A groundbreaking Aboriginal community-led justice reinvestment program to address the underlying causes of crime delivered a saving of almost $3m to the far western New South Wales town of Bourke last year.

A KMPG report has also found that the initiative could deliver an additional economic impact of $7m over the next five years.

Maranguka justice reinvestment is based on the idea that savings can be made through redirecting funding spent on policing and punishment to projects that help prevent offending behaviour.

KPMG calculated the savings based on the reduced number of police hours taken up with responding to domestic violence incidents and other serious offences, the reduced daily cost of imprisonment, as well as fewer bail breaches, fines and other penalties in the region. It also accounted for the reduced number of Centrelink crisis payments, fewer days absent from work and school, and reduced court costs for police and defendants.

“Maranguka is a recognition that we in Australia continue to spend far too much on the end product rather than deal with the upfront,” the NSW health minister, Brad Hazzard, said in launching the report.

“I don’t share the views of some of my colleagues that imposing views from the top will ever actually be the solution,” he said.

“The solution has to be empowerment of those who hold their futures in their own hands. This is a local community exercise.

“Each community knows they have their own set of factors. There isn’t one answer for everybody. But the empowerment of locals to drive their own changes is something that governments of either political persuasion can support.”

Of the $3.1m economic impact in 2017, KPMG said two-thirds were savings in the justice system and one-third was the broader economic benefit to the region.

The report found:

a 23% reduction in police-recorded incidence of domestic violence and comparable drops in rates of reoffending;

a 31% increase in year 12 student retention rates and a 38% reduction in charges across the top five juvenile offence categories;

a 42% reduction in days spent in custody for adults.

“There is no silver bullet here. The challenge is complex and ongoing,” the chair of Just Reinvest NSW, Sarah Hopkins, said.

“What we know is that the community is doing its part. After decades of feeling let down, the community is starting to see the benefits of being part of the decision-making in Bourke,” she said. “There is a resilience around a long-term change process.”