The federal government has run into an economic dilemma when it comes to tobacco sales. They have been taxed so much, that the illegal market has surged, hurting legitimate retailers. Cigarettes are so available and cheap on the black market, the fear is that smoking rates will rise. Legal cigarette and tobacco sales fell 29 per cent in the year through to the end of September, according to the ABS. A report by the Centre for Independent Studies says the federal government’s tobacco tax has reached the point of diminishing returns. Raising excise rates will incentivise illicit supply, rather than diminishing demand. Even more concerning is that the instances of smoking among young Australians are rising.

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News in brief

Australian household spending jumped 1.3 per cent in October, twice as much as expected by economists, suggesting consumers are driving the economy.

The federal government has conceded that it’s unlikely to reach its ambition of building 1.2 million homes before the end of the decade, and only two states are likely to reach their targets for new houses.

Defence Minister Richard Marles said he has received the Pentagon’s review into AUKUS, and the US is completely supportive of the project.

Thailand has temporarily lifted a decades-old ban on the sale of alcoholic drinks during afternoon hours, ahead of the peak holiday season.

Spotify yesterday released its top streaming tracks for Australia, and overseas musicians led the way. Number one was Taylor Swift. Then came Drake, Morgan Wallen, The Weeknd and Billie Eilish.

Fear-o-meter

The federal government’s tobacco excise revenue has more than halved since 2019-20. It will keep falling.

Retailers including Woolworths, Coles, Metcash/IGA, Ampol and Viva Energy have reported a slump in tobacco sales. It should be good news, but it is not.

Tobacco products have been taxed too much. They are so expensive, law-abiding smokers have turned to buying them illegally, often in convenience stores. The cigarettes and vapes regularly originate in China and the middle east, and are sold as fake version of popular brands, or white label products.

The availability of illegal tobacco products – which is a result of the excise tax regime - has meant more younger people are using them.

Roy Morgan data released in July showed 17.4 per cent of Australians aged 18 and over smoked or vaped, similar to levels a decade earlier. However, the number of younger Australians aged 18 to 24 smoking or vaping had risen to 27.8 per cent, according to the AFR.

There is also the problem of crime that comes alongside illegal sales. There have been fire-bombings in Victoria, where rival gangs have fought for control over the trades. In NSW and SA, governments have introduced tough new penalties for selling illegal tobacco.

Smoking is responsible for the deaths of more than 66 Australians a day, or 24,000 people annually, and is the leading cause of preventable death in Australia. Government policy clearly needs to change.

Fear & Greed Q+A today

On performance gaps across the major banks, what’s driving the recovery stories, and the mix of banks he thinks offers the best medium-term exposure in a shifting market.

 

 “I’d be thinking about exposures rather than which one… CBA is the highest-quality bank and deserves a position. If I want SME lending, I look at NAB, but I’d go further down the curve to something like Judo Bank — smaller, relationship-style banking, better growth and return profiles over the medium term. Then if I want something more different or spicy, Macquarie. Expectations are becoming more realistic again… and it could be a good time to get exposure. CBA, Judo and Macquarie is a good mix on a medium-term view.”

 

General information only. Seek advice tailored to your circumstances before making investment decisions.

Greed-o-meter

As mentioned above, the most-streamed artists in Australia this year have been revealed by Spotify, and none of them are Australian. Fortunately, Spotify also released a list of the most-streamed Australian artists, and the most-streamed Australian songs in 2025.

Australian artist:

Australian song:

Source: Spotify

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