What if our government really wanted to save money? As well as going after $6.7 billion in its omnibus savings bill, it could go after the billions more it costs to run our immigration detention centres: $9.2 billion in the past three years, $3.9 billion to $5.5 billion in the next four, according to the most complete accounting yet of the costs normally hidden in inaccessible parts of the the budget.
It comes as an Audit Office report identifies the cost per offshore detainee: a gobsmacking $573,100 per year.
Detention's mind-boggling cost
It costs tax-payers more than half-a-million dollars for each asylum seeker detained on Manus Island and Nauru, a new report concludes.
For that price – $1570 per day – we could put them up in a Hyatt and pay them the pension 15 times over.
It costs less than half that, $200,000 a year, to house a typical onshore prisoner; a mere fraction of that, $72,000 including super, to pay a typical full-time worker, and just $20,700 a year to pay a full pensioner.
Ninety-nine per cent of the population don't come anywhere near $573,100 a year in income or cost. The census stops asking when income sails past $156,000.
But the comparison with wages isn't strictly valid. It understates the outrageousness of the $573,100 price tag. The $573,100 isn't being paid in return for a detainee's labour, in return for a contribution to society, as are wages. It is being paid to prevent the detainee contributing to society. It is what economists call a deadweight loss. We get nothing in return for it, apart from less of what we could have had.
And perhaps because it is not meant to make economic sense (and perhaps because the Department of Immigration and Border Protection has operated as something of a law unto itself), it hasn't even made financial sense.
The Audit Office says the department breached public service guidelines by not conducting proper tenders for the contracts to provide services to Manus Island and Nauru, at times falsely claiming it faced urgent and unforeseen circumstances.
"The available record does not indicate that urgent or unforeseen circumstances existed," the Audit Office says. "The record suggests that the department first selected the provider and then commenced a process to determine the exact nature, scope and price of the services to be delivered."
The department's approach to selecting one provider to service both centres from 2014 "removed competition from the outset". There is no record of staff completing conflict-of-interest declarations, no record of the checks that would have discovered that a director of one of the subcontractors had faced bribery charges and was later acquitted.
After being selected without a proper tender, the new provider extracted an extra $1.1 billion from Australian taxpayers, which was agreed to without going back to the contractors who had just been sacked. The price per detainee shot up from $201,000 to $573,100.
Astonishingly, the report says the department didn't tell its minister at the time, Scott Morrison, that the deal required the Commonwealth to pay a "significant premium over and above the historical costs". Nor did it tell him the price per head.
For that price - $1570 per day - we could put them up in the Hyatt and pay them the pension 15 times over.
The department was not only shielded from public accountability, it also managed to hide things from its minister.
UNICEF and Save the Children get the $9.2 billion figure in their report At What Cost? from the numbers scattered around various parts of the official record. They say there are less specific other costs they haven't included, among them regular independent and senate inquiries, the defence of High Court challenges, and compensation for detention centre employees who have suffered as a result of what they have been exposed to.
Intriguingly, the cost of boat turnbacks, the part of the government's policy that has probably been the most effective in deterring asylum seekers, is tiny by comparison: just $295 million over three years, compared with $9.2 billion for continuing to hold asylum seekers in detention.
And there's a whole other set of costs, which At What Cost wrongly labels non-economic, hidden from the public by gag clauses: self-harm, suicide attempts and mental deterioration, especially among children. Economists would say they destroy human capital. Adam Smith, the father of modern economics, titled his magnum opus An Inquiry into the Nature and Causes of the Wealth of Nations because he had discovered that that's what gave nations wealth – not gold or notes or coins, but human beings who could provide goods and services.
Deliberately or carelessly deprecating human capital is perhaps the worst crime against humanity. The Commonwealth Treasury thinks so. Chief among the goals in its wellbeing framework is giving people "substantive freedom to lead a life they have reason to value".
It has fallen to Malcolm Turnbull to end a system that has passed its use-by date. Even criminals aren't locked up indefinitely on the pretence that their cases are being "processed". The decision of Papua New Guinea to close the Manus Island detention centre makes a decision more urgent. On Friday he meets the president of the Human Rights Commission, Gillian Triggs, to discuss the way forward. She says we should move from deterrence to prevention. It would cost so much less.
Peter Martin is economics editor of The Age
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