Economic impacts

Social costs

The use of alcohol and other drugs has a number of economic impacts relating to household expenditure, decreased productivity and healthcare and law enforcement costs. 

In recent years, the separate costs of tobacco, opioid, cannabis, methamphetamine and alcohol use in Australia have been estimated using different methodologies.

The estimated social cost for tobacco use in 2015–16 was $136.9 billion. While, this is substantially higher than the previous national estimate of $31.5 billion in 2004–05 (Collins and Lapsley, 2008), the difference is likely to be primarily due to differences in the approaches used to determine the estimates (Whetton et al. 2019). The most significant costs were related to the value of life lost, and pain and suffering caused by smoking attributable ill–health and premature mortality, spending on tobacco by dependent smokers, workplace costs and the reduction in economic output due to premature mortality (Whetton et al. 2019).

Opioid use, including the use of any illegal opioids and the use of pharmaceutical opioids not as prescribed, was estimated to cost $15.76 billion in 2015–16. Premature mortality, criminal justice and other health care were the leading sources of costs. Tentative estimates were reported separately for: the loss of quality of life for co-residents (e.g. partners and children) due to the substance use of others—$11.98 billion; and reduced quality of life for the drug consumer—$14.93 billion (Whetton et al. 2020).

The social cost of cannabis use was estimated to be $4.5 billion in 2015–16. More than half (54%, or $2.4 billion) of this cost was related to the criminal justice system, including imprisonment, administering community supervision orders and the impact on victims of crime. Although cannabis has the highest reported prevalence of consumption in Australia, the social costs attributed to cannabis were much lower than those for opioid use. This may be due to the fewer deaths attributed to cannabis use as compared with those attributed to the use of pharmaceutical opioids not as prescribed (Whetton et al. 2020b).

The estimated social cost attributable to methamphetamine use in 2013–14 was just over $5 billion dollars. This included costs associated with a range of domains including: prevention, harm reduction and treatment; health care; premature mortality; crime; child maltreatment and protection; workplace accidents and productivity (Whetton et al. 2016).

The social costs of alcohol misuse in Australia in 2010 was estimated to be $14.35 billion. The highest costs were associated with productivity losses (42.1%), traffic accidents (25.5%) and cost to the criminal justice system (20.6%) (Manning, Smith & Mazerolle 2013).

Household expenditure

Data from the ABS indicate that the proportion of household expenditure on alcohol and tobacco use has decreased over time.

  • The proportion of household expenditure on alcohol in 2015–16 was 2.2%, down from 3.4% in 1984.
  • The proportion of household expenditure on tobacco products has also decreased in 2015–16 to 0.9%, down from 1.6% in 1984 (Table S1.26; Figure IMPACT6).
  • The proportion of household expenditure on alcohol and tobacco varied by main source of income.
    • Households with the main income source as employee income spent a higher proportion on alcoholic beverages (2.3%) compared to those households with a main source of income as government pensions and allowances (1.8%).
    • However, households where the main source of income was government pensions and allowances had a higher proportion of household expenditure on tobacco (1.7%) compared to those households with the main source of income from employee income (0.8%) (ABS 2017).

Figure IMPACT6: Proportion of total goods and services expenditure, alcoholic beverages and tobacco products, 1984 to 2015–16 (per cent)

This figure shows that there has been a decline in the proportion of total goods and services expenditure for alcoholic beverages (2.2% of total expenditure in 2015–16) and tobacco products (0.9%) from 1984 to 2015–16.

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Decreased productivity

In 2019, almost 2 in 5 (38%) employed people reported missing at least 1 day of work in the previous 3 months due to illness or injury (regardless of drug use) (Table S1.27). Overall, 2.7% of recent illicit drug users missed 1 day of work in the last 3 months due to their drug use, with recent meth/amphetamines users (8.0%) and ecstasy users (6.3%) more likely to report that they had missed work than cannabis and pain-killer/opiate users (AIHW 2020).