Cost estimate methodology
The cost estimate methodology in this report broadly adopts the same approach as that taken by Access Economics in 200479. However, the scope and effort implied in constructing the 2002-03 estimates far exceeds that of this study. The aim is to provide decision-makers with a sense of the scale of this problem and its impact on society, in order to provide another perspective on the need and benefits of intervention as advocated by the Plan of Action.
This report updates the 2002-03 cost estimates and projects the costs to 2021-2280. In updating the estimates, the most recent data has been used as a basis for updating the costs, and in other cases an appropriate escalation factor has been applied (rather than replicating the construction of these costs). The cost estimates in this report are not directly comparable to the Access Economics figure, as the figures in this report include non-domestic violence and exclude violence perpetrated against men.
Estimating prevalence
The 2005 Personal Safety Survey (PSS) conducted by the Australian Bureau of Statistics (ABS) provides the most up-to-date prevalence estimates of people who experience violence and harassment. The Women’s Safety Survey covers the same broad topics and is the basis for the Access Economics report. Analysis of the two surveys suggests that between 1996 and 2005 there was a drop in the number of reported violence cases. This report seeks to update the Access Economics prevalence data by applying this trend in order to establish a base case in 2007-08. In the absence of reliable trend data to further project out to 2021-22, the report assumes that holding all else constant, the number of victims of violence against women will trend upwards with population growth estimates obtained from the ABS.
Cost categories
The methodology combines both top-down and bottom-up approaches in order to estimate the costs that are relevant to each cost category. A top-down approach typically involves estimating a proportion of the total costs which can be attributed to domestic violence, whereas a bottom up approach involves applying a unit cost to the number of cases (victims/survivors, children or perpetrators).
KPMG has applied a number of techniques to update the Access Economics estimates in 2002 03 to reflect 2007-08. These techniques were based on two core themes: the change in prevalence of domestic violence, and the general increase in costs over time.
Where the required data was not available, a growth rate was applied to reflect the change in prevalence between 2002-03 and 2007-08. In the absence of other reliable cost drivers, costs were escalated, using the inflation rate over the same period. This method was typically applied to the top-down approaches adopted by Access Economics.
Where comparable data was available, KPMG sought to apply the numbers of cases to the new cost estimates. This method was applied to the bottom-up unit costs.
Once the estimates for 2007-08 were calculated, forecasts to 2021-22 were based on an average population growth of 1.1 per cent per annum81 and are presented in 2007-08 dollars.
Table 24 shows the techniques applied to each cost category.
Table 24: Categories of cost
| Category |
Access Economics methodology |
Escalation factor |
| Pain, suffering and premature mortality |
DALYs (Years of Life Lost + Years of Life Lost due to Disability) are calculated using Australian Institute of Health and Welfare (AIHW) data. Extrapolations to 2002-03 are then based on ABS population changes for women by age between 1996 and 2003.
Once the number of DALYs is established for 2002-03, the value of a life year is applied to assign a cost to suffering associated with domestic violence for victims/survivors.
|
Domestic violence (DV) population growth estimated as the difference between Womens Safety Survey (WSS) and Personal Safety Survey (PSS) DV population (-6 per cent) and applied to DALYs.
Value of life is presented in 2007-08 dollars.
2021-22 estimates are based on population growth of 1.1% per annum. |
| Health |
Access Economics 2004 estimates the health-related costs based on a top-down process using 2001 costing data obtained from the Disease Cost Impact Study (DCIS). The costing data is disaggregated by age, gender and disease category. Attributable fractions relating to domestic violence for each disease category are applied to the data to determine health costs that can be attributed to domestic violence. A health inflation index obtained from AIHW is applied to the 2001 estimates. |
Health inflation rate is applied to account for increases in the cost of service provision and DV population growth to account for change in uptake of services.
2021-22 estimates are based on population growth of 1.1% per annum. |
| Production-related |
Unit cost estimates (including average weekly salary) are sourced from WSS/PSS and other international studies. For each line item categorised under production-related costs, a specific unit cost is multiplied by the number of victims/survivors.
The number of victims/survivors in each category is determined using ratios from other studies which are applied to the domestic violence population estimates (WSS/PSS). |
DV population growth estimates are applied to the number of victims/survivors estimated for 2007-08. Unit costs (using CPI and wage inflation index) are inflated to 2007-08 dollars.
2021-22 estimates are based on population growth of 1.1% per annum. |
| Consumption-related |
Short-run consumption costs are estimated by applying a unit cost to the number of victims/survivors who experience damage to property.
Long-run costs estimate the proportion of victims/survivors who experience a loss in household disposable income as a result of domestic violence.
|
DV population growth estimates are applied to the number of victims/survivors and CPI growth in the unit cost of property damage.
2021-22 estimates are based on population growth of 1.1% per annum. |
| Administrative and other |
Administration costs are the combination of a number of legal system, accommodation and other government program costs. The total number of individuals that have contact with the system in 2002-03 as a result of domestic violence are based on international studies and government sources. Unit costs are applied to these estimates. |
DV population growth estimates are applied to the number of victims/survivors estimated for 2007-08 and the CPI index is used to account for the increase in cost.
2021-22 estimates are based on population growth of 1.1% per annum. |
| Second generation |
A unit costing approach is used based on population estimates sourced from WSS/PSS and cost estimates sourced from other international studies.
A top-down approach is taken to estimate the increased cost of juvenile and adult crime as a result of domestic violence. The cost of juvenile and adult crime is presented as a proportion of total crime. |
DV population growth estimates are applied to the number of victims/survivors estimated for 2007-08 and the CPI index is applied to the unit cost of service provision to children.
The cost of juvenile and adult crime is escalated based on growth in the number of children who witness domestic violence and the CPI index.
2021-22 estimates are based on population growth of 1.1% per annum. |
| Transfers |
Transfer costs refer to the inefficiencies created by taxation in the economy. This is known as a deadweight loss and is estimated to cost 28.75 per cent of the total transfer amount. |
Transfers are estimated from inflated induced government payments, the sum of government services (estimated in the previous cost categories), updated victim/survivor compensation figures and a taxation rate applied to personal and company earnings (estimated in the previous cost categories). |
Estimating non-domestic violence costs
In order to capture the full cost of violence against women, this report includes victims/survivors who experience violence not only by their intimate partner but also by a family member, acquaintance or stranger. A number of studies have estimated the cost of violence — and more specifically sexual assault — to the economy. However, given the differences in estimation techniques, they are not directly comparable to the domestic violence costs estimated in this report. For this reason, the cost categories described above that are relevant to non-domestic violence are included and the individual cost categories that are irrelevant to non-domestic violence are excluded82.
For the cost categories relevant to non-domestic violence, unit costs are calculated on the total domestic violence population of 385,426. Table 25 presents the relevant cost category by unit cost.
Table 25: Unit cost estimates by cost category83
| Cost category |
Average cost per victim/survivor ($) |
| Pain, suffering and premature mortality |
10,073 |
| Health |
1,154 |
| Productivity |
1,581 |
| Administrative and other |
1,441 |
| Transfers |
1,477 |
| Non-domestic violence unit cost |
15,726 |
The estimated unit cost of each victim/survivor of non-intimate partner related violence is $15,726. Thus for every woman who does not experience non-domestic violence as a result of the Plan of Action intervention in a particular year, $15,726 across the economy can be avoided. Based on an estimated population of those who experience non-domestic violence, the total cost to the economy is $5.7 billion. Allocating this total to the respective stakeholders is based on the same proportions as domestic violence, excluding the effects of consumption and second generation costs.