Cigarette

At Crikey we’ve often dissected the economic modelling commissioned and disseminated in the media by industries, companies and lobby groups trying to influence public policy.

Where we’ve been remiss is in not looking at the growing tendency on the part of non-government organisations, community groups and lobbyists for the sectors like public health to do exactly the same thing.

Coming up with modelling to support your demands is a piece of cake if you’re an industry group or rentseeker. You commission an economic consultancy, tell them the result you want, and let them produce it. They plug in some assumptions, compare the result to a business-as-usual scenario, point out how disastrous it is in terms of jobs lost, even though the jobs don’t actually exist yet, and might even bring forward the value of lost GDP from decades in the future to give a lost GDP per capita figure in present day dollars, as though a particular policy will strip thousands of dollars from every Australians’ bank accounts.

Everyone from the mining industry to manufacturers to power companies do it.

It’s more difficult if you’re an NGO charged with lobbying for non-economic outcomes, or a public health outfit that wants more money or regulation for a particular problem. You can’t point to lost jobs as a direct consequence of policy. Many health problems, for example, cost governments a lot of money to treat. But that money actually employs people — doctors and nurses and other health professionals.

That’s where “social costs” come in: the costs borne by everyone else of individual decisions. And, in particular, lost productivity. That’s the new black for, particularly, the health lobby: show that your particular issue causes massive lost productivity that is a substantial cost to the economy. That’s the way to the hearts of hard-nosed decision-makers: show them the economic benefits of dealing with a particular issue.

If you can throw in other social costs, like the cost of the criminal justice system, even better. And with health problens there also the cost of “lost wellbeing”, which is measurable but not an economic cost unless it affects productivity or consumption.

Governments get in on this act as well. The cost to society of tobacco, alcohol and illicit drug use was $56 billion per year in 2004-05, then-Health Minister Nicola Roxon declared in 2008 when she launched a Preventive Health Taskforce that eventually became the Australian National Preventive Health Agency. The figures are now gospel for the public health lobby, although the social cost of alcohol has been strongly challenged.

Now, this isn’t to say that drug use isn’t an issue that affects the whole community. Indeed, there are many critical issues that have been given the “social cost” treatment. Domestic violence, for example, has been calculated by Access Economics for FAHCSIA to cost the economy $13.6 billion a year, quite apart from the human toll. This isn’t to belittle the issues in which the social cost approach has been employed.

But when you start adding them up, you very rapidly get the impression it’s amazing the Australian economy operates at all.

For example, late last year, Access Economics (or Deloitte Access as they now style themselves) did modelling for eating disorder group the Butterfly Foundation. Access Economics found such disorders cost the economy nearly $70 billion a year. And in 2008, Access modelled the cost of obesity for Diabetes Australia, finding it cost $3.6 billion a year in lost productivity as part of an overall cost of $58 billion a year, which included “lost wellbeing”.

And a 2009 report by a dementia organisation suggested that by the 2060s, Alzheimer’s Disease would cost $83 billion a year. Who modelled that? Why, step forward Access Economics. This firm not merely dominates the field when it comes to modelling for rentseekers and opportunistic industries, but for NGOs and the health lobby as well.

Here’s our full list of examples:

By Crikey’s count, various health and social issues are claimed to cost us over $260 billion, in a $1.5 trillion economy. And this is only a selection. A recent Guardian article suggested there was a massive economic cost caused by masculinity – imagine the cost to society of all the problems men cause? Not that women get away scot-free — being young and female is also a problem as far as the public health lobby goes, given girls just want to have fun.

Still, in a contested policy and funding market place, you have to sell your issue, no matter how objectively important it really is, as effectively as possible.