Economic cost of violence against women and their children 

1.1 Background

Violence against women and their children remains a profound problem and addressing it is one of the greatest challenges for Australia. Around one in three Australian women experience physical violence and almost one in five women experience sexual violence over their lifetime⁹.

In May 2008, the Australian Government established the National Council to Reduce Violence against Women and their Children (the Council) to provide expert advice on measures to reduce the incidence and impact of sexual assault and domestic and family violence. The first task for the Council was to develop a national plan of action.

Time for Action: The National Council’s Plan for Australia to Reduce Violence against Women and their Children (the Plan of Action) sends a strong message to the Australian community that violence against women is not acceptable in any form. Its development has the support of a wide range of stakeholders and, most importantly, is built from the many voices of women

The Plan of Action describes the commitment and actions needed to guide all Australians, their governments and communities in reducing violence against women and their children. Implementation of the Plan of Action is central ’s four priorities for women:

• Reducing violence against women.
• Increasing women’s economic independence.
• Increasing the voice of women in the community.
• Working in partnership with men to achieve gender equality.

The Plan of Action includes strategies and initiatives that are focused around six key outcomes:

• Communities are safe and free from violence.
• Relationships are respectful.
• Services meet the needs of women and their children.
• Responses are just.
• Perpetrators stop their violence.
• Systems work together effectively.

The Plan of Action initiatives form a comprehensive suite of interventions to tackle the problem of violence against women and their children, both in terms of responding to violence and early intervention and prevention. Violence against women and their children carries an enormous economic cost to society. A significant proportion of these costs to 2021-22 can be expected to be avoided with the introduction of Plan of Action initiatives.

1.2 Objective

The objective of this report is to present an estimate of the financial and non financial costs associated with violence against women and their children in 2021 22 that may be anticipated if Australians, their governments and communities do not take action by implementing the Plan of Action initiatives. The estimated costs of violence against women and their children is then used to demonstrate the cost reductions that could be achieved with reductions in the levels of violence to 2021-22 as a result of implementing the initiatives.

1.3 Scope

Domestic interpersonal violence (as opposed to violence perpetrated by a stranger) has been the focus of most Australian studies. Australia was one of the first countries to attempt to calculate the economic costs of domestic violence. Despite the inadequacy of much of the necessary data, the Australian studies were traditionally more successful in calculating the direct costs of domestic violence (examples include the cost of crisis accommodation, legal services, income support, and health and medical services) than in calculating the indirect costs of domestic violence (examples include the replacement of lost or damaged household items, and costs associated with changing houses or schools)¹⁰.

For this study, KPMG has adopted as a starting point, work undertaken by Access Economics on behalf of the Office of the Status of Women in 2004¹¹. This work presented an estimate of the costs of domestic violence to the Australian economy, and may generally be regarded as the most recent comprehensive economy-wide estimate of the cost of domestic violence in Australia in 2002-03.

Key features of this methodology included:

• a focus on economic costs, and a clear distinction between economic costs and transfer payments;
• use of a prevalence approach that conceptually captures all annual costs of domestic violence and its consequences;
• allocation of costs to seven categories:
  • pain, suffering and premature mortality;
  • health costs;
  • production-related costs;
  • consumption-related costs;
  • administrative and other costs;
  • second generation costs;
  • transfer costs.
• allocation of costs to eight groups which bear the costs and pay or receive transfer payments:
  • victim/survivor;
  • perpetrator;
  • children;
  • friends and family;
  • employer;
  • federal government;
  • state/territory and local government;
  • rest of the community/society (non-government).

This report updates the cost estimates in the Access Economics study and projects the costs to 2021-22 (with estimates presented in 2007-08 dollars). In updating the 2002-03 estimates, we have in some cases sought to use the most recent data as a basis for updating the costs, and in other cases we have used an appropriate escalation factor to update the costs (rather than replicating the construction of these costs), based on sources referenced in the Access Economics report.

The aim in adopting the Access Economics framework is to build on work already done in this area rather than necessarily recreating the estimate from scratch. The scope and effort implied by the Access Economics work far exceeds that of this study. It is therefore not KPMG's intention that the estimates in this report be considered the latest point of reference for researchers and analysts in this field.

Rather, the aim of this report is to provide indicative estimates of costs of violence against women and their children in 2021-22, and the reduction in costs that might be achieved with a reduction in levels of violence. It is the magnitude of the costs and possible reductions that can be achieved that are emphasised above the actual figures presented. Its purpose 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.

The caveats placed by Access Economics on the 2002-03 estimates still apply in that the overall findings must be considered indicative (and in some cases speculative) and are conditional on numerous assumptions made during the course of the analysis. A considerable margin of uncertainty surrounds the original estimate (and is retained in this update and forecasting of the estimates to 2021-22). Estimates are based on limited data and on parameters that reflect a large element of judgement¹².

The project scope involved the following:

• The model was based on desktop analysis. Cost estimates are indicative only, and should be used for informing decisions rather than as a basis for decision-making.
• The Access Economics estimates formed the basis for updated 2007-08 estimates and were used as the basis for projecting costs to 2021-22. Costs are presented in 2007-08 dollars.
• Where sufficient information was not available, or time did not permit the reconstruction of the Access Economics cost estimates, assumptions were adopted based on the best available evidence.
• All assumptions and their bearings on the cost estimates are transparent.
• The analysis establishes a ‘base case’ profile which forecasts levels of violence against women and their children without intervention (that is, it assumes a continuation of current policy).
• The analysis adopts a reported prevalence-based approach.
• The economic costs do not include the cost of the Plan of Action initiatives. These costs would be estimated as part of a detailed business case for investment.
• The levels of reduction in violence cited in the report do not necessarily reflect the reduction in violence achievable with the implementation of the Plan of Action. This would form part of a detailed business case for investment.

1.4 Approach

The approach to this project involved these key steps:

1. Constructing the base case ‘prevalence of violence’ profile
   • The number of women and children experiencing violence in 2021-22 was calculated using prevalence rates from the Australian Bureau of Statistics Personal Safety Survey¹³. Extrapolations to 2021-22 are based on expected population changes for women and age. The total number of victims/survivors therefore takes into account varying population growth of each age category. This provides a baseline for growth in domestic violence up to 2021.
2. Constructing the economic costs of violence. This involved:
   • constructing and updating the 2002-03 cost estimates by obtaining relevant data to establish present-day costs on which the forecasting was based and applying appropriate cost escalation factors
   • applying costs to the base case profile to estimate the economic costs of violence against women in 2021-22 if no action is taken
   • deriving a cost per victim/survivor by dividing the total cost by the number of projected victims/survivors in each year.
3. Calculating the cost impact. This involved:
   • applying the cost per victim/survivor to estimate the costs that could be avoided for given reductions in reported violence.

1.5 Notes to the findings

The report presents estimates of the financial and non-financial costs and cost reduction impacts that may be achievable with broad implementation of the Plan of Action. Estimates are indicative only and are not linked to specific initiatives in the Plan. This report is not a submission for funding the Plan of Action. It does not contain views on the cost-effectiveness of specific initiatives proposed in the Plan. These are areas that should be considered as part of any business case for investment.

1.6 Structure of the report

The remainder of this report is structured as follows:

• Section 2 provides a definition of domestic violence that underpins the estimates in this report; outlines the classification of costs used in the report; and briefly summarises previous Australian and international studies on the costs of domestic violence and impact of intervention.
• Section 3 defines and outlines the prevalence of domestic violence in Australia.
• Sections 4 to 10 estimate the costs for each cost category (by cost sub-category and by affected group).
• Section 11 presents the effects of including the costs of non-intimate partner violence.
• Section 12 identifies the costs of violence against women and their children for selected vulnerable groups.
• Appendix provides details of cost breakdowns and the method used to calculate costs.

9. Australian Bureau of Statistics, Personal Safety Survey, ABS Cat. No. 4906.0, Canberra, 2005.
10. Laing and Bobic, Economic costs of domestic violence, Australian Domestic and Family Violence Clearinghouse: Literature Review, p. 6, 2002, viewed December 2008.
11. Access Economics, The Cost of Domestic Violence to the Australian Economy: Part I, 2004, viewed December 2008.
12. Access Economics, The Cost of Domestic Violence to the Australian Economy: Part I, 2004, viewed December 2008, p. VI and VIII
13. Australian Bureau of Statistics, Personal Safety Survey, ABS Cat. No. 4906.0, Canberra, 2005.