A sudden reduction in corporate profits has blown a $12 billion hole in the federal budget. This development should spark a debate within and outside government about how we deal with illicit drugs in this country because it’s one of the areas where we aren’t getting value for our money.

In 2002-03 commonwealth, state and territory governments spent $3.2 billion preventing and responding to illicit drugs.

Governments allocated 75% of this money to law enforcement (customs, police, courts and prisons), 10% to prevention, 7% to drug treatment, 5% to health care for drug users and 1% to harm reduction. The final 2% was spent on miscellaneous items.

Taxpayers should consider what value we obtain from this not inconsiderable expenditure in response to illicit drugs.

The $2.4 billion expended in 2002-03 on drug law enforcement brought a miserable return to taxpayers. Former Australian federal police commissioner, Mick Palmer said in 2012, “Australian police are now better trained, generally better equipped and resourced and more operationally effective than at any time in our history, but, on any objective assessment, policing of the illicit drug market has had only marginal impact on the profitability of the drug trade or the availability of illicit drugs.”

While in the last half-century Australia has allocated substantial resources to try and limit the supply of drugs, drug-related deaths, disease, crime, corruption, violence and threats to our national security have all soared.

The rate of heroin overdose deaths increased 55-fold between 1964 and 1997. Opium production in Burma, the source of almost all the heroin reaching Australia, has increased for the sixth year in a row. Opioid overdose deaths in Australia have increased from 360 in 2007, to 500 in 2008, 612 in 2009 and 705 in 2010.

A 2012 survey of Australian drug users reported that 92% found hydroponic cannabis was easy or very easy to obtain while 87% said the same was true for heroin.

According to reports by the United Nations and the European Commission, the wholesale and retail price of heroin and cocaine has fallen about 80% in the last quarter century. Global opium production increased from about 1,000 tonnes in 1980 to 9,000 tonnes in 2007.

In Australia, supporters of a “war on drugs” approach vigorously opposed pragmatic policies (such as needle syringe programs) needed to control the spread of HIV among people who inject drugs. If common sense had not triumphed over ideology in the 1980s, Australia would now be dealing with a much larger and more expensive HIV epidemic.

Property crime in Australia has generally followed trends in heroin use, increasing steadily as heroin consumption soared in the three decades leading up to the new millennium. And then declining in the new century as heroin production in Burma decreased by about 80% in the decade following 1996.

Australia has largely been spared the problems of violence associated with drug markets. But the violent deaths of 36 methamphetamine dealers in Melbourne between 1998 and 2010 should remind us that violence is commonly associated with drug markets in other parts of the world. An estimated 60,000 violent deaths occurred in Mexico after the president declared a “war on drugs” in December 2006.

Corruption is an inevitable cost of drug prohibition. At least three of the 36 deaths of drug traffickers in Melbourne seem to have involved high-level police corruption. In 1987, Barry Moyse, former head of the South Australia drug squad received a 27-year prison sentence for selling drugs.

In 2011, Mark Standen, formerly assistant director of the NSW Crime Commission, received a 22-year sentence for his involvement in a $300 million drug operation. HSBC, one of the largest banks in the world, was fined $US 1.9 billion by US authorities in 2012 for laundering rivers of money from Mexican and Colombian drug traffickers.

Drug prohibition has helped enrich the Taliban and fund the weapons used against Australian soldiers in Afghanistan. About 70% of the opium produced in Afghanistan comes from two southern provinces controlled by the Taliban.

Despite minimal evidence of effectiveness, and abundant evidence of serious collateral damage, gold bars continue to rain down on drug law enforcement. It’s just the opposite for drug treatment and harm reduction where there is substantial evidence of benefit and minimal evidence of serious collateral damage. Lousy policy is still good politics. But treasurers may now want to change that.

In contrast to the money spent on law enforcment, the $224 million spent in 2002-03 on drug treatment was an excellent investment. Methadone maintenance treatment saves between $4 and $7 for every dollar spent.

Methadone and buprenorphine reduce overdose deaths, new HIV infections and crime, as well as improving social functioning. Yet, in many parts of the country, drug users now face long waiting lists for treatment.

The $32 million spent on harm reduction in 2002-03 was also a great investment. Needle syringe programs save $4 in health-care costs and $27 overall for every dollar spent.

Instead of governments spending large amounts of taxpayers’ money to make a bad problem worse, they should shift spending to get a better return on our investment while reducing deaths, disease, crime, corruption, violence and threats to our national security. This approach would also help them balance their budgets.