Australian Institute of Criminology

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In 1992, the Australian Institute of Criminology (AIC) published a paper in its Trends & Issues in Crime and Criminal Justice series that presented a summary of the results of research undertaken by John Walker that sought to estimate how much crime cost the Australian economy in 1990. It was estimated that the total costs of crime for that year were $27b or 7.2 percent of national Gross Domestic Product (GDP; Walker 1992). The methodology underpinning this calculation was developed by Walker (1992) and included the costs of various specific criminal offences, the costs of responding to crime through the criminal justice system, as well as the cost of crime prevention measures. Walker’s estimate was updated for the year 1996 with an estimated cost of $18b or over 4.0 percent of national GDP (Walker 1997).

In 2003, the AIC released two companion reports that sought to update and improve on Walker’s original research, using a revised and extended methodology. It was estimated that crime cost the Australian economy nearly $32b for 2001 or 5.0 percent of national GDP (Mayhew 2003a, 2003b).

In 2008, the AIC again updated the earlier reports, now estimating the cost of crime for the calendar year 2005 at $35.8b or 4.1 percent of national GDP. The largest components of this amount were costs associated with administering the criminal justice system including police, courts, corrections and other criminal justice-related government agencies. Fraud was identified as the most costly crime category in both the 2003 and 2008 reports.

The present report provides a further update on the cost of crime in Australia for the calendar year 2011—the most recent year for which baseline official statistics and survey data were available. The estimated costs for 2011 were $47.6b or 3.4 percent of national GDP.

The methodology used in this report is, for the most part, similar to that employed in previous reports. This allows for a broad comparison between the three estimations, with some specific variations being described below. In terms of overall trends in the costs of crime over the preceding decade, it is apparent that the cost of both specific crime types and the cost of the criminal justice system have both grown since 2001. However, while the growth in the cost of specific crime types has been relatively small when considered as a proportion of national GDP, the level of change of preventing and responding to crime has been more pronounced. Indeed, a number of crime categories have shown a reduction in their incidence and cost since 2001. It should be acknowledged that the 2011 calculations include some cost elements that were not included in previous reports. In particular, these elements explain some of the increase in criminal justice expenditure.

The costs of crime to any community are considerable and it is of value to policymakers, politicians, the general public and researchers to increase knowledge about how the cost of crime can be estimated and how costing methods may be improved. In particular, it is important to understand the relationship between the direct costs of individual crime types and the cost of responding to them. Some policy responses to crime are extremely costly to implement, particularly those that require police action and the use of correctional services. Governments need to be able to assess whether the benefits of relying on particular responses are greater than the benefits of adopting alternative strategies that might be less costly, but more effective in reducing the harms associated with individual crime types. The present and previous cost of crime reports should assist policymakers in assessing the financial and other implications of adopting particular crime control measures and in choosing the most cost-effective measures to use in Australia.

Adam Tomison