Scott Morrison has set up a high-level bushfire recovery agency as more lives were lost and hundreds more homes torched over the weekend, with the government no longer able to guarantee a budget surplus because of the economic hit from the ongoing disaster.
With the repair bill to run into the billions of dollars, Mr Morrison ruled out imposing a levy on taxpayers but with Treasurer Josh Frydenberg is poised to announce as early as Monday initial funding to rebuild communities following a cabinet meeting.
Mr Morrison warned the fire season still had months to run and left open the prospect of a royal commission into bushfire preparedness and response, and would hold talks with the states over hazard reduction, burning and planning laws.
Mr Morrison also rebuffed criticism the government had denied there was a link between climate change and extreme weather events like the fires.
“I should stress that there is no dispute in this country about the issue of climate change globally, and its effect on global weather patterns, and that includes how that impacts in Australia. The government I lead has always made that connection.
Bushfires are raging coast-to-coast with south-east NSW, north-east Victoria and South Australia’s Kangaroo Island bearing the brunt of weekend’s damage, while the main highway into Western Australia remained cut.
A 47-year-old man battling to save a home at Batlow died after suffering a heart attack on Saturday, bringing the national death toll to 24 since September.
After furnace-like heat on Saturday saw 13 fires burn at the highest “emergency” warning level concurrently in NSW alone, cooler weather delivered firefighters some reprieve on Sunday, although pockets of rain hampered backburning efforts and blazes continued to threaten some towns and villages.
Expected to soar
Authorities spent the day assessing the damage, with the latest property losses expected to tally in the hundreds of homes and buildings.
The Insurance Council said an estimated 1606 homes had been destroyed since November 8 in NSW, Victoria, Queensland and South Australia because of bushfires.
Council spokesman Campbell Fuller said $375 million in claims had been lodged but this tally was expected to soar with claims from the weekend’s devastation. Earlier fires in September and October added another $56 million in claims.
Following weeks of stinging accusations of not doing enough to respond to the fire crisis, Mr Morrison announced the appointment of former Federal Police Commissioner Andrew Colvin to head the recovery agency for an initial period of two years.
Mr Colvin will oversee support payments and mental health services to families and businesses that have been left with nothing, coordinate efforts across the federal bureaucracy and work with state and local governments to repair or replace infrastructure.
Mr Morrison would not be drawn on what the likely cost of the bushfires – which have burnt 6.3 million hectares of land across Australia – but as a point of comparison, the royal commission into the 2009 Black Saturday fires in Victoria which killed 173 people and burnt just 450,000 hectares estimated the cost to be $4.4 billion.
But he indicated he would not require the states to make dollar-for-dollar contributions.
The fires have already seen the federal government make $100 million available in income support for victims, while Mr Morrison has pledged $20 million to buy four waterbombing aircraft as well as an extra $11 million annually for their operation.
Further costs to the Commonwealth have been incurred after Mr Morrison gave the green light to the unprecedented compulsory call-out of 3000 army reservists to boost efforts on the ground, while also despatching three naval ships and aircraft to evacuate people.
Mr Morrison said based on the mid-year economic update, the immediate needs for recovery can be met from within the budget “as they are currently assessed”.
But he admitted there were “months” to go in the bushfire season.
“Sadly there will still be more cost that will be incurred as a result of the devastating impacts. The recovery need is going to be great,” Mr Morrison said.
“The Commonwealth will be acting across all those tiers, providing financial support, both directly whether its primary producers, to small businesses, to local councils and others to engage in that rebuilding effort.”
With the government already downgrading its projected budget surplus to $5 billion for 2019-20 because of subdued growth in December’s mid-year update, senior government figures are worried about the economic impact, which will be known in March when the national accounts are released.
Mr Frydenberg told The Australian Financial Review last night: “It’s too early to assess the full economic impact of the devastating fires but our primary concern is not with the financial cost but the human cost.
“Everything that can be done is being done and as the Prime Minister has made clear we will continue to work closely with the states to get support to those who need it most.”
AMP Capital chief economist Shane Oliver estimated the damage from the fires would shave between 0.25 per cent and 1 per cent off gross domestic product.
Dr Oliver said given the economy was only growing at 0.4 per cent a quarter, “that could take us perilously close to zero or below that for a quarter”, adding it would pile more pressure on the Reserve Bank to cut interest rates next month.
“That will probably mean more downgrades to the government and RBA growth forecasts which obviously means much less revenue coming into Canberra and coupled with reconstruction costs that puts the surplus into doubt for this financial year,” he said.
Tourism is facing a hit as coastal hamlets become deserted, while National Farmers Federation chief executive Tony Maher said anecdotal advice put livestock losses in the tens of thousands in southern NSW and northern Victoria alone.
Apple and grape growers were also facing crop losses. Even those whose crops that survived may not be able to sell fruit because of smoke taint.
Mr Maher, who saw first hand the devastation suffered by South Coast dairy farmers last week, said farmers would also need help to replace infrastructure such as sheds, fences and water tanks.
“We’re waiting to get a clearer picture of the impact but it is going to be significant,” he said.
The fire emergency has forced Mr Morrison to postpone a trip to India and Japan next week. Mr Morrison had been personally invited by Indian counterpart Nahendra Modi to deliver the keynote speech at a security conference.
Mr Morrison rejected criticism he had politicised the fires by authorising on behalf of the Liberal Party a social media ad spruiking the contribution of the Defence Department to fire relief, saying it was required under the law.
But Labor leader Anthony Albanese said he was “stunned” by the ad. “It took six weeks for the government to agree to a national response and six minutes for them to put out an authorised Liberal Party ad which can only be seen as being for party-political purposes.”
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