The Economic Cost of Child Abuse
It is often said that an affluent society is best judged by how it treats its most vulnerable citizens. This honourable barometer tends to bring to mind notions of charity and generosity rather than a contemplation of the broader social benefits of investing in the underprivileged. When in fact, expenditure directed towards the disadvantaged has far-reaching economic and social returns that often go unconsidered.
Funding for addressing disadvantage is too often placed in the basket of ‘social programs’, which gives the community the erroneous impression that it has nothing to do with the economy. However, as proponents of the proposed National Disability Insurance Scheme will tell you: it’s not about philanthropy, it’s about investing in people through empowerment and participation.
Child abuse is one of the leading causes of disadvantage in Australia today, and it has a massive human and economic cost to the individual and the community. However research conducted in 2003 and 2006 suggests the community is surprisingly unaware of, and ambivalent towards, the scale of the problem. In 2003, 54% of respondents in a survey did not see child abuse as causing a substantial cost to the community, and in 2006 respondents ranked child abuse as less concerning than the rising cost of petrol and public transport problems .
A lack of understanding about the prevalence of child abuse is one part of the problem. A much larger part is failing to recognise the scope of the consequences. The good news is that government expenditure over the last six or so years since the aforementioned study seems to reflect an emphasis on helping victims of child abuse and implementing prevention strategies.
In recent years the amount spent on directly providing services to children who had experienced, or were at risk of experiencing, child abuse has risen significantly. The Productivity Commission’s Report on Government Services (2012) reported that in 2010-2011 approximately $2.8 billion was spent on child protection and out-of-home care, an increase of $137.7 million from 2009-2010. More broadly, from 2006-07 to 2010-11 it had grown an average of 10.2% per year, equating to a total increase of $914.1 million.
On top of this, expenditure on intensive family support services for families at risk of child removal, or families already in the system, had increased substantially. From 2006-07 to 2010-11 it had increased an average of 24.1% per year from $115.5 million to $274.4 million .
The immediate cost to the taxpayer of funding child protection services is only one small facet of the overall cost associated with child abuse. Research has indicated that victims of child abuse are more likely to experience future drug and alcohol problems, mental illness, poor health, homelessness, juvenile offending, criminality and incarceration. All of which have some sort of individual and collective economic cost associated with them.
Taylor, et al., developed a two-pronged approach for estimating the full cost of child abuse to Australia. The first specification was the ‘prevalence cost’, defined as the one year cost to government expenditure associated with child abuse. This is the funds allocated to child protection services, related health services, juvenile justice etc. Added to this was a one year fraction of the estimated life-long economic costs of child abuse. The study estimated this to be between $10.7 billion to $30.1 billion.
The second specification was called the ‘incidence cost’; this was defined as the estimate of the lifetime cost of child abuse for those abused for the first time in the year 2007, preceding the study. This includes the total government expenditure needed for services and also the total productivity losses from poorer labour market outcomes. This was estimated to be between $13.7 billion and $38.7 billion . The fact that these figures are so large should come as no surprise; positive social and economic participation relies on individuals feeling confident and empowered, attributes that victims of child abuse rarely have the opportunity to develop.
Victims of child abuse often experience the world as dangerous and confusing. This feeling of isolation from mainstream society makes positive social and economic participation nearly impossible. Many of us take for granted the sheer number of skills associated with simply finding employment. These include the ability to assemble a resume and cover letter, prepare for an interview and organise references, not to mention the personal resilience required in the face of sometimes frequent rejection. It is almost incomprehensible to imagine undertaking such a task while feeling totally isolated and paralysed by low self-esteem.
As mentioned earlier, recent budgets indicate a realisation of what is needed to address this problem. The National Framework for Protecting Australia’s Children 2009-2012 paper had a key focus on funding programs aimed at preventing child abuse and neglect. Therefore, all other things being equal, expenditure on prevention strategies should be expected to continue to increase.
Furthermore, programs that are not strictly designed to prevent the occurrence of child abuse can serve to prevent maltreatment by addressing known risk factors. For example, higher and better directed funding for education, poverty alleviation, housing support, drug and alcohol services and domestic violence prevention all create the positive externality of helping prevent child abuse. As preventative factors are so broad and varied, prevention itself can be hard to accurately target and quantify.
The economic benefits of a successful focus on prevention would be equally as difficult to quantify, but would undoubtedly present a monumental return on the initial investment. The message we need to take from this is that funding child protection and related services should not simply be conceptualised as philanthropy, rather as wise long-term economic policy.
 Taylor, P., Moore, P., Pezzullo, L., Tucci, J., Goddard, C., & De Bertoli, L. (2008). The Cost of Child Abuse in Australia. Melbourne: Australian Childhood Foundation and Child Abuse Prevention Research Australia.
 Steering Committee for the Review of Government Service Provision. (2012). Report on Government Services 2012. Canberra: Productivity Commission.