Serious and organised crime is costing the community $36 billion a year, according to a new report by the Australian Crime Commission.
The cost is equivalent to 24 per cent of Australia’s social security and welfare budget and adds an estimated 6.3 per cent to the average cost of living.
The report uses new methodology in an attempt to capture the full costs, which are more than double previous estimates.
Crime Commission CEO Chris Dawson said the new estimates were still only a fraction of the total costs.
“There are many elements we could not measure or only partially measure,” Mr Dawson said.
“The impact is negative, the costs are high, and we all pay the price. There are extreme and personal costs we cannot measure – lives ruined, families torn apart and communities devastated.
“However we can measure some of the financial costs of harms, preventative measures, and law enforcement responses to serious and organised crime.”
Activities include drug supply, fraud and identity theft.
Money flows to terror
The Crime Commission received additional finances last year to investigate terrorist funding and links with organised crime. It has held 18 secret hearings and produced 79 intelligence reports on foreign fighters.
Mr Dawson believes that hundreds of millions of dollars are being redirected to terrorist organisations as a result of organised crime in Australia, particularly through drug trafficking and related ethnic gangs.
The report estimates that 70 per cent of serious crime comes from or has strong links with overseas groups. This is particularly true of the drug trade because the high price of illicit drugs in Australia make it an attractive market.
Justice Minister Andrew Keenan said the government has set up a joint taskforce with the Chinese to target syndicates importing ice into Australia from Southern China, believed to be one of the principal sources of methamphetamines.
He said the report established that foreign interests include people who finance terrorism and those recruited by foreign terrorist organisations.
“It is complex and something our agencies have been focussed on,” Mr Keenan said.
Fraudsters the biggest problem
The single biggest cost to the Australian community, at $6.3 billion, even greater than drug trafficking, comes from fraud. Organised crime targets investor share purchases, superannuation investments and the tax system.
The report states: “This directly affects targeted individuals as well as the financial, insurance and superannuation sectors. The personal costs include the harm caused to personal credit ratings, identity and privacy.”
The report also concludes that identity crime is costing $1.2 billion annually and is now among the most prevalent types of crime, with significant indirect financial impacts such as reputational damage and emotional and psychological harm.
Identity crime is “one of the most pervasive crimes in Australia due to criminal exploitation of our technology and our increased reliance on personal identity information for online services. Serious and organised crime sells stolen and false identities and identity information as an illicit commodity, and also uses identity crime to enable other criminal activity. Misuse of personal information is at the heart of identity crime,” the report said.
Crims go high tech
Cybercrime is also a fast developing criminal threat, costed at $1.1 billion annually, considered by the Crime Commission’s statistical experts as likely to be an underestimate. Malware and ransomware can cause significant disruption to individuals, businesses and government while constantly presenting new opportunities for criminals.
“While there is a direct cost to victims of cybercrime, almost everyone in the community also pays for preventive measures such as cyber-security software, which may exceed the cost of victimisation,” the report concludes.
Trades in illicit commodities, including intellectual property theft, firearm trafficking, along with illegal fishing, logging and tobacco growing and importation, are estimated to cost $1.5 billion.
Prevention costs include $4 billion for Commonwealth government agencies, $3.3 billion for federal and state law enforcement, $2.4 billion for the private security industry and $2.3 billion in the finance and insurance industries.
Because this is the first time the Crime Commission has mounted such a complex exercise, previously relying on overseas modelling to arrive at a guess of Australian costs, it has released a second report explaining the methodology. That report notes the many factors complicating the estimate, including the increasingly transnational nature of organised crime. Legitimate and illegitimate business interests merge.
Small businesses, for example, struggle to remain competitive against businesses used to launder money, for whom profitability is not an issue. With cybercrime the perpetrator can target Australians without ever setting foot in the country.