Regional Rollout of OpalFuel in Central Australia - Cost Benefit           Study Findings  The Opal Alliance - March 2006
The Passion“Now listen, I know some of you have heardabout petrol sniffing, but where I come fromevery single family has a...
The Study    Study commissioned by the Opal Alliance:                          NPY Women’s Council                        ...
Background    The Opal Alliance identified a comprehensive Regional Rollout as the    most logical way to optimise the ben...
Rollout Area Definition    Why this area?    How it was established?5                              Opal                   ...
Study MethodologyBenefit of lower petrol sniffing costs - Cost of Opal rollout = Netbenefit    Petrol Sniffing costs:     ...
Key Findings - Costs of Sniffing    Total cost of petrol sniffing is $78.9m in 2005, comprising:     •   $38.1m (49%) was ...
Key Findings - Costs of Rollout    The total costs of the Rollout is $26.6m comprising the fuel subsidy and    supporting ...
Key Findings - Costs of Rollout (Cont’d)    The cost of a package of strategies to address petrol sniffing is estimated to...
Key Findings - Net Total Cost Benefit     The results of the cost benefit (including healthy life gained) show a     $27.1...
Key Findings - Net Financial Cost Benefit     The results of the cost benefit (excluding healthy life gained) show a     $...
12    Opal     Alliance
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NPYWC Opal Fuel Analysis Presentation

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NPYWC Opal Fuel Analysis Presentation

  1. 1. Regional Rollout of OpalFuel in Central Australia - Cost Benefit Study Findings The Opal Alliance - March 2006
  2. 2. The Passion“Now listen, I know some of you have heardabout petrol sniffing, but where I come fromevery single family has a family memberaffected by petrol sniffing, and we now havea terrible problem on our hands. When ouryoung people sniff petrol they develop allsorts of health problems, such as mentalhealth problems, heart and lung problemsand acquired brain injuries. Petrol snifferssniff all night and do not rest and this affectsthe whole family.Anangu families are exhausted. These petrol sniffers are our own flesh and blood, yetwe have lost them all to petrol... Of course we know that some petrol sniffers cannot behelped. They will live their lives in wheelchairs with acquired brain injuries. But for thenew recruits…well we are hoping that with Opal there will be no new recruits to petrolsniffing.” 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.2 Opal Alliance
  3. 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 methodology3 Opal Alliance
  4. 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 sniffing4 Opal Alliance
  5. 5. Rollout Area Definition Why this area? How it was established?5 Opal Alliance
  6. 6. Study MethodologyBenefit of lower petrol sniffing costs - Cost of Opal rollout = Netbenefit 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 etc6 Opal Alliance
  7. 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 Benefit7 Opal Alliance
  8. 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 11.88 Opal Alliance
  9. 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 programs9 Opal Alliance
  10. 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 Worst10 -40 -20 - 20 40 60 80 Opal Alliance
  11. 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 Worst11 -40 -20 - 20 40 Opal Alliance
  12. 12. 12 Opal Alliance

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