Drugs remained their major Australian market. "Australians are among the world's highest per capita consumers of illicit stimulants, and drug prices in Australia far exceed prices overseas, making domestic drug production and importation highly profitable," the report said.

It said cocaine production, supply and use had risen to new highs, distributed by some of the most sophisticated, profitable and powerful criminal networks in the world.

Mexican cartels had been identified among other Central and South American cartels as one of the key suppliers.

The report said the Mexicans were becoming "deeply entrenched" in Australia and internationally, winning footholds on most continents and producing profits that rivalled the economies of some small nations.

O'Connor said an operation by Australian agencies last year demonstrated the scale and emerging business alliances of crime groups.

Operation Hoffman had uncovered an international drug-importing network straddling Sydney, Perth, Melbourne, South Africa, Tonga and Hong Kong, with links to members of outlaw motorcycle gangs and to Australian and Hong Kong-based associates of Chinese criminal syndicates.

"This is a clear example of how organised criminals form new alliances and alignments to pursue their illegal objectives."

It also showed organised crime networks operated like multinational enterprises.