National Drug Strategy
National Drug Strategy

The costs of tobacco, alcohol and illicit drug abuse to Australian Society in 2004/05

6. Some disaggregated costs 48

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This section provides detailed estimates of the costs of drug-attributable crime, healthcare, production losses and road accidents, and the costs of fires specifically attributable to smoking. It also presents information on the breakdown of the costs of illicit drugs according to the type of drug. The next section provides overall summaries of costs classified by drug of abuse (alcohol, tobacco or illicit drugs). This form of presentation is adopted to provide comprehensive information on particular areas of costs while avoiding the problem of double counting of some costs. For example, road accident costs include, inter alia, productivity losses, for which separate aggregate drug abuse cost estimates are made. Productivity costs cannot be included in both areas without double counting, and yet to exclude them from road accident costs would give the impression that the total costs of drug-attributable road accidents were lower than in fact they are. This problem is overcome in the cases of crime, road accidents and fires by estimating overall costs as well as "n.e.i." (not elsewhere included) costs which are the values carried over to the aggregate tables. In this way all double counting is avoided.

6.1 Crime

Table 16 below presents estimates of drug-attributable crime costs. In interpreting these estimates it should be borne in mind that, as discussed earlier, they are also certainly substantial underestimates as a result of the considerable under-reporting of crimes to police.

As indicated earlier, some component of crime costs is causally attributable jointly to alcohol and illicit drugs. It is not possible to indicate what proportion of these joint costs is attributable to either alcohol individually or illicit drugs individually.

Alcohol-attributable crime cost $1.7 billion in 2004/05 while crime attributable to consumption of illicit drugs cost $4.0 billion. Crime attributable jointly to both types of drugs cost a further $1.4 billion.

Table 16, Summary of selected drug-attributable crime costs, 2004/05

Alcohol ($m)
Illicit drugs ($m)
Both ($m)
Tangible costs
Police
747.1
1,716.9
320.2
Criminal courts
85.8
146.8
28.0
Prisons
141.8
348.6
146.6
Property
67.1
445.4
144.6
Insurance administration
14.3
94.6
30.7
Violence
187.5
196.1
203.2
Productivity of prisoners
368.0
892.1
387.7
Total tangible
1,611.5
3,840.5
1,261.0
Intangible costs
Loss of life (violence)
124.4
130.1
134.8
Total intangible costs
124.4
130.1
134.8
Total costs
1,735.9
3,970.6
1,395.8
Total n.e.i.
Tangible
1,424.0
3,644.5
1,057.8
Intangible
0.0
0.0
0.0
Relevant costs as a proportion of GDP
0.20%
0.48%
0.16%

Note: n.e.i. signifies not elsewhere included.

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The attributable policing and court costs are based on "lower bound" estimates of the relevant attributable fractions.

Table 17 indicates how these cost estimates would change if the upper bound attributable fractions were used. The significance of upper and lower bound DUMA attributable fractions is explained in Appendix B.

Table 17, Summary of the impact upon drug- and alcohol-attributable police and court costs of use of lower and upper bound DUMA estimates, 2004/05
Alcohol ($m)
Illicit drugs ($m)
Both ($m)
Police
Lower bound
747.1
1,716.9
320.2
Upper bound
1,182.9
1,563.8
479.8
Difference (upper bound minus lower bound)
435.9
(153.1)
159.6
Criminal courts
Lower bound
85.8
146.8
28.0
Upper bound
123.9
133.4
42.0
Difference (upper bound minus lower bound)
38.2
(13.4)
14.0

Source: Appendix B.
Note: numbers in brackets are negative.

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6.2 Health

Drug-attributable morbidity imposes healthcare costs for medical services, hospitals, nursing homes, pharmaceuticals and ambulances. However, the premature deaths caused by drug abuse can relieve the community of some healthcare cost burdens. Had the prematurely deceased been still alive, they would have been placing demands on healthcare resources, demands which have been avoided as a result of the premature deaths. This paper estimates these healthcare savings as well as the healthcare costs.

Table 18 presents estimates of drug-attributable healthcare costs and savings. Note that in-patient pharmaceutical costs are incorporated in hospital costs. The pharmaceutical costs identified here refer to prescribed pharmaceuticals outside the hospital system.

Table 18, Healthcare costs and savings resulting from drug abuse, 2004/05

Medical ($m)
Hospitals ($m)
Nursing homes ($m)
Pharmaceuticals ($m)
Ambulances ($m)
Total ($m)
Alcohol
Gross costs
562.3
693.9
389.2
324.8
80.4
2,050.5
Savings from
21.5
31.6
(12.0)
27.2
5.5
73.9
premature
deaths
Net costs
540.7
662.2
401.2
297.6
74.8
1,976.7
Tobacco
Gross costs
462.1
669.6
436.6
205.2
62.5
1,836.0
Savings from
303.7
446.2
613.9
127.9
25.9
1,517.6
premature
deaths
Net costs
158.4
223.4
(177.3)
77.3
36.6
318.4
Illicit drugs
Gross costs
122.5
112.6
11.9
n.a.
6.0
252.9
Savings from
17.8
26.1
5.7
n.a.
1.6
51.2
premature
deaths
Net costs
104.7
86.5
6.2
n.a.
4.4
201.7
All drugs
Gross costs
1,146.8
1,476.1
837.7
530.0
148.9
4,139.5
Savings from
343.0
504.0
607.6
155.0
33.0
1,642.7
premature
deaths
Net costs
803.8
972.1
230.1
375.0
115.8
2,496.8

Notes: n.a. indicates not available.
Numbers in brackets are negative.


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Total drug-attributable gross healthcare costs in 2004/05 were $4.1 billion while net costs were $2.5 billion. The percentages of total costs accounted for by the individual drugs are shown in Table 19 below.

Table 19, Percentages of gross and net health costs, 2004/05

Gross health costs (%)
Net health costs (%)
Alcohol
49.5
79.2
Tobacco
44.4
12.8
Illicit drugs
6.1
8.1
Total
100.0
100.0

Alcohol accounted for 50 per cent of gross costs but 79 per cent of net costs. Tobacco, on the other hand, accounted for 44 per cent of gross costs but only 13 per cent of net costs. The difference in the relativities between gross and net costs for the two drugs is accounted for by the fact that tobacco-attributable mortality is much higher than that attributable to alcohol.

Great care should be taken in the correct interpretation of this type of information. The healthcare savings resulting from premature deaths must be balanced against the other physical and psychological costs of such deaths. In no way could it be claimed that, even if the healthcare savings resulting from the premature deaths were to exceed the gross healthcare costs, these deaths would be in the community’s interest. The community bears other costs as a result of premature deaths, as is clearly illustrated by later information presented on the other tangible and intangible social costs of drug abuse. In the case of alcohol, the extension in life expectancies attributable to moderate alcohol consumption implies that extra healthcare burdens are imposed. It is difficult to believe that anyone would seriously argue that such an extension of general life expectancy is against the public interest.

It has been pointed out above that interpretation of the estimates of the social costs of alcohol misuse is complicated by the existence of protective effects of alcohol consumption. The existence of both harmful and protective effects means that a relatively low aggregate cost figure could conceal the existence of very high costs related to particular conditions. Table 20 clearly illustrates this point.

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Table 20, Alcohol-attributable deaths, hospital bed days and hospital costs, 2004/05, caused or prevented

Deaths (number)
Hospital bed days (number)
Hospital costs ($m)
Caused
3,494
1,031,660
833.1
Prevented
2,437
114,726
139.2
Caused less prevented
1,057
916,934
693.9

Tobacco also can have protective effects, although these are very minor in relation both to the protective effects of alcohol and to the harmful effects of smoking. This is illustrated in Table 21.

Table 21, Tobacco-attributable deaths, hospital bed days and hospital costs, 2004/05, caused or prevented

Deaths (number)
Hospital bed days (number)
Hospital costs ($m)
Caused
15,050
762,851
675.7
Prevented
148
9,233
6.0
Caused less prevented
14,901
753,618
669.6

Estimates of the impact of involuntary smoking on deaths, hospital bed days and hospital costs, classified by age, are presented in Table 22. These results are presented in proportionate terms in Table 23.

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Table 22, Tobacco-attributable deaths, hospital bed days and hospital costs, 2004/05, by age and smoking status

Voluntary
Involuntary
Total
Deaths (number)
0–14
0.0
36
36
15+
14,753
112
14,865
Total
14,753
149
14,901
Hospital bed days (number)
0–14
0.0
61,178
61,178
15+
689,951
2,489
692,440
Total
689,951
63,667
753,618
Hospital costs ($m)
0–14
0.0
30.6
30.6
15+
636.0
3.1
639.1
Total
636.0
33.7
669.6

Table 23, Percentages of tobacco-attributable deaths, hospital bed days and hospital costs, 2004/05, by age and smoking status

Voluntary (%)
Involuntary (%)
Total (%)
Deaths
0–14
0.0
24.5
0.2
15+
100.0
75.5
99.8
Total
100.0
100.0
100.0
Hospital bed days
0–14
0.0
96.1
8.1
15+
100.0
3.9
91.9
Total
100.0
100.0
100.0
Hospital costs
0–14
0.0
90.8
4.6
15+
100.0
9.2
95.4
Total
100.0
100.0
100.0

The above two tables clearly illustrate how the costs of involuntary smoking are largely imposed on the young. In relation to involuntary smoking, the under 15s accounted in 2004/05 for 25 per cent of attributable deaths, 96 per cent of attributable hospital bed days and 91 per cent of attributable hospital costs.

6.3 Illicit drugs disaggregated

The illicit drug-attributable mortality and morbidity costs presented above relate to illicit drugs as a whole. In reality, the category "illicit drugs" represents a range of diverse drugs (see Table 6) and we consider that these costs should, wherever possible, be disaggregated down to the level of individual drugs. The ability to disaggregate is, however, severely limited by the scope of the available epidemiological data. It is possible to identify some of the effects of individual drugs on mortality, potential years of life lost (PYLL), hospital usage and gross hospital costs (not taking into account any savings which have resulted from drug-attributable premature deaths). At this stage it is not possible to assign to specific illicit drugs the costs of ambulances, nursing homes, pharmaceuticals, crime, road accidents and productivity losses. The next three tables present a summary of the epidemiological information for males, females and persons.

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Table 24, Individual drug categories, summary of health outcomes, 2004/05, males

Deaths (number)
PYLL ages 0–74 (number)
Hospital bed days (number)
Gross hospital costs ($’000)
Opiates
182
7,557
13,982
7,717
Cannabis
0
0
4,597
2,036
Amphetamines
0
0
2,861
1,634
Cocaine
0
0
445
239
Psychostimulants
12
537
320
411
Hallucinogens
1
50
237
283
Other psychotropics
1
45
62
88
Anabolic steroids
0
0
0
0
Other
91
3,198
87,764
47,802
Licit/unspecified/combined
296
11,071
21,265
10,463
Total
583
22,457
131,533
70,674
Sum of identified drugs
196
8,188
22,504
12,409

Table 25, Individual drug categories, summary of health outcomes, 2004/05, females
Deaths (number)
PYLL ages 0–74 (number)
Hospital bed days (number)
Gross hospital costs ($’000)
Opiates
46
1,860
8,481
5,377
Cannabis
1
41
2,690
1,018
Amphetamines
0
0
1,849
984
Cocaine
0
0
182
173
Psychostimulants
5
269
258
329
Hallucinogens
0
0
181
211
Other psychotropics
2
87
67
104
Anabolic steroids
0
0
0
0
Other
48
1,363
34,918
21,195
Licit/unspecified/combined
187
5,428
19,546
12,498
Total
289
9,047
68,172
41,889
Sum of identified drugs
54
2,256
13,708
8,195

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Table 26, Individual drug categories, summary of health outcomes, 2004/05, persons

Deaths (number)
PYLL ages 0–74 (number)
Hospital bed days (number)
Gross hospital costs ($’000)
Opiates
228
9,417
22,463
13,094
Cannabis
1
41
7,287
3,054
Amphetamines
0
0
4,710
2,618
Cocaine
0
0
627
412
Psychostimulants
17
806
578
740
Hallucinogens
1
50
418
494
Other psychotropics
3
132
129
192
Anabolic steroids
0
0
0
0
Other
139
4,561
122,683
68,998
Licit/unspecified/combined
483
16,498
40,811
22,961
Total
872
31,504
199,706
112,563
Sum of identified drugs
250
10,445
36,212
20,604

As can be seen in the above tables, a very significant proportion of the total impact on mortality and morbidity results from conditions which the epidemiological data do not assign to specific illicit drugs. The following three tables provide a breakdown of the results for the medical conditions which the epidemiological data identify as related to specific drugs.

Table 27, Individual drug categories, summary of health outcomes, 2004/05, males, percentages of total identified

Deaths (%)
PYLL ages 0–74 (%)
Hospital bed days (%)
Gross hospital costs (%)
Opiates
92.9
92.3
62.1
62.2
Cannabis
0.0
0.0
20.4
16.4
Amphetamines
0.0
0.0
12.7
13.2
Cocaine
0.0
0.0
2.0
1.9
Psychostimulants
6.1
6.6
1.4
3.3
Hallucinogens
0.5
0.6
1.1
2.3
Other psychotropics
0.5
0.5
0.3
0.7
Anabolic steroids
0.0
0.0
0.0
0.0
Total identified
100.0
100.0
100.0
100.0
Identified as proportion of total
33.6
36.5
17.1
17.6
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Table 28, Individual drug categories, summary of health outcomes, 2004/05, females, percentages of total identified

Deaths (%)
PYLL ages 0–74 (%)
Hospital bed days (%)
Gross hospital costs (%)
Opiates
85.2
82.4
61.9
65.6
Cannabis
1.9
1.8
19.6
12.4
Amphetamines
0.0
0.0
13.5
12.0
Cocaine
0.0
0.0
1.3
2.1
Psychostimulants
9.3
11.9
1.9
4.0
Hallucinogens
0.0
0.0
1.3
2.6
Other psychotropics
3.7
3.8
0.5
1.3
Anabolic steroids
0.0
0.0
0.0
0.0
Total identified
100.0
100.0
100.0
100.0
Identified as proportion of total
18.7
24.9
20.1
19.6

Table 29, Individual drug categories, summary of health outcomes, 2004/05, persons, percentages of total identified

Deaths (%)
PYLL ages 0–74 (%)
Hospital bed days (%)
Gross hospital costs (%)
Opiates
91.2
90.2
62.0
63.6
Cannabis
0.4
0.4
20.1
14.8
Amphetamines
0.0
0.0
13.0
12.7
Cocaine
0.0
0.0
1.7
2.0
Psychostimulants
6.8
7.7
1.6
3.6
Hallucinogens
0.4
0.5
1.2
2.4
Other psychotropics
1.2
1.3
0.4
0.9
Anabolic steroids
0.0
0.0
0.0
0.0
Total identified
100.0
100.0
100.0
100.0
Identified as proportion of total
28.7
33.2
18.1
18.3

As Table 29 shows, only 28.7 per cent of total illicit drug-attributable deaths can be assigned to specific drugs, 33.2 per cent of PYLL, 18.1 per cent of hospital bed days and 18.3 per cent of gross hospital costs.

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6.4 Productivity

Drug abuse causes a loss of national productive capacity in the paid workforce as a result of drug-attributable death and sickness. Losses are also experienced in the unpaid workforce—that is, in the household sector—from the same causes. Against these losses should be set the savings in national resources which would have been consumed had the drug-attributable deaths not occurred. Net production losses represent the gross reduction in productive capacity less these consumption savings.

Table 30 presents estimates of the reductions in productive capacity which resulted from drug abuse in 2004/05.

Of the total net production costs of $13.2 billion, tobacco accounted for by far the largest share (60.7 per cent or $8.0 billion). Alcohol represented 26.8 per cent ($3.5 billion) and illicit drugs 12.5 per cent ($1.6 billion). Of the gross production costs of $22.9 billion, workforce losses represented 47.9 per cent ($11.0 billion) and household losses 52.1 per cent ($11.9 billion).

Table 30, Paid and unpaid production costs of drug abuse, 2004/05

 

Alcohol

Tobacco

Illicit

Total

Proportion

 

 

 

drugs

 

of gross

 

 

 

 

 

costs

 

($m)

($m)

($m)

($m)

(%)

Labour in the workforce

 

 

 

 

 

 

Reduction in workforce

 

 

 

 

 

Male

2,741.4

4,030.1

762.3

 

 

Female

469.3

939.3

127.1

 

 

Total reduction in workforce

3,210.7

4,969.5

889.4

9,069.5

39.7

Absenteeism

 

 

 

 

 

Male

228.5

646.9

698.9

 

 

Female

139.4

132.7

34.6

 

 

Total absenteeism

367.9

779.6

733.5

1,880.9

8.2

Total paid production costs

3,578.6

5,749.1

1,622.9

10,950.5

47.9

Labour in the household

 

 

 

 

 

 

Premature death

 

 

 

 

 

Male

1,294.4

5,806.9

314.6

 

 

Female

129.5

3,349.5

143.9

 

 

Total premature death

1,423.9

9,156.4

458.5

11,038.8

48.3

Sickness

 

 

 

 

 

Male

60.7

452.8

30.1

 

 

Female

86.3

233.9

6.9

 

 

Total sickness

146.9

686.7

37.0

870.6

3.8

Total unpaid production costs

1,570.8

9,843.1

495.5

11,909.4

52.1

Total paid and unpaid production costs

5,149.4

15,592.2

2,118.3

22,859.9

100.0

Consumption resources saved

 

 

 

 

 

 

Male

1,464.1

5,534.8

367.8

 

 

Female

147.2

2,048.3

101.6

 

 

Total consumption resources saved

1,611.3

7,583.1

469.5

9,663.9

 

Total net production costs

3,538.0

8,009.1

1,648.9

13,196.0

 

Percentage of total net production costs

26.8%

60.7%

12.5%

100.0%

 



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Table 31 below presents estimates of drug-attributable road accident costs by type of drug. The categories used are basically those adopted in the BTE estimates of aggregate road accident costs.

6.5 Road accidents

Table 31, Drug-attributable road accident costs, 2004/05, by type of drug

 

 

Attributable to

Alcohol ($m)

 

Illicit drugs ($m)

Human costs

 

 

 

Medical

25.9

 

5.1

Ambulance

7.9

 

1.6

Hospital

41.2

 

11.5

Long-term care

10.6

 

2.1

Labour in the workplace

523.7

 

95.2

Labour in the household

44.9

 

106.9

Value of life p.a.

563.3

 

104.6

Quality of life (injuries)

353.6

 

69.7

Legal

162.5

 

32.1

Correctional services

3.4

 

0.7

Workplace disruption

62.6

 

12.3

Premature funerals

0.6

 

0.1

Coroner

0.2

 

0.0

Total human costs

1,800.5

 

442.0

Vehicle costs

 

 

 

Repairs

776.6

 

153.2

Unavailability of vehicles

36.4

 

7.2

Towing

8.6

 

1.7

Total vehicle costs

821.6

 

162.0

General costs

 

 

 

Travel delays

288.9

 

57.0

Insurance administration

185.1

 

36.5

Police

14.8

 

2.9

Property

6.0

 

1.2

Fire

2.0

 

0.4

Total general costs

496.8

 

98.0

Total costs

3,118.9

 

702.0

Of which

 

 

 

Tangible

2,202.0

 

527.6

 

Intangible

916.9

 

174.3

Total n.e.i.

 

 

 

Tangible

1,329.6

 

262.2

 

Intangible

353.6

 

69.7

Relevant costs as a proportion of GDP

0.27%

 

0.05%



Sources: BTE (2001) and authors’ calculations. Note: n.e.i. signifies not elsewhere included.

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It should be noted that, in the overall output tables presented later, some of the road accident cost components above are included in other broader cost categories (for example,
health or productivity). The totals above which are designated "n.e.i." are the ones carried over to the aggregate tables.

Alcohol-attributable road accidents cost an estimated $3.1 billion in 2004/05, of which 71 per cent were tangible costs. Illicit drug-attributable road accidents cost $702 million of which 75 per cent were tangible costs.

As indicated earlier, any comparison of costs and GDP can include only those categories of cost which are included in the GDP calculation. The bottom line of Table 31 makes this comparison for road accidents, thus excluding the costs of labour in the household and all intangible costs. On this basis, alcohol-attributable accident costs represented 0.27 per cent of GDP and illicit drug-attributable accidents 0.05 per cent.

6.6 Fires

Table 32 below presents estimates of the costs of fires resulting from smoking.

Table 32, Costs of smoking-attributable fires, 2004/05

 

$m

Tangible costs

 

 

Health

 

Medical

6.9

Hospital

9.7

Total health

16.6

Labour

 

In the workforce

43.7

In the household

13.1

Total labour

56.8

Fire services

46.9

Property damage

16.1

Total tangible costs

136.4

Intangible costs

 

 

Value of loss of life

35.7

Total intangible costs

35.7

Total costs

172.1

Total tangible n.e.i.

63.0

Total intangible n.e.i.

0.0

As proportion of GDP

0.02%



Note: n.e.i. signifies not elsewhere included.

It is estimated that smoking-attributable fires cost $172 million in 2004/05, of which tangible costs represented 79 per cent and intangible costs 21 per cent.

As is also the case with road accident costs, to avoid double counting of some costs in the aggregate cost tables presented later, only some of the costs in the above table (those labelled "n.e.i.") are carried forward to the aggregate tables.

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