Economists argue Australia's globally high rates of tobacco tax and hardline approach to e-cigarettes have contributed to an explosion in black market cigarettes and vapes.
While Labor acknowledgex the campaign has resulted in falling excise revenue, it says it has achieved the more important goal of reducing smoking.
Health Minister Mark Butler said the AIHW survey was "universally recognised as the authoritative source" for smoking trends, showing that daily adult smoking rates had dropped to the lowest level ever at 5.8 per cent, in a press conference in July.
But the AIHW's National Drug Strategy Household survey is contradicted by other evidence, which shows smoking rates are staying the same or could be rising.
Lachlan Vass, a research manager at the independent e61 Institute, said it was possible the survey understated smoking rates.
Estimates of tobacco consumption derived from wastewater analysis by the Australian Bureau of Statistics suggests total consumption of nicotine increased by 30 per cent from 2020 to 2025.
Adjusting for population growth and excluding vapes and other forms of nicotine, Mr Vass said the ABS data implied cigarette consumption per person had been roughly flat since 2017, but was increasing in recent years.
The discrepancy with the ABS data could be due to survey respondents under-reporting true rates of illicit tobacco usage in the AIHW survey, Mr Vass suggested.
"Survey data has many benefits, but one potential concern when measuring an illicit or socially frowned upon behaviour is social desirability bias - where survey respondents underreport what they do," he said in research published on Friday.
The survey might also be inadequately capturing illicit tobacco users, with the 2025 edition reporting only 34 per cent of smokers used black market smokes, far lower than estimates by the ABS and the government's illicit tobacco commissioner.
Physician and policy expert Nick Coatsworth said public health advocacy groups and the government were applying an uncritical attitude to smoking data to promote their agendas.
"An excellent researcher always considers the question: what if my data is wrong?" Dr Coatsworth told AAP.Â
"No one has been considered enough to raise that question.
"What the e61 report shows is that the minister and his office are cherrypicking data."
A department spokesperson said the survey was a trusted and robust measure of smoking trends and wastewater analysis was not an accurate estimate of smoking or vaping prevalence.
Laura Hunter, chief executive of the Australian Council on Smoking and Health, has criticised the coalition and One Nation's proposed cuts to the tobacco excise
She said the AIHW survey showed higher excise rates were working.
An AIHW spokesperson said the survey was one of Australia's longest-running and most comprehensive sources of information on tobacco use.
"The survey uses established statistical methods to produce nationally representative estimates," they said.
Research from Roy Morgan in July 2025 showed rates of adult tobacco use were largely unchanged since 2014 at 17.4 per cent, while smoking and vaping among younger Australians was increasing.
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