Up in smoke: The extraordinary cost of smoking to Australia

December 2019
Tobacco is responsible for the preventable deaths of 20,000 Australians each year, and the cost to them and to the wider community is high.

We all know smoking is bad for your health, and this has been an important factor prompting many to quit. But, one in eight Australians still smokes.  Tobacco is responsible for the preventable deaths of 20,000 Australians each year, and the cost to them and to the wider community is high.

New research, conducted by a national team led by NDRI, estimates that in the 2015-16 financial year, smoking cost Australia $19.2 billion in tangible costs and $117.7 billion in intangible costs, giving a total of $136.9 billion (Whetton et al., 2019).

The first update of the costs of smoking in 15 years, the study estimated the ‘tangible’ costs of smoking had risen to $19.2 billion. This includes $5.5 billion that smokers spent purchasing cigarettes, $5 billion in lost productivity and worker absences, $2 billion for family members caring for someone with a smoking-related disease who effectively contribute to the health budget through their lost earnings, and the cost of 1.7 million hospital admissions to treat smoking-related conditions.

Intangible costs, such as the years of life lost from premature deaths in that year or lost quality of life from living with a serious illness, were estimated at a massive $117.7 billion.

If smoking is declining, why do the costs appear to be rising?

Since 2004 (Collins and Lapsley, 2008), when the previous national estimate was made, the number of Australians smoking daily has fallen from 17.5% to 12.2% of the population. So why has the overall cost risen?

Cancer and many of the other conditions associated with smoking have long lead times, with an increased risk even if a person stops smoking compared with someone who has never smoked, so in 2015-16 we still see the effects of smoking from years and perhaps decades earlier.

Some of the increase in costs we detected result from increases in the costs of medical care over time for many diseases. In addition, the Australian population has grown and aged; with age being a factor in many of these conditions. Together these offset some of the gains from fewer people smoking.

However, one critical factor in the higher costs identified in our study compared to the 2004 estimate is that we have been able to quantify more of the costs of smoking than was possible in earlier studies.

First, medical research has established links between smoking and such diseases as type 2 diabetes, cataracts and additional cancers (e.g. liver, colon and rectal) (GBD 2015 Tobacco Collaborators, 2017) the treatment costs for and the deaths from which were not included in the previous estimate.

Second, we identified new costs not included in the previous estimate, such as the costs of smoking related littering and the costs of informal care.

The biggest additional components included are in the intangible costs. The estimate for 2004 did not include reduced quality of life due to ill-health, which we costed at $25.6 billion. Finally and most significantly, the recent update used a different but more common approach to determining the number of years of life lost and the ‘value’ of those years (which yielded an estimated cost of $286,553 versus $53,278 per year of life lost).

Are intangible costs important?

Intangible costs are borne entirely by the smoker, so should the rest of society be concerned about these costs? If a smoker has to live with a serious medical condition or dies prematurely, some might suggest that could be considered a risk the smoker should have known about and considered in their decision to smoke. But, nearly all smokers regret having started (Fong et al., 2004), nicotine dependence drives continued use, and many are unhappy about not being able to quit (Pechacek et al., 2017). We argue that the loss of enjoyment and quality of life and the financial costs experienced by these smokers should not be negated by a contentious theory that their poor health is simply a result of a rational decision to start and continue smoking.

Where to next?

Tobacco continues to extract a significant toll in premature death, suffering, reduced quality of life and real financial costs in Australia. Although the prevalence of smoking has declined substantially from a peak of 37% in the mid-1970s, more than three million Australians still smoked in 2016. With more than two-thirds of deaths among smokers attributable to their tobacco use (Banks et al., 2015) the health impacts and costs of smoking continue to be high. Effective strategies to reduce smoking still have the potential to substantially reduce medical costs, improve the quality of life of smokers and their families, and, reduce costs to the whole Australian community.

This research was conducted by a national team led by NDRI and included experts from the South Australian Centre for Economic Studies at University of Adelaide, Quit Victoria, the Australian National University in Canberra, the National Centre for Education and Training on Addiction at Flinders University in Adelaide, and the School of Public Health, Curtin University.

The full report Identifying the Social Costs of Tobacco Use to Australia in 2015/16 is available on the NDRI website.


Banks, E., Joshy, G., Weber, M.F., Liu, B., Grenfell, R., Egger, S., Paige, E., Lopez, A.D., Sitas, F., Beral, V., 2015. Tobacco smoking and all-cause mortality in a large Australian cohort study: Findings from a mature epidemic with current low smoking prevalence. BMC Medicine 13, 38.

Collins, D.J., Lapsley, H.M., 2008. The costs of tobacco, alcohol and illicit drug abuse to Australian society in 2004/05, National Drug Strategy Monograph Series No. 64. Canberra, Commonwealth of Australia.

Fong, G.T., Hammond, D., Laux, F.L., Zanna, M.P., Cummings, K.M., Borland, R., Ross, H., 2004. The near-universal experience of regret among smokers in four countries: Findings from the International Tobacco Control Policy Evaluation Survey. Nicotine and Tobacco Research 6, S341-S351.

GBD 2015 Tobacco Collaborators, 2017. Smoking prevalence and attributable disease burden in 195 countries and territories, 1990–2015: A systematic analysis from the Global Burden of Disease Study 2015. Lancet 389, 1885-1906.

Pechacek, T.F., Nayak, P., Slovic, P., Weaver, S.R., Huang, J., Eriksen, M.P., 2017. Reassessing the importance of ‘lost pleasure’associated with smoking cessation: Implications for social welfare and policy. Tobacco Control, tobaccocontrol-2017-053734.

Whetton, S., Tait, R.J., Scollo, M., Banks, E., Chapman, J., Dey, T., Halim, S.A., Makate, M., McEntee, A., Muhktar, A., Norman, R., Pidd, K., Roche, A., Allsop, S., 2019. Identifying the Social Costs of Tobacco Use to Australia in 2015/16, Tait, R.J., Allsop, S. (Eds.). Perth, Australia, National Drug Research Institute, Curtin University.