The Cost of Addiction

on wood table at party with alcohol and drugs or heroin, pills, gambling.

A joint report released in November 2022 between KPMG and Rethink Addiction has revealed the cost of addiction in Australia was an estimated $80.3 billion in 2021. In addition to this the value of lost life was reported at a staggering $173.8 billion. With one in four Australians struggling with alcohol, other drugs, or gambling in their lifetime, and one in ten currently smoking tobacco daily, it makes it one of the highest rated addiction health burdens in the world.

KPMG Mental Health Advisory Lead, Andrew Dempster said, “Analysing the cost of addiction and the value of lost life in Australia provides valuable insights into the breadth, depth, and nature of the impacts of addiction on the Australian economy and the lives of Australians.” To put it in perspective, the cost to the economy due to addiction is similar to the government’s largest spending program JobKeeper, which cost $90 billion.

The cost breakdown:


  • Tobacco was the highest at 44% or $35.8 billion
  • Alcohol was second highest at 28% or $22.6 billion
  • Prescription and illicit drugs recorded 16% or $12.9 billion
  • Gambling was 13% or $10.7 billion

Australia has been an international leader in reducing tobacco consumption, however smoking remains the leading cause of preventable death and disease. Alcohol and tobacco contribute to more than five times the burden of all disease in Australia than all illicit drugs combined. Almost 1.4 million Australians are impacted by gambling. Harm from gambling extends beyond financial losses to include adverse effects on work, education, and relationships, psychological harm and, tragically suicide.

Many individuals can experience more than one addiction due to the complex relationship between mental health and addiction which may predispose individuals to use drugs as as a coping strategy, while others may find that drug use triggers their first symptoms of mental illness.

Rethink Addiction campaign spokesperson, Professor Dan Lubman said, “We know that for every dollar spent on addiction treatment we save up to $7, and that for every dollar spent on harm reduction we save up to $27. Yet we aren’t investing in treatment and harm reduction anywhere near as much as we should. The Rethink Addiction campaign was established to help reduce stigma and, in doing so, achieve historic policy and funding reform in Australia to ensure roughly half a million Australians can access quality addiction treatment and support services when they need it, for as long as they need it.”

Delayed help-seeking and treatment delays significantly increase the social, health, and economic costs of addiction. Roughly half a million people can not access the treatment they need due to the impact of stigma, limited resources and excessive wait times in the public system. The report suggests that responding to addiction should be a national priority that it should receive as much attention as other highly prevalent health conditions.

The report made the following suggestions as to the way forward:

Investing in prevention, early intervention, treatment, and harm reduction

Investing in treatment alone is not enough to reduce the harms of alcohol, tobacco, other drugs, and gambling. Efforts must made to improve prevention, early intervention, and harm reduction, which have significant social, health and economic benefits.

People are more likely to benefit from treatment when they still have jobs, family, and greater ties to mainstream society. Waiting until these vital supports are no longer available only hinders recovery. The earlier people seek treatment, the more likely they are to have a rapid recovery and better health outcomes

Invest in evidence-based reform

 Evidence-based reform can reduce the cost of addiction in Australia by supporting effective prevention, early intervention, treatment and harm reduction.  The risk of relapse for people living with addiction can be exacerbated by fragmented treatment, characterised by a lack of ongoing monitoring and coordination between different services, and insufficient linkage of specialist addiction treatment with mental health and primary care services. Service gaps impact isolated rural and regional communities the hardest.

Tackle stigma to promote help-seeking

The effects of stigma are damaging and can delay help-seeking by years, even decades. In Australia, the median time to first treatment for someone experiencing an addiction to alcohol is 18 years. Stigma is also present in Australian healthcare settings. Individuals who internalise negative stereotypes can have increased feelings of shame and helplessness, which can lead to the belief that long-term recovery is impossible. In order to ensure real change, stigma must be addressed to promote help-seeking and ensure that treatment and responses to addiction are effective.

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