2  Purpose

The broad purpose of this study is to estimate the full cost, in net present value (NPV) terms, to society of all criminal acts committed in New Zealand during 2003/04. This includes the cost of crime prevention activity (which would not be necessary if there were no crime).

Specific goals of the study are to:

• estimate the costs of each type of criminal act, to inform discussion on how best to target interventions to reduce crime, and to estimate the social and economic benefits of a given reduction in crime;
• estimate the total annual cost of criminal acts in New Zealand, both in absolute terms and as a percentage of GDP;
• compare the estimate for New Zealand in 2003/04 with estimates in other jurisdictions, to inform discussion on the relative significance of crime in New Zealand;
• contribute to work in the Ministry of Justice and elsewhere on estimating New Zealand’s cost of criminal acts;
• identify any important data gaps that would need to be filled to develop more accurate estimates in the future.

This analysis offers one approach to consider when choosing between alternative policy choices in a world where there are inevitably financial and other constraints. However, there are a range of reasons to be cautious about relying exclusively on such an approach:

• assumptions are required to derive the cost estimates for each category of crime, particularly around the multipliers used to convert data on recorded crime to actual crime levels, and there is a correspondingly wide range of plausible values around each point estimate;
• estimating benefits to society is difficult and similarly relies on assumptions that can materially affect the results;
• while information about relative costs and benefits of different crime categories can provide some guidance on prioritising prevention and enforcement effort, other considerations are important – in particular, how policies are implemented and the likelihood of success in reducing the incidence of the targeted category of crime;
• costs of policies are also uncertain, particularly where there are risks that significant behavioural changes could result, and that these changes could lead to unintended effects.

Nevertheless, other approaches face similar problems. Perhaps the best that can be done is to avoid relying on a single approach to guide policy and instead use a range of techniques to inform decisions that are made in the light of all the analysis. Other countries face similar issues and are beginning to utilise cost of crime analysis as one input to their policy-making framework.

For these reasons we suggest that readers exercise appropriate caution in relying on our estimates when advancing particular policy options.