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Mitigation: still nobody listening

The argument is simple: Australia should invest in disaster mitigation now, and save billions of dollars later when the inevitable cyclones and floods strike.

The case has been made time and again – by the insurance industry, by independent reports, by the Government’s own inquiries, and faithfully reported and supported by insuranceNEWS.com.au.

The Australian Business Roundtable for Disaster Resilience & Safer Communities calculated in 2014 that investing $250 million a year in mitigation would save the Federal Government $12.2 billion by 2050.

The following year the Productivity Commission published its report on natural disaster funding arrangements, recommending spending $200 million a year on resilience and mitigation. And last year the Northern Australia Insurance Premiums Taskforce final report declared mitigation the only way to reduce insurance premiums on a sustainable basis.

But the Federal Government’s response has been repeatedly underwhelming.

It took about 18 months to respond to the Productivity Commission report, finally saying it “does not propose to pursue these recommendations at this stage”.

It still hasn’t responded to the premiums taskforce report, more than a year after it was published.

And last week’s Federal Budget also spectacularly failed to deliver.

There was $26.1 million allocated next financial year to disaster mitigation, and a further $7.9 million over four years to enable the Australian Competition and Consumer Commission (ACCC) to monitor and report on northern Australian insurance premiums.

It’s something, but it’s nowhere near enough, and typical of the Government’s approach.

Rather than put serious money into the one step that will work, it prefers to play around at the edges.

The ACCC monitoring can already be put in the “not going to solve the problem” basket, along with comparison websites.

The Insurance Council of Australia (ICA) has barely been able to conceal its disgust.

It bemoans another “missed opportunity” to invest in “urgent nation-building mitigation and resilience measures”.

ICA President Anthony Day made the point in the strongest possible terms at the group’s annual dinner, just days before the budget.

In his speech, Mr Day warned the time for talking is over.

“While we understand that there is support for mitigation on both sides of the political divide, the policy debate has continued too long,” he said.

This vacuum of inaction is what allows other, less effective, solutions to gain traction, he says.

“Without a clear position and action, we continue to hear calls for government intervention into lowering premiums through the creation of alternative funding arrangements.

“This may appeal to some consumers, and to some politicians.

“It taps the hip-pocket nerve on what is a grudge purchase. But it is a bad idea.”

He says the Productivity Commission and premiums taskforce reports “must be accepted as the foundations for appropriate and urgent government action, not intervention”.

Cyclone Debbie was an unwelcome reminder of the damage natural disasters bring.

“Nature venting her fury is a reminder that we can’t be complacent when it comes to protecting our customers and communities,” Mr Day said.

“Today, in the aftermath of Cyclone Debbie, the case for urgent investment in permanent, well-designed mitigation for disaster-prone communities cannot be clearer.

“Australia must do much more to prevent the impact of extreme weather, rather than throw money at it afterwards in ways that do nothing to reduce the impact of the next cyclone, or flood, or storm.

“The situation where only 3% of the budget available for natural disaster responses is spent on mitigation and 97% on relief and recovery must end.”

It’s not impossible – other countries have shown the way.

Canada recently committed about $2 billion to create its Disaster Mitigation and Adaptation Fund.

Surely in Australia it’s a no-brainer. This nation is prone to natural disasters. Climate change and increased development will lead to greater impacts.

It is much more cost-effective to spend money in advance than after the event, but the politicians continue to ignore the issue. You have to wonder how much longer it will take before they do see sense.

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