The economic costs of child abuse and neglect
The purpose of this resource sheet is to outline the economic costs of child abuse and neglect. The resource sheet looks at both the direct costs (e.g. child protection, out-of-home care (OOHC) and family support services) and the indirect costs (in terms of prevention and in the long-term costs of supporting victims/survivors of child abuse).
Knowing what Australia spends on child protection, out-of-home care (OOHC) and family support services is reasonably straightforward. This expenditure is detailed in the Productivity Commission’s Report on Government Services (Steering Committee for the Review of Government Service Provision [SCRGSP], 2018).
Estimating the indirect financial costs associated with child abuse and neglect is more difficult. There are the costs of:
- child abuse prevention programs
- services provided by health, education and many other systems
- inquiries and reviews into child protection services across Australia.
There are also the longer-term costs of child abuse and neglect that include reduced quality of life and the increased need for specialist services for adults who were abused as children. Young people and adults who experienced child abuse and neglect are likely to need support and treatment for a range of issues (CFCA, 2014) including:
- housing and homelessness problems
- drug and alcohol problems
- mental illness
- poor physical health
How much does Australia spend on child protection, OOHC and support services?
Table 1 provides the real expenditure on child protection, OOHC, intensive family support and family support services for each state and territory government, and nationally, in 2016/17 and the previous five years.
|NSW||$’000||1 549 936||1 499 404||1 538 125||1 613 236||1 765 675||1 853 340|
|Vic.||$’000||752 499||786 865||827 040||886 248||972 948||1 088 690|
|Qld||$’000||860 800||874 112||862 614||895 553||903 651||954 807|
|WA||$’000||402 705||432 905||447 165||466 494||467 292||472 745|
|SA||$’000||218 684||234 464||267 540||303 089||395 578||510 070|
|Tas.||$’000||80 182||80 901||85 879||82 760||82 612||96 397|
|ACT||$’000||46 548||49 384||50 974||53 829||57 742||63 255|
|NT||$’000||108 410||188 922||170 699||184 419||187 404||202 812|
|Australia||$’000||4 019 764||4 146 957||4 250 036||4 485 628||4 832 902||5 242 116|
Source: SCRGSP (2018), Table 16A.6
According to the Productivity Commission's Report on Government Services (SCRGSP, 2018), in 2016/17, the following amounts were spent directly on providing services to children who had experienced, or who were at risk of experiencing, child abuse and neglect in Australia:
- Nationally, approximately $5.2 billion in 2016/17 was spent on child protection, OOHC services, intensive family support services and family support services (see Box 1 for definitions). This was an increase of 8.5% from 2015/16. Of this expenditure, OOHC services accounted for the majority of the spend (59.5%, or $3.1 billion).
- For every child aged 0–17 years in the Australian population, the real recurrent expenditure on child protection, OOHC services, intensive family support services and family support services was approximately $959 per child in 2016/17.
Box 1: Definitions of services
The annual Report on Government Services (SCRGSP, 2018) provides a breakdown of expenditure by each jurisdiction on four components of the child and family welfare system. These components are defined as:
- Child protection services: services funded to perform the ‘functions of government that receive and assess allegations of child abuse and neglect, and/or harm to children and young people, provide and refer clients to family support and other relevant services, and intervene to protect children’ (p. 16.37).
- Out-of-home care: ‘overnight care, including permanent placement with relatives (other than parents) where the government makes a financial payment’ (p. 16.35). This includes alternative care settings such as home-based care (relative/kinship care, foster care and other home-based care), residential care, family group homes, independent living and other placement types.
- Intensive family support services: services designed to ‘prevent the imminent separation of children from their primary caregivers as a result of child protection concerns and to reunify families where separation has already occurred’ (p. 16.35).
- Family support services: services funded to provide ‘lower level (that is, non-intensive) services to families in need, including identification and assessment of family needs, provision of support and diversionary services, some counselling, and active linking and referrals to support networks" (p. 16.35).
For a national and state and territory breakdown of expenditure for child protection services, OOHC services, intensive family support services and family support services, refer to Table 16A of the Report on Government Services (SCRGSP, 2018).
Prevention of child abuse and neglect
The data presented above describe the expenditure by government departments responsible for child protection in responding to an identified risk of child abuse and neglect, or the actual occurrence of child abuse and neglect. Australian governments also fund programs and services designed to prevent child abuse and neglect, and ease the risk factors that contribute to child abuse and neglect.
Prevention services and support programs can be large scale and made available to all children and families (i.e. primary or universal prevention programs), or targeted towards children and families who are at-risk (i.e. secondary prevention programs). The range of possible child abuse prevention activities is broad and can include direct child abuse prevention interventions, such as teaching children about online safety, or interventions such as health, education and child care services, which support all families. Some of the broad policy areas considered particularly relevant to child abuse prevention include:
- maternal and child health
- parenting education and support
- school-based education services (e.g. about personal safety and respectful relationships)
- programs for people with a disability
- housing support
- mental health and substance use programs
- poverty alleviation
- child care assistance
- family violence prevention (Taylor et al., 2008).
Family violence prevention has also been incorporated within The National Plan to Reduce Violence Against Women and Their Children 2010–2022 (Council of Australian Governments [COAG], 2011). Preventative programs are not strictly designed to prevent the occurrence of child abuse and neglect; however, they may still act in a preventative way by addressing what is known to be a significant risk factor for child abuse and neglect (Dwyer & Miller, 2014; Goddard & Bedi, 2010). When there are children in the family, family violence is also in and of itself emotionally abusive to children (Goddard & Bedi, 2010).
Because many services funded to provide support and assistance to families may also help to prevent child abuse and neglect, it is difficult to specifically quantify expenditure on child abuse prevention activities. Therefore, it is not feasible to quantify and compare expenditure across states and territories on child abuse prevention.
What are the long-term costs of child abuse?
The immediate economic costs to the community of providing child protection services, OOHC and support services is only one facet of the overall cost associated with child abuse and neglect. The longer-term or indirect financial costs associated with child abuse and neglect are also substantial and carried not by the perpetrator but by the child and society (Segal, 2015). National and international research has demonstrated a number of adverse effects of child abuse and neglect, such as:
- future drug and alcohol misuse
- mental illness
- poor physical health
- juvenile offending
- incarceration (CFCA, 2014).
Although, not all children who have suffered abuse or neglect go on to develop these problems; the consequences of child abuse and neglect can affect social cohesion and result in considerable costs and ongoing government expenditure (Segal, 2015). Consequences such as educational failures, premature death and low workforce participation can lead to a considerable reduction in the productive potential of society and a lower gross domestic product (Segal, 2015).
Taking costs such as these into account, a number of researchers have sought to estimate the long-term financial costs of child abuse and neglect in Australia. Taylor and colleagues (2008), for example, estimated that the annual cost in 2007 of child abuse and neglect for all people ever abused in Australia was $4 billion; while the value of the burden of disease – a measure of lifetime costs of fear, mental anguish and pain relating to child abuse and neglect – represented a further $6.7 billion. The report also estimated that the lifetime costs for the population of children reportedly abused for the first time in 2007 would be $6 billion, with the burden of disease representing a further $7.7 billion.
Kezelman, Hossack, Stavropoulos and Burley (2015) reported that a conservative estimate of the cost to Australian taxpayers of unresolved childhood trauma is at least $6.8 billion per year for child sexual, emotional and physical abuse alone. When broader definitions of childhood trauma are taken into account, this figure increases to at least $9.1 billion (Kezelman et al., 2015).
In 2016, McCarthy and colleagues (2016) estimated the lifetime economic costs for children who were abused and neglected in 2012/13 for the first time to be $9.3 billion. Their estimate considered costs associated with child protection, health, education, criminal justice, housing and homelessness services, as well as lost productivity.
Economic research on young people leaving OOHC also illustrates the high financial cost associated with inadequate support for children transitioning from care to independence. Raman, Inder and Forbes (2005) projected the direct costs to the Victorian Government of service provision to care leavers, taking into account housing, the justice system and corrective services, police, drug and alcohol services, mental health, health, employment and lost GST revenue. The total lifetime costs associated with outcomes for young people leaving care were estimated to be $738,741 (2004/05 dollars) per care leaver.
Estimating that there are, on average, 450 care leavers per year in Victoria, Raman and colleagues (2005) determined that the total cost per year for the state government was $332.5 million. The authors cautioned that this represents a conservative estimate of the direct cost to state governments of providing services to care leavers and argue that savings could be made by better supporting young people as they transition from care to independent living. (The costs of young people leaving care are discussed further in Osborn and Bromfield (2007).)
The cost of operating youth justice systems across Australia provides yet another example of an indirect financial cost of child abuse and neglect to the community. A recent Victorian report found that children and young people who suffer child abuse and neglect are over-represented in youth justice systems (Victorian Government, 2018). The report found that of the children and young people sentenced or on remand in 2015/16, 45% had been subject to a previous child protection order, and 19% were subject to a current protection order (Victorian Government, 2018). According to the Productivity Commission’s Report on Government Services (SCRGSP, 2018), total recurrent expenditure on youth justice services – including detention-based and community-based services – across Australia in 2016/17 was $769.5 million.
Other costs associated with child abuse and neglect involve those associated with the numerous inquiries into child protection. The Royal Commission into Institutional Responses to Child Sexual Abuse is estimated to have cost half a billion dollars (Wright, Swain & McPhillips, 2017). The Royal Commission identified 84 relevant inquiries occurring over the past 24 years that were directly relevant to their work (Commonwealth of Australia, 2017). The Australian Institute of Health and Welfare (AIHW, 2018) annual report on child protection detailed 25 inquiries into child protection services across Australia since 2004. Of these inquiries, 18 have been since 2010. The cost of these ongoing inquiries contributes further to the economic costs of child abuse and neglect in Australia.
The direct economic costs of child abuse and neglect are substantial. The additional indirect costs and those costs associated with the long-term effects of child abuse and neglect make the prevention of child abuse and neglect a priority for governments, non-government organisations and the community. More importantly, preventing child abuse and neglect is critical because of the social costs of child abuse and neglect and the imperative to prevent children from experiencing its devastating effects.
- Australian Institute of Health and Welfare (AIHW). (2018). Child protection Australia 2016–17 (Child welfare series no. 68. Cat. no. CWS 63). Canberra: AIHW.
- Child Family Community Australia (CFCA). (2014). Effects of child abuse and neglect for children and adolescents. Melbourne: Australian Institute of Family Studies. Retrieved from https://aifs.gov.au/resources/policy-and-practice-papers/effects-child-abuse-and-neglect-children-and-adolescents
- Commonwealth of Australia. (2017). Royal Commission into Institutional Responses to Child Sexual Abuse: Final Report. Canberra: Commonwealth of Australia.
- Council of Australian Governments (COAG). (2011). National plan to reduce violence against women and children 2010–2022. Canberra: Department of Social Services.
- Dwyer, J., & Miller, R. (2014). Working with families where an adult is violent. Melbourne: Department of Human Services.
- Goddard, C., & Bedi, G. (2010). Intimate partner violence and child abuse: A child centred perspective. Child Abuse Review, 19, 5–20.
- Kezelman, C., Hossack, N., Stavropoulos, P., & Burley, P. (2015). The cost of unresolved childhood trauma and abuse in adults in Australia. Sydney: Adults Surviving Child Abuse and Pegasus Economics.
- McCarthy, M. M., Taylor, P., Norman, R. E., Pezzullo, L., Tucci, J., & Goddard, C. (2016). The lifetime economic and social costs of child maltreatment in Australia. Children and Youth Services Review, 71, 217–226.
- Osborn, A., & Bromfield, L. (2007). Young people leaving care (Research Brief No. 7). Melbourne: Australian Institute of Family Studies. Retrieved from www.aifs.gov.au/cfca/publications/young-people-leaving-care
- Raman, S., Inder, B., & Forbes, C. (2005). Investing for success: The economics of supporting young people leaving care. Melbourne: Centre for Excellence in Child and Family Welfare.
- Segal, L. (2015). Economic issues in the community response to child maltreatment. In B. Matthews, & D. C. Bross (Eds.), Mandatory reporting laws and the identification of severe child abuse and neglect, (pp. 193–216). Dordrecht: Springer.
- Steering Committee for the Review of Government Service Provision (SCRGSP). (2018). Report on government services 2016. Canberra: Productivity Commission.
- Taylor, P., Moore, P., Pezzullo, L., Tucci, J., Goddard, C., & De Bortoli, L. (2008). The cost of child abuse in Australia. Melbourne: Australian Childhood Foundation and Child Abuse Prevention Research Australia.
- Victorian Government. (2018). Inquiry into youth justice centres in Victoria: Final Report. Melbourne: Victorian Government Printer.
- Wright, K., Swain, S., & McPhillips, K. (2017). The Australian Royal Commission into Institutional Responses to Child Sexual Abuse. Child Abuse and Neglect, 74, 1–9.
1 Real recurrent expenditure refers to expenditure that does not result in fixed assets.
This resource sheet was updated by Karen Broadley, Senior Research Officer, with the Child Family Community Australia (CFCA) information exchange at the Australian Institute of Family Studies.
Previous editions have been compiled by Joanne Commerford, Lucy Ockenden, Veronica Meredith, Deborah Scott, Lalitha Nair, Leah Bromfield, Prue Holzer, Alister Lamont, Katie Kovaks and Nick Richardson.