2.1
This chapter considers the views held by stakeholders on the provisions of the Emergence Response Fund Amendment (Disaster Ready Fund) Bill 2022 (the bill).
2.2
The chapter first sets out support for the bill. The chapter then examines matters raised by stakeholders, including varying views about the prioritisation and allocation process of funds, and the amount allocated to the Disaster Ready Fund.
2.3
The chapter concludes with the committee’s view and recommendation.
Support for the bill
2.4
There was broad support amongst submitters for the bill. For example, the Tasmanian Government supported the intent of the bill to establish the Disaster Ready Fund using funds from the existing Emergency Response Fund.
2.5
The Australian Academy of Science submitted that the bill provided an opportunity to reform how Australia plans and governs disaster resilience and adaptation to climate change, given the increasing evidence that climate change will increase Australia’s disaster risk in the future.
2.6
The Insurance Council of Australia (ICA) commented that the establishment of the National Emergency Management Agency (NEMA) and the Disaster Ready Fund are ‘vital and necessary steps to prioritise and accelerate climate and hazard risk reduction investment in Australia’, and supported the bill as proposed.
2.7
The Australian Small Business and Family Enterprise Ombudsman stated that the bill would ‘support improvements to insurance availability and affordability and strengthen the resilience of disaster-prone communities’.
2.8
The Australian Local Government Association (ALGA) highlighted that in addition to disaster mitigation, funding from the Disaster Ready Fund would have co-benefits that would accrue even in the absence of a natural disaster, including economic growth, social capital in Australian communities, and regional investment decisions.
Support for the shift from recovery to resilience
2.9
The committee heard that Australia is experiencing disasters of greater severity and frequency. Submitters therefore supported the shift in policy to invest in resilience-building measures and risk reduction.
2.10
Australian Red Cross emphasised that ‘increasingly, evidence shows that investment in disaster resilience, or preparedness prior to disaster, results in less damage, fewer impacts and quicker, more equitable recovery after the disaster’.
2.11
Ms Kylie Macfarlane, Chief Operating Officer, ICA, explained that this shift in policy would allow the focus on recovery to reduce over time because communities would be ready for events:
They've prepared the buildings. What they live in and where they're living are better resilient to the impacts of events and, hence, recovery or the need for investment in recovery will diminish over time.
2.12
Similarly, ALGA submitted that greater mitigation ‘ahead of disasters is a
cost-effective pre-disaster investment, which avoids a much larger investment [in] recovery following a disaster’.
Support for continued response and recovery funding
2.13
The committee heard that, while the $200 million per year would be dedicated solely to resilience and risk reduction initiatives, funding for recovery efforts would continue under the Disaster Recovery Funding Arrangements 2018 (DRFA) as the primary mechanism available to the Commonwealth for recovery funding.
2.14
The Tasmanian Government agreed that the DRFA are the most appropriate framework for cost sharing for response and recovery as they are flexible, and demand driven.
2.15
The Foundation for Rural & Regional Renewal (FRRR) submitted that, while they were supportive of the shift to resilience and risk reduction projects, ‘it must not come at a cost to communities trying to recover from the effects of disasters’.
Views on the prioritisation and allocation of funds
2.16
While supporting the bill, many submitters commented on the need for a transparent process for the prioritisation and allocation of funding under the Disaster Ready Fund. The committee heard varying views about the distribution of funds, including to areas at most risk, based on centralised data, as well as community resilience projects, the allocation of a substantial proportion of the funds to local governments, and consideration of the relative distribution of funds between state governments.
Areas at most risk
2.17
Ms Macfarlane, ICA, told the committee that the insurance sector would like to see the distribution of funds from the Disaster Ready Fund allocated to the areas at most risk of flood, bushfire, cyclone and coastal erosion.
2.18
For the insurance sector to accurately assess areas of high risk, the ICA and Insurance Australia Group (IAG) emphasised that the first step to making an informed decision on prioritising and allocating these funds is to have a national data base of natural disaster risk. Ms Macfarlane told the committee:
We need centralised data that is universally shared, is centrally held and can be trusted, so the whole nation is having the same conversation and risk is being determined based on the same source of information.
2.19
Mr Mark Leplastrier, Executive Manager, Natural Perils, IAG, explained that ‘[i]f we're all using different methods and data to assess risk, we'll be less effective in identifying the high-risk areas and what to do about them’. Mr Leplastrier said that if the insurance sector cannot assess the risk accurately enough, ‘we won't be able to allocate to or prioritise the areas that need the most help’.
2.20
Natural Hazards Research Australia also submitted that investments must be risk-based and informed through the identification of the highest-priority disaster risks and mitigation opportunities. Natural Hazards Research Australia commented that ‘[i]nvestments must draw on sound research and expertise to consider future challenges such as climate and demographic change’.
Advisory panel
2.21
In addition to a centralised, trusted source of hazard information to identify areas at most risk, IAG submitted that, as natural disaster resilience and mitigation crosses a range of industries and expertise, an expert advisory panel should be consulted on the allocation of funding. IAG considered that:
…any process for prioritising and allocating the Disaster Ready Fund must include consultation with an expert advisory group, made up of business, not for profit and academics with expertise in disaster resilience.
2.22
As part of any expert advisory panel, IAG and ICA believed the insurance sector should be involved.
Resilience for people and communities
2.23
The committee heard from some witnesses and submitters that a significant proportion of the Disaster Ready Fund should be directed to building social and human resilience for people and communities.
2.24
Australian Red Cross recommended that the bill be amended to include a provision that would direct 50 per cent of the Disaster Ready Fund to building social and human resilience for people and communities.
2.25
Australian Red Cross explained that, while the most obvious methods of building resilience are installing and improving hard measures (for example firebreaks, levees, seawalls and building more resilient homes), the impacts of disasters are not limited to the costs of damaged property, infrastructure or facilities. Australian Red Cross stated:
…research shows that the economic costs of the social impacts of disaster (health and wellbeing, employment, education and safety issues) are greater than the physical costs of restoration of assets – possibly even double.
2.26
Mr Andrew Coghlan, Head of Emergency Services, Australian Red Cross, highlighted that, as Australia is seeing more frequent disasters, the ‘impacts of disaster on disaster, just as people are getting back on their feet after a previous event, are significant’.
2.27
Mr Toby oConnor, Chief Executive Officer, St Vincent de Paul Society National Council of Australia (St Vincent de Paul), considered that the Disaster Ready Fund should have a funding purpose which:
…prioritises community-led solutions and favours local businesses and organisations that have a local presence in the first instance; enables appropriate health and social support services to be funded; supports the funding of activities that build community resilience; supports the funding of activities that ensure the most vulnerable in our communities are assisted; and enables organisations large and small to skill up their volunteers and staff to respond in a timely, professional and quality-assured way in times of crisis.
2.28
In their submission, Australian Red Cross outlined that risk reduction programs that focus on individuals and families, such as education and awareness programs, are far less expensive to run than the cost of infrastructure projects. These also have significant, positive community benefits that can be realised immediately. Australian Red Cross highlighted examples of its programs to build community resilience, including:
Community Disaster Resilience Program (piloted and ready to roll-out)
Pillowcase Program (child, youth and family preparedness)
Redi-Plan training, Psychological First Aid Training, Recovery Basics Training
Psychosocial support programs and community outreach
Disaster Recovery Program.
2.29
The Australian Small Business and Family Enterprise Ombudsman considered that resilience and risk reduction initiatives should embrace local knowledge and experience and build on existing local initiatives. They submitted that supporting local initiatives like 'Cyclone Saturday' in northern Queensland through the Small Business Friendly Councils initiative would contribute to community-specific resilience.
2.30
Yarra Ranges Council urged the increased investment from the fund be directed towards community voices and emphasised an emerging opportunity to build in long-held First Nations’ knowledge and practices that could effectively be delivered at the local level. Yarra Ranges Council drew attention to their Firestick cultural burning program as an example of building First Nations’ knowledge and practices into emergency management practices and disaster risk reduction activities.
2.31
Australian Red Cross and St Vincent de Paul Society also recommended an inclusive approach be taken to ensure marginalised people and people most at risk benefit from the Disaster Ready Fund in a culturally safe, systematic, and meaningful way.
Local government
2.32
ALGA argued that local governments need access to most, if not all, of the Disaster Ready Fund for local mitigation projects.
2.33
ALGA submitted that funding assistance for mitigation is imperative, particularly for small councils which rely heavily on federal funding for financial viability. Without funding through initiatives such as the Disaster Ready Fund, ALGA stated that these councils would be unable to reduce their risks.
2.34
Councillor Linda Scott, President, ALGA, told the committee that ‘we think that either the total fund, or at least the overwhelming majority, should be delivered to local governments’. Cr Scott said:
We would hope, having advocated for this fund to be established, that it would be almost universally available for local governments. Again, it's not in any way to say that we don't understand the need for social services, charities and a range of others to be funded when natural disasters occur. But local governments, understanding our communities, have mitigation projects in the pipeline and are well placed to deliver them with our communities.
2.35
Yarra Ranges Council also reiterated the need for data to understand risk and improve disaster resilience for local governments. Yarra Ranges Council submitted that supporting data-gathering at a local or regional level through the ‘targeted investment from the Disaster Ready Fund to areas with the greatest risk of disaster (who are often the most under-resourced) will help to address a critical resourcing gap’.
State governments
2.36
The Queensland Government submitted that consultation is needed on potential approaches for the funding model under the Disaster Ready Fund. The Queensland Government argued that benefit is seen in a risk-based funding model, highlighting that ‘Queensland is the most disaster impacted state in Australia with Queensland communities susceptible to a variety of hazards including flooding, severe weather and wind, cyclones and bushfires’.
2.37
The Queensland Government considered that under previous rounds of the Emergency Response Fund, ‘Queensland has not received an equitable share of funding that reflects the disaster risks faced by Queensland communities’. In addition, the Queensland Government was of the opinion that the assessment criteria for the Emergency Response Fund resilience programs ‘were often not transparent and did not appear to reflect jurisdictional prioritisation for funding’.
2.38
For the Disaster Ready Fund to be successfully implemented, the Queensland Government proposed that the Government should consult with ‘jurisdictions on the development of a clear and consistent set of objectives and eligibility criteria, as well as robust and transparent assessment criteria’.
2.39
The Tasmanian Government submitted that while Australia is a disaster-prone country, with all communities facing some level of disaster risk, governments should work together to ensure that all communities are appropriately supported to build their resilience. The Tasmanian Government explained:
Targeting investment to communities currently recovering from disasters, to regions prone to particularly severe events, or to densely populated areas with high levels of physical or other capital, may be appropriate in some circumstances but should not unduly limit access for other communities.
2.40
The Tasmanian Government stated that smaller regional communities exposed to frequent events of moderate severity ‘could realise significant social, economic and environmental benefits from resilience investment, and they should have opportunities to pursue these outcomes’.
2.41
The Disaster Ready Fund was particularly welcomed by the Tasmanian Government due to the disaster risk profile and other characteristics of Tasmanian communities that the Tasmanian Government stated had made it challenging to access resilience funding through other mechanisms.
Australian Government statements on guidelines for the Disaster Ready Fund
2.42
In response to varying views about the prioritisation and allocation of funding under the Disaster Ready Fund, Ms Hannah Wandel OAM, Acting First Assistant Coordinator General, Programs and Policies Division, at the National Emergency Management Agency (NEMA), told the committee that consultation had begun with state and territory counterparts to ensure the guidelines are co-designed and collaborative.
2.43
Ms Wandel, NEMA, said that the guidelines would determine which types of projects and initiatives would be able to be funded under the Disaster Ready Fund. She explained this could include grey infrastructure projects, and green and blue infrastructure programs such as levees, flood walls, floodways, firebreaks and constructed wetlands or reefs.
2.44
Ms Wandel noted that other programs being consulted on included systemic risk-reduction projects which would ‘improve the quality of the response to future disasters—so that could include investments in things such as early warning systems or databases and projects that would update national standards’.
2.45
Ms Wandel said NEMA was keen to work with organisations, such as the Australian Red Cross, on community resilience projects that could be funded through the Disaster Ready Fund. She also noted that private sector organisations, as well as the insurance and charitable sectors, will be consulted on the guidelines.
2.46
The guidelines would set out relevant eligibility criteria but also assessment criteria for projects, which would then be assessed and provided through to the Minister for Emergency Management for approval. Ms Wandel noted that independent experts would sit on an assessment panel.
Annual limits on debits from the Disaster Ready Fund
2.47
The committee heard varying views on the amount of $200 million per year allocated to the Disaster Ready Fund. While some submitters were comfortable with the amount proposed in the bill, several submitters indicated that the quantum of funds allocated to the Disaster Ready Fund would likely need to be increased significantly.
2.48
Cr Scott, ALGA, told the committee that the size of the fund, $200 million per year, was what the ALGA advocated for based on the specific recommendations of the 2015 Productivity Commission report. Cr Scott said while the ALGA is comfortable with the amount proposed, ‘with the increasing disasters, the cost of materials, and inflation, it's something local government would reserve the right to comment on in future’.
2.49
IAG commended the Government’s $200 million per year commitment, also acknowledging this level of funding was a recommendation of the Productivity Commission’s report. IAG also suggested that the Government make it clear that any unused funds would be available for use in the next financial year.
2.50
The St Vincent de Paul Society and Australian Red Cross welcomed the allocation of $200 million per year for disaster resilience and risk reduction. However, Mr Coghlan, Australian Red Cross, said ‘there's no doubt we need more investment in both mitigation and dealing with disasters’. Mr Coghlan acknowledged that ‘there's clearly a need for greater investment beyond the amount specified in this fund. That would be a fantastic thing and would certainly lead to better outcomes, no question’.
2.51
The Tweed Shire Council supported the allocation of $200 million per year for Disaster Resilience and risk reduction. However, it recommended that the amount should be significantly increased given the investment required in removing people and property from the flood plain in the Tweed Shire Council.
2.52
Australian Paramedics Association (APA) (NSW) submitted that the $200 million per year proposed to be allocated to the Disaster Ready Fund would ‘be wildly inadequate to prepare Australian communities and Emergency Services for increasing disasters caused by Climate Change’. APA (NSW) argued that:
Disaster Ready Fund spending will need to be more than nine times greater than proposed by the [bill] in order to meaningfully reduce the most severe risks associated with the natural disasters which will be faced by Australian communities and the Paramedics who serve them in the coming decades.
2.53
APA (NSW) recommended that the sum of money available to be debited from the Disaster Ready Fund annually ‘should be increased to reflect the level of financing that will reasonably be required to prepare Australian communities for the natural disasters likely to befall them in coming years’.
Review of the legislated maximum annual disbursement
2.54
The Joint Submission, prepared by the Department of Finance and the Department of Home Affairs, in consultation with the Department of the Treasury, NEMA, and the Future Fund Management Agency, stated that the bill would require the responsible Ministers (the Treasurer and the Minister for Finance) to review the annual funding limit at least every five years. The Joint Submission explained that the review would allow the ministers ‘to adjust the annual funding limit in the future in response to investment market or policy considerations.’
2.55
Some submitters supported the responsible Ministers being able to adjust the maximum disbursement amount of the Disaster Ready Fund via a disallowable legislative instrument and to review the amount every five years. The Queensland Government stated that this would ensure that when needed, additional funding could be accessed for resilience building activities.
Other comments on the bill
2.56
Some submitters commented on other aspects of the bill, including:
suggestions for more streamlined administrative processes for the Disaster Ready Fund to reduce complications and additional burdens on local governments and the states when applying for the program; and
a portion of funding from the Disaster Recovery Fund being set aside to prepare for catastrophic disasters.
Committee view
2.57
It is clear to the committee that Australia is facing natural disasters of increasing severity and frequency due to climate change. The current natural disaster funding arrangements, while necessary, are manifestly insufficient. With an almost exclusive focus on natural disaster response and recovery, the current arrangements leave Australia underprepared for the future.
2.58
Bodies such as the Productivity Commission have long recommended a greater focus on disaster mitigation and resilience rather than just disaster response and recovery. More recently, the Royal Commission into National Natural Disaster Arrangements also recommended governments commit greater resources to resilience and mitigation.
2.59
The committee therefore welcomes the establishment of 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 committee notes that submitters supported the shift in policy to invest in resilience building measures and risk reduction, and that no submitters opposed the bill.
2.60
That said, the committee recognises the importance of continued funding for recovery efforts and believes the Disaster Recovery Funding Arrangements are the most appropriate mechanism for recovery funding.
2.61
In response to calls for a transparent process for the prioritisation and allocation of funding under the Disaster Ready Fund, the committee understands that the National Emergency Management Agency (NEMA) is currently undertaking consultations to develop guidelines for how projects and initiatives would be funded.
2.62
The committee notes that the guidelines would set out relevant eligibility and assessment criteria for projects funded through the Disaster Ready Fund, and projects would also be assessed and provided to the Minister for Emergency Management for approval.
2.63
The committee understands that as part of the consultation process for the Disaster Ready Fund guidelines, NEMA is eager to engage with state and territory counterparts, as well as local government, private sector organisations, the insurance industry, and charitable organisations. The committee is confident that through the consultation process, the guidelines will be co-designed and collaborative to ensure that projects that support disaster risk reduction and community resilience are prioritised and allocated appropriately.
2.64
The committee notes that the amount of $200 million per year for natural disaster resilience was recommended by the 2015 Productivity Commission report into natural disasters. The committee also acknowledges the views of some submitters and witnesses that the quantum of funds allocated under the fund may need to be increased, potentially substantially. To ensure that the level of funding remains appropriate, the committee supports the responsible Ministers reviewing the limit at least every five years.
2.65
The committee recognises that if it is determined that the limit should be changed, the responsible Ministers would have the flexibility to do this through a disallowable legislative instrument. The committee is encouraged that the Future Fund Board would be consulted about any proposed adjustment to ensure the adjustment complies with the Board’s obligations under the Disaster Ready Fund Act and the Disaster Ready Fund investment mandate.
2.66
For the reasons discussed above, the committee recommends that bill be passed.
2.67
The committee recommends that the bill be passed.
Senator Louise Pratt
Chair
Labor Senator for Western Australia