1. Regional Rollout of Opal
Fuel in Central Australia - Cost Benefit
Study Findings
The Opal Alliance - March 2006
2. The Passion
“Now listen, I know some of you have heard
about petrol sniffing, but where I come from
every single family has a family member
affected by petrol sniffing, and we now have
a terrible problem on our hands. When our
young people sniff petrol they develop all
sorts of health problems, such as mental
health problems, heart and lung problems
and acquired brain injuries. Petrol sniffers
sniff all night and do not rest and this affects
the whole family.
Anangu families are exhausted. These petrol sniffers are our own flesh and blood, yet
we have lost them all to petrol... Of course we know that some petrol sniffers cannot be
helped. They will live their lives in wheelchairs with acquired brain injuries. But for the
new recruits…well we are hoping that with Opal there will be no new recruits to petrol
sniffing.”
Janet Inyika, NPY Women’s Council staff member, former Executive member and resident of Amata
community SA, launching Opal fuel with Health Minister Tony Abbott, Adelaide, February 2005.
Translation by Linda Rive, NPY Women’s Council.
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3. The Study
Study commissioned by the Opal Alliance:
NPY Women’s Council
CAYLUS
The GPT Group
Undertaken by Australia’s leading economic consultancy, Access
Economics
Independent third party assessment, globally accepted methodology
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4. Background
The Opal Alliance identified a comprehensive Regional Rollout as the
most logical way to optimise the benefits of Opal
Our advocacy efforts were concentrated on a regional approach supported
by Federal and State Government initiatives
We found a willingness to use Opal but resistance to a Regional Rollout
on the grounds of cost and practicality
But there was an information gap on both the cost and benefit of Opal - a
factor critical to forming policy on Opal
The Access Economics Study aims to fill these gaps
Opal fuel alone is not the complete solution but it is a great tool to help
reduce sniffing
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6. Study Methodology
Benefit of lower petrol sniffing costs - Cost of Opal rollout = Net
benefit
Petrol Sniffing costs:
• Loss of life
• Health costs
• Crime
• Justice system costs
• Rehabilitation costs etc
Rollout costs:
• Opal subsidy (@ 27c per litre)
• Supporting programs
– Employment
– Education
– Intervention
– Policing etc
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7. Key Findings - Costs of Sniffing
Total cost of petrol sniffing is $78.9m in 2005, comprising:
• $38.1m (49%) was the net cost of the disease burden
• $16.2m (20%) was the crime and justice system impact
• $8.3m (11%) was the productivity loss
• $12m(15%) was the health, long term care and rehabilitation impacts
• $2.3m (3%) was informal care provided by families and significant others
• $1.9m (2%) was deadweight losses from raising additional taxation revenue to fund
transfers
After allowance for less than 100% effectiveness of Opal, the benefit of
cost reduction is reduced to $53.7m
On a scenario basis the Cost range (expressed as a benefit) is:
Prevalence Total Net Wellbeing Total Financial
Scenario Benefit ($m) Benefit ($m) Benefit* ($m)
Best (100%) 73.5 38.1 35.3
Base (75%) 53.7 28.6 25.1
Worse (50%) 34.9 19.1 15.8
* Note: Total Benefit minus Net Wellbeing Benefit equals Total Financial Benefit
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8. Key Findings - Costs of Rollout
The total costs of the Rollout is $26.6m comprising the fuel subsidy and
supporting strategies
Fuel subsidy cost $15.8m
• Fuel subsidy based on 27 c per litre (was 33c)
• Fuel usage is considered conservative at 58.5m litres
Usage Scenario Litres (million) Cost ($m)
High (worst) case 73.1 19.7
Base case 58.5 15.8
Low (best) case 43.9 11.8
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9. Key Findings - Costs of Rollout (Cont’d)
The cost of a package of strategies to address petrol sniffing is estimated to
be $10.8 million per annum.
• shared by the NT, SA, WA and Commonwealth Governments.
• well-implemented supplementary demand reduction policies are essential to accompany supply
substitution:
– Awareness and harm minimisation health strategies;
– Youth and recreational programs;
– Employment, education and training services;
– Preventive and rehabilitative outstation programs;
– Deterrence (legal sanctions, police presence); and
– Community action programs
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10. Key Findings - Net Total Cost Benefit
The results of the cost benefit (including healthy life gained) show a
$27.1m net gain ($53.7 costs - $26.6m)
This means there would be a net decrease in costs across the Rollout
Area and a 75% reduction in sniffing in the base case
TOTAL COST BENEFIT ANALYSIS ($ MILLION)
Net
Benefits
Costs Best
Base
Worst
10 -40 -20 - 20 40 60 80 Opal
Alliance
11. Key Findings - Net Financial Cost Benefit
The results of the cost benefit (excluding healthy life gained) show a
$1.5m net loss ($25.1 costs - $26.6m)
$1.5m is a small cost to save lives and reduce petrol sniffing (140 Quality
Adjusted Life Years are gained)
TOTAL COST BENEFIT ANALYSIS ($ MILLION)
Net
Benefits
Best
Costs
Base
Worst
11 -40 -20 - 20 40 Opal
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