Bills Digest No.
15, 2022–23
PDF Version [868KB]
Tessa Satherley
Economic Policy Section
21 September 2022
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Key points
- The Bill proposes to amend the Emergency Response Fund Act 2019 to repurpose the existing Emergency Response Fund as a dedicated, ongoing source of funding for natural disaster mitigation and risk reduction, to be known as the Disaster Ready Fund.
- From 1 July 2023, the Fund’s remit would narrow to focus exclusively on building resilience and preparing for future natural disasters (to an annual cap of $200 million), replacing the current focus on post-disaster recovery and resilience ($150 million cap) and smaller allowance for more forward-looking resilience and risk reduction projects ($50 million cap).
- The Bill would preserve the status quo for the current financial year to allow payment of funds committed to two projects by the previous Coalition Government, as set out in its May 2022 Budget ($150 million for recovery and resilience following the 2022 east coast floods; and $50 million for the Coastal and Estuarine Risk Mitigation Program).
- The core architecture and governance arrangements for the Fund and its two associated special accounts would remain unchanged, as would current arrangements governing the Fund’s investment mandate. Most amendments are simple changes to the names of the existing Act, Fund and special accounts (see the schematic on page 12), and to clarify the authority and responsibilities of the new National Emergency Management Agency (NEMA) with respect to the Fund.
- Concerns raised during consideration of the originating Bill for the Emergency Response Fund Act 2019 – notably, ministerial discretion to expend significant funds under limited legislative guidance and Parliamentary scrutiny – are not resolved by the current Bill.
- These governance concerns may become more acute under the proposed pivot from primarily reactive spending, following an objective disaster, to exclusively proactive spending to counter future risks.
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Contents
Glossary
Purpose of the Bill
Structure of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Key issues and provisions
Other provisions
Date introduced: 7
September 2022
House: House of
Representatives
Portfolio: Finance
Commencement: Sections
1–4 on Royal Assent; Schedule 1 on the earlier of a day fixed by
Proclamation or six months after Royal Assent; Schedule 2 on 1 July 2023.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as at
September 2022.
Glossary
| Term/abbreviation |
Definition |
| 2019 Act |
The Emergency
Response Fund Act 2019, proposed to become the Disaster Ready Fund
Act 2019, unless otherwise stated |
| Australian Business Roundtable for Disaster
Resilience & Safer Communities |
Advocacy and information-sharing group; membership
currently comprises the most senior executive or a non-executive director of the
Australian Red Cross, insurers IAG and Munich Re, Optus and Westpac Group |
| Bill |
The Emergency
Response Fund Amendment (Disaster Ready Fund) Bill 2022, unless otherwise
stated |
| COAG Reform Fund |
The Fund established by the COAG Reform Fund
Act 2008 for the purpose of making grants of financial assistance to
the states and territories |
| DRF |
Disaster Ready Fund, to be created by repurposing the
existing ERF through this Bill |
| Emergency Management Australia (EMA) |
Former
division of the Department of Home Affairs responsible for many aspects
of federal emergency management coordination; now merged with the National
Recovery and Resilience Agency to form a new organisation (see ‘NEMA’)[1] |
| ERF |
The Emergency Response Fund established by the Emergency
Response Fund Act 2019 to provide
an additional funding source for future emergency response and natural
disaster recovery needs |
| Explanatory Memorandum |
The Explanatory
Memorandum to the Emergency
Response Fund Amendment (Disaster Ready Fund) Bill 2022, unless otherwise
stated |
| Future Fund |
Australia’s sovereign wealth fund, established by the
Future Fund
Act 2006; originally created to meet the Australian Government’s
unfunded superannuation liabilities, it now invests the assets of the original
Future Fund, the Medical Research Future Fund, the DisabilityCare Australia
Fund, the Aboriginal and Torres Strait Islander Land and Sea Future Fund, the
Future Drought Fund and the ERF, which will be renamed the DRF by this Bill |
| Future Fund Board |
The
Future Fund Board of Guardians, which decides how to invest the assets of
each fund under the Future Fund’s management (see ‘Future Fund’) |
| ICA |
Insurance Council of Australia, the national peak
body for the insurance industry |
| Investment Mandate |
The Emergency
Response Fund Investment Mandate Direction 2020, made by legislative
instrument on 4 February 2020 (non-disallowable and not subject to sunsetting
under section 39 of the 2019 Act) |
| LGAQ |
Local Government Association of Queensland, a member
association serving all Queensland local councils |
| NEMA |
National
Emergency Management Agency, created by the incoming Albanese Labor
Government by merging Emergency Management Australia and the National
Recovery and Resilience Agency, effective from 1 September 2022 (see ‘Emergency
Management Australia (EMA)’); it sits within the Home Affairs portfolio[2] |
| RACQ |
Royal Automobile Club of Queensland, an insurance
company |
| Special accounts |
Limited special appropriations from consolidated
revenue that notionally set aside an amount that can only be expended for designated
purposes.[3]
For this Bills Digest, the relevant special accounts are: · the Emergency
Response Fund Special Account, to be renamed the Disaster Ready Fund Special
Account (DRF Special Account) · the Home
Affairs Emergency Response Fund Special Account, to be renamed the Disaster
Ready Fund Payments Special Account (the DRF Payments Special Account) |
Purpose of the Bill
The purpose of the Emergency
Response Fund Amendment (Disaster Ready Fund) Bill 2022 (the Bill) is to
amend the Emergency
Response Fund Act 2019 (the 2019 Act) to repurpose the existing
Emergency Response Fund (ERF) as a dedicated, ongoing source of funding for
natural disaster resilience and risk reduction, to be known as the Disaster
Ready Fund (DRF).
Structure
of the Bill
The Bill is divided into two Schedules:
-
Schedule
1 contains the detail of the proposed amendments.
- Part
1 amends the 2019 Act. It would insert new text covering both the new, resilience‑focused
purpose of the DRF from 1 July 2023, and the interim arrangements preserving
the current funding rules for the 2022–23 financial year.
- Part
2 makes consequential amendments to other Acts.
- Part
3 contains transitional and application provisions to support smooth operation
of the Fund as the different amendments come into force.
- Schedule
2 comprises additional amendments to take effect from the start of the 2023–24
financial year.
- Part 1 would delete from the 2019 Act any references to the previous
post-disaster recovery functions of the DRF.
- Part 2 contains transitional provisions.
Background
The
existing Emergency Response Fund
This Bill seeks to substantially change the policy intent
and remit of the existing ERF.
The ERF was created in 2019 under the previous Coalition
Government but with bipartisan support to provide ‘an additional funding source
for future emergency response and natural disaster recovery… following natural
disasters in Australia that have a significant or catastrophic impact.’[4]
The 2019 Act established the ERF and its two associated special accounts
(see pages 11–12 of this Bills Digest).
A secondary purpose for the ERF was added via amendments
secured by the then Labor Opposition,[5]
as summarised by Senator Murray Watt, then Shadow Minister for Natural Disaster
and Emergency Management: ‘providing funding for what’s known as mitigation, or
resilience, infrastructure and efforts — things that can be done to minimise
the impact of disasters when they do hit.’[6]
According to Senator Watt:
Under the commitments that we have extracted from the
government, the government will increase the funding available under its
proposed Emergency Response Fund from $150 million a year, which is what was in
the original bill, to $200 million per year. As a result of that commitment, we
have an increase of $50 million per annum to be spent by the government on
disaster matters. More importantly, the government has agreed that that extra
$50 million will be dedicated to improving disaster preparedness by funding a
range of risk reduction works.[7]
This Bill repurposes the ERF exclusively for disaster
mitigation and risk reduction. By doing so, the Bill responds to concerns
raised by stakeholders upon the establishment of the ERF (and since) about the
need for a greater focus on mitigation and resilience investment before
disasters strike, in contrast to the prevailing pattern – criticised by the
Productivity Commission[8]
– of governments spending primarily on recovery and rebuilding after disasters.
The detailed background to the ERF’s creation is covered
in the Parliamentary Library’s Bills
Digest on the originating Bill for the 2019 Act[9]
and in the report
of the Senate Finance and Public Administration Legislation Committee’s inquiry
into that Bill.[10]
Recent
context
The Parliamentary
Library’s 2022 Briefing Book article on ‘Natural disasters and climate
risk’ recaps recent natural disasters and climate change projections for
Australia, and outlines the national governance arrangements for disaster
response and climate adaptation as they stood at the time of the 2022 federal
election.[11]
The Briefing Book article also explores background issues
relevant to Parliamentary consideration of the current Bill, including:
- the
inadequacy of federal-state emergency management arrangements as they stood in
May 2022, in light of the nation’s experience with natural disasters over
the previous three years
- the
debate regarding the right balance between investment in disaster prevention
(for example, seeking to reduce global greenhouse gas emissions), mitigation (such
as infrastructure hardening and land use reform)[12]
and response and recovery (such as rescues and rebuilding)
- moral
hazard – for example, whether the expectation of Australian Government
financial assistance following a disaster could reduce incentives to protect oneself
from known extreme weather risks[13]
- planning
for the growing fiscal impact of natural disasters as climate change advances.[14]
How the
current Bill responds to this context
Speaking in relation to the Bill, Home Affairs Minister
Clare O’Neil[15]
criticised the former Coalition Government’s low expenditure from the ERF, and reiterated
the Productivity Commission’s longstanding recommendation to increase spending on
disaster mitigation, not just disaster response.[16]
This Bill implement’s Labor’s
pre-election commitment to invest
‘up to $200 million per year on disaster prevention and resilience’ (with the
intention that this be matched by the states and territories),[17] by rededicating the ERF’s
existing $150 million annual post-disaster recovery allowance to pre-disaster
mitigation. Added to the ERF’s existing $50 million annual allowance for
mitigation spending, this brings the total available for mitigation to a cap of
$200 million annually.
The Bill does not increase the maximum total annual
expenditure allowed from the DRF, though it creates a mechanism for doing so
(see page 18).
Committee
consideration
Senate
Finance and Public Administration Legislation Committee
The Bill has been referred
to the Senate Finance and Public Administration Legislation Committee for
inquiry and report by 16 November 2022,[18]
on the grounds that the Bill deals with a ‘Complicated
issue with huge ramifications for disaster affected communities’.[19]
Details of the inquiry are at the inquiry
webpage.
Policy
position of non-government parties/independents
At the time of writing, parliamentary and public debate or
commentary on the Bill has been limited.
Coalition
Some inferences may be drawn from commentary and debate
prior to the Bill’s introduction. For example, the Shadow Minister for
Emergency Management, Senator Perin Davey, raised concerns about whether the
Coalition’s 2022 ERF spending commitments (in particular the $150 million announced
for post-flood recovery and resilience in NSW and Queensland) would be honoured
in full by the incoming Labor Government.[20]
Responding to such concerns, the interim arrangements in
the Bill for the 2022–23 financial year allow the Government to pay out previously
committed funds. Home Affairs Minister Clare O’Neil has committed that the Government
will do so[21]
(see pages 15–17 of this Bills Digest). However, the geographical scope
of previously committed flood recovery support still appears to be contested.[22]
Australian
Greens
During parliamentary debate on the originating Bill for
the 2019 Act, the Australian Greens (the Greens) raised concerns which
are likely still current. Of relevance to this Bill, they called for:
- greater
action on greenhouse gas emissions to address climate change, which is the root
cause of Australia’s worsening natural disaster outlook
- a recalibration
of spending on disaster response versus mitigation, although they noted Labor’s
amendments[23]
as ‘a step in the right direction’[24]
- higher
taxes on fossil fuel companies to bear the cost of establishing the Fund.
At that time, the Greens also echoed governance concerns
raised by the Scrutiny Committee in relation to the originating Bill to the 2019
Act.[25]
For example, Greens Senator Mehreen Faruqi stated:
… natural disasters and emergencies cause immense suffering,
and responding to that suffering quickly and properly is absolutely vital. But
instead of committing to resilience and well-managed disaster response, or
actually acting on the root causes of why these disasters are occurring, the
government has brought forward this bill, which fails on the resilience front,
fails on the climate action front and lacks all of the appropriate transparency
and safeguards in its spending on disaster response.[26]
Greens Senator Larissa Walker added:
We here at the Greens will always be strong supporters of not
just mopping up after a disaster but actually investing in preventing them,
investing in not only community resilience and preparedness but the mitigation
of what’s causing these natural disasters. We are in a climate emergency.[27]
Position of
major interest groups
Insurance
industry
The Insurance Council of Australia (ICA) has welcomed the
introduction of the Bill and called on the States and Territories to match the
Australian Government’s funding commitment in their respective jurisdictions.[28]
This position is consistent with its arguments in response to the originating
Bill to the 2019 Act:
The Insurance Council supports the need for recovery funding
to help communities to rebuild after a natural disaster. However, a much
stronger focus, previously recommended by multiple government initiated
inquiries, is required on spending for disaster mitigation. The primary role of
governments in disaster management should be to reduce community impacts
arising from extreme weather events, strong policies that seek to control risks
through appropriate building codes, land use planning and investment in
preventative mitigation infrastructure.[29]
In supporting this Bill, the ICA reiterated its previous
policy recommendations that state-based duties, levies and taxes on insurance
products be abolished, and for land use planning reform and strengthened
building codes to further reduce the risk to properties of natural disasters.[30]
Queensland-based insurer RACQ has also welcomed the Bill
and called on the states and territories to match funding[31]
(see further ‘Queensland stakeholders’ below).
Some other insurers commented on the need for more
emphasis on resilience and mitigation measures during the inquiry
of the Senate Finance and Public Administration Committee into the originating
Bill for the 2019 Act:
- Insurance
Australia Group (IAG) submitted that ‘While IAG supports disaster recovery
efforts … a more balanced approach to spending on disaster mitigation and
resilience measures and recovery and reconstruction is required … IAG has
continually expressed the view that prevention is better than cure.’[32]
- Suncorp
Group Limited submitted that it ‘would like to see the Government address
the chronic shortfall in disaster resilience funding[.] … By substantially
increasing natural hazard resilience funding, post-disaster resources could be
reduced. Australia is currently stuck in a vicious cycle of disaster, rebuild,
repeat.’[33]
Queensland
stakeholders
Foreshadowing the likelihood of future competition between
States and Territories for the limited available funding, Queensland-based
insurer RACQ has stated that ‘Queensland must get its fair share’ from the DRF.
Its CEO, David Carter, elaborated:
As the east coast prepares for a third consecutive La Nina
this summer, Queensland faces the brunt of increased climate impacts … It’s
only sensible and fair that Queensland receives significant support from this
Fund to better protect our communities against this threat.[34]
The Local Government Association of Queensland (LGAQ) has also
welcomed the Bill, anticipating that many Queensland councils would receive
funds for critical resilience and mitigation projects. LGAQ CEO Alison Smith has
stated:
Many Queensland councils have millions of dollars worth of
disaster resilience projects ready to proceed but are being hamstrung by lack
of adequate funding available … Getting money flowing from the Federal
Government’s Emergency Response Fund is a big step in the right direction for
communities in Queensland, Australia’s most disaster-prone state … We are
looking forward to seeing up to $200 million a year from the national fund go
towards prevention measures such as flood levees, sea walls, cyclone shelters,
evacuation centres, fire breaks and telecommunications improvements.[35]
Other
stakeholders
Some other stakeholders’ positions might partially be
anticipated based on their comments during the Senate
inquiry into the originating Bill for the 2019 Act:
Financial
implications
As stated in the Explanatory
Memorandum to the Bill, ‘The changes in the Bill will not have any
financial impact.’[39]
The existing financial architecture of the Fund and associated special
accounts, and the total annual spending cap of $200 million, remain
unchanged.[40]
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bill’s compatibility with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[41]
Parliamentary Joint Committee on Human Rights
At the time of writing, the Parliamentary Joint Committee
on Human Rights had not considered the Bill.
Key issues
and provisions
Continuity of the Fund’s existing financial and
governance architecture
The Bill preserves the substance of the existing financial
architecture and governance arrangements developed for the ERF, mostly
extending them to the renamed DRF without change.
Most provisions in the Bill simply give effect to the
change in name from ‘Emergency Response Fund’ to ‘Disaster Ready Fund’ and
similar name changes for associated special accounts, as illustrated in Figure
1 on the following page.
Minor changes to the governance model
The Bill also proposes the following relatively minor
refinements to the previous model.
Schedule 1, Part 1, item 97
repeals subsection 32(1) and inserts proposed subsections 32(1A) and (1),
to harmonise the procedure for debiting grant funding to state and territory
governments with the current procedure for debits to support other
beneficiaries; item 101 makes equivalent changes for subsection
32A(1) (see Figure 1).
Under these changes, the Emergency Management Minister
would request the Finance Minister to give the relevant direction to debit
funds, rather than the current procedure whereby the Emergency Management
Minister gives this direction, despite the special account being administered
by another department (the Department of Finance) – an arrangement described in
the Explanatory Memorandum to the Bill as ‘unusual and inconsistent with
comparable provisions in the legislation governing other Australian Government
investment funds.’[42]
Figure 1: Schematic
of proposed changes to the Emergency Response Fund
Source: Parliamentary Library analysis.
The Bill also includes various provisions responding to
the establishment of the National Emergency Management Agency (NEMA) by:
- reassigning
to NEMA rights and responsibilities in the Fund’s governance arrangements which
were formerly assigned to the Department of Home Affairs[43]
(for example, establishing NEMA’s accountable authority and SES as valid
delegates of the Emergency Management Minister)
- renaming
the current ‘Home Affairs Emergency Response Fund Special Account’ as the
‘Disaster Ready Fund Payments Special Account’[44]
(see Figure 1 on page 12)
- generally
deleting or clarifying references to the Department of Home Affairs.[45]
Schedule 1, Part 1, item 105 repeals and replaces
Division 5 of Part 3 of the 2019 Act. Within the proposed new ‘Division
5—Limitation on total annual debits from the DRF Special Account’ are proposed
sections 34 and 34A. Proposed subsection 34(8) creates a
requirement for the responsible Ministers (that is, the Treasurer and Finance
Minister) to review the legislation at least once every five years.
Unresolved
governance issues
As the ERF’s core financial and governance architecture is
unchanged by the current Bill and will transfer to the DRF, concerns expressed
by the Senate Standing Committee for the Scrutiny of Bills in relation to the
originating Bill for the 2019 Act remain relevant.[46]
Notably, the Committee was concerned by the broad
ministerial discretion to confer grants and other funding under the limited high-level
guidance in the 2019 Act, and without significant Parliamentary scrutiny:
Broad discretionary powers… The committee’s view is
that, where it is proposed to allow the expenditure of a potentially
substantial amount of Commonwealth money, the expenditure should be subject to
at least some level of parliamentary scrutiny. In this regard, the committee is
concerned that the bill contains only very limited guidance on its face as to
the terms and conditions that would attach to financial assistance granted in
accordance with clause 20 …
The committee also notes that clause 24 (which seeks to set
constitutional limits on the provision of financial assistance) provides that
the minister may grant financial assistance to a state or territory … In this
respect, the committee notes that section 96 of the Constitution confers on the
Parliament the power to make grants to the states and to determine the
terms and conditions attaching to them. Where the Parliament delegates this
power, the committee considers it appropriate for the exercise of the power to
be subject to at least some level of parliamentary scrutiny. However, as noted
above, the bill appears to contain only limited guidance as to the terms and
conditions on which financial assistance may be granted.[47]
[original emphasis]
The Committee sought additional advice from the Minister
in relation to that matter. Having received the Minister’s response, the
Committee acknowledged:
… that funding provided in accordance with the bill would to
[sic] be subject to a number of controls designed to prevent arbitrary
decision-making and promote transparency. However, from a scrutiny perspective,
the committee remains concerned that the bill would permit the expenditure of a
substantial amount of Commonwealth money, with limited guidance on the face of
the bill as to the terms and conditions on which funds may be granted.[48]
Another concern for the Scrutiny Committee is set out
below:
Significant matters in non-disallowable legislative
instruments… Clause 39 of the bill would permit the responsible ministers
to give the Future Fund Board (FFB) written directions about the performance of
its Emergency Response Fund investment functions. Directions given by the
responsible ministers make up the Fund’s Emergency Response Fund Investment
Mandate. Given that the directions making up the investment mandate are given
by a minister to a Commonwealth entity, they will not be subject to
disallowance or sunsetting. The committee’s consistent view is that significant
matters relating to a legislative scheme (for example, the investment of
Commonwealth funds) should be included in primary legislation, or at least in
legislative instruments subject to disallowance and sunsetting.[49]
Again, the Committee sought additional advice from the
Minister in relation to that matter. Having received the Minister’s response,
the Committee acknowledged:
… the importance of ensuring certainty in long-term
investment activities. However, as outlined in its initial comments, the
committee does not generally consider operational certainty, or consistency
with arrangements for other Commonwealth investment funds, as sufficient
justification for leaving significant elements of schemes, such as the
emergency response fund scheme, to non-disallowable legislative instruments.
Indeed, the committee has stated on a number of occasions that such matters
should be included in primary legislation, or at least in delegated legislation
that is subject to disallowance. From a scrutiny perspective, the committee
also considers that the proposed level of parliamentary oversight may not be
sufficient. In this respect, the committee reiterates that disallowance and
sunsetting are the primary means by which the Parliament exercises control over
delegated legislation … Finally, it remains unclear to the committee how
providing that the Investment Mandate would be subject to disallowance would
undermine operational certainty.[50]
In that instance, the Scrutiny Committee requested relevant
amendments to address these issues, and that additional information be included
in the Explanatory Memorandum – such as the sources of advice the minister
would consult before making grants, and the expectation that grant program
guidelines be published. The Explanatory Memorandum was not revised (although program
guidelines were developed and published); nor
did the Senate pass amendments to tighten the spending criteria or allow
additional Parliamentary scrutiny through the 2019 Act.
In contrast, the inquiry into the originating Bill for the
2019 Act by the Senate Finance and Public Administration Legislation
Committee concluded that these governance arrangements were adequate,[51]
citing extensively[52]
from the joint submission by the Department of Finance and Emergency Management
Australia.[53]
The ‘Additional Comments’ by Labor Senators to the Committee[54]
did not mention the governance issues summarised above, although Greens Senators
expressed some relevant concerns during parliamentary debate on the Bill.[55]
The current Bill does not substantively change the clauses
of concern in the original (in sections 20, 24 and 39) with respect to these
matters.[56]
‘Other provisions’ (below at page 22 of this Bills
Digest) notes one other feature of concern to the Scrutiny Committee in
2019 that would be preserved by the current Bill.
Changes to
Division 5 – limitations on total annual debits from the special account
The commencement of different provisions in the Bill has
been timed to ensure the status quo continues for the current financial year with
respect to funding categories and annual limits. Provisions in Schedule 1 will enable
the previous Government’s commitments to be honoured out of the rebranded DRF
within this financial year;[57]
see ‘Amendments applicable to the 2022–23 financial year’ below and Figure 2 on
the following page. Amendments in Schedule 2, to take effect from the start of
the 2023–24 financial year, would then:
- remove
the post-disaster recovery and resilience category of expenditure (the ERF’s
current main spending category, with a $150 million cap)
- rededicate
the associated annual funding allowance to mitigation and resilience (the ERF’s
current minor spending category, with a $50 million cap)
- restrict
ongoing Fund expenditure exclusively to mitigation and resilience going forward.
The effect of these changes in practice is summarised in
Figure 3 and ‘Amendments that take effect from the 2023–24 financial year’ on
the following page.
The Explanatory
Memorandum to the Bill clarifies:
It is expected that Schedule 2, which would commence on 1
July 2023, would commence after Schedule 1, which would commence on a day
to be fixed by Proclamation. This would ensure that the provisions operate as
intended, and allow the Government to meet existing commitments in 2022-23 and
dedicate the Disaster Ready Fund to natural disaster resilience and risk
reduction initiatives thereafter.[58]
Amendments applicable
to the 2022–23 financial year
Schedule 1, Part 1, item 105 of the Bill inserts proposed
subsections 34(6) and 34(7) to retain the annual limits for
expenditure for both spending categories in the existing subsections 20(1) and
20(1A) of the 2019 Act, namely:
- post-disaster
recovery (to a cap of $150 million per year – see current subsection 34(1))
- future
resilience (to a cap of $50 million per year– see current subsection 34(2)).[59]
Figure 2: Timing
of proposed amendments under the Bill
Source: Parliamentary Library analysis.
Figure 3: Operation
of the proposed amendments
Source: Parliamentary Library analysis.
This would allow the new Labor Government to honour the
previous Coalition Government’s spending commitments from the Fund (see also
page 8 of this Bills Digest) while still legislating its proposed
long-term changes in full.[60]
Amendments that take effect from the 2023–24
financial year
The amendments in Schedule 2 repeal those sections
enabling or referring to expenditure for post-disaster recovery.
Importantly, Schedule 2, Part 1, item 3 repeals the
existing subsection 20(1) in ‘Division 2—Arrangements and grants’, as
illustrated in Figure 3 on the previous page and Figure 4 below.
Effectively, this will complete the process of refocusing
the DRF from the original primary function of the ERF, namely providing ‘an
additional funding source for future emergency response and natural disaster
recovery… following natural disasters in Australia that have a significant or
catastrophic impact’[61]
(that is, a reactive mechanism) to a focused Australian Government funding
channel to support future disaster risk mitigation and resilience projects (a
proactive mechanism).
As elaborated by the Government in its Explanatory
Memorandum to the current Bill:
From 1 July 2023, the Act will no longer provide for grants
or arrangements to be made for natural disaster recovery. The amendments in
Part 1 of Schedule 2, which will take effect from 1 July 2023, would remove the
provisions that are no longer necessary. This would reflect the Government’s
decision to dedicate the Disaster Ready Fund to natural disaster resilience and
risk reduction initiatives. …
The Government will retain existing funding sources for natural
disaster recovery efforts, most notably under the Australian Government-State
Disaster Recovery Funding Arrangements 2018 (DRFAs). The DRFAs provide for
disaster recovery funding to be delivered through state and territory agencies
to disaster-affected communities.
Dedicating the Disaster Ready Fund to natural disaster
resilience and risk reduction will allow a clearer distinction between the
different funding sources and enhance the focus on building resilience to and
reducing the cost of future natural disasters.
[62]
Figure 4: Simplified
outline of key amendments to Division 2
Source: Parliamentary Library analysis.
New governance around changing annual funding caps
for one or more years
Amendments in Schedule 1, Part 1, item 105 set out a
new procedure for the responsible Ministers (the Treasurer and Finance
Minister) to revise the legislated annual expenditure cap(s) for one or more
years. The 2019 Act has no equivalent mechanism.
Under the Bill, such changes would require mandatory
consultation with the Future Fund Board and would be disallowable by Parliament:
• Under
proposed subsections 34(2) and 34(3) and section 34A, the
responsible Ministers would be able to change the annual $200 million
expenditure cap after requiring the Future Fund Board to assess the
ramifications of doing so and to provide written advice, with a minimum
consultation period of 60 days.
• The
Bill would not require the Future Fund Board’s advice to be made public.
• A ministerial
determination to change the cap would be a legislative instrument, and the Explanatory
Memorandum clarifies that it ‘would be subject to disallowance by
the Parliament’[63]
(emphasis added).
Policy
implications of removing disaster recovery from the Fund’s remit
There may be debate as to whether the commitment in the Explanatory
Memorandum to ‘retain existing funding sources for natural disaster
recovery efforts’[64]
(see page 17 of this Bills Digest) is fully consistent with the Bill’s
removal of the existing ERF disaster recovery funding allowance, by
rededicating it wholly to mitigation.
Critics may question why the new Labor Government did not
pursue alternatives such as increasing the available mitigation funding
allowance to $200 million while preserving the existing recovery funding
allowance. Admittedly, recent turmoil on world markets has seen the Fund’s short-term
investment performance deteriorate, with losses of 1.9 per cent for
the quarter to 30 June 2022 (compared with an average return of
7.5 per cent per year since its inception);[65]
this may have forestalled such a step. However, if such factors are under
consideration, the new Government has not articulated this reasoning publicly
in connection with this Bill.
Critics may also question whether the existing
federal–state Disaster Recovery Funding Arrangements[66]
– to which the new government has reiterated its commitment (see page 17 of
this Bills Digest) – adequately provide for the catastrophic disasters that
were the focus of the ERF. As articulated by former Coalition Minister for
Water Resources, Drought, Rural Finance, Natural Disaster and Emergency
Management, David Littleproud, at the introduction of the originating Bill for
the 2019 Act:
The Emergency Response Fund is a long-term investment to
provide an additional source of sustainable funding for emergency response and
recovery following a natural disaster that has a significant or catastrophic
impact on Australia. … The fund will only be accessed when the government
determines existing recovery programs are insufficient to meet the scale of
the response required.[67]
[emphasis added]
However, the scale of Budget expenditure following recent
disasters under the existing federal‑state arrangements has amounted to many
billions of dollars, which dwarfs the allowed annual spending limits from the ERF/DRF.[68]
This context may reduce the force of such concerns.
Fiscal
implications of changing the remit
The changed spending remit may also entail a significant
departure from the fiscal logic of the original ERF.
The ERF’s objective was to provide ‘a sustainable source
of funding for natural disaster emergency response and recovery into
perpetuity’.[69]
That is, the policy intent behind the ERF was to grow the Fund as a source of
emergency top-up funds for future catastrophes, as explained by former
Coalition Government Minister for Emergency Management and National Recovery
and Resilience Bridget McKenzie:
… the Emergency Response Fund is a [F]uture [F]und. It’s $4.8
billion at the moment. We’re wanting to grow that to $6.6 billion over the next
eight years for future generations because we know natural disasters are going
to be more intense and frequent going forward. The interest of that we’re able
to spend every financial year.[70]
However, the former Coalition Government struggled to
justify this approach of maximising Fund growth rather than spending investment
income on recovery, when Australian communities experienced successive major natural
disasters over 2019 to 2022.[71]
Noting Labor’s persistent criticism in Opposition of the
Coalition’s ‘failure’ to spend money from the ERF,[72]
it may be difficult for the new Albanese Government to pursue the same conservative
spending strategy with respect to the rebranded Fund, even in a more
challenging market and fiscal environment.
If the Fund’s growth cannot match the demand for financial
support for mitigation and resilience projects – whether because of the scale
or frequency of state and territory requests, Australian Government spending choices,
poor market conditions or a combination of such factors – this could have
implications for the Fund’s Investment Mandate, even though the current Bill does
not directly change this mandate in any significant way.
It could also have implications for the Fund’s sustainability
and suitability as a long-term funding mechanism for large-scale mitigation and
resilience projects nationally. Such projects are likely to be both expensive and
extensive, as climate change advances. For example, the
NSW Government anticipates a cost of billions of dollars to implement its
committed buy-back scheme for Lismore properties following the catastrophic
2022 east coast floods.[73]
NSW also proposes to raise the height of Sydney’s Warragamba Dam, at an
estimated cost of $1.4 billion (a federal contribution has been sought).[74]
Tellingly, during debate in NSW about the competing
mitigation and resilience funding plans of the NSW Labor Opposition and
incumbent NSW Coalition Government, Premier Dominic Perrottet argued ‘$200 million
… wouldn’t even pay for the potholes from the last flood.’ Although the Premier
was not referring to the $200 million annual cap of the federal Labor’s Government’s
DRF, similar arguments could arise in this context.
As at 31 March 2022, the ERF had earned less than
$1 billion in interest since its formation, and its total balance is under
$5 billion.[75]
Sceptics may question the viability of meeting the need for federal support for
ambitious mitigation projects exclusively or primarily from the investment
returns on the current Fund balance in the current market, notwithstanding that
the $200 million annual sum (if fully spent, and if matched by the states
and territories) would align with the recommendation from the Productivity
Commission’s 2014 inquiry.[76]
Governance
issues arising from the pivot from post-disaster to pre-disaster investment
Current
arrangements
As discussed above,[77]
the governance arrangements for ERF/DRF expenditure confer broad ministerial
discretion to select funding recipients. This is preserved by the current Bill.
Further, the current program
guidelines require only that the Emergency Management Minister consult the
head of Emergency Management Australia (EMA, now merged into NEMA) when
deciding grants. In turn, the head of EMA should consult with state and territory
or local governments, affected communities and other experts as appropriate. These
requirements are not in the 2019 Act, and this would not change.
Arguably, the ERF’s focus on post-disaster recovery
has itself been the main assurance mechanism for merit-based, transparent funding
decisions for most of the ERF’s annual spending allowance. Provided
exceptional, large-scale catastrophes do not occur simultaneously and compete
for the same funding pool, there is arguably less need for stringent criteria
and decision-making frameworks to fairly prioritise potential recipients. For
example, few would contest the merit of assigning recovery funds for the 2022
east coast floods or 2019–20 Black Summer bushfires; these were extraordinary
events.
In contrast, assigning funding for projects to counter
future possibilities is less clear cut, as expressed by the former Independent
Senator Rex Patrick during debate on the originating Bill for the 2019 Act:
I understand that the $150 million will be spent in some
sense as a result of a disaster. That is almost outside of the control of even
Mr Dutton. I want to go back to the $50 million. Clearly that is pre-emptive…
Will there be consultation? Will there be a call for submissions? Will there be
experts involved in deciding how this $50 million will be spent each year? Is
the government setting up a panel? How exactly does that money get allocated? …
[O]ne might presume there might be huge demand for these funds.[78]
Need to
prioritise mitigation projects
The new Labor Government has not yet established how it would
enhance existing governance arrangements to support the fair prioritisation of
projects to mitigate hypothetical future risks. This will be more challenging
and subjective, and developing suitable guidance criteria may prove complex,
controversial or both.
Firstly, the uncertainties and technical difficulties of forecasting
the local impacts of extreme weather trends may frustrate attempts to rank
proposals based on ‘outcomes’ and ‘value for money’.[79]
Communities face qualitatively different disaster risks (bushfire, riverine
flooding, flash flooding, storm surge, cyclone, et cetera). These risks are
more or less urgent in the near term depending on location (eastern versus western
parts of the country) in conjunction with medium‑term weather cycles (El
Nino versus La Nina); they are more or less expensive to governments in terms
of rebuild costs (repairs across a densely populated city versus repairs to a
few farm homesteads and fences); and they are more or less complicated by moral
hazard issues.[80]
These risks are also evolving rapidly in response to
climate change, and existing risk models based on historical and/or high-level
data are proving increasingly imperfect at the local level.[81]
Without drawing on actuarial experts and extensive climate modelling, government
decision-makers may be unable to reach defensible estimates of which projects are
likely to deliver the greatest future value (in terms of avoided rebuilding
costs, avoided deaths or other potential impact metrics). Is it fair to expect
applicants to conduct or commission such actuarial assessments? Alternatively,
would the public be comfortable basing funding decisions on the output of an
Australian Government actuarial master formula? If not, by what yardsticks
would competing proposals be assessed?
The current Bill is also silent on how recipients will be
prioritised in the event of competition between States and Territories (or
regions) for funding. Comments from stakeholders in Queensland immediately
after the introduction of the Bill already foreshadow such competition (see page
10 of this Bills Digest).[82]
Should some principal of funding equity among states and territories apply? If
so, should its application take account of differences in the jurisdictions’
revenue-raising capacities and need profiles, as is done when distributing GST
revenue?[83]
What would be each jurisdiction’s ‘fair share’?[84]
Alternatively, will states and territories essentially determine which projects
get funded by exercising their willingness (or not) to match Australian
Government investments from the Fund, making the Australian Government’s views
on projects’ relative merit at least partially moot?
The choice of metrics for ‘value’ would also be fraught. The
cost burden of disaster recovery is rising,[85]
so there may be a fiscal case for prioritising projects that would save the
greatest amount of money in future. However, this approach may increase inequality.
The most expensive property damage and greatest rebuild costs will be seen in
highly developed, built-up areas. All else being equal, should Fund expenditure
therefore prioritise risk mitigation projects primarily benefiting
urban-dwelling Australians in our most densely developed coastal cities, above
projects benefitting rural and remote communities? Alternatively, should
governments spend less to counter potential losses in the wealthiest postcodes,
on the basis that residents would be better able to absorb shocks than would
poorer Australians? Or would this unfairly punish people for their success or
luck? Or should decision-makers instead weight proposals based solely on their potential
human impact? If so, should they focus on the potential number of lives saved
per dollar spent, or instead the potential number of homes and jobs saved,
poverty avoided, price inflation avoided or other economic impacts? How will
these be modelled?
Such tensions are common to spending decisions in many
other policy areas, and reasonable compromises are possible. However, the
current Bill and Explanatory Memorandum provide no indication of the new Labor Government’s
thinking on these issues, which is likely to be of some interest to Parliament.
Minor drafting
errors
The Bill appears to have minor drafting errors which will
be able to be corrected during the debate on the Bill:
- Schedule
1, Part 3, item 209 refers to ‘amendments made by items 80F, 86, 95,
96B and 99’ whereas the Explanatory
Memorandum refers to ‘amendments made by items 80, 87, 96, 100 and 104’.[86]
There are no items 80F or 96B.
- Schedule
2, Part 1, items 8 and 10 incorrectly cross-reference text in paragraph
28A(7)(b) and subsection 32A(3).
Other provisions
The
exercise of delegated powers by officials
Schedule 1, Part 1, items 80, 87, 100 and 104
make minor changes concerning the exercise of delegated powers by delegates of
the Finance Minister (as allowed under section 59 of the 2019 Act), adding
the requirement to copy in other relevant departments (but not their respective
ministers) when exercising delegated powers. The Explanatory
Memorandum clarifies that such delegations are limited to senior public servants,
and that the purpose is to ‘to reduce administrative burden, given that
correspondence usually occurs at a departmental level as a result of
delegations. Departments would still be required to keep their Ministers
appropriately informed under provisions in the PGPA Act’.[87]
[emphasis added]
Schedule 1, Part 1, item 96 makes the equivalent
adjustment with respect to delegates of the Emergency Management Minister (as
allowed under section 61 of the 2019 Act), and the Explanatory
Memorandum states that such delegations ‘would be limited to the
accountable authority of the NEMA and SES employees, or acting SES employees,
in the NEMA.’[88]
However, the 2019 Act permits delegation to a much
broader category of people under paragraph 61(1)(c), which allows the
Emergency Management Minister to delegate powers to any Commonwealth official who
has the expertise appropriate to the power. Paragraph 61(1)(c) would be
retained by this Bill. The Senate Standing Committee for the Scrutiny of Bills
expressed concern with this feature in its 2019 reports on the originating Bill
for the 2019 Act,[89]
and its comments remain relevant:
…while the committee acknowledges that delegates, as
‘officials’ under the PGPA Act, would be subject to a number of relevant
duties, it remains concerned that the bill does not appear to limit the
delegation of the Emergency Management Minister’s powers to staff at a
particular level, or require the minister to be satisfied that delegates
possess expertise appropriate to the relevant delegation.[90]
Housekeeping
provisions
The Bill also includes various ‘housekeeping’ provisions.
For example, Schedule 1, Part 1, items 21, 22, 31 and 39 delete
redundant references to the Education Investment Fund, whose balance was
transferred into the ERF on its commencement in 2019,[91]
and which no longer exists. Similarly, Schedule 1, Part 1, item 61 repeals
a subparagraph referring to the former Nation-building Funds Act 2008,
which is no longer in force.
[1]. Murray
Watt (Minister for Emergency Management), ‘Australia’s
Key Disaster Agencies Now Even Closer’, media release, 1 July 2022.
[2]. Murray
Watt (Minister for Emergency Management), ‘Transcript
of Press Conference: Parliament House, Canberra: 31 August 2022: Launch of New
Federal Disaster Agency; NEMA; BoM Spring/Summer Outlook; Natural Disaster
Payments; Flood Risks’, media release, 31 August 2022. For
further background on emergency management governance arrangements, please see Tessa
Satherley and Daniel May, ‘Natural
Disasters and Climate Risk’, Parliamentary Library Briefing Book: Key
Issues for the 47th Parliament (Canberra: Parliamentary Library, June 2022).
[3]. See
‘Special
Appropriations: Special Accounts’, Department of Finance, 14 July 2022.
[4]. Explanatory
Memorandum, Emergency Response Fund Bill 2019, 4.
[5]. See:
Murray Watt, Second
Reading Speech: Emergency Response Fund Bill 2019 and Emergency Response Fund
(Consequential Amendments) Bill 2019, Senate, Debates, 17 October
2019, 3227.
[6]. Murray
Watt, Second
Reading Speech, 3228.
[7]. Murray
Watt, Second
Reading Speech, 3228.
[8]. Productivity Commission (PC), Natural Disaster Funding
Arrangements: Volume
1 and Volume
2, Inquiry Report, 74 (Canberra: PC, December 2015).
[9]. Hazel
Ferguson, Helen Portillo-Castro, and Paula Pyburne, ‘Emergency
Response Fund Bill 2019 [and] Emergency Response Fund (Consequential
Amendments) Bill 2019’, Bills Digest, 41, 2019–20 (Canberra:
Parliamentary Library, 2019), 7–9.
[10]. Senate
Finance and Public Administration Legislation Committee, Emergency
Response Fund Bill 2019 and Emergency Response Fund (Consequential Amendments)
Bill 2019 (Canberra: The Senate, 2019), 3–5.
[11]. See
the section ‘Current disaster response and climate adaptation arrangements’ in
Satherley and May, ‘Natural
Disasters and Climate Risk’, Briefing Book for the 47th Parliament.
With the exception of the merger of Emergency Management Australia and the
National Recovery and Resilience Agency into the new National Emergency
Management Agency or ‘NEMA’ (see the Glossary at pages 4–5), federal governance
arrangements for emergency management and climate adaptation are substantively
unchanged at the time of writing.
[12]. See
the break-out box about defining ‘mitigation’ at the end of the section ‘Changes
to natural disaster arrangements during the 46th Parliament’ in Satherley and
May, ‘Natural
Disasters and Climate Risk’, Briefing Book for the 47th Parliament.
[13]. The
issue of moral hazard arises if, for instance, a person decides to purchase a
residence on the beach or a riverfront despite the known and growing risk of
flooding/erosion, on the expectation governments would succumb to public pressure
to fund a sea wall or levee, or to offer a buy-back. The issue also arises if
local, state or territory planning schemes allow risky – but lucrative – land development
despite known natural disaster risks, on the expectation that public pressure
would force a higher level of government to subsidise the cost if those risks were
realised.
[14]. Satherley
and May, ‘Natural
Disasters and Climate Risk’, Briefing Book for the 47th Parliament.
[15]. Clare
O’Neil, Second
Reading Speech: Emergency Response Fund Amendment (Disaster Ready Fund) Bill
2022, House of Representatives, Debates, (proof), 7 September 2022,
13–15.
[16]. The Productivity Commission’s 2014
Inquiry into Natural Disaster Funding Arrangements had reported that Australian
Government mitigation spending was only 3 per cent of what it spent
post-disaster; PC, Natural
Disaster Funding Arrangements: Volume 1, 9.
[17]. Australian
Labor Party, Disaster
Readiness, Australian Labor Party policy document, 10 June 2022.
[18]. Anne
Urquhart, Committees:
Presentation of Selection of Bills Committee Report No. 4 of 2022, Senate, Debates,
8 September 2022, 16.
[19]. Senate
Standing Committee for the Selection of Bills, Report,
4, 2022, 8 September 2022: [3] and [6].
[20]. Perin
Davey (Shadow Minister for Emergency Management), ‘Where
Has the Money Gone?’, media release, 29 June 2022.
[21]. Clare
O’Neil, Second
Reading Speech, 14; see also the Explanatory
Memorandum, 3.
[22]. Senator
Davey (Nationals) has argued that the Coalition ‘committed $75 million each to
New South Wales and Queensland Governments to spend in flood affected Local
Government Areas – not just the Northern Rivers’. Minister O’Neil’s second
reading speech and the Explanatory Memorandum refer only to $150 million for
flood recovery in the Northern Rivers region of NSW. (The Northern Rivers regional
capital, Lismore, and surrounding communities experienced unprecedented flood
damage in February–March 2022, when previous
flood height records were broken by more than 2 metres. The NSW Government has accepted
in principle the recommendation of its independent
inquiry into the flood response (the O’Kane Inquiry) for ‘a phased program
to migrate people off the highest-risk areas of the Lismore floodplain, and
other Northern Rivers floodplains, through a significantly expanded land swap
and voluntary house purchase scheme’ (part of Recommendation 19); see Max
Maddison, ‘Flood
Buybacks “To Cost Billions”’, Australian, 18 August 2022, 1 and 8.
[23]. See
page 6 of this Bills Digest.
[24]. Larissa
Waters, Second
Reading Speech: Emergency Response Fund Bill 2019 and Emergency Response Fund
(Consequential Amendments) Bill 2019, Senate, Debates, 17 October
2019, 3234.
[25]. The
2019 Scrutiny Committee’s concerns are discussed at pages 13–15 of this Bills
Digest.
[26]. Mehreen
Faruqi, Second
Reading Speech: Emergency Response Fund Bill 2019 and Emergency Response Fund
(Consequential Amendments) Bill 2019, Senate, Debates, 17 October
2019, 3229–3232.
[27]. Larissa
Waters, Second
Reading Speech, 3236.
[28]. Insurance
Council of Australia (ICA), ‘Insurance
Council welcomes Disaster Ready Fund’, media release,
7 September 2022.
[29]. ICA,
Submission
to Senate Finance and Public Administration Legislation Committee, Inquiry
into the Emergency Response Fund Bill 2019 and Emergency Response Fund
(Consequential Amendments) Bill 2019, [Submission no. 18], 26 September 2019,
1.
[30]. ICA,
Building
a More Resilient Australia: Policy Proposals for the Next Australian Government
(Sydney: ICA, 2022), 6, 10 and 18.
[31]. RACQ,
‘Queensland
Must get its Fair Share of Disaster Funding’, media release, 7 September 2022.
[32]. Insurance
Australia Group (IAG), Submission
to Senate Finance and Public Administration Legislation Committee, Inquiry
into the Emergency Response Fund Bill 2019 and Emergency Response Fund
(Consequential Amendments) Bill 2019, [Submission no. 7], 25 September 2019,
[1]–[2].
[33]. Suncorp
Group Limited, Submission
to Senate Finance and Public Administration Legislation Committee, Inquiry
into the Emergency Response Fund Bill 2019 and Emergency Response Fund
(Consequential Amendments) Bill 2019, [Submission no. 20], 26 September 2019,
1.
[34]. RACQ,
‘Queensland
Must get its Fair Share’.
[35]. John
Thompson, ‘LGAQ
Welcomes $200 million in Disaster Prep Funding’, Council Magazine,
8 September 2022.
[36]. Australian
Business Roundtable for Disaster Resilience and Safer Communities, Submission
to Senate Finance and Public Administration Legislation Committee, Inquiry
into the Emergency Response Fund Bill 2019 and Emergency Response Fund
(Consequential Amendments) Bill 2019, [Submission no. 21], 27 September 2019,
[1].
[37]. Australian
Local Government Association, Submission
to Senate Finance and Public Administration Legislation Committee, Inquiry
into the Emergency Response Fund Bill 2019 and Emergency Response Fund
(Consequential Amendments) Bill 2019, [Submission no. 9], 25 September 2019,
[2].
[38]. Australian
Red Cross, Submission
to Senate Finance and Public Administration Legislation Committee, Inquiry
into the Emergency Response Fund Bill 2019 and Emergency Response Fund
(Consequential Amendments) Bill 2019, [Submission no. 15], September 2019,
[1].
[39]. Explanatory
Memorandum, 4.
[40]. The
Bill makes provision for the annual spending cap to be revised by responsible
ministers following advice from the Future Fund board, as discussed at page 16
of this Bills Digest. Such a change would be subject to Parliamentary
scrutiny and open to disallowance.
[41]. The
Statement of Compatibility with Human Rights can be found at page 5 of the Explanatory
Memorandum to the Bill.
[42]. Explanatory
Memorandum, 18 and 20.
[43]. For
example, Schedule 1, items 151–154 amend section 61.
[44]. For
example, Schedule 1, items 42 and 54.
[45]. For
example, Schedule 1, items 27–29.
[46]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
Digest, 6, 2019, 18 September 2019, 6–11; and Scrutiny
Digest, 7, 2019, 16 October 2019, 56–70.
[47]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
Digest, 6, 2019, 6–7.
[48]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
Digest, 7, 2019, 60.
[49]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
Digest, 6, 2019, 9.
[50]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
Digest, 7, 2019, 66.
[51]. Senate
Finance and Public Administration Legislation Committee, Emergency
Response Fund Bill 2019 and Emergency Response Fund (Consequential Amendments)
Bill 2019, 22–23.
[52]. Senate
Finance and Public Administration Legislation Committee, Emergency
Response Fund Bill 2019 and Emergency Response Fund (Consequential Amendments)
Bill 2019, 13–16.
[53]. Department
of Finance and Emergency Management Australia, Revised
Joint Submission to Senate Finance and Public Administration Legislation
Committee, Inquiry into the Emergency Response Fund Bill 2019 and Emergency
Response Fund (Consequential Amendments) Bill 2019, [Submission no. 5], September
2019.
[54]. Senate
Finance and Public Administration Legislation Committee, Emergency
Response Fund Bill 2019 and Emergency Response Fund (Consequential Amendments)
Bill 2019, 25–26.
[55]. See: Mehreen Faruqi, Second
Reading Speech, 3231; Senator Faruqi argued the Bill ‘lacks all of the
appropriate transparency and safeguards in its spending on disaster response.
Having seen the government’s mismanagement of the drought relief fund and the
embarrassment of their so-called drought envoy, are we meant to trust that a
fund administered by Minister Littleproud, who seems to be in two minds as to
whether climate change is human made or not, is going to be the right thing for
the community? I think not.’
[56]. See
Schedule 1, items 124–128.
[57]. Explanatory
Memorandum, 30.
[58]. Explanatory
Memorandum, 30.
[59]. Other
relevant provisions in Schedule 1 are items 77, 84, 99 and 103.
[60]. See:
Clare O’Neil, Second
Reading Speech, 14; Explanatory
Memorandum, 3.
[61]. Explanatory
Memorandum, Emergency Response Fund Bill 2019, 4.
[62]. Explanatory
Memorandum, 30–31.
[63]. Explanatory
Memorandum, 22.
[64]. Explanatory
Memorandum, 31.
[65]. Future
Fund, Portfolio
update at 30 June 2022, 31 August 2022, [6].
[66]. See
‘Current disaster response and climate adaptation arrangements’ in Satherley
and May, ‘Natural
Disasters and Climate Risk’, Briefing Book for the 47th Parliament.
[67]. David
Littleproud, Second
Reading Speech: Emergency Response Fund Bill 2019, House of
Representatives, Debates, 11 September 2019, 2450–2452.
[68]. See
‘Natural disaster expenditure in the Australian Government Budget’ in Satherley
and May, ‘Natural
Disasters and Climate Risk’, Briefing Book for the 47th Parliament.
[69]. Explanatory
Memorandum, Emergency Response Fund Bill 2019, 32.
[70]. Bridget
McKenzie (Minister for Regionalisation and Emergency Management), ‘Transcript
of Interview with Patricia Karvelas: ABC Radio National: Solomon Islands
Security Pact; Emergency Response Fund’, media release,
22 April 2022.
[71]. See
for example: Jamieson Murphy, ‘Govt
Finally Cracks Open $4.8b Emergency Response Fund for Flood Victims’, Canberra
Times, 21 March 2022; and the brief chronology of disasters in
the first section of Satherley and May, ‘Natural
Disasters and Climate Risk’, Briefing Book for the 47th Parliament.
[72]. See,
for example, the Emergency
Response Fund Spending Interest, ParlInfo search results.
[73]. See
Maddison, ‘Flood
buybacks “To Cost Billions”’.
[74]. Alexandra
Smith, ‘Raising
Warragamba Dam Wall will need Federal Cash: Premier’, Sydney Morning
Herald, 24 July 2022, 4. For clarity: these examples are drawn
from state and territory policy discussions and commentary unrelated to the
current Bill. They are mentioned here only to illustrate the argument.
[75]. ‘Emergency
Response Fund’, Department of Finance, 5 May 2022.
[76]. PC,
Natural
Disaster Funding Arrangements: Volume 1.
[77]. See
pages 13–15 of this Bills Digest.
[78]. Rex Patrick, Second
Reading Speech: Emergency Response Fund Bill 2019, Emergency Response Fund
(Consequential Amendments) Bill 2019 and Second
Reading Speech: Emergency Response Fund Bill 2019, Emergency Response Fund
(Consequential Amendments) Bill 2019, Senate, Debates, 17 October 2019,
3249 and 3251.
[79]. As
required under the Commonwealth
Grants Rules and Guidelines 2017, 26–31.
[80]. For
example, many rivers flood reliably, but new residential and commercial
developments continue to appear on known floodplains. Coastal erosion and storm
surge risks are increasing, but demand for beachfront property remains high.
Moral hazard comes into play if risky developments and/or property purchases
are incentivised based on the expectation governments will shield market
participants from the full cost of future disasters.
[81]. See
for example Vyacheslav Lyubchich, Nathaniel K.
Newlands, Azar Ghahari, Tahir Mahdi and Yulia R. Gel, ‘Insurance
Risk Assessment in the Face of Climate Change: Integrating Data Science and
Statistics’, Advanced Review, WIRES Computational Statistics 11, no.
4 (July/August 2019), e1462.
[82]. See,
too, the debate during the introduction of the former Coalition Government’s Cyclone
and Flood Damage Reinsurance Pool, in which some senators and members
questioned the fairness of a measure to support cyclone risk management in
northern Australia, but which did not help communities elsewhere to address growing
flood and bushfire threats under climate change – see Tessa Satherley, ‘Treasury
Laws Amendment (Cyclone and Flood Damage Reinsurance Pool) Bill 2022’, Bills
Digest, 54, 2021–22 (Canberra: Parliamentary Library, 2022), 13–14.
[83]. ‘About GST distribution’,
Commonwealth Grants Commission.
[84]. RACQ,
‘Queensland
Must get its Fair Share’.
[85]. See
‘The natural disaster and extreme weather outlook’ in Satherley and May, ‘Natural
Disasters and Climate Risk’, Briefing Book for the 47th Parliament.
[86]. Explanatory
Memorandum, 29.
[87]. Explanatory
Memorandum, 16.
[88]. Explanatory
Memorandum, 17.
[89]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
Digest, 6, 2019, 18 September 2019: 6–11; and Senate Standing Committee for
the Scrutiny of Bills, Scrutiny
Digest, 7, 2019, 16 October 2019: 56–70.
[90]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
Digest, 7, 2019, 16 October 2019: 69.
[91]. Ferguson,
Portillo-Castro, and Pyburne, ‘Emergency
Response Fund Bill 2019 [and] Emergency Response Fund (Consequential
Amendments) Bill 2019’, Bills Digest, 9–13.
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