Australia’s economy “vulnerable” to disaster, Treasurer warns

A National Emergency Management Agency analysis released on Friday (13 January) shows 68 per cent of Australians live in a local government area that was subject to a natural disaster declaration in 2022.

Flooding and other severe weather affected every state and territory in 2022, with floods continuing in South Australia and in the Kimberley communities in Western Australia.

The flood damage bill has ushered in fresh warnings from Treasurer Jim Chalmers that natural disasters will put more pressure on the economy this year, with disaster funding playing a key part in the government’s May budget.

Mr Chalmers said the $5 billion doesn’t begin to capture the “full human cost”, community cost, and the cost to infrastructure and assets.

“We’ve put that number out there really just as a reminder that even though we are rightly focused on the human cost of these natural disasters, which are becoming more and more frequent, there is a cost to the economy as well and a cost to the budget.”

“When almost seven in every 10 Australians lived in a disaster‑impacted area in 2022, that gives you a sense of the size and scale of the challenge that we’re up against.”

He added that the national economy was vulnerable to natural disasters and the May budget would reflect resilience and mitigation ahead of future disasters, as well as the cost-of-living relief.

“We’re focused on the human cost of these natural disasters, first and foremost, but there is an economic and a budget cost as well, we recognise that it was a big focus of the October budget, and it will be a big focus of the May budget as well.”

The comments followed the Treasurer’s visit to flood-impacted communities in northern NSW last week to inspect rebuilding efforts.

Almost one year since floods tore through Lismore and surrounding areas, many people are still living in temporary accommodation, as the cost of building has skyrocketed and labour shortages continue.

Mr Chalmers said the government was working on ways “to build a bigger and better workforce nationally, but also to make sure that we can get the workers where they’re needed.”

He said one of the outcomes of the Jobs and Skills Summit in September was about taking immediate steps to get more skilled workers into our economy.

However, he added that even when you put skills shortages to one side, rebuilding takes time and “unfortunately, you can’t rebuild these places overnight.”

Construction costs pinch

In addition, dragging the rebuilding process behind is the increased cost and access to building materials.

The latest Corelogic Cordell Construction Cost Index (CCI) has revealed that construction costs increased over the 2022 calendar year by 11.9 per cent, which marked the largest annual increase on record, excluding the period impacted by the GST.

However, the quarterly growth rate of 1.9 per cent showed a dramatic easing in the index following September’s quarterly increase of 4.7 per cent.

The data followed the Australian Bureau of Statistics (ABS) monthly Consumer Price Index (CPI) indicator, which rose to 7.3 per cent in the 12 months to November 2022.

The biggest contributors are the volatile timber prices, with fluctuations in structural timber costs and general increases in timber products. Prices for metal products such as gutters, lintels and fixings, used for roofing and structural purposes continue to increase, and concrete values also remain unstable, the data revealed.

[Related: 4th major bank to reopen in Lismore, post-floods]