Regional communities can take years to recover economically from natural disasters with the impacts spilling over to nearby regions. A report released by SGS Economics & Planning and Suncorp highlights the importance of rapid insurance payments and the need to protect regions from future disasters.
The report, Economic Recovery after Disaster Strikes Volume Two, models the economic impact from the Townsville floods in January 2019, the Black Summer bushfires in East Gippsland and Batemans Bay in December 2019-January 2020, and the east coast hailstorms in January 2020, and shows insurance has been crucial for restoring local economic activity.
Regional Australia faces not only an increased risk of disasters but takes longer to recover owing to a narrower economic base, with East Gippsland’s bushfire impacted economy not expected to recover until after 2022. Without insurance, the region’s economy would have permanently shrunk by 4 per cent, or almost $100 million.
Suncorp Group CEO Steve Johnston said last summer demonstrated that communities need to be better protected from Australia’s changing climate.
"Disaster mitigation, rather than disaster clean-up, is what Australia needs to focus on. Preparing our homes and communities to better withstand extreme weather is a smarter investment than rebuilding. Yet governments spend 97 per cent of disaster funding on mopping up and just three per cent on preparation,” he said.
Mr Johnston said Suncorp will continue to advocate to governments to prioritise investment in appropriate resilience infrastructure in order to reduce the impact of natural disasters on homes, communities and the economy.
Creating a more resilient Australia requires a richer, deeper partnership between government, industry and communities to address not just how we respond to these disasters, but in how we prepare for the future.
Suncorp Group CEO Steve Johnston
Economic stress often extends beyond the locations hit by natural disasters. The 2019 Townsville floods caused a $2.5 billion reduction in the region’s Gross Domestic Product, with the ripple effect impacting surrounding regions including Ayr, Charters Towers, Cairns, Whitsundays, Mackay and outback Queensland, the report shows.
Ellen Witte, Partner at SGS Economics & Planning said: “The insurance payouts have not only given the local economies a softer landing, but they also drive a rapid economic recovery. The benefits will be felt for years.
“Rapid recovery is not only important for the economy. We know that the health and wellbeing impacts of disasters on our communities often outweigh the economic issues. Indirectly, insurance payouts help to prevent ongoing suffering and social issues.”
SGS Economics and Planning is an independent consulting business with a social purpose. A certified B Corporation, SGS works to shape a more equitable, prosperous and sustainable world. SGS’s multidisciplinary team of economists, planners, mathematicians, researchers and data scientists explore and create solutions to pressing social, economic and environmental issues. This independent insight helps businesses and governments make evidence-based decisions and confidently plan better places, communities and economies.