is working. Since 2021, governments have spent more than $1 billion across illicit nicotine enforcement, the pharmaceutical vaping model, and public health education campaigns. The results: smoking rates have increased, nicotine usage has increased, legal tobacco sales have collapsed and organised crime has expanded its grip on the market. The most recent federal budget allocated only an additional $14 million over the forward estimates to tackle this issue. Some states are spending more than that alone. Surely this demonstrates that the enforcement-only approach is failing. This experiment has failed. The time for change is now before it's too late. Thank you. CHAIR: Thank you very much. Do you also have an opening statement, Mr Stirling? Mr Stirling : Yes, thank you, Chair. Thank you for the opportunity to appear today on behalf of Master Grocers Australia. MGA has represented independent retailers in this country for nearly 130 years. We have operated through wars, depressions, pandemics, financial crises, and enormous social and economic change. But the changes the tobacco crisis has caused are like nothing they have ever seen before. Our members are family-owned supermarkets, bottle shops and local stores that sit at the centre of communities across Australia, particularly in regional and outer suburban areas. Before I proceed further, I also want to address an issue directly and transparently. MGA receives relatively small amounts of funding connected to tobacco companies. MGA receives funding from a wide variety of suppliers, including milk refrigeration gas companies, insurance companies, and other suppliers that are essential for our industry. Our members expect that suppliers who profit from them support their not-for-profit industry association in fighting for their interests. That funding from any supplier has absolutely no bearing on MGA policy positions. Our policy positions are independently determined only and consistently in the best interests of our members and the broader community. We are not here today as advocates for tobacco. MGA supports legitimate public health objectives and lawful tobacco regulation. We are here because we are witnessing the expansion of organised crime into everyday Australian communities, and increasingly that organised crime is being funded and enabled through illicit tobacco and now, alarmingly, through illicit alcohol as well. This is about whether Australia is willing to tolerate the normalisation of organised criminal enterprise operating openly through shopfronts in suburban streets and local regional communities. What was once a black market operating in the shadows has now evolved into a mature parallel economy. Illegal tobacco is now sold openly and systematically across Australia through sophisticated criminal supply chains that undercut lawful businesses, evade tax, ignore regulation, and expose communities to violence and intimidation. Our members are experiencing those consequences directly. Retailers who have done absolutely nothing wrong are facing extortion attempts, threats, ram raids, intimidation, and fears of collateral damage from firebombings. Staff are frightened, customers are frightened, communities are frightened, and many independent retailers increasingly feel abandoned. One of the most devastating consequences has been the financial burden imposed on lawful businesses. Independent retailers are paying for this crisis through skyrocketing insurance premiums, increased security costs, and lost sales flowing to organised criminal networks operating outside of the law. Lawful businesses are complying with every rule, every licence condition, every tax obligation and every regulatory requirement whilst competing against criminal operators who comply with none of them. This is not healthy market competition. It reflects a growing misalignment between policy settings, enforcement capability and operational realities, and Australians can see it. They can see illegal tobacco stores operating openly. They see organised crime becoming normalised. And when the public sees that laws are not effectively enforced, confidence in institutions and the rule of law begins to erode. And that should concern all of us deeply. MGA's position is straightforward. We are pro the rule of law and we believe that governments have the authority and responsibility to ensure regulated markets remain enforceable. We believe organised crime should not be permitted to establish parallel economies in Australian communities, and we believe lawful small businesses should not be sacrificed as collateral damage for policy settings that are no longer aligned with operational reality. But this problem is now spreading. The same criminal infrastructure networks and methods that emerged through illicit tobacco are now moving into illicit alcohol, and we are seeing the early warning signs immediately. Australia has an opportunity to act before this becomes more deeply entrenched, but it requires a serious national response. This is ultimately about preserving public confidence in the integrity of Australian law itself. MGA urges this committee to recognise the scale of the challenge and respond with measures proportionate to the seriousness of the threat. We urge the committee to listen to experts participating in this inquiry, including groups like the Shopping Centre Council that have been instrumental in successful measures like landlord enforcement powers; medical professionals; law enforcement; and economists. Because if organised crime networks can operate openly, profit enormously, intimidate communities and displace lawful businesses with limited consequence, then this issue extends far beyond tobacco. And at that point, we are confronting a broader test of sovereign authority and the rule of law in Australia. Thank you, Chair. CHAIR: Thank you very much for that. Senator Cox, we will go to you to begin questions. Senator COX: Thank you both for appearing before the committee today and providing us with some evidence. Based on the opening statements, I want to pick up on one of the points that you stress to us. I appreciate the impacts that the illicit tobacco trade is having on the safety of workers. First up, I want to be very, very clear about that. No worker should be experiencing the threats that you have described to the committee today. Could you tell us more about your engagement with your members and workers in reporting some of these threats to authorities? Mr Stirling : Certainly. Workers in independent grocery stores and liquor stores are increasingly facing aggression from not only customers but also the broader community itself, which is deeply frustrated by the lack of action. Unfortunately what we have seen is that the price of illicit tobacco has now been normalised. There is a normalised baseline now of about $10 per pack. And when customers complete their grocery shop in an independent supermarket and perhaps want to purchase some tobacco after they've purchased other groceries, they become irate when they are told that it will be $50 or $60 for a packet of tobacco, because the normal expectation now among some consumers is that $10 is the baseline. That then leads to aggression and it leads to incredibly dangerous and uncomfortable situations, especially for young retail workers who might be confronting that kind of aggression for the first time in their lives. Mr Foukkare : A large number of our retailers are continuing to invest in increased security measures in their stores and increase training for their staff. It's really just about making sure the staff are going to be okay to go home to their families. That's probably one of the most important parts that get missed. We've had instances where some retailers in bad areas are setting up safe rooms. They're converting their back office into a room where the staff can escape to should they be attacked. So retailers are doing everything they can to protect not only, firstly and foremostly, their people but also their products, whatever they might be, as well as their business in terms of damage that may happen. Senator COX: It paints a very grim picture, I agree, particularly for young retail workers who are out there that may be at the coalface of experiencing some of the threats and the violence and aggression that you've described to the committee. In your opening statements, you very much told us that you're not here to be advocating for tobacco excise to be reduced, because the profitability of serious and organised crime and the evidence we heard from the ACIC and AFP—the government would be getting into a bidding war with organised crime. They don't care how cheap the product is. They will just keep selling it at a cheaper and cheaper price. In relation to what it is that you would like to see happen, are you able to further articulate for the committee what it is exactly that you are advocating for? Mr Foukkare : I think in my opening statement I was pretty clear that excise policy has failed. In our submission I've got five really clear points around how we believe this issue can be addressed. And it's important to note that it's not as though only one or two or three of these recommendations in isolation will actually go to addressing the problem. We strongly believe that all of the levers that can be pulled need to be pulled. First and foremost, we need to reduce the excise by 50 per cent. We believe that will make a legal packet around $25, in comparison to—it's hard to get data but on average an illegal pack, if you buy it from a store, not a carton, is around $15. We strongly believe that most Aussies will do the right thing. Most Aussies know that when they support organised crime, they're also supporting people that sell drugs in the community, that cause chaos in the community. Secondly, we believe that nicotine vaping should be regulated in a controlled manner, sold by licensed retailers with regulated products, not childlike flavours, obviously not marketed. It's effectively sold exactly the same way tobacco products are today, behind a counter, sealed, hidden from public view, with all of the relevant rules. Thirdly, we believe there needs to be one national framework. It's quite frustrating that we've had an ITEC Commissioner and office in place for nearly two years now and, as yet, unless there's one floating around, no national framework has been published on what each state should do. As it stands, we have eight different sets of rules across the country. So our recommendation would be to have one set of rules, and in our submission we break down all of those specifics: things like store closure powers and landlord termination powers, significant fines, more enforcement, people on the ground et cetera. Fourthly, we can't continue to have websites and social media platforms openly selling these products and not being shut down by the government. These are Australian domain based websites that should not be operating, yet they continue to. Lastly, we need a dedicated enforcement unit, which we believe should be funded by the federal government, and the federal government can deploy either that funding or resources to each of the states. That's because while we're having some success in some parts of the country with different legislation, there are just too many people involved in the enforcement and there's mixed messaging around the country. They are the five points that we believe need to be implemented in parallel to be able to take control and bring demand away from the illegal market back into the legal market and at the same time protect communities. Senator COX: I just want to pick up on a couple of points. The states and territories have already agreed to those eight critical priorities across the trade of illicit tobacco, including supply chain disruption and strengthening Border Force enforcement. What are the gaps then? You pointed to state and territory licensing or regulation in practice. What are the gaps that exist? Mr Foukkare : There's a— Senator COX: Sorry to interrupt you. I know there's a part for the Commonwealth to play. But what essentially are you saying around that inconsistency across states and territories? That's what we're here to receive—that information. Mr Foukkare : I can provide on notice after the fact a complete summary of that. But in very simple terms, in terms of licensing, we hear a lot about it. There are only two states that have a fit and proper person test within their licensing requirements, much the same as our Liquor Licensing Act. Every state and territory should have it. We support Angus and the SCCA on the work they've done for landlords and that closure power, but the fact that every state has their own slightly different version with different limitations and different applications—they just need standardisation. In Victoria, it's the heart of the problem. They have 14 tobacco inspectors and if you ring them up and ask them, 'Who are you checking on?', they say, 'We're checking on all the stores with licences.' Well, that's not where you should be starting. There's no need to go to a 7-Eleven or a Woolies or an Ampol, because they're not the problem. Actually there's a publicly available list that's been made that's available online of 1,200 stores in Victoria that sell illegal tobacco. How about you start there? But they ignore that. We have that same thing happening in New South Wales and we have the same thing happening in other states. From a gaps perspective, I think the areas that are of biggest concern are those that I've just gone through. But I am happy to provide it. There's a list of 15 items that we track to understand who is doing it the best, and there are gaps all over the place. I'm happy to provide that summary to you on notice. Senator COX: Yes, if you could provide that on notice, it would be extremely helpful. Have you provided the list of 1,200 operators that you've just referred to law enforcement or any of the authorities? Mr Foukkare : Absolutely I have. I've provided that directly. Just for your records, it's available online as a list both in New South Wales and Queensland, published by some of the mainstream mastheads. It's searchable by postcode and has the business name and address. They are very easy targets. Senator COX: I want to follow up with one final question. You probably want to share the call very shortly. Lots of evidence has been provided to us from health professionals, from law enforcement, even from big tobacco, talking about a legally provided product. And still we're at the point of understanding how, if we were to reduce an excise on the sale of tobacco as a legal product, that still wouldn't cut the mustard in relation to—there's no evidence that says that every consumer out there, every Australian person, would decide that they were going to pay for a legal product. There's no evidence in relation to that at all. So I'm interested to hear from both of you around what the specific role of the Commonwealth is in relation to ensuring that legitimate operators, are able to compete fairly. Mr Stirling : Master Grocers has in its written submission urged the committee to have a look at the excise settings and consider all evidence from experts that are contributing to this discussion about whether the excise settings are correct. Our retailers tell us that their customers have reached the point where they are making rational decisions based on price, not because they want to be purchasing illegal tobacco but because they have no choice. And the customers that our retailers speak to on a daily basis about this are saying that if the product was a little bit cheaper, then they would happily purchase the legal product that is attracting excise. They feel bad— Senator COX: Are you able to provide any evidence in relation to this, Mr Stirling? We've not heard that evidence. There is not something that is quantifiable that has been in evidence that's been received by this committee. Off-the-cuff comments and anecdotal evidence are not substantial enough for us to make a national policy decision based on tobacco excise. Because you've chatted to a few customers that have said, 'Maybe I'll buy a cheaper product if it saves me a couple of dollars over the till'—that's not going to get a policy change in this committee and it's not going to be a recommendation, because it doesn't hold any weight. I'm not sure you understand that. None of the evidence being presented to us actually says that Australians would purchase a legal product at more—maybe a reduced—cost. That's like handing our health policy to big tobacco in this country and taking us back about 20 years in policy. Mr Stirling : I understand. Our submission is that there is a price up to which consumers are prepared to purchase lawful tobacco, and it's our submission that we have now crossed that point where consumers are making decisions to purchase illegal tobacco. Senator COX: Where does that evidence come from, Mr Stirling? Is that a peer-reviewed piece of evidence that's been provided so that other academics like those at the last hearing can look at it and make sure that it's actually been obtained without any influence or coercion? CHAIR: Senator Cox, I think they can provide evidence based on what their memberships are telling them in terms of their associations, and I think— Senator COX: I didn't ask you, Chair. I asked the witness to answer the question. CHAIR: I think we can be respectful as to the grounds on which— Senator COX: I absolutely am. CHAIR: the witnesses have their expertise. So I will now share the call. Senator COX: Based on their membership? CHAIR: Senator Roberts, you have the call. Senator ROBERTS: Thank you both very much for appearing and for outstanding opening statements. You have summarised the problem, from what I can see. Let me make a couple of checks that I'm understanding properly. Many of your businesses are family run businesses. Some are independent, some are franchised? Mr Stirling : That's correct. Senator ROBERTS: Your industry employs 80,000 staff in the convenience sector? Mr Foukkare : Correct. Mr Stirling : In independent retail, grocery retail, that would be well into hundreds of thousands. Senator ROBERTS: Turnover in the convenience industry was valued at $9.8 billion annually in 2025? Do you know the figure there? Mr Stirling : I don't have the figure, Senator. Senator ROBERTS: Just jump in any time, Mr Stirling. Mr Stirling : Thank you. Senator ROBERTS: I'm looking at a summary here that the secretary has produced. The legal convenience industry annual tobacco sales contribution is currently at 18 per cent, down from 40 per cent less than five years ago. That's a heck of a decrease. Over the last five years, the industry has lost more than $2.5 billion in legal tobacco sales, with $750 million of this bleeding out in the 2025 calendar year alone. Mr Foukkare : Correct. Senator ROBERTS: That's devastating. Mr Foukkare : Absolutely devastating. A lot of petrol and convenience retailers out there that we represent that have seen the gross profit for their entire business cut in half over the last five years. And now retailers are doing the necessary changes that they can implement—for example, investing in their store offer to sell more food or more grocery-type products, or better coffee to their customers. But as you can appreciate, it's not that simple to replace 22 or 23 per cent of your turnover just overnight, because the bigger impact is that the customer that used to buy legal tobacco actually isn't even coming into the store anymore. Senator ROBERTS: I'd like to come to that in a minute. The conclusions summarised from your submission are that Australia is at a critical turning point. This is not just about smoking. The current trajectory is unsustainable and produces outcomes that undermine public health, government revenue and community safety. I'll get to the other points you made in your statement. Without decisive action, the illegal tobacco market will continue to contract with increasing control ceded to organised crime. That's one of your extra points. You went on, 'A balanced approach combining excise reform, regulatory change and strengthened enforcement is essential to restore control of the market.' But in your statement you went on, 'It's about sovereignty, rule of law, democracy, civilisation and society.' They're not your exact words, but is my summary correct? Mr Foukkare : What you reference to my statement—yes. Mr Stirling : And mine, yes. Senator ROBERTS: Thank you. We know the root cause. It's excessive excise duty which has made it attractive to go illegal. I'm not looking for a figure here, but one of your five-part solutions is to reduce excise to 50 per cent of what it currently is. Is that enough? I'm asking genuinely; I'm not advocating. Is that enough? It seems to me that illicit tobacco is now ingrained, people have had a taste of it; it'll be hard to get them back. Mr Foukkare : My view on this is actually twofold. I'll explain quickly. It may not be enough. The government may need to go harder, but I think we're at the point now where—I sat in some of the hearings earlier today and I listened to the hearings a couple of weeks ago—we can't be ignorant of the fact. Even with the budget that was released last week, excise income by 2029-30 is expected to be down at $2 billion. Now, if you go on their track record over the last 10 years, that's wrong. So that's going to be lower than $2 billion; I'm not going to go through the details. So, we either make a drastic change or we are happy acknowledging that the whole market will be run by organised crime groups. That's why I cannot for the life of me listen anymore to people who actually created this mess, because they've given advice over a long period of time that was initially very well intended, but it got to the point where it broke. So I think there needs to be a reset, and unless we have that reset, organised crime groups will control tobacco control policy in Australia. Not the health minister, Mark Butler. Not the Treasurer, Jim Chalmers. It will be taken out of their hands. And if we think crime is bad now, we have another think coming, because if they take full control, it's a disaster. Senator ROBERTS: One final point, Chair. I've never touched a cigarette, never had a cigarette between my lips. I think it's a dirty habit. But I recognise that some people have an addiction, some people have a need for one. Who am I to take that off them? I can accept that. Thank you for acknowledging that you are connected with the tobacco industry. But you're not pushing their cause. That was abundantly clear. You're pushing a cause for Australia and for the citizens of Australia. Is that correct? Mr Stirling : Absolutely, that is correct. And one thing I'd just like to add is that this conversation needs to be about changing the risk matrix for organised crime, but also for consumers. We need to implement a mix of different policy responses—excise is part of the solution, enforcement is part of the solution—to change that dynamic because right now illicit tobacco is, in our submission, a risk-free enterprise. That is what we need to be looking at. Senator ROBERTS: What you want is the power of choice and the responsibility that comes with the power of choice to go back to the Australian citizens? Mr Stirling : We want the Australian law to be followed. We don't want a parallel market where organised crime thinks that following the law is optional. Senator ROBERTS: Right, because that gives illegal operators, illicit operators, an unfair advantage. Mr Stirling : Of course, absolutely. Senator ROBERTS: You can't compete with those, can you? Mr Stirling : That's right. It creates an existential risk for many communities right around this country. A grocery supermarket is an essential service, and if that store is no longer financially viable, if the risk of getting firebombed is too great, they'll close. And what that means is that communities will be left without a supermarket. They'll have to drive hundreds of kilometres to the next town in some parts of this country to do their weekly shop. Senator ROBERTS: Thank you so much. CHAIR: Thank you very much. Senator Steele-John. Senator STEELE-JOHN: Thank you, Chair. To begin, I'll go to Master Grocers. In your opening statement, you've acknowledged a financial connection to the tobacco industry, correct? Mr Stirling : That's correct. Senator STEELE-JOHN: How much money does your organisation take from the tobacco industry? Mr Stirling : Senator, that information is commercial-in-confidence, and on that basis I decline to answer the question. Senator STEELE-JOHN: So you won't disclose the exact extent of the funding to this committee? Mr Stirling : It's commercial-in-confidence information, Senator, just like it is with our other corporate partners that are suppliers to the industry. Senator STEELE-JOHN: Do you have in-kind support from the industry as well as direct financial contribution? Mr Stirling : I have conversations with all suppliers and I seek open dialogue with all our suppliers. Senator STEELE-JOHN: I don't know whether it came across clearly then. I'm asking: do you receive in-kind support from the tobacco industry in addition to financial contributions? Mr Stirling : No, the support that we receive is financial. Senator STEELE-JOHN: From which tobacco corporations do you take this money? Mr Stirling : Our arrangements with suppliers are commercial-in-confidence. I have disclosed that we receive funding from the tobacco industry, but that is the extent to which I feel comfortable to answer that question. Senator STEELE-JOHN: To the Australian Association of Convenience Stores, could you please declare any source of income, revenue, or financial or in-kind support provided to you by the tobacco industry or by representatives of the tobacco industry? Mr Foukkare : Whilst I would love to share that with you, we represent retailers, and retailers sell the legal regulated tobacco product every day in their stores. We represent all of the major retailers that sell legal regulated tobacco. That's part of how our membership income comes through, which is a membership fee retailers pay. We also have supplier memberships, and all of those fees are publicly available on our website. But getting into specifics of who pays what is obviously commercial-in-confidence as well. What I can say and reinforce to you is that our board is made up of 13 individuals: 10 retailers, a combination of large, medium and small, and three suppliers. Of the three suppliers that are on our board, none are members from the tobacco industry. The advocacy priorities set up that we advocate for are set by our board and aren't influenced by any external factors apart from what our board has set, which are issues that the industry is facing. Mr Stirling : That's the same for us. Senator STEELE-JOHN: I understand that you are claiming commercial-in-confidence over the precise figures, but just to clarify so that it's clear for the record: your association does take financial contributions from tobacco companies? Mr Foukkare : As I said in previous hearings, as I said in my opening statement, the answer to that simply is yes. And for context, yes, the same goes for sandwich suppliers, beverage suppliers, service providers, you name it—any product that you can buy in a petrol or convenience store. They're members and they pay a membership fee and they choose what they want to invest. Senator STEELE-JOHN: Do you regularly meet with representatives of the tobacco industry? Mr Foukkare : It's similar to what Martin said: we engage with all of our members. That's no different to you meeting with your constituents and finding out what problems are going on. But ultimately the advocacy priorities are set by our board. Senator STEELE-JOHN: I've heard that from you. How many meetings have you conducted in the last year with the industry or representatives of the industry? Mr Foukkare : I'd have to take that on notice. It would be a few. I'm happy to take it on notice. Senator STEELE-JOHN: Please take it on notice. These are the standard questions required of us under our World Health Organization obligations. It's nothing other than that. I'll put the same question to the Master Grocers of Australia. You regularly meet with and speak with representatives of the tobacco industry, correct? Mr Stirling : I'm not sure what you mean by the word regularly, but it's like with all suppliers: I meet with every supplier and have conversations that are relevant to the industry. Senator STEELE-JOHN: How many meetings have you taken, or has your organisation taken, with representatives of the industry, or the industry directly, in the last year? Mr Stirling : I'd have to take the question on notice. Senator STEELE-JOHN: Please do take the question on notice. You'll have two weeks to get it back to the committee. Do either of your organisations accept membership from businesses that currently profit from illicit tobacco or from other illegal products? Mr Stirling : No. Mr Foukkare : No. Senator STEELE-JOHN: What is your vetting process to ensure that membership fees paid by businesses aren't directly coming from the illicit tobacco industry, from money made by illicit tobacco? Mr Stirling : The NGA constitution is very clear about who can and cannot be a member, and financial voting members of our association are retail stores. These are the IGAs, the Foodworks, the Spars, the Foodlands of the country. These are legitimate retailers that seek membership with our organisation. Senator STEELE-JOHN: So you believe them to be engaged in legitimate business? That's your vetting process: just that you believe they are? Mr Stirling : There are checks and balances built into the system. To be able to trade under the banner of one of these respected brands, there's a self-fulfilling enforcement mechanism. If there is any evidence that any of these stores are engaging in unlawful behaviour, then it will be the banner brands that give them the privilege to trade under those brands that will be the first to respond, and they will no longer I presume, have the privilege of trading under those banners. Senator STEELE-JOHN: And for the Australian Association of Convenience Stores, the same question: what is your vetting process? Mr Foukkare : So first and foremost, similar to the Master Grocers, we have a constitution that outlines 'To be a member, this is what you've got to do'. Secondly, we actually have roles and responsibilities for all of our members, whether you are a retailer or a supplier, across a whole raft of things that goes out with all membership information. And the other thing, which I'm sure happens in the Master Grocers as well—we have a lot of franchised or commission agent sorts of owners that work under a national brand. Every brand has compliance checks that are undertaken regularly. It could be monthly, it could be quarterly; it depends on the brand. They go through a check and audit inclusive of back rooms and behind counters to identify any noncompliance with anything, whether that be an energy drink that has too much caffeine in it, whether that be selling illegal tobacco, whether that be selling something that isn't recommended or approved by that group. So there are checks and balances that are always ongoing. There have been two instances where one of our members has been identified as selling illegal tobacco. On both instances, they were de-branded and are gone and no longer members of our organisation. Further to that, we'll continue to report anybody, member or not, that is selling illegal tobacco, because they're doing the wrong thing not only as a member but for the community. Senator STEELE-JOHN: Your two organisations are here as some of the most passionate advocates for a massive reduction in tobacco excise. So I assume you've conducted modelling and discovered that with a large enough tax cut, your members have an opportunity to make money, potentially more money, from legal tobacco than they do currently from illicit tobacco. Is that correct? Mr Foukkare : Yes. I've conducted independent analysis by Tulipwood Economics, very extensive modelling to look at different scenarios. If we sell more legal tobacco, yes, there's a commercial benefit. But what I ask you, Senator, is: would you rather an organisation that employs Australians, that pays taxes, that supports their community, that keeps the economy moving—whether you're a petrol and convenience store or an independent grocery—make a few more dollars, or would you rather organised crime groups use the extra profit to actually fund importation of drugs and weapons and human trafficking, which is what they do? I don't know where the question's going, but it's a bit of a strange question. Senator STEELE-JOHN: My question's quite straightforward. You're here advocating for a significant tax reduction. And so my conclusion, and you've confirmed it for me I think in your answer, is that you're doing so because you've done some modelling that shows that with a large enough reduction in your taxes, your members stand to make more money from legal tobacco than they might currently be making from illicit tobacco. Mr Foukkare : Absolutely, but so will the Australian federal government and so will every state and territory with regard to increased GST receipts. We can't forget the fact that as little as six years ago, the federal government took $16.1 billion in federal excise. Today, that number is $4 billion. I'll just go on simple maths: $12 billion a year. That is a quarter of the NDIS funding per annum—just as an example. Separate to that, that $12 billion is $1.2 billion in GST that is no longer going to the states so they can use that to enforce the policy mess that we're dealing with. So whilst commercial retailers will benefit, so will the federal government and it could then use that income to actually do good for the community—things like public education campaigns on don't smoke, don't vape. You're laughing but I'm giving you real examples. Senator STEELE-JOHN: I'm just trying to wrap my head around the premise, which seems to be 'Cut the taxes for the tobacco industry to fund the NDIS.' Mr Foukkare : I gave it as an example. Senator STEELE-JOHN: It's quite a wild suggestion. Mr Foukkare : I didn't say cut them to fund it. I said currently the federal government is down $12 billion from six years ago per annum. Currently, if I believe the media, it costs the government around $50 billion to fund the NDIS per annum. So, right now, illegal tobacco has stripped the government of the ability to earn that $12 billion to be able to use at their discretion, whatever it might be—whether it be tax cuts, whether it be investing in roads, whether it be using that money in the NDIS. That's the only example that I was giving. Mr Stirling : If we are to accept that tobacco consumption, nicotine consumption, is stable, it is our submission that society is always going to be better off if a legal retailer is selling that product rather than organised crime. If that is the choice—is it organised crime or is it legal retail?—we say that it's a no-brainer that legal retail is always going to be better, for the reasons that Theo has raised. To your point, Senator: have we got evidence about excise settings? Some of our members in their own desperation and to try to understand the local needs of their communities and how to help their communities have commissioned their own research. For example, Ritchies Stores has commissioned Oxford Economics, and that analysis has been widely circulated through media. There are answers here, and we need to start listening to credible sources like that so that we can protect communities and deprive organised crime of multibillion-dollar profits. Senator STEELE-JOHN: No further questions for these witnesses, Chair. CHAIR: Thank you very much. I'll give the call to Senator Colbeck. Senator COLBECK: Thank you. To the last point, Mr Foukkare, your submission calls for a 50 per cent reduction in excise. I've had a look at the Oxford Economics modelling. I've spoken to Oxford Economics about the modelling. And there were questions from colleagues before about price points in the market, which you've also made reference to. I your recommendation of a 50 per cent reduction based on what comes out of that Oxford Economics modelling? Mr Foukkare : Separate to the Oxford modelling, which I believe was conducted in February of this year, in February of 2024 our research was through Tulipwood Economics. We undertook modelling which looked at status quo at the time, reductions in excise at different levels down to 50 per cent, and the regulation of vaping and what the government would be able to generate if they applied a small tax rate to that as well. That's how we've come up with our recommendation on 50 per cent. But again, in parallel, if it was to be supported at the same time that a regulated vaping model would come into the market, we believe that would be the most sensible approach because effectively the government income on vaping today is zero. If you were to be able to bring any of that back in, that would start to offset some of that income from—well, it's kind of a moot point now because the excise on tobacco is so low. Anyway, that's another story. Senator COLBECK: So your evidence is not based on conversation with a few retailers per se; it's based on a couple of pieces of modelling and research that have been done and released publicly. Mr Foukkare : Absolutely, and I'm happy to share a copy of that report in full to the committee if required. Senator COLBECK: That's the Tulipwood document? Mr Foukkare : Correct. Senator COLBECK: We would certainly appreciate that. You and I have been part of a conversation previously and you talk in your submission about a number of websites that you've advised authorities of that were clearly selling illicit tobacco over a period of six months. I think you say more than three dozen. I mentioned 50 this morning. How many of those are you aware of that have been closed down? Mr Foukkare : To our knowledge, none. Senator COLBECK: Can you take us through what you reported and what response you got back from the authorities? Mr Foukkare : Yes, I can. I think what I have done is—it's either me or one of our members directly in cooperation. One of our members emailed the illicit tobacco commissioner weekly with a list of the websites and continued to add to the list of websites as they discovered more for a period of successive months. Senator COLBECK: So you're doing their work for them, basically, in that sense? Mr Foukkare : Yes, we're trying to help them get to the point of where they need to get to more quickly. But we haven't had any luck. Senator COLBECK: Have you had any response with respect to— Mr Foukkare : We have. We have met with the ITEC Commissioner, the Assistant Minister for Home Affairs and the Minister for Home Affairs on this topic as part of a roundtable. They are aware of it. They have advised us that it's a complicated matter and they're working through it but as yet they haven't made any progress. We've asked them, 'How hard can it be? If you're able to turn off, supposedly, social media for under-16s, surely you could turn off what you need to for a website selling some illegal smokes and vapes?' But it doesn't sound that easy. Mr Stirling : Senator, can I add to that point very quickly? There is deep frustration and cynicism within the independent grocery sector because these reports are made routinely by retailers who look out of their shopfront windows and see illegal shops right across the street operating without any consequence. Those reports are made and nothing happens, so that builds cynicism within the minds of these operators. What is the point of making these reports if nothing changes, if nothing happens? Maybe this is a broader question about resourcing. If there are inadequate resources to respond to these reports, perhaps that is something that this committee should consider. Senator COLBECK: Have either of you had any conversations with law enforcement agencies that would indicate that resourcing is a limitation in terms of state police forces, for example, on the choice of going to a domestic violence event here or attending an illicit tobacco store here—where are you going to go? Have you had any conversations of that nature with law enforcement? Mr Stirling : Yes, consistently. Mr Foukkare : Yes, it's the same here. We've met in most states and territories with the police minister and also with the police themselves. I've also worked quite closely with the Lunar taskforce in Victoria over a number of years now since they were set up. This has been made very clear. We feel for them. The police are doing a good job and the health inspectors are doing as good a job as they can given the available resources. Clearly the fact that in New South Wales you could have 23 stores shut in a period and then you go back and you just pressure-test seven of them a week later and six of them are operating again—that's played out. I live on the Gold Coast in Queensland. There are a large number of stores that have been closed down for three months. On my weekend adventures I saw that three of them that were closed down are open again. I wandered in and yes, they're selling illegal vapes and tobacco again. So full credit to everyone doing what they can, but these people don't care. They will continue to morph into whatever they need to morph into, and that's why enforcement only in this case is not going to give the outcome. Senator COLBECK: In terms of the experience that you're having, or that your staff are having, and what you're having to do to support or protect them, can you give us a quick insight into what you're doing in that circumstance? Mr Stirling : The response is one that is fundamentally based on trying not only to protect young workers, especially, from being exposed to violence and aggression from customers but also to prevent them from being collateral damage. That is the firebombings that I'm referring to. Our members' stores are usually co-located with other retailers on shopping strips. And the nightmare scenario is that one of these illicit tobacco shops that are targeted in the organised crime control wars that happen is going to go up in flames and subsequently destroy and hurt workers in our members' stores. These stores have nothing to do with organised crime, yet they are at serious risk of collateral damage—and, even worse, from being hurt and even killed by just going to work. So our members are responding with exceptionally expensive solutions. That might be security upgrades like CCTV, it might be in some instances security guards, but what it will typically mean, especially for a small business, is making sure that there are more staff on at any one time, which of course comes at a significant cost. Senator COLBECK: Those of your members that might have an Australia Post franchise within their store, and I know that there are some—what feedback are you getting from them in terms of those that used to go to the tobacco counter but now go to the Australia Post counter to pick up their smokes? Mr Foukkare : Pretty clearly they've been significantly busier than they have been from a parcel collection perspective. That's a nightmare scenario because they're actually coming into your own store and picking up the illegal product and maybe not buying anything in your store. So that's happening. Australia Post, it's been pretty broadly reported, is probably the largest distributor of illegal tobacco and illegal vaping products in the country, which is pretty wild when you think about that on its own. Senator COLBECK: It's a government instrumentality. Mr Foukkare : Yes, absolutely. Mr Stirling : We agree with that assessment. Our members who do have Australia Post licences routinely report to us having to hand over suspiciously light packages in the shape of tobacco cartons. That is a routine experience. Senator COLBECK: Thank you. CHAIR: Senator Cox. Senator COX: Earlier on in my questions to you both, I made a statement that there was agreement across state and territory jurisdictions in relation to those critical priorities on illicit tobacco. I just wanted to correct that. It's actually to be tabled to cross-portfolio ministers to get joint commitment on that; it hasn't been agreed to as yet. So you may want to take up that task if you are meeting with states and territories. Thank you for allowing me to correct that, Chair. CHAIR: Thank you very much, Senator Cox, and thank you to the witnesses. We appreciate your attendance. If there are any questions that you've taken on notice, could we please have those back by 1 June. If you need an extension to that time, please let the secretariat know. Alternatively, if you go away and you think, 'I wish I had said something else', please provide it to us in writing. We are very grateful for your evidence today. With that, you are released..