Opportunities for economic reform within fire management across South East Australia

Large and intense bushfires burnt over 17 million hectares during the 2019/ 20 Australian bushfires. The 2019/ 20 bushfires were also very costly, estimated by AccWeather to be $110 billion in terms of total damage and economic loss. The estimate is based on an analysis incorporating independent methods to evaluate all direct and indirect impacts of the fires based on a variety of sources.

There are other human, social and environmental impacts and associated financial costs associated with bushfires, currently at high risk due to high fuel loads present across landscapes. There are huge environmental impacts of bushfires across ecosystems, biodiversity, waterways, air quality, greenhouse, heritage and other costs.

There is inadequate funding of bushfire mitigation and a focus on bushfire suppression in Australia. As noted in a Deloitte Access Economics (2022) report:

Australia's disaster relief strategies are underpinned by a cycle of underinvestment in resilience and adaptation. It's been estimated by the Productivity Commission that 97 per cent of all-natural disaster funding in Australia is spent after an event, with just 3 per cent invested prior to an event to reduce the impact of future disasters.

In Australia, it is past time to dramatically increase pre bushfire mitigation (prescribed burning/ mechanical fuel reduction), reducing the costs of post bushfire spending.

On top of this, in South East Australia there is a focus on bushfire suppression at the expense of bushfire mitigation. This is well explained in words as noted in Deloitte 2014 report:

The current policy approach is to focus on suppression activities during the bushfire season and fuel reduction burning in the cooler months of the year. Fuel reduction burning is often conducted at relatively low levels and has risks as well as environmental and social costs associated with it.

In contrast to the Australian situation, policy in both the United States and Canada has recently shifted towards an increase in fuel reduction activities through the use of both fuel reduction burning and the mechanical removal of fuel. Importantly, the recent shift in policy responses, and the associated data and research, provides a basis for understanding how policies pioneered in North America may be applied in an Australian context.

Real data gathered from almost 60 years of historical data from the forests of south west WA, unequivocally shows that when the area of prescribed burning trends down, the area of uncontrolled bushfires trends up. The area annually burnt by bushfire escalates exponentially when the area of prescribed burning in a region falls below 8 percent per annum.

Increased efforts in pre bushfire mitigation have worked in WA, dramatically reducing bushfire areas, suppression costs and a consequent need for recovery funding.

Prescribed burning has been underutilised across south east Australia over the last thirty plus years, of the order of 1 % (up to 2 %) of forested areas per annum, totally inadequate to achieve safe resilient landscapes and reduce bushfire area. It gets worse, in many states the approach now is to focus on protecting communities, leaving landscapes exposed with high fuel loads and the same communities exposed when landscape bushfires occur.

In Australia, as noted in this document from the Menzies Research Centre"one dollar spent on mitigation can save at least two dollars in recovery costs. Committing additional mitigation funding makes economic sense". In the USA, robust preparedness programming is essential to reducing the costs of wildland fires as noted by the US Forest Service They note that Forest Service analysis has demonstrated that for every $1.00 that is reduced in preparedness funding, there is an increase of $1.70 in suppression costs.

Key information in a 2020 Menzies Research Centre report "Strengthening Resilience: Managing natural disasters after the 2019-20 bushfire season", includes:

· Despite this relentless commitment to inquiries, in 2014, a report released by the Productivity Commission into Natural Disaster Funding Arrangements found that government natural disaster funding arrangements had been inefficient, inequitable and unsustainable. 'They are prone to cost shifting, ad hoc responses and short term political opportunism.' The Productivity Commission lamented that the funding mix was disproportionately recovery-based and did not promote mitigation. It observed that the political incentives for mitigation were weak, 'since mitigation provides public benefits that accrue over a long-time horizon,' and that over time this would create entitlement dependency and undermines individual responsibility for natural disaster risk management.'

· A report by the Australian Business Roundtable for Disaster Resilience & Safer Communities suggests that a mitigation expenditure in the order of $5.3 billion over the period from 2020 to 2050 (in present value terms) could generate budget savings in the order of $12.2 billion for all levels of government, or $9.8 billion when looking at the Commonwealth government budget only. If successfully implemented, it could see Australian and State Government expenditure on natural disaster response fall by more than 50 per cent by 2050.

These words highlight the huge importance of increasing pre disaster fire mitigation in Australia, opportunities to progress this, taking a long term view and providing budget savings.

The USA is addressing forest fuels and resilience particularly in western USA, particularly at the wildland urban interface as outlined in "Confronting the Wildfire Crisis". The scale of employment and financial benefits is staggering and should be considered for Australia:

The investments in fuels and forest health treatments will create an estimated 300,000 to 575,000 jobs, protect property values and small businesses, and stimulate local economies. In time, as we alter the trajectory of wildfire in the West, we can bring down the Forest Service's annual wildfire suppression costs-which averaged more than $1.9 billion per year from 2016 to 2020-and devote the funds to further restoring forest health and reducing wildfire risk in fire-adapted forests nationwide.

There are a range of other opportunities to improve the use of government funds in fire management. One opportunity area is reducing the high expenditure on large aircraft and increasing mitigation. In the 2019/20 RFS annual report, financial details were actual total expenses in 2020 was $869,534,000; grants and contributions in 2020 was $929,705,000 and aircraft hire in 2020 under Grants and Subsidies was $255,510,000.

Another opportunity area is the need to review of the increasing bushfire insurance costs and optimising insurance approaches, and hopefully reduce these costs. A 2019 USA example is outlined in "Fighting Wildfires with Innovation".

There are many other fire management economic reform opportunities across the spectrum of mitigation, prevention, suppression and recovery, some of these are outlined above and a number in Attachment 1.

Failure to implement the identified and critical bushfire economic opportunities will result in continued large and intense bushfires across landscapes, devasting large areas, communities, ecosystems and flora and fauna.