This report seeks to estimate how much crime costs the Australian economy by calculating the number of crimes that come to the attention of the authorities and, using crime victimisation survey data, the number of crimes that are not recorded officially. A dollar figure is then calculated for each estimated crime event and an indication given of the total cost of each specific crime type in terms of actual loss, intangible losses, loss of output caused through the criminal conduct and other related costs such as medical expenses, where relevant. Added to these costs are the costs of preventing and responding to crime in the community including the costs of maintaining the criminal justice system agencies of police, prosecution, courts and correctional agencies, as well as a proportion of the costs of Australian and state and territory government agencies that have crime-related functions. Finally, a deduction is made for the value of property recovered in the case of property crime, as well as the amount of funds recovered from criminals under federal, state and territory proceeds of crime legislation. More detailed information about how each of these estimates was derived is provided in the main body of the report.
Official attention paid to specific crime types, particularly drug-related crime and organised crime, affects both the reporting rate and also the cost of policing and correctional responses. In this sense, individual crime type costs and prevention and response costs are not mutually exclusive. Arguably, as individual crime types attract more attention, reporting rates increase and prevention and control of the crimes in question are seen as being deserving of increased resources.
Table 1 presents data on estimates of the number of crimes recorded by police for each of the categories of crime examined in this report. Data are shown for 2011 and by way of comparison, for 2001 as reported by Mayhew (2003a, 2003b) and for 2005 as reported by Rollings (2008). Official police statistics from each state and territory were also used to provide counts of thefts from vehicles, shop theft, criminal damage, arson and fraud. These were extracted from official police publications and may not follow the same counting rules as those used for the ABS Recorded Crime collection (ABS 2013b). Assault data are not nationally available and so an estimate of what police-recorded assaults might have been for 2011 has been calculated based on crime victimisation survey data (ABS 2013a). This estimate of police-recorded assaults has not, however, been used in the calculation of the costs of assault. No data are presented in Table 1 in respect of drug offences, as the costs of crime perpetrated to fund drug addiction are included within other crime categories. Instead, an estimate is provided of the human cost of drug-related crime, principally dealing with the costs of various health consequences of addiction. Similarly, the costs of alcohol-related crime are included in individual crime categories and because alcohol consumption is generally legal, the human cost of alcohol consumption has not been included in this report.
|Crime type||Source of the recorded data||Recorded crime victims (n)||% change 2001–11|
|Homicide||ABS Recorded crime||600||496||463||-23|
|Attempted murder||ABS Recorded crime||458||295||185||-60|
|Assault||Estimation derived from ABS crime victimisation survey data for 2011||151,573 (excluding attempted murders)||161,000 (excluding attempted murders)||169,903 (excluding attempted murders)||+12|
|Sexual assault||ABS Recorded crime||17,000||18,000||17,592||+3|
|Robbery||ABS Recorded crime||27,000||17,000||13,617||-50|
|Burglary||ABS Recorded crime||435,000||197,000||218,193||-50|
|Thefts of vehicles||ABS Recorded crime||140,000||85,000||55,382||-60|
|Thefts from vehicles||Individual police jurisdictionsa||266,000||188,000||168,666||-37|
|Shop theft||Individual police jurisdictionsa||73,000||70,000||80,625||+10|
|Other theft||ABS Recorded crime||390,000||261,000||269,000||-31|
|Criminal damage||Individual police jurisdictionsa||319,000||294,000||249,220||-22|
|Arson||Individual police jurisdictionsa||17,500||20,000||14,975||-14|
|Fraud||Individual police jurisdictions, AFP and AIC data||111,320 (including 920 AFP cases)||99,367 (including 367 AFP cases)||97,611 (including 61 AFP cases)||-12|
a: Data were received from New South Wales, South Australia, Victoria and Tasmania and have been inflated to give an Australia-wide estimate of recorded crimes. ABS Crime Victimisation Survey data have been used for costing calculations where possible (ABS 2013a)
Source: ABS 2012b; AFP 2012; New South Wales, South Australian, Victorian and Tasmanian police jurisdictions unpublished data
Some crimes have not been included specifically because of lack of data on their incidence or cost. These include kidnapping, extortion, blackmail, abduction, criminal defamation, environmental crime, good order offences, regulatory offences, illegal immigration, road traffic offences, human trafficking, corporate crime, tax evasion, cybercrime, identity crime, child exploitation offences and organised crime. Many criminal acts that comprise aspects of these crime types are, however, captured within the crime categories included in this report. The discussion of fraud offences, for example, includes a number of types of cybercrime, identity crime, tax evasion and organised crime. These crime types were also omitted from the previous estimates of Mayhew (2003a; 2003b) and Rollings (2008). Future iterations of this report will seek to explore these using alternative data sources.
The incidence of crime in the community
In order to estimate the number of crimes that actually occur in the community, as opposed to those that come to the attention of the authorities, reference was made to crime victimisation survey data. For each crime category, a so-called multiplier was calculated, which could be used to estimate the number of crimes that take place, including both officially recorded crimes and an estimate of undetected and unreported crimes.
Multipliers help to adjust for levels of underreporting to provide more accurate estimates of how frequently a particular crime occurs. As a general rule, the higher a multiplier, the less that crime type is reported. Determining an accurate multiplier is of critical importance, as some crime types are infrequently reported to police for a variety of reasons. Others are often reported in order to facilitate insurance claims and recovery of losses.
Table 2 shows the multipliers and the corresponding estimated number of crimes for each crime category for the years 2001, 2005 and 2011. Most multipliers have changed very little between this report and those of Mayhew (2003a; 2003b) and Rollings (2008). In the United Kingdom, however, the Home Office (2011) has published a report that has updated the unit costs and multipliers used to calculate the costs of crime in 2011 in the United Kingdom. Some of the changes made to the multipliers are relevant to the present assessment and reference is made to these in the discussion of each crime type as appropriate, noting the different criminal environment that is present in the United Kingdom.
|Crime type||Multipliers||Estimated number of crime incidents|
|Thefts of vehicles||1.1||1.0||1.2||147,000||85,000||65,600|
|Thefts from vehicles||Commercial||56,880|
a: See Mayhew 2003b
b: See Rollings 2008
c: Assaults for 2011 are derived from Crime Victimisation Survey data for 2011–12 (ABS 2013a) inflated to include victims under 15 years of age
d: See Jorna & Smith unpublished Commonwealth fraud—number of incidents, and losses reported by agencies to AIC in annual survey
e: Number of victims of personal fraud in 2007 who lost money (ABS 2008)
Note: A multiplier of 1.0 means that all incidents are recorded in police statistics; a multiplier of 5.0 means that only 20 percent of incidents are recorded in police statistics
Estimated costs of crime
Table 3 presents the total estimated costs of crime to the Australian economy in 2011, with comparative data for 2001 and 2005. As in previous reports, fraud offences easily account for the highest dollar value of all crime types (12.7% of total costs in 2011), as might be expected for crimes that involve direct economic consequences. The next most costly crime types in 2011 were drug abuse and assault. The least expensive crime in terms of total dollar value was shop theft in 2011.
|Cost type||2001a||2005b||2011||% change 2001–11|
|Estimated cost ($m)||Percentage of total costs||Estimated cost ($m)||Percentage of total costs||Estimated cost ($m)||Percentage of net total costs|
|Thefts of vehicles||880||2.8||597||1.7||421||0.9||-52.2|
|Thefts from vehicles||530||1.7||529||1.5||677||1.4||+27.7|
|Household precautions||1,830||5.8||Not included||0.0||2,360||5.0||+29.0|
|Total crime and other costs||31,780||35,802||47,660||100.1||+50.0|
|Less assets confiscated||Not included||-||Not included||-||63.6||0.1||-|
a: See Mayhew 2003b
b: See Rollings 2008
The total costs for 2011 are estimated to be approximately $47.6b (3.4% of national Gross Domestic Product; GDP). Rollings (2008) estimated the total costs of crime in 2005 to be around $36b (4.1% of GDP), while Mayhew (2003b) estimated the total costs of crime in 2001 to be around $32b (3.8% of GDP).
For the 2011 calculation, however, account has been taken of the amount of funds recovered from criminals under proceeds of crime legislation. In 2010–11, $63,041,487 was recovered in the states and territories, excluding Tasmania and the Northern Territory for which data were unavailable. This number was inflated by 0.84 percent, which is the percentage of fraud incidents recorded by police in the Northern Territory and the Australian Capital Territory out of the total number of fraud offences recorded by police in Australia in 2010–11. Using the proportion of fraud offences to estimate the value of confiscated assets in the Northern Territory and the Australian Capital Territory is appropriate as fraud represents the principal offence category in respect of which assets are confiscated. The estimated total amount of funds recovered in 2010–11 was $63,571,035 for the Australian states and territories as a whole.
In addition, in 2010–11, $13,946,311 was recovered federally, although this has already been taken into account as part of the calculated losses in respect of Commonwealth fraud. As such, it is appropriate to deduct from the total crime losses the sum of $63.6m.
Clearly, there have been minor variations in the methodology used to estimate the cost of crime between the analyses conducted by Mayhew (2003b), Rollings (2008) and the present study. Bearing these differences in mind, it can be said that over the last decade it appears that the costs of crime have increased by almost 50 percent. As a percentage of national GDP, however, there has been a decline of 1.6 percent. Since Rollings’ (2008) estimate for 2005, the costs of crime have increased by a third (33%), or a decline of 0.7 percent of GDP. Between 2001 and 2011, inflation has increased by 33 percent and between 2005 and 2011, inflation has increased by 19.6 percent (RBA 2013).
Figure 1 shows the estimated cost of each crime type for 2011 in millions of dollars.
In total, the costs of individual crime categories represented 48 percent of the total net cost of crime, with the remaining 52 percent being allocated to criminal justice response and victim assistance costs and crime prevention and security measures, and insurance administration. On the basis of the present calculations, in 2011, Australia spent approximately $1,500 more on preventing and responding to crime than the actual cost of criminal acts themselves. Figure 2 shows the individual components of these latter prevention and response to crime cost components.
Over the decade between 2001 and 2011, the costs of individual crime types and criminal justice responses have changed, with the cost of some crime types increasing while others declined. The largest increases were in the cost of sexual assault, assault and criminal damage offences, while the greatest declines occurred in connection with shop theft and theft of vehicles. Substantial increases also occurred in connection with criminal justice system costs and the cost of victim assistance. Figure 3 shows the variations in the cost of crime between 2001 and 2011 for each crime type, while Figure 4 shows the variations in the cost of crime between 2001 and 2011 for each of the other cost of crime components.
The estimates in this report should be considered approximate and are not designed to reflect exact costs of crime for each of the categories examined. The difficulties associated with estimating the costs of crime have been explained in previous AIC publications (Mayhew 2003a, 2003b; Rollings 2008; Walker 1992, 1997), as well as in a number of academic papers (see Centre for Criminal Justice 2008 for a review). Further research is needed to quantify the costs of crime associated with new and emerging crime types such as cybercrime, identity crime, organised crime, environmental crime and corporate crime. Although some aspects of each of these have been included in the cost estimates included in this report, other specific costs have not been explored owing to limitations in the available data. In addition, the evidence base in respect of some of the crime types included in this report is somewhat unsatisfactory. Examples include some aspects of fraud as well as arson, including bushfire arson.
A major area of costing that has not been explored in this report relates to lost productivity of criminals due to their involvement in crime. For example, the extent to which criminals participate solely in the criminal world, how economically productive they might be if not engaged in criminal activities and the gross number of individuals involved in criminal activities are not known with certainty. This report accounts for the lost productivity of the victim of crimes (time spent away from work, time spent fixing any damage, time spent in hospital etc), but does not attempt to quantify the lost productivity to society of those individuals who are engaged in illegal activities rather than in legal ones.
Other areas of costing such as the cost of crime to business, the costs of lost business output, intangible losses, and the health and medical cost for victims of personal crime all require further research and analysis in Australia. In the absence of local data, some reliance has been placed on estimates from the United States and the United Kingdom. Ideally, local Australian data should be used in preference.
Finally, there is a need for detailed comparative analysis of the findings of the current research with similar exercises conducted in other countries. This would help to identify areas in which Australia has made achievements in crime control and areas in which further work is needed to help to contain the costs of crime in Australia.