Views on the bill
The committee received three submissions to the inquiry. Submitters focussed
on the establishment of an Australia Fund.
Support for establishing an Australia Fund
The bill seeks to establish a Joint Parliamentary Committee to investigate
establishing an Australia Fund. The Explanatory Memorandum notes that:
Such a fund would be designed to assist in the support and
reconstruction of Australian rural and manufacturing industries in times of
crisis, including natural disasters (such as drought, floods and bushfires) or
in cases of a world financial crisis or unfair market intervention or
Regional Development Australia Barwon South West (RDA BSW) supported the
establishment of the Australia Fund to support regional businesses to respond
or adjust to economic shocks as a result of crisis events. It explained
Australia's regions produce approximately 40 per cent of the
national economic output. The Australian Government plays an important role in
building resilience and flexibility to support this significant national economic
contribution. Whilst regional and rural economies may suffer disproportionately
during adverse external shocks, with exacerbated negative effects on employment
security, income and living standards, there are also implications for the
national trade balance. If, for example, productive capacity is reduced by
disaster damage, exports decrease, the trade balance may weaken, and localised
inflation may increase.
Historically, the high economic losses inflicted by natural
in the recent times together with the expected impacts of future potential
events, make resilience against disasters a key policy objective.
Regional Development Australia Pilbara (RDA Pilbara) supported the
establishment of an Australia Fund noting that although there are existing
government programs to designed to assist 'the viability of rural industry...these
do not specifically address the needs of businesses or communities in times of
RDA Pilbara proposed the following measures:
From the perspective of the structure of the Pilbara economy
and its cyclical nature the following measures...are strongly supported by RDA
Pilbara to reduce the business risks for the SME sector and encourage expansion
- Loan money
to businesses, act as a guarantor for loans, capitalise or waive interest,
purchase existing bank loans, and assume control of relevant property of the
business for a specified time.
- In this
way, the Fund would be designed to enable businesses to continue operations to
earn revenue, employ workers and pay taxes, rather than be prematurely wound
up, and support communities affected by natural disasters, or sharp declines in
economic activity as a result of significant commodity price falls.
funds for industry and/or company restructuring and the acquisition of new
technologies to make businesses more economically viable and internationally
existing bankruptcy and insolvency laws with the aim of introducing legislation
designed to assist companies to trade through difficult times, rather than be
- On the
basis of an assessment of the industry and/or businesses, to provide emergency
and ongoing drought/flood/bushfire relief for the livestock and agricultural
industries in the Pilbara.
The Australian Local Government Association (ALGA) discussed the need to
find the right balance of funding mitigation, relief and recovery if an
Australia Fund were to be established. ALGA noted it supported any funding
which can assist with the reconstruction of local communities and their
industries in times of crisis:
However, ALGA strongly believes in prudent, up-front
investment in mitigation measures with the objective of avoiding or minimizing
recovery and reconstruction costs of disasters. Increased funding on natural
disaster mitigation measures would reduce the call on Commonwealth and State
funding for recovery in the longer term. It would also reduce the need to repeatedly
rebuild communities following natural disasters.
ALGA stated further:
Spending more on mitigation however should not be at the
expense of reducing relief and recovery support. Even with increased investment
in mitigation funding there will still be a need for funding for reconstruction
and intervention. Key elements that should be considered in relationship to
this funding are the timeliness of funding reaching communities in times of
need, and the cost of delivering the funds. These factors need to be
appropriately managed so as not to disadvantage communities compared to an
alternative system of financial support.
In its August 2017 report into Australia's general insurance industry
the Senate Economics References Committee noted the 2015 Productivity
Commission (PC) inquiry into National Disaster Funding Arrangements. In its
investigation into options to achieve an effective and sustainable balance of
natural disaster recovery and mitigation expenditure, the PC recommended, among
other things, that:
Australian Government post disaster support to state and
territory governments (states) should be reduced, and support for mitigation
increased. Greater budget transparency and some provisioning is also needed.
- States need to shoulder a greater share of natural disaster
recovery costs to sharpen incentives to manage, mitigate and insure against
these risks. The Australian Government should provide a base level of support
to states commensurate with relative fiscal capacity and the original 'safety
net' objective of disaster recovery funding, with the option for states to
purchase 'top up' fiscal support.
- Australian Government mitigation funding to states should
increase to $200 million a year and be matched by the states.
- These reforms would give state and local governments autonomy in
how they pursue disaster recovery and mitigation. The reforms should be
supported by performance and process based accountability mechanisms that embed
good risk management.
At the time of reporting, the committee noted that:
...the disproportionate spending between mitigation and
post-disaster expenditure remains unchanged since the PC's final report.
Federal mitigation spending was approximately three per cent of post-disaster
expenditure in recent years. The PC noted that 'the reform imperative is
greatest for states most exposed to natural disaster risk...'
The committee notes the Senate Economics References Committee observations
from its prior inquiry into general insurance, that more needs to be done at
the state level to ensure there are greater mitigation strategies put in place
by state governments to help deal with natural disasters. The committee also
notes that there are a number of programs in existence that are designed to
support those suffering the impact of the drought. Further, the committee notes
legislation to establish the Future Drought Fund is currently before the Parliament.
The Future Drought Fund is intended to provide a secure revenue stream to be
used for drought resilience, preparedness and response.
As noted in chapter 1, the former Parliamentary Joint Select Committee
on the Australia Fund Establishment tabled its report on 25 June 2015.
The committee considers that establishing a parliamentary inquiry into matters
which have been subject to a largely identical inquiry, with essentially
identical terms of reference, is not the best way to support Australian
communities and industries.
The committee recommends that the Senate not pass the bill.
Navigation: Previous Page | Contents | Next Page