Australian states could sue tobacco companies for billions in healthcare costs under proposal

Exclusive: Former barrister who helped legally establish that secondhand smoke causes lung cancer argues states could seek up to $50bn in compensation

Get our breaking news email, free app or daily news podcast

Australian state governments could sue tobacco companies for billions in public hospital and healthcare costs, under a proposal developed by a former barrister who helped legally establish that secondhand smoke causes lung cancer.

The South Australian government is formally seeking advice on the proposal, while other states are reviewing it.

Authored by Sydney Health Law research affiliate Neil Francey, the proposal argues the states could file proceedings in the federal court seeking up to $50bn in compensation for health costs, and to fund cancer screening programs and prevention measures.

It targets the dominant tobacco companies in Australia – British American Tobacco (BAT), Philip Morris and Imperial Brands – and their parent corporations overseas.

Francey is presenting the blueprint at the Clinical Oncology Society of Australia’s annual scientific meeting in Sydney on Thursday, arguing the companies could be held liable for decades of misleading and deceptive conduct under Australian consumer law.

He has also briefed state government MPs. Under the plan, the six state governments would pool their resources to set up a dedicated, joint legal taskforce to run the case.

“For decades, the tobacco industry has unjustly enriched itself while distracting and confusing smokers about the harms and addictiveness of their product,” the proposal says.

“The industry has not been forced to bear the full costs of the harm caused by their product. These costs have either been borne by smokers themselves, or by taxpayers when smokers get sick and receive publicly funded or subsidised health care.”

A BAT Australia spokesperson said the company does not comment on potential or pending legal claims, while Philip Morris and Imperial Brands did not respond to requests for comment.

Francey told Guardian Australia that the proposal excludes the Northern Territory and the ACT, as the territories are an arm of the commonwealth, and there are differences in healthcare funding arrangements that could complicate the case.

The proposal seeks to recover healthcare costs incurred by the states since 2000, when internal tobacco industry documents were published revealing the industry knew that smoking caused serious diseases but colluded to cover up and obfuscate the evidence.

“I think you can justify a figure in the order of fifty billion, possibly even more,” Francey said.

In 1991, Francey represented consumers in a federal court of Australia case triggered by a Tobacco Institute of Australia advertisement that claimed there was “nothing which proves scientifically that cigarette smoke causes disease in nonsmokers”.

The court found compelling scientific proof that passive smoking causes lung disease and respiratory conditions in non-smokers, making the industry’s claims unlawful. The historic ruling accelerated workplace and public indoor smoking bans.

Francey said his latest proposal has the benefit of being brought by state governments under consumer protection laws, bypassing some of the challenges faced by smokers pursuing personal injury lawsuits, where it can be hard to prove which brand caused the harm, and with tobacco companies arguing people have “freedom of choice”.

Francey said state governments could seek court orders against companies engaged in misleading and deceptive conduct which has led to loss and damage and the likelihood of suffering in future.

The South Australian health minister, Blair Boyer, said there was a “substantial” public interest in measures reducing the harms that tobacco-related diseases place on governments, health systems and communities.

“While this proposal draws on historic findings regarding misleading and deceptive conduct by the tobacco industry, it is important that the state does its own due diligence,” he said.

“I have sought advice on the proposal, the likelihood of success and the benefits to South Australians, which will allow the government to consider its options.”

A spokesperson for the NSW health minister, Ryan Park, said: “We will review his proposal carefully”.

A spokesperson for the Queensland health minister, Tim Nicholls, confirmed a meeting with Francey, but said the state was focused on laws targeting the illicit tobacco and vape trade. The Western Australian health minister, Meredith Hammat, said the state’s efforts are currently focused on strengthening tobacco legislation and enforcement activities.

The CEO of the Australian Council on Smoking & Health, Laura Hunter, said it would be “entirely reasonable for tobacco companies to bear the costs of the harm their products have caused” in Australia.

“For years, they’ve made money selling products that addict people and cause serious illness and death,” she said. “The responsibility for addressing that harm belongs with the companies that profited from it.”

The legal push follows cases overseas, including the landmark 1998 Master Settlement Agreement signed by major US tobacco companies and state attorneys general to settle dozens of lawsuits seeking to recover billions in smoking-related healthcare costs.

In 2025, three of the biggest tobacco companies were ordered to pay billions in compensation for smoking-related harms in Canada, though health groups expressed disappointment that the decision did not address harms from future use.

A professor of tobacco control with the University of Sydney, Becky Freeman, said the Canadian case was protracted over many years, and that any country taking on tobacco companies needed to ensure they were on “solid ground” to avoid spiralling costs and lacklustre outcomes.

“I am absolutely supportive of the tobacco industry being held accountable,” she said.

“I would want to ensure any action was comprehensive.”

Associate Prof Jonathan Liberman, an expert in law and global health at the University of Melbourne who has spent more than two decades working on legal aspects of tobacco control, said what has made tobacco litigation challenging is the scale and duration of the tobacco industry’s wrongdoing, and how vigorously the industry has defended it.

A range of features of the US legal system make large-scale litigation easier there, he said. To be successful in Australia, litigation against the tobacco industry over the health costs of smoking would need specific enabling legislation, and well resourced law firms working outside government doing the bulk of the necessary legal work, he said.

“Without these, lawsuits risk consuming significant time and public resources that may be better directed toward direct policy reform, and ultimately falling over on a combination of procedural grounds and resources running out.”