Australia — The NSW government has been hit with ballooning disaster response costs as major fires and floods continue to blow budget forecasts.
The Disaster Relief Fund was allocated $95 million in this year’s budget, but government spending will top $348 million, after roads were wiped out by storms, and aircraft and heavy machinery were hired to fight fires which devastated the state over summer.
Widespread bushfires between September and November have cost taxpayers $106 million so far; storms and floods cost $183 million in road restoration, while $56 million was spent continuing recovery efforts from the previous year.
Over $2 billion has been spent responding to natural disasters in NSW in the past decade, but costs have tripled in the past six years, from $106 million in 2008 to an estimated $445 million last year.
”The costs have significantly increased,” Treasurer Mike Baird said. ”There are more events, and as events come, they are more expensive.”
He did not want to draw a link with climate change, but said the trend demands a rethink of how the government pays for natural disasters. ”My response is, whatever the cause, whether the frequency increases or reduces in the future, I have to deal with it as treasurer.”
He has proposed a sustainable fund be set aside to ”provide a buffer, rather than an annual hopeful allocation”. Any such fund would only be established once the budget is returned to surplus.
This year, the state budget has been able to meet the unexpectedly high natural disaster costs, but Mr Baird is concerned about what may happen if there was less capacity to pay. ”In the longer term, there must be a better way,” he said.
Only 20 per cent of the cost of a natural disaster is incurred in the first year.
Mr Baird said the additional measures governments now take to provide support to communities in the aftermath of a disaster, and rebuilding infrastructure, had contributed to the increasing costs.
October’s bushfires, which burnt the Blue Mountains, Eurobodalla, Lake Macquarie, Lithgow, Shoalhaven, Wingecarribee, Wollondilly, Wollongong and Wyong, have so far cost the government $68 million.
Storms in February last year hit 19 towns, from Ballina to the Clarence Valley, costing $38 million.
Major floods in February 2012, which washed out 56 towns in southern NSW, including Albury, Bathurst and the Bega Valley, have cost $89 million in road restoration.
Ninety per cent of disaster spending by government is on asset repair and loans, with $15,000 grants to small businesses and primary producers the next major expense.
A portion of NSW’s disaster spending is reimbursed by the Commonwealth government, but this payment is delayed, and has averaged 18 per cent of the total bill over the decade. The reimbursement reached 46 per cent last year.
Mr Baird said the government was searching for ”the best way to protect the budget and the community”.