John O’Donnell

The Productivity Commission’s report, “Advancing Prosperity” was released in March 2023.

As noted in this five-year report, the Productivity Commission (PC) is the Australian Government’s independent research and advisory body on a range of economic, social and environmental issues affecting the welfare of Australians. Its role, expressed most simply, is to help governments make better policies, in the long-term interest of the Australian community. The Commission’s independence is underpinned by an Act of Parliament. Its processes and outputs are open to public scrutiny and are driven by concern for the wellbeing of the community as a whole.

The report includes 29 reform directives made up of 71 separate recommendations.  The 29 reform directives are outlined in Table 2.1 Prioritised reform directives and the reform directives and their associated recommendations together are listed in table 2.2.

Sound natural disaster management is very important issue in relation to Australia’s prosperity. This includes bushfires, flooding, storms, storm surges and other disasters.  The cost of ongoing disasters is huge and has major impacts on the economy.  The 2019/ 20 bushfires burnt over 17 million hectares and they were also very costly, estimated by AccuWeather to be $110 billion in terms of total damage and economic loss.

The 5-year PC report includes no reform directives and three recommendations in relation to natural disaster management. Each recommendation is outlined below:

Recommendation 3.1 A generational review and reform process for Australia’s risk protection ‘system’;

Government could commence a broad review of Australia’s risk protection and social insurance arrangements, focusing on:

• encouraging individual entrepreneurship
• removing barriers to innovative service models by insurers
• fostering efficient mitigation and early intervention.

In the near term, incremental gains could be made by progressing:

• abolition of stamp duty on insurance premiums
• continued incremental expansion of the range of out of hospital services that private insurers can fund
• targeted exemptions from risk equalisation for innovative, evidence-based preventative initiatives by health insurers
• greater flexibility for life insurers to fund (on a discretionary basis) some approved health-like services, particularly in areas like mental health
• increased sharing of government held or funded data, particularly data collected through health providers (recommendation 4.4)
• continued exploration of the ‘insurance approach’ in government programs through measures such as payment by results, social impact bonds, actuarial evidence and innovation funds.

In the case of Recommendation 3.1, this appears to be generic, especially noting the reference to “could”. Nor does it mention mitigation opportunities in relation to bushfires and flooding under the incremental gains list.  “Fostering efficient mitigation and early intervention” is positive but it is suggested that more thought and work needs to be undertaken to tease this issue out for all natural disaster types and to identify barriers to efficient mitigation.

The next recommendation is Recommendation 6.2.

Recommendation 6.2 Helping to inform adaptation investment decisions.

Households and businesses should be provided with the information they need to make informed adaptation decisions. State and Territory governments should mandate the pre-sale disclosure of climate risks for all residential and commercial property sales.

• Such disclosure should be based on existing climate change projections and cover a range of physical risks including riverine flooding, sea level rise, subsidence, fire and other natural disasters.

This addresses only part of the natural disaster problem and there is no consideration of town, city and community adaptation and safety and the important matters of effective and adequate pre-disaster mitigation funding and measures, discussed further below.

The next recommendation is Recommendation 6.4.

Recommendation 6.4 Cost-benefit analysis for adaptation-related infrastructure projects.

Proposed adaptation-related infrastructure projects (including projects to rebuild or relocate communities impacted by large scale natural disasters) should be subject to rigorous cost-benefit analysis that incorporates plausible climate projections over the projected life of the asset and compared with that of alternative options. In the case of community rebuilding proposals, a rigorous cost-benefit analysis would consider the broad range of costs and benefits – cultural, social, economic, and environmental – of rebuilding in-situ with increased defensive measures, relative to rebuilding in an alternative location.

This addresses only part of the natural disaster problem and in relation to bushfires doesn’t consider the miniscule rates of prescribed burning and mechanical thinning currently occurring across much of SE Australia, including near towns, cities and across landscapes generally.  In regards to bushfires, there are opportunities being used in the US to better protect communities from bushfires using mild fire and thinning of dense vegetation. This also is discussed further below.

Current bushfire mitigation and suppression measures are not working in many locations and little is changing to rectify this across SE Australia.  Bushfire disaster mitigation measures are very localised, often concentrated near communities, scattered, often small in size and not undertaken at adequate levels across the landscape. Prescribed burning in forests for all states of Australia, except for WA, is around 1 per cent (occasionally up to 2 per cent) of forests per year and not adequately applied across landscapes.  In relation to NSW, fuel loads have only been reduced on 3.3 per cent of forested areas over 5 years. This isn’t going to work that well. Current high fuel loads across southern Australia forested landscapes are not being addressed.  When looking broadly at fire and bushfire management across southern Australia, matters aren’t hunky dory at all.  Inquiries, royal commissions and most governments haven’t adequately addressed the key issues such as prescribed burning and fuel load reduction across landscapes, nor at community interfaces. 

A very good assessment on bushfire management is outlined in the Quadrant document “The Utter Failure of yet another Bushfire Panel” by Roger Underwood (19 November 2020). As noted in this article “Bushfire management in Australia must be based on preparedness and damage mitigation”.

Large numbers of Australian communities aren’t adequately protected from bushfires, nor are firefighters, nor infrastructure and investments.  This is evident in the extent of bushfires, lost lives, and impacts on large numbers of communities/ towns and cities, infrastructure, fire fighters and forests and fauna.  Approaches being used in the USA in relation to fire adapted communities, Firewise, local fire safe councils, the Ready, Set, Go! Program, improved funding to reduce fuel loads, undertaking prescribed burning, forest thinning and community involvement in fire management all need to be considered for Australia, but are not.

It is my belief that the Productivity Commission needs to better address the key areas where natural disaster management is failing and will continue to fail.   

There are a number of key concerns and opportunities that the PC report hasn’t considered in relation to flooding.  Whole catchment approaches/ hydraulic flood studies to assist in mitigation planning don’t appear to have been considered in the report. These important studies are underway in a number of NSW north coast river catchments. Also, the report has not considered innovative approaches, such as room for the river program, undertaken on 30 projects in the Netherlands and other areas across the world, in a sustainable manner to reduce flood impacts.

The 5-year PC report did note the importance of up front mitigation and resilience building in the text of the report:

In its 2015 report on Natural Disaster Funding and 2009 report on Government Drought Support, the PC recommended a shift of relative funding effort towards up front mitigation and resilience building. The Government’s recently announced Disaster Ready Fund is a good example of this renewed emphasis on prevention.

Rigorous selection of projects and evaluation of the program could help identify where up front public funding can have the greatest impact in reducing the damage caused by natural disasters. It is possible that such approaches, including options co-funded with the general insurance industry, could help deal with other risks more efficiently.

A broad ranging review could bring into play insurance concepts that tend to be misunderstood or de-emphasised in many policy settings, like moral hazard, adverse selection, risk management and the respective roles of pooled and self-insurance options.

I suggest that it would have been useful if the Productivity Commission and governments had reviewed all of this over the last 5 years to advance this to a much more advanced level than it is now.

The Productivity Commission report also noted funding for disaster management in relation to the Disaster Ready Fund:

The DRF will deliver against the recommendations of a Productivity Commission Inquiry into National Disaster Funding in 2015 for up to $200 million per year on disaster resilience, with funding matched by states and territories.

The DRF is a positive step.  The recommended a shift of relative funding effort towards up front mitigation and resilience building in the 2015 report is a good step forward but is unlikely to be adequate to greatly reduce ongoing natural disasters.

Overall, considering the scale of the bushfire and flood disasters, and in particular ongoing disasters, with regard to the PC’s 2015 report on Natural Disaster Funding and this latest 2023 report, its disaster management recommendations and reliance on government current actions, I consider that that there are many areas need to be further considered and better addressed in relation to Australian natural disaster management. This includes:

1. Review of the inadequate bushfire disaster mitigation measures in southern Australian forests such as prescribed burning and mechanical treatment, which are mostly very scattered, often small in size and not undertaken at adequate levels across the landscape to reduce bushfire risks, large areas and long fire runs.
2. Review of the inadequate focus on the establishment and maintenance of safe, healthy and resilient forests across landscapes with current fire management and reducing impact on communities, firefighters and communities.  Scattered non landscape approaches result in non-optimum outcomes.
3. Consider and incorporate other key information applicable to bushfire management, including over 60 years of prescribed burning and bushfire data in WA (and the effectiveness of the prescribed burning in WA); the very limited prescribed burning data across Australian states (except for WA); and approaches used by the US in regards to wildland urban interface.
4. Review of the limited utilisation of whole catchment approaches/ studies to flood hydraulic assessment to optimise flood mitigation planning and mitigation selection.  Note these important studies are underway in a number of NSW north coast river catchments.
5. Review of the factors behind the inadequate involvement of communities pre, during and post natural disasters and the establishment of community natural disaster groups such as fire adapted communities in the US.
6. Continue to address the concern that just 3 per cent of disaster funding is invested prior to an event to reduce the impact of future disasters, as noted in a Deloitte Access Economics (2022) report. This percentage may have changed a little with the DRF funding. Fuel loads and strata are at very high levels still.
7. Review of the full range of natural disaster mitigation opportunities, barriers to implementation, risk management plans (including many ineffective bushfire risk management plans) and better incorporation of these issues into natural disaster productivity reports.
8. Review the inadequate progression of natural disaster opportunities with the insurance industry, noting key documents produced involving the industry, including the Insurance Council of Australia’s Building a more resilient Australia – policy proposals for the next Australian Government (February 2022)  and also Menzies Research Centre Policy Paper, Strengthening Resilience: Managing natural disasters after the 2019-2020 bushfire season.
9. Explore if current government natural disaster funding is going to be adequate in light of the factors raised above, noting that there are set criteria in relation to the DRF that restrict grant opportunities across landscapes and so are likely to result in treatments with limited effectiveness.  Note that there is little detail regarding state disaster funding in relation to Commonwealth funding.
10. Review the inadequate annual assessment of funding disaster mitigation against annual disasters across Australia and for each state, by each natural disaster type.  For bushfires, this needs to consider the scale of mitigation undertaken, whether it is at adequate levels, bushfire area and intensity for each state.
11. Undertake further review of the nominated reform directives and recommendations in relation natural disaster management.  There are no reform directives to address the serious ongoing natural disaster issues and areas not adequately considered outlined above.

In my opinion, the three PC recommendations in relation to natural disaster management in its “Advancing Prosperity” report should be reviewed to incorporate matters raised here.

Under current approaches, large bushfire disasters will continue and often have very long fire runs across landscapes, and large numbers of towns, cities, fire fighters and ecosystems will continue to be impacted by bushfires.  The same applies for flood disasters.

I believe that the Productivity Commission and governments have missed key opportunities to better nail natural disaster management across Australia, especially considering the good work in the 2015 report on Natural Disaster Funding over 8 years ago.  

There are opportunities to work together with governments, communities, fire and flood practitioners and the insurance industry to improve current natural disaster approaches and mitigation.

About John O’Donnell

John is a retired district forester and environmental manager for hydro-electric construction and road construction projects.   His main interests are mild maintenance burning of forests, trying to change the culture of massive fuel loads in our forests setting up large bushfires, establishing healthy and safe landscapes, fire fighter safety, as well as town and city bushfire safety.