Below I investigate the approximate economic cost of crime in Alice Springs at the time of this writing: 2022. Firstly, I look at pre-tax spending; out-of-pocket expenses related to crime. Secondly, I look at the costs of the justice system. I look at the cost of domestic violence separately. I am not an economist; I do these calculations in a way a lawyer would do them. Lawyers use blunt tools. According to the calculations below, the total cost of crime
in Alice Springs currently stands at approximately:
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$148,613,338 per year on crime
$73,814,733 per year on domestic violence
..
These figures do not take into consideration hidden costs, such as, in some categories, unreported crime, because they are not known or knowable. “Pain and suffering” is not calculated for domestic violence because this type of cost is different from case to case. Hence, the figures above are minimums. The basis for the estimates is shown below. As noted above, I invite anyone to improve on these calculations, and I will be happy to adjust them. This is an blog and adjustments are easy to make.
Pre-tax spending
Before we pay taxes to keep the criminal justice system working, there are pre-tax out-of-pocket expenses related to crime to be considered. The table below is an attempt
to calculate these as clearly as possible. I used the following statistics from the NT Police Force:
To calculate the out-of-pocket cost of crime in Alice Springs, the public crime statistics published by The NT Police, Fire and Emergency Services were used for the first
and second columns of Figure 4 below. Domestic Violence was not taken into consideration.
The 2008 Costs of crime, crime facts info no.169 of the Australian Institute of Criminology were used for the first six of the seven types of crime in the 3rd column. Car theft was calculated separately. According to the Australian Institute of Criminology, assault costs Australia in 2008, $1.4b per year, with an average of $1,700 per assault; sexual assault costs $720m overall, with an average cost of $7,500 per incident; burglary costs $2.2b overall and $2,900 per incident; and the average unit cost for property damage was $350 per
incident. Car theft leaves the insured with around $5,000 in out-of-pocket expenses, according to the National Motor Vehicle Theft Reduction Council.
Figure 4 takes the average cost per instance of crime and multiplies it by the Alice Springs figures. It then adjusts the outcome for 2022 (as the averages by the Australian
Institute were calculated in 2018).
For the calculation 2008 to 2022, the Inflation Calculator of the Reserve Bank Australia was used. Since this calculator extends only to 2021, the 2021 rate was used for the final calculations in 2022. The unreported assault figures were calculated as being 25 per cent by the NT Police Association in 2019.
The population of Alice Springs was estimated at 31,000 (this includes visitors).
I did not calculate the economic consequences of unreported break-ins, property damage and domestic violence, as no reliable estimates could be found.
From the table above, we learn that the consequences of crime cost the community nearly $20 million per year. This is around six hundred and thirty dollars per inhabitant.
Part of this is absorbed by insurance companies and Medicare.
Note that the above estimate is conservative because:
- the percentage of unreported cases is known only for the ‘assault’ categories:
- the related intangible costs of a crime – expenses such as the loss of time and the damage to one’s mental health – are not taken into consideration. These are likely to comprise about one-third of total losses, even with a conservative approach to cost.
Example: A broken passenger-side window
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Let us consider the petty crime of smashing a car window – a daily occurrence in Alice Springs. The incident happens in broad daylight on a residential street in front of the victim’s workplace, which is in a residential area. The victim had accidentally left an empty folded shopping bag on the passenger seat. This bag was found on the ground next to the vehicle and was the reason why the window was smashed. There were no valuables in the car.
It cost the victim $470 to replace the window. Glaziers are extremely busy in Alice Springs and run out of windows regularly, so the victim must wait. The victim could not use her car for five days. She had to take taxis to and from work, which cost her $150. It took an hour and a half to clean up her car and the area around it and an hour to take the vehicle to the workshop and back. It took two hours to go to the police station, wait, and report the incident. While she cleaned up the glass, she hurt her hand. If we calculate this at her hourly salary at work, the cost of her time is $225. The total cost of this petty crime, which was committed in a minute or less, now stands at $845. It was not worth claiming on insurance because the insurance
premium would have gone up if she had made a claim. We have yet to calculate pain and suffering. The victim is now scared that every time she parks her car in front of her workplace, her window will be broken again. She now leaves her vehicle unlocked.
However, this has led several times to attempts to steal her car (she found several plastic parts of the dashboard on the floor). This causes her to be scared that her car will be
stolen or set to fire. Her salary is not very large and she is considering giving up her job.
How lawyers calculate pain and suffering
After an incident that causes harm, in a civil lawsuit for personal injury, financial compensation for all losses stemming from the at-fault party’s wrongdoing can be demanded from the offender in a court of law. These losses are called “damages.” In most personal injury cases in courts, the victim will be entitled to compensation for two kinds of damages: economic and non-economic. Economic damages include medical bills and lost income,
while non-economic damages cover the less quantifiable effects on the victim. The legal term for non-economic damages is “pain and suffering.”
The author does not recommend suing a youth from our streets in civil court because there is no point in doing so; the kids have no money.
Material costs, as we have seen in the broken window example, are easy to calculate. Time and effort are irretrievably lost, but we can still attempt to put a price on them. We aptly call these “irretrievable losses.” We have already done this in the above calculation.
The type and seriousness of a personal injury determine the monetary value that can be put on it. The amount of money the victim spent having their injuries assessed and treated is called “medical special damages”. This is the indicator used by insurance companies. The
more painful the injury, the higher the number that gets fed into the formula to measure pain and suffering, connecting types of injuries with pain levels. In our example, the physical injury is zero because the victim did not go to a doctor.
Physical injuries are typically divided into two categories: soft injury, which consists of the description of discomfort by the victim, and hard injury, which is an injury that can be detected through a medical examination. A strained back, neck, knee, or ankle is considered a soft injury because it involves only muscles and other soft tissue. These injuries attract a damages formula multiplier between 1.5 and 3 because they are not permanent or
dangerous.
Hard injuries are more serious and attract a damages formula multiplier of 4 to 5 and sometimes higher. This is the case for injuries observed by an X-ray, or a medical
description of the injury; for example, a compressed or pinched nerve. An injury requiring repair or intrusive medical treatment, such as stitching a wound or setting a bone, increases the damages formula multiplier. Examples of hard injuries are broken bones, head injuries, wounds, and spinal injuries. Vandalism, break-ins and assaults cause significant
psychological suffering. In legal injury cases, “pain and suffering” encompasses emotional and mental injuries such as fear, insomnia, grief, worry, inconvenience, and the loss of the enjoyment of life. In these cases, the victim may be able to recover an amount, and sometimes a large amount, for pain and suffering damages. Especially in cases involving severe injury, pain and suffering can be a significant part of a personal injury victim’s losses.
Two methods of calculating the victim’s loss through pain and suffering are the most common. The first method is to multiply the actual damages by a “reasonable” number between 1.5 and 5 (depending on the severity of the injury). For example, if a victim incurs $3,000 in bills, she may multiply that by three and state that $9,000 represents a reasonable amount for pain and suffering. Sometimes, the top multiplier of 5 is not high enough. In those claims, the multiplier may be increased to up to 10 times special damages. The second method uses a per diem approach where a certain amount, say $100, is assigned to every day from the day of the incident until the person reaches full recovery.
If we use the first method, let us assign the smashed window incident a seriousness of 2. 2 x $845 = $1,690 in pain and suffering + $845 in irretrievable loss and actual costs. The broken car window has now cost us $2,535.
If we unleashed these calculations on the above table of the costs of crime in Alice Springs, the costs would at least triple.
Domestic violence
Domestic violence must be calculated separately as the parameters differ from other crimes. It was estimated in 2014-15 that women experiencing physical violence, sexual violence and emotional abuse by a partner will incur an on average cost of approximately $27,000 per
person. This is approximately $29,950 in 2021.
Domestic violence post-tax spending Australian Governments (National, State and Territory)
bore costs of domestic violence to the tune of an estimated $7.8 billion a year in 2014-157 ; an average of $26,780.20 per victim.
This brings the total cost of domestic violence in Alice Springs to $73,814,733 per year. This does not take into consideration unreported cases and pain and suffering.
Post-tax spending on crime (not DV)
The rate of (re)offending in the Northern Territory comes at a huge post-tax cost. The government spends about $338 per adult prisoner per day to house roughly 1,749 inmates across the Territory, according to the Attorney- General department’s 2020-21 annual report.8 That is nearly $600,000 per day. The incarceration of an adult prisoner in the NT is estimated to cost $317.73 per day. The cost increases significantly for NT youth in detention, estimated to be $2,038.05 per day.
On 31 January 2022 there were 626 prisoners in The Alice Springs Correctional Centre.
The average juvenile in detention in Alice Springs on 25 July 2022 was 16.11 Territorians are the most heavily policed in Australia, with about eight officers for every 1000 people. A 2022 report by the Productivity Commission shows that the Northern Territory police has the highest
average staffing costs and the most expensive police force per person in the country. Despite this, Territorians feel the least safe compared with other Australian policing jurisdictions. The NT force costs each Territorian $1,807, more than four times the cost of police in the ACT and
three times the cost for West Australians. The average staffing cost per officer in the Northern Territory was $212,323. The population of Alice Springs was estimated at 31,000.(this includes visitors) For the calculation 2008 to 2022, the Inflation Calculator of the Reserve Bank of Australia was used. Since this calculator extends only to 2021, the 2021 rate
was used for the final calculations in 2022.
A total minimum of $148,613,338 is spent per year on crime and its consequences and a minimum of $73,814,733 on domestic violence. We have not even considered the cost of prevention, such as CCTV cameras, dogs, alarm systems and human security, and diversion programs for offenders. Victims of Crime expenses were not calculated. The cost of domestic violence was not calculated.
In Australia, crime prevention is primarily the responsibility of state and territory governments. Local government must play a significant role in delivering crime prevention at the community level. Councils have long been involved in helping to create safer communities. Most crime of
immediate concern to communities is local: for example, property crime, antisocial behaviour, and vandalism. Thus, the primary focus for preventive action should also
be local.
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The focus on local government in creating safe communities was first described by Gilbert Bonnemaison, a deputy in the French national parliament and mayor of a town near Paris in post-WWII France. The Bonnemaisonmodel stresses that prevention strategies should focus on addressing the problems experienced by disadvantaged community members by striving to (re)integrate these people into their local communities, thereby reducing the likelihood that they will participate in crime. The Bonnemaison model became a prototype for local crime
prevention action in countries across the world, including Australia.
This emphasis on the role of local governments in crime prevention is, in turn, strongly encouraged by international organisations such as the UN Office on Drugs and Crime, the UN-Habitat’s Safer Cities Program and the World Health Organisation through its Safer Communities Program. Good governance, combined with strong and consistent leadership, should provide a framework within which evidence-based crime prevention policies and programs can flourish. The Northern Territory is and is seen to fail consistently to do this, whether under right-wing or left-wing leadership. The blame game between the two does not help us move forward. What is needed is long-term, robust, bi-partisan cooperation.
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