Prisons dilemma: an economist's perspective on incarceration - Speech



Rosie Anne Fulton is an Indigenous woman from Alice Springs who suffers Foetal Alcohol Spectrum Disorder. She has endured a lifetime of abuse and disadvantage. Far from attracting help and support from government agencies, her problems landed her in a Kalgoorlie prison.

After being caught driving without a licence and whilst intoxicated in Western Australia, Rosie Anne was incarcerated under that state’s mental impairment laws. She was detained indefinitely without any conviction and ended up serving 22 months in custody before being released thanks to the advocacy of the Aboriginal Disability Justice Campaign.

Marlon Noble’s situation is no less shocking. Charged with sexual assault when he was 19, the court quickly found him to be mentally impaired. Like Rosie Anne, it was decided Marlon was unfit to stand trial and he was instead held in custody. The Department of Public Prosecutions eventually withdrew Marlon’s charges after finding that there was little evidence to support the original allegations that had landed him behind bars. Marlon was released, but not before languishing in prison for a decade without a conviction. Marlon said of his experience: “I don’t like it in jail. Scary place. You got no families in there, no brothers or sisters to talk to. You’re on your own.”

How did Australia become a place where locking people up for long stretches is the default setting in our justice system? And how can we, in good conscience, allow this to continue as the incarceration rate skyrockets? 

Economists would be familiar with the famous thought experiment in game theory known as the ‘prisoners’ dilemma’. The nub of it is that two people, by virtue of being unable to communicate, end up making a decision that is bad for both of them.

I want to argue today that Australia’s justice policies suffer from what we might call a ‘prisons dilemma’. For want of a serious conversation about what works and what doesn’t, we’ve become stuck in a situation where we spend huge amounts on jails yet end up perpetuating cycles of disadvantage, poverty and crime. As a result, our community suffers, and so do the individuals who are incarcerated.

To turn that situation around, we need to lower Australia’s incarceration rates. Achieving that will demand a recipe of responses rather than any single solution – in my time with you today I’ll talk a bit about what I believe our priority responses should be. But to get Australia’s imprisonment rates down, and keep them down, we also need to adopt a rigorous, evidence-based mindset which evaluates all current and future policies against this objective. We already know that a lot of what we do in the justice system doesn’t ‘work’ if this is our goal, yet we continue with existing policies anyway. Putting the question: what works? at the centre of justice policymaking would be a big step forward for Australia.      

Before I go about prescribing policy, let’s take a step back. I first want to paint a picture of the trends in our incarceration rates, and then look at what is behind those trends. This will help us better understand the ‘prisons dilemma’ that we face in Australia today.

What has happened to incarceration rates?

It is a paradox that most crime rates have been falling over the past decade, yet we are imprisoning more people than at any time since Australia was a prison colony.

Over the twenty years from 1994 to 2014, the murder rate per 100,000 people has fallen from 1.6 to 1.0. The kidnapping rate is down from 3.1 to 2.3.  Armed robbery down from 28 to 20. Motor vehicle theft from 671 to 213. Of the major crime categories, only sexual assault – the crime which has undergone the largest transformation in people’s willingness to report – has risen, from 74 to 88 per 100,000.

So in the course of the past twenty years, murder, armed robbery and kidnapping are down by one-third, while car stealing is down by two-thirds. These statistics suggest that today’s society is getting safer. But our prison population numbers tell another story.

Australia may have started out as a nation of prisoners, but for much of the 20th century we had far lower rates of imprisonment than today. In 1905 we were putting people in jail at a rate of 110 crims per 100,000 Australians, but this dropped to a low of 52 per 100,000 people in 1920. The rate began to climb throughout the 1990s, but it was not until 1998 that we hit 100 in 100,000 people again – the kind of levels seen in 1905.

Since then, things have only gotten worse. In mid-2014 the number of Australians behind bars hit 33,791. That equates to more than 185 prisoners per 100,000 adult Australians – the highest rate of imprisonment since before World War I.[1] This is one-third higher than Canada, which currently imprisons people at a rate of 118 per 100,000. Fortunately though, it is still well below America’s shockingly high figure of almost 700 prisoners per 100,000 adults.[2] 

Evidently, we have a problem with increasing incarceration. But what are the contours of this problem? Which states and territories are most responsible for driving it? And which demographics are over-represented?

Drilling down from the national statistics to a state level yields interesting results. Amongst other things, there is a huge disparity in how frequently people are sent to jail in different parts of the country. For example, the ACT imprisons people at a rate of 130 per 100,000 head of population, while the Northern Territory has the highest rate at an appalling 858 per 100,000. Where Western Australia recorded the next highest incarceration rate of 265 per 100,000, Queensland, South Australia and Victoria all recorded rates below 190.

Although the number of people being imprisoned has changed dramatically in recent decades, ANU criminologist Adam Graycar points out that some things have stayed very much the same: “Many of our prison population in 1900 were incarcerated principally as a result of their mental state…and in 2000 this situation has changed very little. In 1900 young males contributed significantly to criminal activities, and at the end of the century this continues to be the case.”[3]

For Australian men aged in their early 20s, the imprisonment rate is 554 per 100,000 people. For men in their early 30s, it is 633 per 100,000.[4] That compares with just 39 per 100,000 for 20-something women and 57 for women in their 30s.

Then there’s Indigenous incarceration rates, which continue to be nothing less than a national disgrace. When the Royal Commission into Aboriginal deaths in custody reported in 1991, there was widespread shock about the level of Indigenous incarceration in Australia, at 1739 prisoners per 100,000 Indigenous adults. Yet over the next two decades the Indigenous incarceration rate increased even further. By mid-2014, 2174.5 out of every 100,000 Indigenous adults were behind bars; in Western Australia, where the rate is highest, it is 3663.5 per 100, 000 adults.[5] Even adjusting for the fact that Indigenous people tend to be younger, they are still thirteen times more likely to be in jail than non-Indigenous people.

A significant proportion of prison inmates have a diagnosed mental illness. Some studies have found that up to one in three people taken into police custody may be receiving psychiatric treatment at the time.[6] The rates of mental illness are even higher among indigenous prisoners. Recent research in Victoria revealed that 72 per cent of male Aboriginal prisoners and 92 per cent of female Aboriginal prisoners met the criteria for a diagnosis of a major mental illness.[7] Rosie Anne Fulton and Marlon Noble’s stories are but two of far too many real-life tragedies encompassed by these statistics.

There’s one final set of figures we need to take into account before moving on to a discussion of what we can do about all this. That’s the data on recidivism. One might be able to make the case that imprisoning so many people is the right thing to do, if there was evidence this deterred them from a life of crime in future. But as you’re no doubt aware, the reality is much the opposite. 

The Australian Institute of Criminology tells us that two in every three adult prisoners have previously served time in jail. About one in four will be reconvicted within three months of being released from prison, and up to 41 percent of prisoners will be back behind bars within two years of being released.[8]

For juvenile offenders, approximately half have spent time in some kind of incarceration on at least one prior occasion. One in two will be reconvicted within six months of being released. Going to jail early sets these young people down a path that is very difficult to turn back from as they grow up. 

We’re familiar with the social costs of re-offending, but what about the economic costs? According to the Productivity Commission, Australia spent over $3.3 billion on corrective services in 2013-14 alone. Each prisoner costs the taxpayer nearly $300 per day – about the price of a nice hotel room in the CBD. The amount we spend on locking people up has been growing at an average rate of 2.3 per cent a year since 2009 – that’s almost double the rate of growth in spending on student assistance schemes like Youth Allowance and Austudy over the same period.[9]

Based on all this data, there are clearly ethical, social and economic reasons why we should be working to halt the rise of Australian incarceration rates and get the trend going the other way again.

Why are incarceration rates going up?

There are three factors which I believe have played a significant role in driving up our incarceration rates in recent years. Acknowledging these causes points the way to policy responses that can bring these down again.  

Those three factors are: the rise of mandatory sentencing, the increased use of imprisonment-in-lieu orders, and the continual decline in funding for community legal aid.

The use of mandatory sentencing has spread across Australia in recent decades, and now applies in almost all states and territories for a variety of different offences. In Western Australia mandatory sentences apply for cases of grievous bodily harm or serious assault to police; while in the Northern Territory these rules cover murder, rape and offences involving violence. New South Wales courts now hand down mandatory sentences for so-called ‘one punch’ attacks where a person dies as a result of an assault and the offender was intoxicated; while Queensland and South Australia use these for a surprisingly wide range of offences including trafficking in drugs and guns, and some organised crime violations.[10]

The Human Rights Law Centre has noted that mandatory sentencing laws limit judicial discretion in sentencing and prevent courts from taking account of the cultural backgrounds and responsibilities of offenders, and the economic and social issues they face. The entire premise of our justice system is that impartial judicial officers weigh the merits of each individual case before reaching a judgement – that principle is violated by mandatory sentencing rules.

Moreover, the Australian Law Council has expressed serious concerns about the efficacy of mandatory sentencing, citing a number of anomalous and unjust cases. For example, a 16-year-old with one prior conviction received a 28-day prison sentence for stealing a bottle of spring water. An Aboriginal woman and first-time offender received a 14-day sentence for stealing a can of beer.[11] It makes no sense to send people to jail for offences like these, yet mandatory sentencing laws bind the courts’ hands so that logic and common sense don’t even come into it.

Then there’s the use of imprisonment-in-lieu orders. Decades of research have firmly established a relationship between contact with the justice system and social disadvantage. People dealing with poverty, unstable home lives and addictions are much more likely to have run-ins with the police and the courts, and more likely to experience adverse consequences such as imprisonment when they do. As Russell Marks explored earlier this year in his book ‘Crime and Punishment’, one particular problem for these disadvantaged Australians is fines: parking tickets, toll road late-payment notices, penalties for riding public transport without a ticket. For someone living payday-to-payday, paying a $97 parking fine is generally a lower priority than keeping the lights on or having enough to eat. But when unpaid fines start to mount up, suddenly people find themselves coming into contact with the courts.

A number of states across Australia now use imprisonment-in-lieu orders, which require people to ‘pay off’ fines by serving time in jail. In other words, people who may have skipped paying a couple of parking tickets because they simply couldn’t afford it are being sent to jail to serve time alongside violent and serious criminals.

Sometimes the consequences of this are deadly. In 2014, a 22-year-old Indigenous woman known only as Ms Dhu died in a West Australian police lock-up while serving time in lieu of a $1,000 fine. That is nothing short of a tragedy and a disgrace.

Thankfully, cases like this are reasonably rare. But the practice of serving jail time in lieu of fines is anything but. In Western Australia, 15 per cent of all new admissions to prison are now for fine default. In that same state, the number of Indigenous Australians going to jail for unpaid fines increased by almost 500 per cent between 2008 and 2013 alone. 

Finally, we shouldn’t overlook the role that declining government investment in public legal defence and community legal services has played in seeing more people wind up in jail. It’s a simple equation: less funding means less legal representation to go around for people who can’t afford their own lawyer. More people showing up at court without representation means more people who cannot effectively defend themselves against charges.       

The legal needs of disadvantaged Australians are currently serviced by a mix of Legal Aid Commissions, Community Legal Centres, Aboriginal and Torres Strait Islander Legal Services and Family Violence Prevention Legal Services. All of these services have struggled with inconsistent and often-shrinking funding from state and federal governments.

In 2014, the Productivity Commission concluded that an extra $200 million in funding needed to be invested into these services to sustain front line legal aid front line.[12] Instead, the Coalition Government has imposed two years of cuts, disruption and uncertainty imposed on the legal assistance sector including:

  • $24m cut from Community Legal Centres
  • $15m cut from Legal Aid Commissions
  • $13m cut from Aboriginal and Torres Strait Islander Legal Services; and
  • Family Violence Prevention Legal Services cut from the Attorney-General’s Department and forced to tender afresh for the entirety of their Commonwealth funding.

The impact of these cuts has been felt on the ground. Programs have been cancelled. Staff have been let go. Some centres have closed their doors. While the Government has abandoned some of its earlier cuts, the Government still plans to slash almost a third of its funding to CLCs after the next election.   

We simply will not be able to reverse the rise in incarceration rates if the trend of under-funding the community legal sector continues.

What should we do to get them going in the other direction?

So we understand the causes and contours of Australia’s problem with incarceration. But what should we do to tackle this?

Because the causes are varied, any effort to drive down incarceration rates will necessarily also demands a mix of responses. As I said at the outset though, we should always be guided by a strong evidence base and rigorous evaluation of what works. As Don Weatherburn has noted, we don’t let pharmaceutical companies market untested drugs in Australia. Why should unevaluated policy be any different?[13]

An immediate (and in my opinion, fairly uncontroversial) way to put a dent in our incarceration rates would be to end the use of imprisonment-in-lieu orders. I agree that there need to be sanctions like fines to ensure that the vast majority of us comply with civil rules and regulations on where to park or how fast to drive. But imprisoning people because they are too poor to pay these is a truly Dickensian public policy response which is out of all proportion to the social harm caused. Instead, I’d suggest we should replace imprisonment-in-lieu orders which a system of income contingent loans for people who find themselves in debt to the state, as the noted economist Bruce Chapman has suggested.[14]

Next, we should reduce or end the use of mandatory sentencing and instead introduce a diversionary bias into the system which actively works to channel people away from jail and into suitable forms of rehabilitation instead. The Dean of Deakin Law School, Mirko Bagaric, argues that jail should be confined “almost exclusively to those we have reason to be scared of: sexual and violent offenders.”[15] Currently, about 43 per cent of those imprisoned are locked up for non-violent crimes including theft, illicit drugs and unlawful entry with intent (or as they called it on The Bill, good old ‘B&E’).[16] By diverting people who have committed non-violent crimes into rehabilitation, we can prevent them entering into a negative spiral of reoffending and cut the prison population at the same time.    

Some people worry that focusing on rehabilitation as opposed to harsh or mandatory sentencing amounts to being ‘soft on crime’. But it’s not about being soft or harsh; it’s about being smart. Studies show that increasing the size or severity of prison sentences does not correspondingly strengthen their deterrence effect.[17] This makes sense when you consider the demographics prisoners typically come from: young, disadvantaged men – possibly with a mental illness – who are living day-to-day. For these men, knowing whether a prison sentence is 10 or 20 years long figures much less in their thinking than the question of whether they will be caught and punished at all.

When we stop sending so many people to prison, we can free up resources for investment elsewhere - like making sure that people get help with the drug addictions that caused them to commit robberies, or skills which let them get a proper job instead of a criminal one. This approach is known as ‘justice reinvestment’ and my colleague in the federal Parliament, Shadow Minister for Indigenous Affairs Shayne Neumann has been a very strong advocate for this.

Earlier this week Bill Shorten, Shayne Neumann and Mark Dreyfus announced Labor’s plan to roll out this justice reinvestment model in specific sites across Australia.

The community of Bourke in regional NSW has been trialling this approach for the past two years, and Bill has indicated we would provide the resources for a long-term study of what’s happened there, to see what Australia can learn.

We will also work with communities that are committed to this approach to select three more launch sites: in a major city, a regional town and a remote community. Through COAG, we will work with other states to create a national coordinating body for collecting data and measuring progress. Currently this will focus specifically on addressing the appalling rates of incarceration amongst Indigenous Australians. But as I’ll mention in a moment, I’d like to see this approach expanded.

Around the country, progressive legislators like West Australian MLA Paul Papalia, South Australian Attorney-General John Rau and ACT Attorney-General Simon Corbell all deserve to be commended for pursuing other strategies which put rehabilitation before jail. But it’s not just progressives who are realising that the solution to crime doesn’t lie behind bars. It’s worth noting that overseas, U.S. Republicans such as Pat Nolan and Rick Perry have been acting to lower the mass incarceration rates in their jurisdictions. In 2007, Texas enacted its Justice Reinvestment Initiative, enabling it to save $210.5 million that year by diverting funding from expanding the state’s prisons to addiction treatment for low-level drug offenders as an alternative to imprisonment. [18]

The justice reinvestment approach doesn’t only free up funds to spend on rehabilitation. Some of the resources could also be diverted to ensuring community legal services have the funding they need to provide effective representation to all those Australians who need it.

Finally, we wouldn’t know that rates of recidivism are too high or that poverty and disadvantage are leading causes of someone winding up in jail if we hadn’t looked at the evidence. I believe we need to take this evidence-based approach much further when considering which of our current justice policies to keep, and which to change. One way to do this would be to establish a federal panel, headed by a former senior police officer, to look at smarter ways of cutting crime and incarceration rates. Having a dedicated expert body with a remit for examining the evidence both locally and overseas and coming up with innovative new ideas to trial seems to me to be a useful step forward in shaking Australian justice policy out of its current imprisonment obsession.

Of course, my colleague David Feeney, the Shadow Minister for Justice, is the one who is leading Labor’s policy development in this area. But it’s an idea I’m keen to take up with him, and all our state and territory colleagues, because I believe it could make a real difference to how we do crime and punishment in Australia.        


Winston Churchill once noted that: ‘the mood and temper of the public in regard to the treatment of crime and criminals is one of the most unfailing tests of civilisation of a country.’

When we talk about how Australia treats our criminals, often the discussion is about the niceties or otherwise of prison facilities – whether we offer our prisoners the relative comfort of Norway’s Halden prison or the undoubted austerity of La Tramacua in Columbia. We don’t talk enough about whether they should be in prison at all, and how we can work to ensure far fewer Australians end up behind bars.  

Given Australia’s growing imprisonment rates, I’m worried we are sliding towards a mass incarceration future simply because we’ve failed to stop and have a serious conversation about the alternatives. Unlike the famous ‘prisoners’ dilemma’, however, our prisons dilemma can be resolved in a way that works for all of us – both prisoners and society. By ending the use of imprisonment-in-lieu and developing alternative ways for disadvantaged Australians to pay back fines; by easing away from mandatory sentencing and diverting the resources to rehabilitation; by re-investing in legal aid; and above all by establishing a federal panel to come up with new evidence-based approaches, we can reverse the worrying rise in the number of Australians winding up behind bars.  

[1] Australian Bureau of Statistics. 2014. Prisoners in Australia, 2014. Cat. No. 4517.0. ABS. Canberra

[2] Institute for Criminal Policy Research. 2015. World Prison Brief – United States of America

[3] Adam Graybar. 2001. ‘Crime in Twentieth Century Australia’, in Australian Bureau of Statistics, 2001 Year Book Australia. Cat. No. 1301.0. ABS. Canberra

[4] Australian Bureau of Statistics 2015, Gender Indicators, Australia, Aug 2015. Cat. No. 4125.0

[5] Australian Bureau of Statistics. 2014. Prisoners in Australia, 2014 – Imprisonment Rates. Cat. No. 4517.0. ABS. Canberra

[6] James Ogloff. 2015. Good mental health care in prisons must begin and end in the community. The Conversation, 24 April

[7] James Ogloff, Jenny Patterson, Margaret Cutajar and Karen Adams. 2013. Koori Prisoner Mental Health and Cognitive Function Study. Report prepared for the Department of Justice, Victoria

[8] Jason Payne. 2007. Recidivism in Australia: findings and future research. Research and Public Policy Series No. 80. Australian Institute of Criminology

[9] Parliamentary Budget Office. 2013. Australian Government Spending – Part 1: Historical trends from 2002-03 to 2012-13. Report no. 02/2013

[10] Law Council of Australia. 2014. The mandatory sentencing debate. Canberra.

[11] Ibid

[12] Jane Lee, 2014. ‘Australian legal aid services ‘need $200 million more a year’ – Productivity Commission’, The Age 4 December

[13] Don Weatherburn. 2012. ‘Effective law and order policy need not be a shot in the dark’, The Sydney Morning Herald, 10 January

[14] Bruce Chapman, Arie Frieberg, John Quiggan and David Tait. 2003. Rejuvenating Financial Penalties: Using the Tax System to Collect Fines, Discussion Paper 461. Centre for Economic Policy Research, Australian National University

[15] Mirko Bagaric. 2015. ‘Prisons policy is turning Australia into the second nation of captives’, The Conversation, 10 April

[16] Australian Bureau of Statistics. 2014. Prisoners in Australia, 2014. Cat. No. 4517.0

[17] Anthony Doob and Cheryl Webster. 2003. ‘Sentence Severity and Crime: Accepting the Null Hypothesis’, Crime and Justice, Vol. 30, University of Chicago Press

[18] Council of State Governments Justice Center, 2009. Justice Reinvestment in Texas: Assessing the Impact of the 2007 Justice Reinvestment Initiative. Council of State Governments Justice Center

Be the first to comment

Please check your e-mail for a link to activate your account.

Stay in touch

Subscribe to our monthly newsletter


Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.