5 What Price Prohibition? An Estimate of the Costs of Australian Drug Policy

The prohibition against Australians using illicit drugs is ineffective, but still imposes a high burden on government revenues and indirectly contributes (because of its ineffectiveness) to additional costs paid by Australian households. These are the claims of those who argue for a change in policy in Australia towards illicit drugs and their use. How much does present policy cost the Australian taxpayer? To what extent does the ineffectiveness of the law in preventing illicit drug use indirectly add to costs paid by Australian households? We argue that the Cleeland Report underestimates the true costs of the law enforcement against illicit drug use by a factor of at least two. We argue that a large proportion of these costs would be eliminated if the drugs were made available, at cost, to regulated drug users. We estimate a total annual cost to Australia of $776 million, as well as forced transfers of $656 million (in 1987–88). Keywords