The costs associated with smoking outweigh savings from premature death across medical, hospital, pharmaceuticals and ambulance services. The only real saving is in aged care residential services.
For NSW alone in 2006/7 that "cost" was in the order of 230 million.
Oh, and thats without even looking at social costs (sick days, reduced/lost income, decreased productivity, fires, antismoking advertising .... list goes on )
Not to mention the cost of cigarettes to the individual/family and poverty associated with income spent on tobacco.
Source: The Social Costs of Smoking
in NSW in 2006/07 and the Social Benefits of Public Policy Measures to Reduce Smoking Prevalence (table on Page 6 ) published by NSW health.