Natural Disaster Funding (Australia): Inquiry report 2015

report imageGlobal Resilience Collaborative (GRC) welcomes the recently produced report by the Productivity Commission examining the funding arrangements.  To most people involved in resilience to disruptions such as natural disasters it was not a surprise to learn that the report found that ‘governments nationally focus too much on recovery, at the expense of redirecting resources towards better-preparing for the future disasters”.

Following are key points from the report.  The full report can be accessed via the link at the end of page.

 

  • Australia is exposed to natural disasters on a recurring basis. Effective planning and mitigation of risks is an essential task for governments, businesses and households.
  • Current government natural disaster funding arrangements are not efficient, equitable or sustainable. They are prone to cost shifting, ad hoc responses and short-term political opportunism. Groundhog Day anecdotes abound.
  • Governments overinvest in post-disaster reconstruction and underinvest in mitigation that would limit the impact of natural disasters in the first place. As such, natural disaster costs have become a growing, unfunded liability for governments.
  • The funding arrangements matter because they impact the incentives to manage risks, including by using potent but politically challenging levers like land use planning. The reform imperative is greatest for states most exposed to natural disaster risk, like Queensland.
  • The recommended reforms comprise a coherent policy package across recovery and mitigation funding, budget treatment of recovery costs, and accountability requirements for all governments. ‘Cherry picking’ component parts would see the much needed balance between mitigation and recovery, as well as greater state autonomy, remain elusive.
  • Australian Government post-disaster support to state and territory governments (states) should be reduced, and support for mitigation increased. Greater budget transparency and some provisioning is also needed.◦States need to shoulder a greater share of natural disaster recovery costs to sharpen incentives to manage, mitigate and insure against these risks. The Australian Government should provide a base level of support to states commensurate with relative fiscal capacity and the original ‘safety-net’ objective of disaster recovery funding, with the option for states to purchase ‘top-up’ fiscal support.

◦Australian Government mitigation funding to states should increase to $200 million a year and be matched by the states.

◦These reforms would give state and local governments autonomy in how they pursue disaster recovery and mitigation. The reforms should be supported by performance and process based accountability mechanisms that embed good risk management.

 

  • Governments have a role in providing emergency relief payments to individuals seriously affected by natural disasters, to defray immediate economic and social hardship. Such relief should be provided in a consistent, equitable and efficient way.
  • Governments can do better in terms of policies that enable people to understand natural disaster risks and also to give them the incentive to manage the risks effectively.◦Information on hazards and risk exposure has improved significantly in recent years, but there are opportunities to improve information consistency, sharing and communication.

◦Regulations affecting the built environment have a significant influence on the exposure and vulnerability of communities to natural hazards. While building regulations have generally been effective, there is a need to transparently incorporate natural disaster risk management into land use planning.

 

  • Insurance is an important risk management option. Insurance markets in Australia for natural disaster risk are generally working well, and pricing is increasingly risk reflective. Insurers can and should do more to inform households on their insurance policies, the natural hazards they face and the indicative costs of rebuilding after a natural disaster

 

Source: http://www.pc.gov.au/inquiries/completed/disaster-funding/report

 

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