Michael Keenan (Stirling, Liberal Party, Minister for Justice) Share this | Hansard source

I thank the member for Canning for that question and compliment him on the robust way that he always represents his constituents in this place and has done so for 16½ years. It is a very important question about the way we fund natural disasters in Australia, because there is a consensus among anyone who has ever looked into these arrangements that we are not doing them as well as we can. In Australia, we spend billions of dollars every year on dealing with the after-effects of natural disasters. Unfortunately for Australia, we are uniquely vulnerable to natural disasters of all types—fire, cyclone and flood. Nature has a way of getting at us in many different ways in this country, and we need to make sure that we have arrangements in place that can appropriately respond to that.

Of the billions of dollars that we spend on natural disasters, we spend 97 per cent on dealing with the after-effects of a natural disaster—so dealing with rebuilding infrastructure and payments to individuals—and we only spend three per cent on actually trying to mitigate the effects of a disaster before it occurs—for example, building a fire shelter to actually save people from the effects of fire rather than just dealing with the after-effects and building a flood levee that stops things from being flooded in the first place rather than just rebuilding the infrastructure time and time again after it is washed away in floods. Often, the same infrastructure can be washed away on a yearly basis.

When we came to office, we recognised the problems with our arrangements and we asked the Productivity Commission to have a look into them and to give us some advice about how we can do it better. They found what we generally knew—that our current disaster funding arrangements are inefficient and ultimately unsustainable. They also suggested a whole series of measures that we might be able to take to address that issue. I thank the Productivity Commission very much for this work. It is very useful work and it has provided a very good framing of the problem for the government. But the government will be responding in a way that does not take into account some of the harsher aspects of the recommendations that the Productivity Commission made, particularly in relation to funding cuts. We will not be cutting funding to the states in the wake of a natural disaster. Indeed, the government proposes to implement a system that will actually make sure that no state will be worse off—in almost every case, an individual state afflicted by disaster will be better off—while still making sure that we address the fundamental concern, which is that we are spending all of our money on recovery and a tiny fraction on resilience and mitigation.

I have been consulting with the states and territories about how we are going to implement the recommendations from the Productivity Commission and also reassuring them that they will not be disadvantaged by what the Commonwealth will be doing. What we have proposed to do is to shift to a model where we fund the states up-front. At the moment we have a model that is mired in red tape and in constant arguments with the states after a disaster about who should pay for what. We want to move to a model that we can establish over the next few years. When a disaster occurs, we price the infrastructure that has been destroyed or damaged up-front and we make a payment to the states on a one-off basis so that they can then spend the money in the way that they see fit in remediating after a disaster. For example, if a bridge in Queensland is washed away, we have already priced what that is going to cost in advance. We pay that money to the Queensland government. We think that they are best placed to decide how that money is spent. So they could build that bridge back better, safer and stronger if they wanted to. They could build that bridge back in a different location if they thought doing so was appropriate. But that expenditure will not be micromanaged by the Commonwealth anymore in the way that it currently is, which requires constant oversight, constant red tape and constant duplication of effort. We believe that that money can be better spent at the state level with this new up-front assessment model that we will, in a collaborative way, establish with state governments.

We also want to make sure, though, that more money is being spent on betterment and mitigation, and not just spent remediating after a disaster. The way that we are going to ensure that is by quarantining part of the funding that we give to the states to actually spend on mitigation. In the case of a disaster—and members will know this—the Commonwealth funds based on a scale. At least 50 per cent is funded by the Commonwealth after a disaster, while in the most severe cases we fund 75 per cent. We want to quarantine part of that money to explicitly be spent on mitigation and betterment projects that we have worked with the states in identifying. In that way, as I hope the member for Canning appreciates, we will improve the way we fund natural disaster arrangements in Australia.

Proposed expenditure agreed to.

Finance Portfolio

Proposed expenditure, $676,496,000

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