Referral
1.1
On 7 September 2022, the Emergency Response Fund Amendment (Disaster Ready Fund) Bill 2022 (the bill) was introduced into the House of Representatives by the Minister for Home Affairs, the Hon. Clare O’Neil MP, and read for a second time.
1.2
On 8 September 2022, pursuant to the recommendations of Report No. 4 of 2022 of the Senate Selection of Bills Committee, the Senate referred the provisions of the bill to the Finance and Public Administration Legislation Committee (the committee) for inquiry and report by 16 November 2022.
Conduct of the inquiry
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The committee agreed to open submissions on 8 September 2022 and set 7 October 2022 as the closing date. The committee wrote to a range of key stakeholder groups, organisations and individuals drawing their attention to the inquiry and inviting them to make a written submission.
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The committee received 21 submissions, which are available on the committee’s webpage and listed at Appendix 1.
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The committee held a public hearing in Canberra and via videoconference on 18 October 2022. The witness list for the hearing can be found at Appendix 2.
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Details of the inquiry, including links to the bill and associated documents, were published on the committee’s website.
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The committee thanks all those who contributed to the inquiry by making submissions and speaking before the committee at the public hearing.
Report structure
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This chapter provides an overview on the purpose and background to the bill, and the key provisions of the bill.
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The second and concluding chapter outlines the key issues put forward in evidence and presents the committee’s views and recommendation.
Australia’s current approach to natural disasters
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Australia’s approach to natural disasters is heavily weighted towards disaster recovery and response rather than disaster mitigation and resilience. Two funding mechanisms for disaster recovery and response currently exist: the Australian government-state Disaster Recovery Funding Arrangements 2018; and the Emergency Response Fund established with the commencement of the Emergency Response Fund Act 2019 (ERF Act).
Disaster Recovery Funding Arrangements 2018
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The Australian government-state Disaster Recovery Funding Arrangements 2018 provide for disaster recovery funding to be delivered through state and territory agencies to disaster affected communities. Under the proposed bill, this funding for natural disaster recovery efforts would continue.
The Emergency Response Fund
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The Emergency Response Fund allows the government to draw up to $200 million in any given year, beyond what is already available to fund emergency response and natural disaster recovery and preparedness, where it determines the existing recovery and resilience-building programs are insufficient to provide an appropriate response to natural disasters.
1.13
Disbursements from the Emergency Response Fund can be made subject to the following limits:
$150 million each financial year to fund emergency response and recovery following natural disasters in Australia that have a significant or catastrophic impact; and
$50 million each financial year to build resilience to and prepare for or reduce the risk of future natural disasters and build the long-term sustainability of communities that are at risk of being affected by a future natural disaster.
Concerns with, and criticisms of, the current funding arrangements
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When the Emergency Response Fund was established, stakeholders raised concerns about the need for a greater focus on mitigation and resilience investment before disasters strike.
Productivity Commission
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The prevailing pattern of governments spending primarily on recovery and rebuilding after disasters has been criticised by the Productivity Commission. In its May 2015 report into Natural Disaster Funding Arrangements, the Productivity Commission made several recommendations regarding funding arrangements for recovery and for mitigation, managing shared risks, and insurance. These included a recommendation for the Government to increase spending on disaster mitigation, not just disaster response.
Royal Commission
1.16
On 20 February 2020, the Royal Commission into National Natural Disaster Arrangements (Royal Commission) was established in response to the extreme bushfire season of 2019–20 which resulted in loss of life, property and wildlife and environmental destruction. The Royal Commission examined coordination, preparedness for, response to and recovery from disasters as well as improving resilience and adapting to changing climatic conditions and mitigating the impact of natural disasters.
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The final report, tabled in Parliament on 30 October 2020, made recommendations around resilience and mitigation, including the establishment of a standing resilience and recovery entity, disaster education aimed at promoting disaster resilience for individuals and communities, and engagement with Traditional Owners to explore the relationship between Indigenous land and fire management and natural disaster resilience.
Purpose of the bill
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The purpose of the bill is to establish the Disaster Ready Fund to improve Australia's disaster readiness by investing up to $200 million per year in disaster resilience and mitigation projects. The bill would repurpose the Emergency Response Fund by turning it into a dedicated ongoing source of funding for natural disaster resilience and risk reduction initiatives.
1.19
The bill seeks to amend the ERF Act to:
change the name of the Emergency Response Fund to the Disaster Ready Fund;
allow up to $200 million per annum to be debited from the Disaster Ready Fund for natural disaster resilience and risk reduction;
allow the responsible Ministers (the Treasurer and the Finance Minister) to adjust the maximum disbursement amount via a disallowable legislative instrument; and
facilitate the transfer of responsibility for fund expenditure to the National Emergency Management Agency (NEMA) and streamline administrative arrangements in relation to transfers from the fund.
1.20
The Hon. Clare O’Neil MP, Minister for Home Affairs, stated in the bill’s second reading speech that ‘due to climate change Australia is facing longer and more intense natural disaster seasons’. She explained that the establishment of the Disaster Ready Fund is a crucial step for Australia to be ‘better prepared to respond to, recover from and prepare for the next natural disaster’.
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Minister O’Neil stated that investing up to $200 million per year on resilience projects was recommended by the Productivity Commission in its natural disasters report, and is supported by insurers, local government and disaster relief bodies.
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Minister O’Neil noted that by dedicating the Disaster Ready Fund to natural disaster resilience and risk reduction, the bill would ‘provide a clearer distinction between the different funding sources for recovery and resilience and enhance the focus on building resilience for future natural disasters’.
Honouring of existing Emergency Response Fund commitments
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The explanatory memorandum (EM) states that the Government will honour the commitments made by the former government under the Emergency Response Fund in 2022–23, including:
…$50 million for the Coastal and Estuarine Risk Mitigation Program (to reduce the impacts of natural disasters and coastal hazards such as storm surges and coastal inundation) and $150 million to fund recovery and post-disaster resilience measures in the Northern Rivers region of NSW.
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Minister O’Neil stated that to ensure the above commitments can be met, and to promote the long-term sustainability of the Disaster Ready Fund, ‘the government will make new commitments to fund natural disaster resilience and risk reduction initiatives from the fund from 1 July 2023’.
National Emergency Management Australia
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The administrative responsibility for expenditure from the Emergency Response Fund was formerly the responsibility of Emergency Management Australia in the Department of Home Affairs. It transferred to the National Recovery and Resilience Agency (NRRA) on 1 July 2021.
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On 1 September 2022, the National Emergency Management Agency (NEMA) was established, merging the functions of Emergency Management Australia and the NRRA. NEMA is administratively responsible for all disaster related functions, including expenditure from the Disaster Ready Fund. This bill would make the legislative amendments required to implement this transfer and to streamline the administration of funding from the Disaster Ready Fund.
Key provisions of the bill
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The bill is comprised of two schedules:
Schedule one, having three parts and to commence on a day to be fixed by Proclamation; and
Schedule two, having two parts, to commence on 1 July 2023.
Schedule 1 – Part 1 – General amendments
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The bill’s main provisions are contained in Part 1 which proposes amendments to the ERF Act. The key measures in Part 1 of Schedule 1 would:
update the title of the ERF Act to reflect the renaming of the Emergency Response Fund as the Disaster Ready Fund. The Act title would be amended to the Disaster Ready Fund Act 2019;
make amendments to reflect the transfer of administrative responsibility from Emergency Management Australia, the NRRA, and the Department of Home Affairs to the newly established NEMA; and
allow the Government to meet existing commitments from the fund in
2022–23.
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Proposed new Division 5 in Part 1 of the bill would also require the responsible Ministers to review the legislated maximum annual disbursement amount at least every five years and give them the ability to adjust the amount via a disallowable legislative instrument.
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The responsible Ministers, prior to making an adjustment, would also be required to seek advice from the Future Fund Board on the impact of the proposed adjustment on the ability of the Board to comply with the Disaster Ready Fund Act 2019 and the Disaster Ready Fund Investment Mandate. The Emergency Management Minister would also be consulted as part of this process.
Schedule 1 – Part 2 – Consequential amendments
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Part 2, items 156 to 208, make consequential amendments to terminology in the following Commonwealth legislation:
Aboriginal and Torres Strait Islander Land and Sea Future Fund Act 2018
COAG Reform Fund Act 2008
DisabilityCare Australia Fund Act 2013
Future Drought Fund Act 2019
Medical Research Future Fund Act 2015.
Schedule 1 – Part 3 – Transitional and application provisions
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Part 3 contains transitional and application provisions concerning directions given by the responsible Ministers, and annual reporting.
Schedule 2
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Amendments made by Part 1 or Schedule 2 would remove references in the ERF Act that allow arrangements and grants to be made for the purposes of natural disaster recovery. Part 2 of Schedule 2 would provide a transitional provision to ensure that arrangements and grants made under the ERF Act before commencement of the bill remain valid following commencement of the changes in the bill.
Compatibility with human rights
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The statement of compatibility with human rights for the bill states that the bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
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Particularly, the bill engages with:
Article 11(1) of the International Covenant on Economic Social and Cultural Rights (ICESCR)—right to an adequate standard of living, including food, water and housing; and
Article 12 of the ICESCR—right of everyone to the enjoyment of the highest attainable standard of physical and mental health.
Consideration by the Scrutiny of Bills Committee
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The bill was reviewed by the Senate Standing Committee on the Scrutiny of Bills (Scrutiny of Bills Committee).
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The Scrutiny of Bills Committee raised concerns that the bill would confer broad powers on the responsible Ministers to determine the maximum debit amount that may be drawn from the Disaster Ready Fund Special Account, with little guidance on how these powers are to be exercised.
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The Scrutiny of Bills Committee noted:
…there is no guidance on the face of the bill regarding the circumstances in which it may be appropriate for the ministers to adjust the maximum debit limit. In this regard, the absence of an express cap on the face of the bill on the amount that may be debited by delegated legislation heightens the committee's concerns.
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The Scrutiny of Bills Committee requested advice from the Minister as to whether the bill could be amended to provide a cap on the amount that may be determined from the ministers, or whether further criteria or considerations constraining the exercise of these powers could be included on the face of the bill.
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The Minister for Finance, Senator the Hon. Katy Gallagher, responded that the proposed bill provides an appropriate framework for reviewing and amending changes to the maximum disbursement amount, and it is not necessary to amend the bill to provide a cap on the maximum disbursement amount that may be determined by the responsible Ministers.
1.41
The Scrutiny of Bills Committee also noted that the bill would require the responsible Ministers to seek advice from the Future Fund Board on the amount that may be debited from the Disaster Ready Fund. The advice would outline what the impact of making the adjustment would be on the ability of the Future Fund Board to comply with the ERF Act and associated investment mandate. The bill would also provide that the responsible Ministers must have regard to advice given by the Future Board Fund in determining an annual limit on debits.
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However, the Scrutiny of Bills Committee noted that the proposed bill has no requirement for the advice given by the Future Fund Board to be tabled in Parliament. The Scrutiny of Bills Committee stated that ‘the explanatory memorandum does not appear to explain why the advice is not required to be tabled in Parliament, nor does it explain whether the advice will be publicly available’.
1.43
The Minister for Finance advised that it would not be necessary to amend the proposed bill to require the Future Fund Board's advice to be tabled in Parliament as the reasons for an adjustment would be set out in the explanatory statement accompanying any legislative instrument that adjusts the maximum disbursement amount.
Financial impact statement
1.44
The EM states that the bill would not have any financial impact.