Senator Dean Smith wrote an opinion piece in the paper backing the insurance industry’s view which calls for increased funding in mitigation to help improve insurance affordability and protect vulnerable communities.
The insurance industry and the Insurance Council of Australia (ICA) has been united in its message to governments on disaster funding: investing in mitigation now saves more later.
The Australian Business Roundtable on Disaster Resilience and Safer Communities has calculated that the annual cost to Australian taxpayers of natural disasters is in the order of $6.3 billion, and is expected to quadruple to $23 billion in just 30 years. In 2015 these costs alone accounted for almost 1 per cent of gross domestic product.
In its 2014 report on Natural Disaster Funding Arrangements, the Productivity Commission found an over investment in post-disaster reconstruction by government and an under investment in mitigation initiatives that would have the benefit of limiting the financial impact of natural disasters.
Critically, the report noted that mitigation spending by the Australian government was “only 3 per cent” of what it spent on post-disaster efforts in recent years.
In his opinion piece, Senator Smith has compared this with Canada which recently set aside $2 billion for a Disaster Mitigation Fund, including the redirection of hundreds of millions of dollars from their Green Infrastructure Fund, to mitigate against its ever growing costs of natural disasters.
NIBA CEO Dallas Booth said, “Brokers play a really important role by talking to the clients about the risks they face and how to mitigate those risks – by doing things within their control. What we’re talking about here are the risks faced by the whole community because of exposure to flood, fire, poor town planning and inadequate building standards. These are the areas where all levels of government have critically important roles to play. The value of mitigation funding has been proven time and again.”.
ICA has said earlier this year that natural disasters already cost the economy $9 billion a year, according to Deloitte Access Economics, and the Government’s “modest” measures will not stop that figure soaring to a predicted $33 billion by 2050.