The treasurer warns the explosion in vaping is weighing on the budget as well as the health of Australians.
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The switch to vaping and black-market tobacco products is costing the government about $5 billion in lost taxes, according to numbers crunched by the Australian Association of Convenience Stores.
Treasurer Jim Chalmers was unable to confirm this figure, but said the explosion in vaping and alternatives to cigarettes was a "big problem" for the budget.
"But it's a much, much bigger and more concerning problem when it comes to our local communities and the health system more broadly," he told reporters in Brisbane.
Dr Chalmers said the status quo for vaping and smoking was "completely unacceptable".
"Anyone who has driven past the bus stops before and after school and seen, in particular, the way that vaping is spreading among our young people knows these are incredibly concerning developments," he said.
The treasurer said all options were on the table to tackle the challenge.
Under Australian laws, it is illegal to buy, possess or use nicotine for vaping without a doctor's prescription, and only pharmacies can sell e-cigarettes or e-liquids that contain nicotine.
But users are still able to buy vapes illegally, with research showing the products are not often used to quit smoking.
Liberal MP Karen Andrews said more needed to be done to stop the illegal sale of vapes, especially to young people.
"I understand there may well be an issue for the budget, but we are talking about products that are coming into Australia that should not be allowed in through our border, a product that has been sold to people it should not be sold to," she told Sky News.
"And I would have thought that the government of the day would have been more focused on people's health and education and making sure that they crack down on illegal vaping."
Australian Associated Press
