May 6, 2025 • 13 mins
In January, Katie Tangey was killed in a Melbourne house fire believed to be part of the ongoing “tobacco wars”. Police say she was an innocent victim and the arsonists got the wrong address.
The tobacco wars are driven by rival gangs fighting over a black market worth billions, and have been marked by firebombings, extortion and murder.
While headlines focus on the violence, skyrocketing government taxes on tobacco have long been fuelling the fire behind the scenes.
Today, associate editor for The Saturday Paper, Martin McKenzie-Murray, on how a public health initiative created the conditions for a deadly turf war.
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Guest: Associate editor for The Saturday Paper, Martin McKenzie-Murray.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
From Schwartz Media. I'm Daniel James. This is seven AM.
Smoking rates in Australia have plummeted. We now have some
of the lowest in the developed world. But behind the
public health success, something far darker is unfolding. A violent
black market has taken hold, one fueled by extortion, fire
(00:23):
bombings and murder. And it's all happening under the banner
of Australia's so called tobacco wars. Today Associate editor for
the Saturday Paper, Martin Mackenzie Murray on how a public
health victory created the conditions for a deadly turf war
and the innercent victim caught in the middle. It's Wednesday,
(00:48):
May seven. Marty. You've been looking into the case of
Katie Tangy. Can you tell me about who she is
and what happened to her?
Speaker 2 (01:00):
So she was a young Melbourne woman, twenty seven and
she was house setting for her brother who was overseas
on his honeymoon earlier this year in January. And she
had gone to bed one evening on the sixteenth and
a little after two clock two men arrived. We know
(01:21):
this through CCTV footage.
Speaker 3 (01:25):
Investigators say moments before an explosion inside the property. Two
people got out of this suv parked nearby, pouring an
accelerant on the.
Speaker 2 (01:34):
Home, and a little after two o clock, Katie made
a desperate coll to triple zero. She was trapped in
the house.
Speaker 3 (01:42):
Firefighters raised to the Truggennighter home around two am and
desperately searched inside, but the intensity of this blaze was
so extreme they had to retreat, and in the light
of day came the confirmation the twenty seven year old
woman who was looking after her brother's home while he's
on his honey had been killed.
Speaker 2 (02:02):
It's difficult to I think overstate the obscenity of her death,
and I know for a fact that it's haunted several
first responders and the police that are now investigating her death.
Speaker 1 (02:15):
So what's known about who did this to her?
Speaker 2 (02:18):
So police have been deliberately or tactically vague on motivation,
but they have been very clear that they believe that
this was a part of the tobacco wars, and have
been equally clear and emphatic that Katie Tangi was an
entirely innocent bystander, that she had nothing to do with
the illicit tobacco market, and the working theory is that
(02:44):
these arsonists and killers got the wrong address.
Speaker 1 (02:50):
So tell me more about the so called tobacco wars
and how you became interested in reporting on them.
Speaker 2 (02:55):
Yeah, so it's something that's become kind of inescapable. From
about it year ago, I noticed when I went out
to pubs, I saw people smoking Manchester cigarettes or the
South Korean brand essays. And it was really conspicuous because
many years ago, under the Gillide government, we passed planned
packaging laws and so different types of cigarettes and different
(03:18):
types of tobacco products were indistinguishable. But so aggressively have
cigarettes been taxed that it's reached a point where they've
become prohibitively expensive, and for those who are unlikely, unwilling,
incapable of quitting, they are pushed into a black market.
It became kind of very common knowledge amongst smokers where
(03:42):
you could go to get these really cheap packs of cigarettes,
and it became such that this market for all cigarettes
became a billion dollar industry, billions plural, and excited the
rivalries between organized crime families who were just laying for
the monopolization of a really lucrative black market. The second
(04:06):
part is this extensive campaign of extortion of small businesses,
often kind of mum and dad businesses, tobacconists. And so
what will happen What has happened extensively across Victoria for
the last two years are that shop owners will receive
a visit from gangsters and they will say, we want
you to stock under the counter our goods, that is
(04:29):
illicit cigarettes that have been trafficked and if you don't
sell them, terrible things will happen.
Speaker 1 (04:36):
So these illegal cigarettes have taken off because cigarettes have
become so expensive. So can you just describe to me
how we got to this point.
Speaker 2 (04:44):
Yeah, tobacco has always attracted a special tax forever, but
in the decade twenty ten to twenty nineteen it was
subject to super aggressive and successive tax.
Speaker 3 (05:01):
Well smikers to be whacked with big cigarette price.
Speaker 1 (05:04):
Rises for the next four years to.
Speaker 3 (05:06):
Help balance the budgets and create a healthier nation.
Speaker 2 (05:09):
So in twenty ten there was a twenty five percent
tax increase applied to cigarettes, and then in the years
between twenty thirteen and twenty twenty there was an annual
increase of twelve point five percent.
Speaker 3 (05:23):
A policy release today would see the tobacco excise rise
by twelve and a half percent each year until twenty twenty.
Speaker 2 (05:31):
The result of that meant that your average packet of
cigarettes went from about thirteen dollars to more like fifty dollars.
Speaker 1 (05:41):
This was always.
Speaker 2 (05:43):
Justified by the government as a public health measure to.
Speaker 4 (05:48):
Protect people from taking it up and additional support for
current and former smokers to look after their health.
Speaker 2 (05:55):
And Mike Butler, the Health Minister, has said something a
couple of years ago like an expense of cigarette is
an unattractive cigarette.
Speaker 4 (06:03):
Because we know that a higher priced cigarette is a
more unattractive cigarette.
Speaker 2 (06:08):
The idea was very simple. The more expensive cigarettes are,
the fewer people will smoke them. But there was always
a problem.
Speaker 4 (06:15):
With that.
Speaker 1 (06:19):
Coming up after the break. The real reason smoking rates
are dropping. Well, Marty, you've been investigating how the cost
of cigarettes has sparked a turf war at Australian cities.
(06:41):
We've been told that taxing the hell out of cigarettes
means less people will smoke them, and that's why we've
seen such a decline in smoking here. So is that true? So?
Sure enough?
Speaker 2 (06:52):
I spoke to a criminologist from Deacon University, James Martin,
who specializes in black markets, and he says we have
an abundance of for a wealth of public data about
smoking rates in Australia over recent decades. And he says
it's an interesting comparison to make between the first decade
of the century twousand to twenty ten and the second
(07:14):
decade twenty eleven to about twenty twenty, which, as I
just described, was one marked by really significant taxation increases
on cigarettes. And he says there's no statistically meaningful difference
between those two decades, one marked by light taxation, the
(07:35):
other marked by really severe taxation. There's no statistically meaningful
difference in declining smoking rants. What is significant now is
that in the last few years, since twenty nineteen, we
have in Australia experienced the sharpest decline in public smoking
rants in decades. It's gone from eleven point six percent
(07:57):
of daily smokers to eight point eight percent, which is
an internationally very low number. But in those years twenty
nineteen to twenty twenty three, little changed, certainly little in
the taxation environment. What did change was the emergence of vaping,
and James Martin is of the belief that it's beyond
a coincidence that what we can attribute to that decline
(08:21):
in smoking rates is not taxation, which has now encouraged
a black market because prices have become prohibitive. What is
significant is the emergence and introduction of vaping.
Speaker 1 (08:32):
So what you're saying is that vaping has more to
do with lowering smoking rates than the taxes. Correct, But
there is a line between the rising prices and rising crime.
Is that a fair comparison to make? Absolutely?
Speaker 2 (08:45):
I kind of must have been warning about this for
a long, long long time, and it's not an arcane
or difficult concept to grasp that if you increase the
price of something, you may change behavior, but you will
also never eradicate demand for that product, and you will
(09:05):
encourage a flourishing black market for it. And that's precisely
what we've said. You can't tax things infinitely. There becomes
a point where you get perverse outcomes. And in this case,
the revenue that tobacco indexation created was enormous. So until
(09:25):
kind of recently, the taxation on cigarettes was the fourth
largest source of revenue for the federal government. That's now
slipped to about seventh. That's a loss of billions of dollars,
and that loss isn't mostly attributable to those declining smoking
rates that I just spoke of. It's attributable to the
(09:48):
fact that people are buying their cigarettes illegally, and so
the government's not receiving any tax from those packs of
cigarettes or cartons of cigarettes that are brought on the
black market.
Speaker 1 (09:58):
So what does this tell you, Marti about how the
tobacco walls should be addressed and what will happen if
they aren't handled properly.
Speaker 2 (10:04):
I think one thing that's very distinctive about Australia is
a formal or official treatment of vaping. There is a
conspicuous hostility to vaping relative to say New Zealand or
the United Kingdom or Sweden would be another example. Our
formal attitude to vaping is really suspicious and really hostile,
(10:25):
and it makes us quite different. It makes us an
outlier compared to kind of comparable countries. Another point that
Stephen Hamilton, who's an Australian economist at George Washington University
in the States, made to me is that if you
want to combat the black market that is so obviously
(10:48):
flourishing and flourishing violently, then you need to immediately reduce
the taxation on cigarettes to levels that they were ten
or fifteen years ago.
Speaker 1 (11:00):
Has the government intimated that they will go down that
path at all?
Speaker 2 (11:04):
Oh? Absolutely not no, and people would be outraged by it.
But I think given the public indifference to kind of
punitive taxation of cigarettes, it is completely unthinkable to me
that the government would would entertain such a change, and
instead they will talk about this as a police matter.
(11:27):
And whilst policing has a role in this, really it
is our public health policy and taxation policy that has
encouraged this black market. But I think for as long
as cigarettes remain for many prohibitively expensive, the size and
(11:48):
the lucrativeness, the attraction of illicit tobacco will remain and
will have a large and violently enforced black market.
Speaker 1 (12:00):
Marty, thank you so much for your time. Thanks Daniel.
Also in the news today, the government says it will
stand up for the Australian screen industry. After US President
(12:21):
Donald Trump promised to one hundred percent tariff on films
made outside the United States, he called out other countries
offering incentives, saying it was a concerted effort to attract
American film production to their shores and described it as
a national security threat. Messaging and Propaganda Arts Minister Tony
Burke says he's spoken with Screen in Australia about the statement,
(12:41):
and Foreign Minister Penny Wong says Trump has expressed a
willingness to engage with film studios on the issue. And
Israel's security cabinet has approved a plan to escalate its
military campaign in Gaza, including the full capture of the
territory and an indefinite presence there. The plan also involved
a displacement of hundreds of thousands of policitians to southern Gaza,
(13:02):
is to be implemented gradually. The UN says the plan
will lead to countless small civilians being killed and the
further destruction of Gaza. I'm Daniel James seven am will
be back tomorrow
From Schwartz Media. I'm Daniel James. This is seven AM.
Smoking rates in Australia have plummeted. We now have some
of the lowest in the developed world. But behind the
public health success, something far darker is unfolding. A violent
black market has taken hold, one fueled by extortion, fire
(00:23):
bombings and murder. And it's all happening under the banner
of Australia's so called tobacco wars. Today Associate editor for
the Saturday Paper, Martin Mackenzie Murray on how a public
health victory created the conditions for a deadly turf war
and the innercent victim caught in the middle. It's Wednesday,
(00:48):
May seven. Marty. You've been looking into the case of
Katie Tangy. Can you tell me about who she is
and what happened to her?
Speaker 2 (01:00):
So she was a young Melbourne woman, twenty seven and
she was house setting for her brother who was overseas
on his honeymoon earlier this year in January. And she
had gone to bed one evening on the sixteenth and
a little after two clock two men arrived. We know
(01:21):
this through CCTV footage.
Speaker 3 (01:25):
Investigators say moments before an explosion inside the property. Two
people got out of this suv parked nearby, pouring an
accelerant on the.
Speaker 2 (01:34):
Home, and a little after two o clock, Katie made
a desperate coll to triple zero. She was trapped in
the house.
Speaker 3 (01:42):
Firefighters raised to the Truggennighter home around two am and
desperately searched inside, but the intensity of this blaze was
so extreme they had to retreat, and in the light
of day came the confirmation the twenty seven year old
woman who was looking after her brother's home while he's
on his honey had been killed.
Speaker 2 (02:02):
It's difficult to I think overstate the obscenity of her death,
and I know for a fact that it's haunted several
first responders and the police that are now investigating her death.
Speaker 1 (02:15):
So what's known about who did this to her?
Speaker 2 (02:18):
So police have been deliberately or tactically vague on motivation,
but they have been very clear that they believe that
this was a part of the tobacco wars, and have
been equally clear and emphatic that Katie Tangi was an
entirely innocent bystander, that she had nothing to do with
the illicit tobacco market, and the working theory is that
(02:44):
these arsonists and killers got the wrong address.
Speaker 1 (02:50):
So tell me more about the so called tobacco wars
and how you became interested in reporting on them.
Speaker 2 (02:55):
Yeah, so it's something that's become kind of inescapable. From
about it year ago, I noticed when I went out
to pubs, I saw people smoking Manchester cigarettes or the
South Korean brand essays. And it was really conspicuous because
many years ago, under the Gillide government, we passed planned
packaging laws and so different types of cigarettes and different
(03:18):
types of tobacco products were indistinguishable. But so aggressively have
cigarettes been taxed that it's reached a point where they've
become prohibitively expensive, and for those who are unlikely, unwilling,
incapable of quitting, they are pushed into a black market.
It became kind of very common knowledge amongst smokers where
(03:42):
you could go to get these really cheap packs of cigarettes,
and it became such that this market for all cigarettes
became a billion dollar industry, billions plural, and excited the
rivalries between organized crime families who were just laying for
the monopolization of a really lucrative black market. The second
(04:06):
part is this extensive campaign of extortion of small businesses,
often kind of mum and dad businesses, tobacconists. And so
what will happen What has happened extensively across Victoria for
the last two years are that shop owners will receive
a visit from gangsters and they will say, we want
you to stock under the counter our goods, that is
(04:29):
illicit cigarettes that have been trafficked and if you don't
sell them, terrible things will happen.
Speaker 1 (04:36):
So these illegal cigarettes have taken off because cigarettes have
become so expensive. So can you just describe to me
how we got to this point.
Speaker 2 (04:44):
Yeah, tobacco has always attracted a special tax forever, but
in the decade twenty ten to twenty nineteen it was
subject to super aggressive and successive tax.
Speaker 3 (05:01):
Well smikers to be whacked with big cigarette price.
Speaker 1 (05:04):
Rises for the next four years to.
Speaker 3 (05:06):
Help balance the budgets and create a healthier nation.
Speaker 2 (05:09):
So in twenty ten there was a twenty five percent
tax increase applied to cigarettes, and then in the years
between twenty thirteen and twenty twenty there was an annual
increase of twelve point five percent.
Speaker 3 (05:23):
A policy release today would see the tobacco excise rise
by twelve and a half percent each year until twenty twenty.
Speaker 2 (05:31):
The result of that meant that your average packet of
cigarettes went from about thirteen dollars to more like fifty dollars.
Speaker 1 (05:41):
This was always.
Speaker 2 (05:43):
Justified by the government as a public health measure to.
Speaker 4 (05:48):
Protect people from taking it up and additional support for
current and former smokers to look after their health.
Speaker 2 (05:55):
And Mike Butler, the Health Minister, has said something a
couple of years ago like an expense of cigarette is
an unattractive cigarette.
Speaker 4 (06:03):
Because we know that a higher priced cigarette is a
more unattractive cigarette.
Speaker 2 (06:08):
The idea was very simple. The more expensive cigarettes are,
the fewer people will smoke them. But there was always
a problem.
Speaker 4 (06:15):
With that.
Speaker 1 (06:19):
Coming up after the break. The real reason smoking rates
are dropping. Well, Marty, you've been investigating how the cost
of cigarettes has sparked a turf war at Australian cities.
(06:41):
We've been told that taxing the hell out of cigarettes
means less people will smoke them, and that's why we've
seen such a decline in smoking here. So is that true? So?
Sure enough?
Speaker 2 (06:52):
I spoke to a criminologist from Deacon University, James Martin,
who specializes in black markets, and he says we have
an abundance of for a wealth of public data about
smoking rates in Australia over recent decades. And he says
it's an interesting comparison to make between the first decade
of the century twousand to twenty ten and the second
(07:14):
decade twenty eleven to about twenty twenty, which, as I
just described, was one marked by really significant taxation increases
on cigarettes. And he says there's no statistically meaningful difference
between those two decades, one marked by light taxation, the
(07:35):
other marked by really severe taxation. There's no statistically meaningful
difference in declining smoking rants. What is significant now is
that in the last few years, since twenty nineteen, we
have in Australia experienced the sharpest decline in public smoking
rants in decades. It's gone from eleven point six percent
(07:57):
of daily smokers to eight point eight percent, which is
an internationally very low number. But in those years twenty
nineteen to twenty twenty three, little changed, certainly little in
the taxation environment. What did change was the emergence of vaping,
and James Martin is of the belief that it's beyond
a coincidence that what we can attribute to that decline
(08:21):
in smoking rates is not taxation, which has now encouraged
a black market because prices have become prohibitive. What is
significant is the emergence and introduction of vaping.
Speaker 1 (08:32):
So what you're saying is that vaping has more to
do with lowering smoking rates than the taxes. Correct, But
there is a line between the rising prices and rising crime.
Is that a fair comparison to make? Absolutely?
Speaker 2 (08:45):
I kind of must have been warning about this for
a long, long long time, and it's not an arcane
or difficult concept to grasp that if you increase the
price of something, you may change behavior, but you will
also never eradicate demand for that product, and you will
(09:05):
encourage a flourishing black market for it. And that's precisely
what we've said. You can't tax things infinitely. There becomes
a point where you get perverse outcomes. And in this case,
the revenue that tobacco indexation created was enormous. So until
(09:25):
kind of recently, the taxation on cigarettes was the fourth
largest source of revenue for the federal government. That's now
slipped to about seventh. That's a loss of billions of dollars,
and that loss isn't mostly attributable to those declining smoking
rates that I just spoke of. It's attributable to the
(09:48):
fact that people are buying their cigarettes illegally, and so
the government's not receiving any tax from those packs of
cigarettes or cartons of cigarettes that are brought on the
black market.
Speaker 1 (09:58):
So what does this tell you, Marti about how the
tobacco walls should be addressed and what will happen if
they aren't handled properly.
Speaker 2 (10:04):
I think one thing that's very distinctive about Australia is
a formal or official treatment of vaping. There is a
conspicuous hostility to vaping relative to say New Zealand or
the United Kingdom or Sweden would be another example. Our
formal attitude to vaping is really suspicious and really hostile,
(10:25):
and it makes us quite different. It makes us an
outlier compared to kind of comparable countries. Another point that
Stephen Hamilton, who's an Australian economist at George Washington University
in the States, made to me is that if you
want to combat the black market that is so obviously
(10:48):
flourishing and flourishing violently, then you need to immediately reduce
the taxation on cigarettes to levels that they were ten
or fifteen years ago.
Speaker 1 (11:00):
Has the government intimated that they will go down that
path at all?
Speaker 2 (11:04):
Oh? Absolutely not no, and people would be outraged by it.
But I think given the public indifference to kind of
punitive taxation of cigarettes, it is completely unthinkable to me
that the government would would entertain such a change, and
instead they will talk about this as a police matter.
(11:27):
And whilst policing has a role in this, really it
is our public health policy and taxation policy that has
encouraged this black market. But I think for as long
as cigarettes remain for many prohibitively expensive, the size and
(11:48):
the lucrativeness, the attraction of illicit tobacco will remain and
will have a large and violently enforced black market.
Speaker 1 (12:00):
Marty, thank you so much for your time. Thanks Daniel.
Also in the news today, the government says it will
stand up for the Australian screen industry. After US President
(12:21):
Donald Trump promised to one hundred percent tariff on films
made outside the United States, he called out other countries
offering incentives, saying it was a concerted effort to attract
American film production to their shores and described it as
a national security threat. Messaging and Propaganda Arts Minister Tony
Burke says he's spoken with Screen in Australia about the statement,
(12:41):
and Foreign Minister Penny Wong says Trump has expressed a
willingness to engage with film studios on the issue. And
Israel's security cabinet has approved a plan to escalate its
military campaign in Gaza, including the full capture of the
territory and an indefinite presence there. The plan also involved
a displacement of hundreds of thousands of policitians to southern Gaza,
(13:02):
is to be implemented gradually. The UN says the plan
will lead to countless small civilians being killed and the
further destruction of Gaza. I'm Daniel James seven am will
be back tomorrow
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