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The cost of prison vs residential treatment for offenders

An economic analysis for Aboriginal and Torres Strait Islander offenders


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This Deloitte Access Economics report for the Australian National Council on Drugs (ANCD) finds that there are significant financial savings of $111, 458 per offender, as well as improvements in health and mortality, with the diversion to community rehabilitation of offenders from prison.

Deloitte Access Economics Report, released February 2013, 86 pages

In 2009, the ANCD’s National Indigenous Drug and Alcohol Committee (NIDAC), released a paper, Bridges and Barriers: addressing Indigenous incarceration and health, which identified a disproportionate number of Indigenous Australians in the correctional system, and argued the importance of diverting young men and women away from a life of substance use and crime. The paper recommended that funding be redirected from the construction and operation of any further correctional centres to establish a ‘break the cycle’ network of Indigenous-specific residential rehabilitation services for courts to utilise as a viable alternative to incarceration.

Deloitte Access Economics was commissioned by NIDAC to:

  • Examine the patterns and prevalence of Indigenous people in the prison system
  • Outline the impact and implications of incarceration of Indigenous people and 
  • Analyse the costs and benefits of addressing Indigenous problematic alcohol and drug use with treatment, particularly residential rehabilitation, as compared to prison.

In 2011, there were 115 correctional custodial facilities in Australia, and in 2010–11, more than  $3 billion was spent on Australian prisons. The estimated annual average cost per prisoner per day in 2012–13 is $315.

Research suggests that outcomes of incarceration are worse for Indigenous Australians than for non-Indigenous Australians. Indigenous Australians are over-represented in Australian prisons (26%), rates of recidivism are high and incarceration is associated with poor health outcomes, including a relatively higher risk of mortality post-release.

While rates of drug use are high for both groups, Indigenous prisoners are significantly more likely to be dependent on alcohol, and Indigenous men are significantly more likely to report that they were intoxicated at the time of the offence for which they were incarcerated.

The Deloitte Access Economics report highlights the considerable benefits associated with the diversion of Indigenous offenders into community residential drug and alcohol rehabilitation services instead of incarceration. Diversion is associated with financial savings as well as improvements in health and mortality.

  • The total financial savings associated with diversion to community residential rehabilitation compared with prison are $111,458 per offender
  • In addition, treatment of Indigenous offenders in the community rather than in prison is also associated with lower mortality and better health-related quality of life
  • In monetary terms, these non-financial benefits have been estimated at $92,759 per offender.

To gain a greater understanding of the issues covered, download the report now.

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