Jo McManus
Australia’s had its fair share of natural disasters in the past 12 months. The most recent, of course, being in our Kimberley region with those devastating floods up there. Last year the Australian Small Business and Family Enterprise Ombudsman held an inquiry into problems facing small businesses in the wake of a natural disaster. And I thought quite astonishingly, he discovered only one in four small businesses even have a disaster plan.
The Ombudsman is Bruce Billson and he joins me now. Good afternoon, Bruce.
Bruce Billson
Jo, great to be with you and your listeners.
Jo McManus
Bruce, were you surprised that so many small businesses were underprepared if there was a disaster?
Bruce Billson
I was hoping the number would be a bit higher, but it didn't really surprise me. I suppose optimism came headlong into reality where many of your listeners who run and own a small and family business are very time poor. There's always too many things to do.
And working in the business is often a priority over working on the business and thinking about what might knock the business off track or really have a profound impact, whether it be a natural disaster, COVID shutdowns, or even, dare I say, a really bad health event for the business owners themselves. Have they thought about contingency plans? What's their business continuity plan? It sounds a little bit funky, but that's how the practitioners call it. And, you know, it didn't really shock me. I'm hoping we can improve that, though.
Jo McManus
One of the things I found interesting about your report, Bruce, was that you said that 97% of money spent by governments on disasters is after the event and only 3% is on preparedness. How can we change that?
Bruce Billson
Well, pleasingly the Government's aware and is working hard to shift that. Minister Murray Watt I know was with the Prime Minister and your Premier visiting the Kimberley earlier in the week. And even the insurance industry sort of saying gee, we spend a lot of money on the response and that's understandable, the tragedy’s hit, the disaster is being felt directly. But some targeted investment in preparedness, in resilience building, in mitigation works, in hardening infrastructure and even in planning for disasters that sadly are more frequent and more severe, according to the UN, and we're seeing a little bit of that ourselves, that would be a really wise way to go.
And you've seen the current Australian Government set up some preparedness and mitigation funding and I'm hoping we'll see more of that into the future so that the harm and the hurt and the tragedy of a natural disaster can not only be abated in an economic sense, but the personal tragedies, Jo, for too many businesses. Sometimes these disasters spell the end of the business because it's just so overwhelming to come back from some of these events.
Jo McManus
You've come out with 16 recommendations, and I think the one that resonated the most with me was a tell us once triage system where small business owners don't have to tell their story over and over and over again. Is that something that's even possible?
We’re optimists aren’t we Jo? We’ve got to look for a better way of doing it. Another one of the recommendations was having a bit of a support hub. So, all the various governments and agencies, not-for-profits and even the private sector that come into a community looking to provide help can actually be co-located. So that's happening in some areas.
The next step, though, is this ‘tell us once’ where you're dealing with this tragedy and an enormously overwhelming sense of what do I do now? If we can capture information, have the business owner and business leader tell their story, point to the impacts, explain what would be most helpful, and then have that hub almost triage that person, land them with the right people who are providing the right help, but actually carry with them the information that's relevant so they've only had to say it once rather than relive what could be tragic, hurtful, emotionally overwhelming stories just because there's a new person or a new government department looking to provide some help.
Jo McManus
And look, to be honest with you, I wish that that could be available for individuals going through disasters as well because they suffer the same sort of red tape stuff. The other thing that I noticed was that you saw that many small businesses were uninsured, under-insured and or could not afford insurance because it was so expensive. Is there a way around that issue?
Bruce Billson
Well, the market’s hardened, to use the phrase, which is the willingness of those underwriters and those that are funding the insurance claims. Their risk appetite is down, Jo, so they're being more discerning about what risk they'll take on. And in many cases, too many small businesses are finding insurance that's necessary for them to be able to engage in trade and commerce is either eye-wateringly expensive if you're in an area where you know there's an assessment that disaster is more likely then perhaps somewhere else, or they might not be able to get it at all. Or if they make a claim, the excesses are enormous. So, this is what we saw over and over again, particularly areas that have got a disaster proneness to them, that insurers have less of an appetite to get in and ensure those businesses.
So, the tragedy is amplified by an inability to make an insurance claim to help recover, to rebuild. And this is something that we're seeing. You've seen some responses through the Northern Australian Reinsurance Pool. We’ve surfaced some examples in areas that are flood prone as well that have worked in the UK. It's kind of a no regrets policy, Jo, where you sort of say, well, people are in these areas, we might need to take extra special steps, we might need to target the risk reduction investment. But you know, let's help them have accessible and affordable insurance. And if a claim is needing to be made, have it not like-for-like but like-for-right. If you're in a flood prone area, you might need to elevate your place and not just build the same thing over again and then have the carpet ruined again.
Jo McManus
That makes perfect sense. Look, I really appreciate your time on the program this afternoon. Thanks very much for joining us.
Bruce Billson
Thanks, Jo.
ENDS