Disaster mitigation economic opportunities for Australia

The author has just experienced a Northern NSW flood. This time we were lucky, but other locations in Northern NSW and Southeast Queensland were not. Prior to this, there was major flooding in North Queensland, and more flooding is currently underway. Before that, there were major bushfires in Victoria, South Australia, and Western Australia. More floods and bushfire disasters loom, with bushfires likely to worsen due to dense regeneration from previous intense bushfires and increasing eucalypt decline.

This review considers the economic opportunities related to Australian disaster management.

Economic opportunities in relation to Australian disaster management

A series of economic opportunities are outlined below in relation to disasters in Australia.

1. Reform disaster funding arrangements

The first economic opportunity is for government to reform natural disaster funding arrangements, which are inefficient, inequitable, and unsustainable. These are prone to cost shifting, ad hoc responses, and short-term political opportunism, as outlined in the Menzies Research Centre (2020):

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 undermine individual responsibility for natural disaster risk management.

At that time, it said, mitigation funding amounted to only three per cent of what is spent on post-disaster recovery and recommended that the Australian Government should gradually increase the amount of annual mitigation funding it provides to state and territory governments to $200 million.

The author proposes a complete shift in disaster funding focus—from recovery to mitigation—supported by substantial increases in mitigation investment and a comprehensive review of risk-based approaches.

2. Capture significant budget savings

Targeted mitigation spending can yield large budgetary savings. The Menzies Research Centre (2020) notes:

A paper commissioned by the Australian Business Roundtable for Disaster Resilience & Safer Communities estimated that expenditure of $5.3 billion (in present value) to 2050 would generate budget savings of $12.2 billion for all levels of government, including $9.8 billion for the Commonwealth. With targeted mitigation spending, Commonwealth and State/Territory government expenditure on natural disasters could be reduced by more than 50 per cent by 2050.

Annual funding of $200 million is insufficient to achieve meaningful mitigation or savings. A scattered and underfunded approach cannot address the scale of the problem.

3. Optimise mitigation for efficiency

Disaster mitigation should be approached thoroughly and nationally. Swanek (2024) noted: