The Australian Institute of Criminology report 'Estimating the costs of serious and organised crime in Australia, 2020–21' -
estimates the cost of serious and organised crime in Australia for the 2020–21 financial year. It was not possible to undertake new empirical research to provide accurate baseline data to support the estimated costs. Instead, the most recent reported statistics for individual crime types or public and private expenditure were used as baseline indicators of incidence. The corresponding unit cost estimates were uprated using the RBA (2021) inflation calculator. Where more recent unit cost estimates were available, these were used in preference to uprating to account for inflation. ....
As indicated above, it is estimated that 6.5 percent of the proceeds of crime actually laundered would be paid as commission to professional facilitators of laundering, representing a loss to the economy. In some cases, proceeds of crime are simply spent on lifestyle, enabling them to remain within the economy.
Taking into consideration the observations above concerning the problematic nature of making comparisons between cost estimates over time, and bearing in mind changes in the societal influences on crime, changing crime control measures that have been implemented and changes in statistics and estimation methodologies present in current and previous research, Figure 1 presents the total costs of the higher level of serious and organised crime involvement for each loss category in respect of the years 2016–17 and 2020–21. The changes should not, however, be interpreted as necessarily reflecting a change in the net amounts of each cost category as the costing methodologies used have developed over time, and some new crime types have been included and different techniques of estimation applied based on new sources of information becoming available. To indicate how the totals changed between 2016–17 and 2020–21 because of changes in methodologies of measurement, an estimate was made of the higher-level costs presented in Table 21 that related to the counting of new forms of serious and organised crime, not previously counted, and new ways in which costs were calculated. From Figure 1, it is apparent that changes in costing methodologies increased the estimated costs of only some categories of crime. In the case of other crime types, the increase was predominantly due to changes in net actual costs. ...
The additional costs due to changes in methodology and cost categories totalled $8,072m since the 2016–17 estimation was published. The difference between this and the total in Table 21 is $52,049m, which is 9.7 percent more than the total higher-level costs for 2016–17. This is graphically shown in column 3 of Figure 2 along with comparable totals for 2013–14. These are presented as both the total estimated cost as well as the total cost as a percentage of Australia’s gross domestic product (GDP; ABS 2022: Table 36, col H). From Figure 2, the total estimated cost of serious and organised crime has increased by 65 percent since 2013–14, while this cost as a percentage of GDP has increased by 41 percent (or 1.2 percentage points). Between 2016–17 and 2020–21, this increase as a percentage of GDP was only 17.6 percent (or 0.6 percentage points). Nonetheless, the final global estimates indicate the increasing, substantial economic impact of this form of criminality on the Australian economy over time.
The AIC states
This report estimates the cost of serious and organised crime in Australia in 2020–21 to be between $24.8b and $60.1b. This is the third in a series of reports undertaken for the Australian Criminal Intelligence Commission estimating the cost of serious and organised crime. It updates and improves on the methodology used in the previous report, which estimated the cost of organised crime in 2016–17. As with the previous research, this report considers the direct and consequential costs of serious and organised crime in Australia, as well as the costs to government entities, businesses and individuals associated with preventing and responding to serious and organised crime. While the current estimates were undertaken during the COVID-19 pandemic and may reflect changes in criminality resulting from the pandemic, the full economic impact of serious and organised criminal offending committed during the pandemic will not be known for some time. It is clear, however, that the impact of serious and organised crime on the Australian economy is substantial.
This Statistical Report provides an estimate of the cost of serious and organised crime in Australia for the year 2020–21. This is the third in a series of reports undertaken for the Australian Crime Commission (2015a, 2015b) and the Australian Criminal Intelligence Commission (ACIC; Smith 2018a) and draws on a methodological approach first developed by Mukherjee and Walker at the Australian Institute of Criminology (AIC) in the 1980s to estimate the size and cost of all crime in Australia (Mukherjee et al. 1987). The present study is the eighth iteration of the original cost of crime research design, with each report demonstrating improvements in the scope and sophistication of the methodology.
Crime, of course, is continually evolving and adapting to changes in society, the economy and the criminal justice system. Since the last report was written (Smith 2018a), Australia and the world have been subject to the global coronavirus pandemic, which has not only affected the health and wellbeing of individuals but also changed the way in which social relations take place and how business and government operate. The pandemic has also provided many opportunities for criminality to occur (Levi & Smith 2021) and, although some of these have been taken up, the full economic impact of offending committed during the pandemic will not be known for some time.
Accordingly, the estimate of the cost of serious and organised crime for 2020–21 reflects some changes evident in the incidence of crime during the pandemic but is unlikely to show the full impact of such crime identified at the time of writing. It would therefore be inappropriate to attribute any changes in the costs of crime presented in this report, compared with those costs presented in earlier reports, solely to the influence of the pandemic. Further research on individual crime types is required to determine the exact ways in which, and the extent to which, costs have changed from previous estimations.
As with the previous research, this report examines the direct and consequential costs of serious and organised crime and the costs associated with preventing and responding to serious and organised crime by government entities, businesses and individuals or households. The estimated total cost for 2020–21 was between $24.8b (low), $39.9b (medium) and $60.1b (high) and comprised the following cost categories.
Direct serious and organised crimes were estimated to cost up to $37.3b in 2020–21. These are crimes that have a clear and direct link with serious and organised crime (eg illicit drug trafficking, human trafficking and organised financial crime).
Consequential serious and organised crimes were estimated to cost up to $6.4b in 2020–21. These are conventional crimes committed as a consequence of serious and organised crimes. They are crimes that generate funds used to support involvement in serious and organised criminal activities (in particular, the crimes illicit drug users commit to finance drug purchases), crimes that result from involvement in serious and organised crime-related activities (eg violence, sexual assaults and burglaries committed by those using illicit drugs), or conventional crimes committed by organised crime groups (eg organised shop theft) or committed to facilitate serious and organised criminal activities (eg using violence to intimidate businesses or using identity crime to facilitate financial fraud).
Prevention and response costs were estimated to be up to $16.4b in 2020–21. These include costs incurred by law enforcement, the criminal justice system, other government agencies, the private sector and individuals in the community in preventing and responding to crime.
Interestingly, the upper estimate of total direct costs, including consequential costs, of serious and organised crime in 2020–21 ($43.7b) was only slightly less than the total recurrent expenditure of all government agencies with some responsibility for serious and organised crime control in Australia in the same year ($45.1b).
The methodology adopted in this report seeks to estimate costs for the financial year 2020–21. Where data were not available for this period, the Reserve Bank of Australia (RBA; RBA 2021) inflation calculator was used to uprate estimated costs from earlier periods to reflect changes in the cost of living, where appropriate.
