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Cost benefit analysis shows drug law reform stacks up

Extra investment by government in drug treatment, education and harm reduction will more than pay for itself, an independent economic cost benefit analysis released today shows.
Shamubeel Eaqub from Sense Partners, who prepared the report, found that the benefits of a package of drug law reform measures will outweight the costs.

The analysis looked at three interrelated drug policy reform proposals of the Drug Foundation. Both decriminalisation of drugs and introduction of a strictly regulated market for cannabis are fiscally positive. Shifting away from a punitive response to drug use would significantly reduce costs in the criminal justice system.

Each year the reform package would result in the following:
1. At least $225 million net social benefit from an extra $150 investment in addiction treatment, drug education and harm reduction interventions
2. Between $34m - $83 million net social benefit from adopting the Law Commission’s 2011 recommendation to replace the Misuse of Drugs Act 1975 with a health-based drug law.
3. An estimated $185 - $240 million new tax revenue from legal regulation of cannabis, with an additional $6-$13 million savings to the justice sector. New tax revenue would more than fund desperately needed additional addiction treatment, drug education and harm reduction services.
The report states the benefits of the proposed reforms “will outweigh the additional costs of increasing drug harm education, prevention, harm reduction and treatment services that the Foundation argues should go hand in hand with a reform of drug legislation.”

“We’ve always argued that treating drugs as a health issue rather than a criminal justice issue is the right thing to do to reduce drug harm and provide help to people who need it. This report adds a solid economic case for reform of New Zealand’s drug policy and legislation,” said Ross Bell, Executive Director, NZ Drug Foundation.

“This report comes at a critical time as the government conducts major reviews into mental health and addiction services, the education sector, and the justice system, as well as its plans for the 2019 ‘wellbeing budget’.”

The report, Estimating the Impact of Drug Policy Options: Moving from a criminal to health-based approach,concludes that “Based on the international evidence, all proposals here, by themselves or in combination, will reduce harm from current levels. These benefits outweigh costs.”

“Putting money into health is a more effective use of taxpayer money than continuing to pour millions into punitive drug policy,” said the report’s author Shamubeel Eaqub, from Sense Partners.

“Offering help, as early as possible, is far more effective and less costly than investi¬ng in courts and prisons,” Mr Eaqub said.

The cost-benefit report takes a conservative analysis of the potential savings, but also suggests benefits could be substantially higher when taking account of factors such as lost social and economic opportunities for individuals who receive a conviction for a minor drug offence, and pain, suffering and distress experienced by families.

“There is potential for some pretty big numbers, but even at the most conservative case, the proposed drug law reform stacks up,” Mr Eaqub said.

“The prime minister, and the justice and health ministers, have recently spoken favourably in support of health responses to drug problems. It’s time for them to put money where their mouths are and commit significant investment into the health and education sector in the 2019 budget.

“The costs of our outdated drug law and underinvestment in health support hurt regular New Zealanders every day. As this report underlines, there are sound economic grounds for the government to change the way we address drug issues. The sooner we get on with drug reform, the sooner we can begin turning peoples’ lives around,” Mr Bell said.

The report - Estimating the Impact of Drug Policy Options: Moving from a criminal to health-based approach –was conducted by Sense Partners, an economics consultancy, and commissioned by the NZ Drug Foundation, the NZ Needle Exchange Programme, and the Matua Raki addiction workforce development programme within Te Pou o te Whakaaro Nui.

Report download: nzdrug.org/economic-report


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