Calls for dramatically increased disaster mitigation action

Friday 31 May 2024

Opinion Piece John O’Donnell

As highlighted in a recent article by Leith van Onselen in MacroBusiness Australian Economy Call for inquiry into surging insurance premiums (dated Wednesday, 6 March 2024), there is widespread concern in relation to increasing insurance premiums. Former Australian Competition & Consumer Commission (ACCC) chair Allan Fels has called for the ACCC to investigate the insurance sector over its recent hike in insurance premiums.

Further information in relation to the increasing costs of living and insurance is outlined within the NSW Government April 2024 emergency services funding reform consultation paper highlighted in the link below. The NSW Government deserves credit for undertaking this review, although it is highly likely that businesses and homeowners will still pay the bulk of emergency services funding collections, so it is unlikely that there will be major cost of living benefits.

Currently, NSW’s emergency services are funded by the Emergency Services Levy on insurance companies (73.7%), local governments (11.7%) and the State Government (14.6%). These fund the costs of Fire and Rescue NSW, NSW Rural Fire Service and the NSW State Emergency Service. The NSW State Government only paying 14.6% is a major concern, it is very low. The business and resident contributions to the levy are excessive, and increasing.

Increasing bushfire mitigation to adequate levels is an important measure to reduce bushfire disasters and insurance costs. For bushfires, markedly increased bushfire mitigation results in:
  1. Reduced bushfire suppression costs.
  2. Reduced bushfire impacts and recovery costs for both insured and not insured. In Australia, as noted in Strengthening resilience: Managing national disasters after the 2019-20 bushfire season, “one dollar spent on mitigation can save at least two dollars in recovery costs. Committing additional mitigation funding makes economic sense”.
  3. Reduced insurance costs and emergency services levy needs.
  4. Reduced bushfire environmental
  5. Reduced loss on infrastructure, including plantations and timber supply.
  6. Reduced consequent flood impacts after intense bushfires.
  7. Likely reduced La Nina impacts for the years post intense bushfires as highlighted by a study completed by Fasullo. Fasullo 2023) A multiyear tropical Pacific cooling response to recent Australian wildfires in CESM2 John T. Fasullo*, Nan Rosenbloom, Rebecca Buchholz.
These benefits are significant and there is an urgent need to increase disaster mitigation.

There are federal initiatives in relation to reducing insurance costs and reducing disaster risks including funding of the Hazards Insurance Partnership (HIP), which in managed by NEMA; the Government’s A$1 billion Disaster Ready Fund initiative, which is providing significant funding for mitigation measures; the Australian Climate Service’s (ACS) Priority Catchment Strategy; and NEMA’s Education and Awareness Strategy. There are good initiatives, but inadequate to reduce disaster risk, especially in regard to ongoing inadequate mitigation funding and commitments.

A number of other measures need to be introduced to refine and reorder disaster management in eastern Australia and reduce disasters and insurance/ emergency services levy costs. The attached paper has considered this matter further.

Hopefully, Governments, emergency services, treasury and finance departments speedily action ideas about easing reducing disaster impacts and cost-of-living pressures. It’s time for dramatically increased disaster mitigation action.

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Source and image credit: John O’Donnell

Environmental Forestry 2024

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