Organised crime groups have become so successful at importing drugs into Australia that the wholesale price being paid for ice, cocaine and ecstasy has dramatically fallen in the past 18 months.
The NSW Crime Commission says the illegal drug trade remains the main source of income for organised crime in Australia and at present illicit substances are in "plentiful supply".
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Drug raids at Sydney strip clubs
In December 2015, NSW police raided Kings Cross strip clubs amid concerns cocaine was being supplied to patrons.
Fairfax Media has learned that the wholesale price paid by Australian criminal groups to import cocaine from overseas was as high as $280,000 a kilogram three years ago. Eighteen months ago it had dropped to $240,000 a kilogram and now sells below $200,000 and as low as $180,000.
The cost for a kilogram of ice has fallen in the last 18 months from $220,000 to as low as $95,000 and ecstasy had dropped from $65,000 to $37,000.
At the same time the latest National Drug and Alcohol Research Centre annual survey of drug users shows prices being paid at street level remain unchanged – indicating that organised crime groups are increasing their profit margins.
Law enforcement agencies attribute the massive price drop to the fact that larger quantities of drugs are being successfully imported into Australia.
This is despite the federal government announcing that more drugs than ever are being picked up at the borders. In 2014-15 more than 7.3 tonnes of illicit drugs and the chemicals used to make them were seized – the highest amount in five years.
Among these seizures was Australia's second largest ever drug bust where 2.8 tonnes of ice and MDMA were discovered hidden within furniture and with a street value of $1.5 billion in December 2014.
The NSW Crime Commission said that bust did little to put a dent in the local drug market.
"It was one of Australia's largest ever drug seizures but, despite this seizure, the price of both ice and MDMA has continued to drop, suggesting a continuing plentiful supply," the NSW Crime Commission's annual report states.
It understood that the Sydney market has become so awash with drugs that law enforcement have noticed some organised crime groups in the city are moving into Brisbane, Perth and Melbourne to do business.
The NSW Crime Commission said expatriate Australians are playing a major role in bringing drugs into the country.
Former Sydney resident Hakan Ayik, an associate of the Comancheros bikie gang, operates a global drug trafficking network from his native Istanbul. Former Kings Cross identity Vaso Ulic is wanted over drug imports in Australia. He is currently based in Montenegro in the former Yugoslavia.
Sydney Hells Angels associate Wayne Schneider, who was murdered last December, was based in Thailand where he was selling drugs from European and South American dealers to groups in Australia.
He was reportedly involved in the $1.5 billion bust made in December 2014. The NSW Crime Commission said record seizures were little deterrent to importers, who now factor in such drug busts as "merely a business overhead".
"There was strong intelligence to suggest that syndicates will simply embark upon new variations of methods for importation to continue their business in order to recoup losses following the seizures," the NSW Crime Commission said.
Australian Drug Law Reform Foundation director Alex Wodak said the quantity of drugs entering Australia has been a long-term problem and that expensive law enforcement polices had not worked.
"It's a market driven by demand and supply," he said. "And while ever there is a demand there will always be a supply and demand is strong here. There's a lot of people, especially young people, want to get off their face. They always have and presumably always will."
Dr Wodak said the best way to cut the demand was treat drug users for their addictions and treat it as a health issue rather than a law enforcement one.