Australia's present drug policy of prohibition is failing to achieve its objective of reducing the use and trafficking of illegal drugs in Australia. Recommendations are proposed as alternatives to the current policy. The social costs of prohibition, the scope and nature of the drug trade in Australia, and law enforcement strategies are examined. The study proposes that the Commonwealth Government improve its statistical database while evaluating existing law enforcement strategies; initiate action through the Ministerial Council on Drug Strategy to ensure that data on the price, purity, and availability of drugs on the streets are scientifically collected and analyzed; set targets as indicators of the success of the latest initiatives in solving the drug trade problem; make presently illegal drugs available subject to government regulation; and ban all advertisement of alcohol and tobacco products. 3 appendixes, 45 references.