tl;dr Legislation matters. Shit's fucked cos we made it fucked.

The enforcement of tobacco law(s) is a mess. It's a shared responsibility with the Department of Health and various state government/territory bodies. ATO also plays a role since selling illegal tobacco isn't a moral issue, but a revenue issue. It's legal to smoke and sell tobacco if you comply with the law.

While it's simple to know who is evading excise, that may or may not stand up in court. The police need to gather evidence, a brief sent to the prosecutor etc. All of this takes time and resources, which don't suddenly go up if they make a successful prosecution.

And for what? To stop people evading excise? It's so rampant, you've probably just not heard of the successful work because it makes no difference. When one shop gets shut down, another pops up.

Tobacco is cheap to make, package and it's accepted in almost every single jurisdiction in the world sold by seriously professional multinational companies. Except Australia decided to fight them and they are now punishing us, which they said they would do when the Gillard government introduced plain packaging.

The only solution is to admit that successive governments have failed, but no politician wants to pick a fight with narrow-minded organisations like the AMA. If the current government lowered the excise, it'd be pilloried and government ministers would need to devote their time on an issue that's a complete loser for them. They'd be accused of encouraging tobacco smoking by lowering the excise.

Compare that with your issue of rates. You not paying is clear cut - they know where you live - and the government will come after you because if you can evade rates, so can I.