As Australia’s tobacco wars continue, a NSW heroin drought in 2000 might offer lessons

Victorian Premier Jacinta Allan has announced she plans to introduce “Australia’s toughest illicit tobacco laws”, which marks another escalation in the state’s battle against the illicit tobacco trade.

Under the proposed laws, Victoria Police and regulator Tobacco Licensing Victoria will be able to shut down tobacco shops if they are found to be selling illegal tobacco.

Whether or not these proposed laws have any major impact on Victoria’s “tobacco wars” will only be known in time.

But our research into a different drug in a different state in 2000 may help shed some light on how authorities can diffuse the current tensions.

Fires and violence

Victoria Police’s Taskforce Lunar says it is investigating more than 125 fires across the state (most at businesses involved in selling tobacco) and has arrested more than 100 people in connection with the fires and related serious offending.

The violence has also spilled beyond shopfronts.

In January 2025, Katie Tangey was killed in the melbourne suburb of Truganina after a townhouse was set alight. Police said the offenders may have targeted the wrong address.

This is the sharp end of Australia’s tobacco crackdown.

Read more: Alleged tobacco kingpin Kazem ‘Kaz’ Hamad has been arrested in Iraq – what happens next?

Why is this happening?

A legal pack of cigarettes costs about $40–$60. A large share of that price is tax. Excise is now around $1.50 per cigarette.

The federal government hopes sky-high excise will reduce daily smoking prevalence to 5% or less by 2030.

As legal sales fall, the black market has surged. Illicit packs can sell for as little as $10–$15, a fraction of the legal price, giving organised crime a powerful incentive to supply the market.

The Australian Taxation Office estimates the illegal trade now accounts for about one in five tobacco sales, as syndicates import untaxed tobacco and sell cut-price packets outside the system.

So is Australia’s price-led strategy working?

Our findings from the heroin market suggest the answer depends heavily on what happens to supply, not just price.

Lessons from history

Around Christmas 2000, something remarkable happened in Australia’s heroin market: heroin purity plummeted by more than 75%, prices tripled, and overdose deaths fell by 64% nationwide.

Most evidence points to a genuine “heroin drought”: a major disruption of the supply chain, widely attributed to law enforcement efforts that disrupted supply routes.

We set out to see what that drought did to crime. We used 25 years of data for every postcode in New South Wales and compared postcodes with high historical heroin use with other areas and other crime types.

In the first month of the heroin shortage, crime in high-heroin areas jumped by about 8% as dependent users scrambled to cope with higher prices and weaker drugs.

After that, the pattern flipped: the relative crime rate declined about 1% a year. By the late 2010s, cash-motivated crimes in those areas were roughly 23% lower than the pre-shortage trend would have predicted.

Putting a dollar figure on that long-run drop suggests an annual reduction in crime costs of around A$2.21 billion (2020 dollars).

This is our estimate, based on Australian Institute of Criminology cost-of-crime figures updated for inflation – and it should be treated as a conservative back-of-the-envelope estimate rather than a precise calculation.

What can we learn from this?

The heroin drought produced short-term pain and a large but mostly invisible long-term gain.

It also shows why judging drug crackdowns from the first few headlines is risky: successful and failed crackdowns can look much the same at the start.

The numbers also depend on which data you look at. In our study, if you focused only on court prosecutions, you would have misread the story entirely, because changes in DNA laws pushed up the number of solved and prosecuted robberies even as the robbery rate itself was falling.

Tobacco policy has the same measurement trap. If you look only at legal cigarette sales, you might see a sharp decline and think “mission accomplished”. But those numbers miss the cigarettes coming in car boots and backyard factories, and they miss the violent competition over illicit tobacco.

Some key differences

Heroin and tobacco markets are very different. Heroin is illegal, imported and hard to manufacture. Tobacco is legal, easy to grow and widely accepted in many communities.

The comparison is therefore not between the substances themselves but between the market dynamics.

The heroin drought shows when authorities manage to sharply reduce supply and sustain that reduction, the long-term fall in harm can be large — even if the short-term picture looks messy.

Even with excellent policing we are unlikely to recreate a true heroin-style drought for cigarettes and our research cannot tell us what the “right” level of tobacco tax is.

What it does show is that when you do manage to choke off supply and keep it that way – and back it with treatment – the strategy can deliver large, long-run reductions in harm.

In plain terms: to get the long-term benefits, you need a supply reduction that lasts. A short-lived squeeze just encourages the market to adapt (new routes, new suppliers) while the harms continue.

By contrast, pushing prices very high while leaving supply routes largely intact risks splitting the market: well-off, risk-averse smokers keep buying legal packs, while everyone else is pushed towards untaxed imports sold by organised crime.

The awkward part is what happens in the meantime.

If we want policy that truly reduces harm – whether for nicotine, opioids or whatever drug comes next – we need patience, better numbers and a clear idea of what counts as success.