The Minns government wants insurers, banks and superannuation funds to help bankroll projects that reduce major flood and bushfire risks faced by NSW residents.
The newly formed NSW Reconstruction Authority is working to identify by the end of this year how mitigation programs – like permanent relocation, flood levees or nature-based measures such as reforestation or increased tree canopies – could attract investment from the private sector.
Areas along the Hawkesbury River were hit by major flooding in 2021.Credit: Getty
Already, the government has flagged issuing social impact bonds, which have been used previously to provide additional finance for the Parramatta light rail and Metro Northwest line projects. However, it wants to start speaking with the private sector about developing other options to ease the financial burden of rolling out multiple projects statewide.
Bushfires, floods, coastal erosion and inundation, storms and cyclones and heatwaves are all seen as posing a growing threat to households and the private sector in coming years.
Minister for Planning and Public Spaces Paul Scully and Emergency Service Minister Jihad Dib are jointly driving the plan to mitigate the risk associated with these events in NSW.
“This is critical work that requires investment from both the public and private sectors. Governments cannot do this alone,” Dib said.
Protecting western Sydney areas such as Windsor from flood risks has become a priority for the NSW government.Credit: Oscar Coleman
The Reconstruction Authority next week will hold its first industry briefing about the mitigation plan, with an expert panel including Andrew Hall, Insurance Council Australia chief executive and others discussing next steps to help manage disaster risk.
Historically, about 97 per cent of diaster funding is spent on response and recovery, leaving just over 3 per cent spent on diaster risk reduction, according to the Productivity Commission. However, following a series of catastrophic flood and bushfire events, both state and federal governments have signalled a shift in their thinking.
The authority last month launched the first State Disaster Mitigation Plan (SDMP), which outlines how every region statewide will have to develop a comprehensive response to reduce the risks posed by natural disasters, with the Hawkesbury-Nepean Valley and the Northern Rivers nominated as priorities for action.
The plan stressed the need for cost sharing “between all sectors, including private asset owners, insurers and the banking industry”, particularly those with a stake in avoiding disaster impacts.
Federal Minister for Emergency Management Murray Watt said the mitigation projects nationwide would require “many billions of dollars”, with some requiring a commitment from all sides of politics over many terms of government. He said he hoped the private sector would play a bigger role in this area.
“We’ve been in discussions with a range of private sector entities to examine how we can encourage more private sector investment,” he said.
A spokesperson from the Insurance Council of Australia said they supported the Minns government’s recent decisions to halt further development in parts of Sydney’s north-west due to flood risk, removing the Emergency Services Levy from insurance, and for its development of a long-term State Disaster Mitigation Plan.