$2.3m Price On PM's Head
Mark Davis, Political Correspondent
3 June 2004
Australian Financial Review

2004 Copyright John Fairfax Holdings Limited.

A disrupted dinner could cost more than $19,000 and a bomb hoax $300,000. But the death of a prime minister in a security incident would be well over $2 million.

These are some of the costs to the community that the Australian Federal Police says are being saved by the $82.5 million spent on its intelligence-gathering and protection services for senior public officials.

Consultants called in by the AFP estimate the economic cost of the death of a high public office holder like the prime minister in a security incident in Australia would amount to $2.34 million.

The calculation which estimated the value of lost labour because of the death and the costs of a state funeral, legal investigations and insurance payouts was part of a cost-benefit analysis of the AFP's protection services for politicians, foreign dignitaries and other high office holders, which has been obtained by The Australian Financial Review under the Freedom of Information Act.

The analysis by the Centre for Independent Economics in March concludes that the $82.5 million annual cost of the AFP's protection services which include assigning police to provide close personal protection to office holders and gathering protective intelligence generates benefits of about $333 million a year.

It reveals that between July 2001 and December 2002 there were 235 cases where there had been a high risk of a security incident, it was avoided through the AFP's protection services.

CIE says 88 of these incidents involved a specific threat to a high office holder that had been avoided.

It says 72 per cent of security incidents involved relatively low-level threats, 16 per cent medium threats and 12 per cent high-level threats.

But CIE estimated that if the AFP's services had not been in place, the number of "protection incidents" would have risen by at least 5 per cent, generating about 1280 more cases a year, ranging from low-threat incidents, such as delays caused by protests, to high-threat incidents, such as violent attacks or bombings causing deaths and injuries. Cost-benefit analysis is a common technique used to evaluate government programs and services by comparing the costs of delivering the services with the economic benefits that they create for the community.

CIE's approach was to compare the actual security outcomes in recent years with outcomes that would have occurred if the AFP's protection services had not been in place.

The difference between the actual outcomes and the counterfactual case is the benefit delivered by the protection services program.

CIE then converted these benefits to a dollar figure by calculating the costs the community would bear from the increased security incidents in the absence of the AFP program.

In addition to putting the economic cost of the death of a high office holder at $2.35 million, CIE calculated that a serious injury to a high office holder would cost $370,014 and a minor injury would cost $2438.

It calculates the cost of a low-threat incident, such as a high office holder attending a dinner and being delayed for an hour by protesters, at $19,034 if the incident is not controlled by protection services.

A medium-threat incident, such as a rowdy protest causing the cancellation of such an event and minor injuries in crowd scuffles, is put at $191,051.

The price tag for a high-threat incident such as a bomb hoax requiring the evacuation and search of a building is estimated to be $305,278.

A real bomb, if defused, would cost $2.55 million. But damage from an explosion in a venue that is not evacuated is put at $71.1 million, based on the Sydney Hilton bombing in 1978.