This report illustrates the substantial direct costs governments incur by failing to address the root causes of social and environmental issues. 

Known as ‘failure demand’, these costs arise when delayed or insufficient attempts to address harms lead to an even greater demand for government services. In short, failure to properly plan for and address harms now, leads to higher costs down the track. This shows up significantly in areas like acute healthcare, criminal justice, support payments and disaster response.

The report uses three examples – childhood poverty, preventable disease and chemical contamination – to illustrate the extent of avoidable spending, and make the fiscal case for tackling issues as early as possible. Doing so would not only be good for government budgets, it could have a major impact on people’s quality of life and the health of the environment.

The report recommends embedding avoidable cost analysis – the practice of using evidence to estimate future costs from preventable issues – into government budgets and policy design, to ensure the true costs and savings of policies are accurately reflected. Doing so would incentivise investment in preventative initiatives, that sometimes have high upfront costs but can save money over their lifespan. To do this, the report recommends establishing an Avoidable Costs Unit within the Commonwealth Treasury and within each state and territory treasury.