Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Phil Staley.
ABC North Queensland
Subject: Small business natural disasters preparedness and resilience
It's that time of year where tropical lows often form off our coasts. It's all about preparation. Some of us call it disaster season, it’s not very nice but unfortunately sometimes that fits the description. Hopefully you do have an emergency kit, you know, an evacuation plan. For the most part we’re all pretty good with that stuff. We all know that it's wet this time of year and we usually have strategies. So, here's a head scratching statistic, and I was surprised at it. One out of every four small businesses, only one, has a disaster plan in place. And that's according to the Australian Small Business and Family Enterprise Ombudsman, Bruce Billson. And Mr. Billson is with me now. Bruce Billson, good morning.
Fab to be with you and your listeners. Phil.
That figure did raise my eyebrows. First of all, where does that figure come from?
We conducted some extensive surveys across the country. I would suspect it’s probably a bit higher in your part of the world, Phil. But that's the number that came out from the surveys. This was, I suppose, the funky way of saying it is a business continuity plan. These are really looking at what you do in the event of a disaster.
It's fair to say people are attuned to the physical implications of a disaster. You know, I really enjoyed visiting many of the communities within your listening audience when we were doing our research for this inquiry and learned so much about cyclone Saturday in the lead up to the disaster season, as you referred to it, and those preparations that are often very much looked at, physical assets about property and premises.
What we were looking at was going a bit further. What's the stuff that makes your business tick? What vital information do you have? How do you manage and store that? What are your contingency strategies in the event some critical service - might be power, might be communications, something like that - are taken out? Do you have a ready reckoner of action steps you’ll take in the event of a threat to your business like that? Key phone numbers like if you're lucky enough to have your insurer’s, your broker’s number or other key contacts. It's that kind of thing, Phil, where something might knock your business off course and what sort of plan do you have in place to navigate those times?
Last year the Small Business Natural Disaster Preparedness and Resilience Inquiry got tabled in Parliament. Something like 16 recommendations in that, coming out of this survey. Without going through it page-for-page, what were the major topics that were in those recommendations?
I suppose the big ones, Phil, were pretty much if we want small and family business owners, who are so vital to our economy and our community, to prepare well and be best-placed to navigate a disaster - and this disaster could even be something happening to them themselves, like a critical health episode might really risk taking the business down - and then be well placed to recover, it would be good to know what government and others are doing in their name.
That is, what is the certainty of support they'll get? What does that look like? What would a response look like? When can they anticipate that a town might be, say, shut down because of a flood so that they can factor those things into their own planning?
And we saw in other parts of the continent where the local business community kind of knew that if water was tipping over some spot up the catchment that they had, you know, two hours, three hours to move valuable stock to higher locations and to put their plan in effect. And then, you know, when that gets challenged with someone saying, okay, everyone out of town, you can't do anything else, when that happens prematurely, that can really harm the business with their recovery strategies and their mitigation plans, Phil, just to make sure that the harm is minimised.
There was stuff around supports being provided if a disaster hits a community. Have a hub, a single place where all the support can be brought together. The business can then navigate the support that's available so it's whatever most suitable to them, they can reach out, but importantly tell the hub once what's going on in their world. Tell them what's happened to their business, have what help would be most useful, and then be guided to where that support comes from. That would certainly streamline the response-end of the disaster event.
And another statistic I did see Bruce Billson, something like 97% of disaster money issued out by the Government comes post disaster, 3% towards avoiding it. To me that's a massive disparity. How on earth does a government do that, more preparedness? 3% versus 97%!
It needs a bit of recalibration. No one doubts the importance of a response once a disaster occurs. But you know that old saying, an ounce of prevention is a pound of cure. There's a bit of that going on here. And pleasingly the Federal Government’s recognised that. They have got disaster mitigation funding's been increased by several hundred millions of dollars. That's great. That’s so that's steps can be taken to harden infrastructure to make sure communities are protected to put in place some safeguard actions that in the event of a disaster, the impact is less devastating.
And it's not just about money, Phil. If a disaster impact can be avoided, the emotional and social costs that happen when you are on the receiving end of a natural disaster, if that can be reduced or mitigated and you can get through those events in better shape, that's phenomenally beneficial not only for the economy and the communities involved, but for the individuals who, like you alluded to in your intro, have seen several natural disasters in a short period of time. And, you know, that's a real strain on your emotional wellbeing as well as your financial wellbeing.
My guest is Australian Small Business and Family Enterprise Ombudsman, Bruce Billson. Mr. Billson, how hard is it? You try to get these things implemented through governments and have money directed towards them when it's so uncertain? There might be a cyclone, but there might not be a cyclone. It’s so unpredictable. Does that make it hard for the governments to implement things? There might be some hesitancy there?
Well, it's a bit like your earlier thoughts about the number of businesses that have a disaster plan or a business continuity plan. People are so busy working in the business, they don't often have the time and the bandwidth to be working on the business.
You know, they're really focused on the immediate here and now. And that's often the challenge that you have when governments are working out how to prioritise scarce resources that are made available by the taxpayer.
I mean, there's immediate housing crisis. As you know, there's infrastructure challenges in your part of the world. I mean, to then say, yes, we need to do that as well as invest in levee systems, how we harden our road network, our telecommunications, how we make that spend now. And it might be a little bit extra now, but that will make sure that those assets can be there fully functioning and withstand a disaster event should they occur.
So, it's an important discussion. We all know what it's like when those things fail and everyone wonders, well, why wasn't this done about it? Why wasn't this road raised? Why is this rail line at this level? I mean, these are the sorts of conversations everyone's very wise about after the event. This is more encouragement to say, let's take that longer term view and think about them as a mitigation measure that's got benefits to the community, the economy, and particularly to individuals.
Finally, Mr. Billson, insurance, it's always a point of conjecture, especially in regional Australia. It goes up and up and I'm sure we've all heard horror stories of huge premium increases following natural disasters. There is almost certainly some small businesses that flat out just can't afford insurance. So, I wonder, is there something in those recommendations you put forward that might be able to help those businesses?
Yeah, there is some thoughts in our recommendations. Insurance is basically, you pay someone else to take some risk off your hands. Now, in a hardening insurance market, the insurers are saying, yeah, we might not want to take that risk off your hands. Or we might want to do that at an extremely increased price.
Now, to overcome that, to give everybody the best chance to get affordable insurance, some of those preventative measures, those mitigation measures we spoke about earlier, are key to that. That is if you can show that the risk of damage and the cost of damage in the event of a disaster can be reduced you then are in a better place to have that conversation with the insurers.
Couple of things we’ve recommended. If you're a business that's done, everything you could possibly imagine to protect and reduce risk and manage risk, where's the price signal, Phil? Where's your premium savings? Too often these premiums are determined by postcodes and a range of very generic factors which don't really incentivise people to do all that they can at an individual or property specific level. So that's part of it.
Second part of it is, and we know about it in northern Queensland, there is a role for reinsurance. You've got the Northern Australia Reinsurance Pool. That's designed to be there when there's a really catastrophic event that might, you know, knock the socks of the insurer. That's an important measure and there’s scope to expand that.
And I suppose the last part of it is if the taxpayers are going to spend more money and private property owners are going to spend more money protecting their assets and mitigating the risk, maybe we can say, look, if we do X, Y and Z, insurers will you come back into the market where you’ve currently left, but will you revise the products that you're offering? At the moment, Phil, many of the property insurance is like-for-like. So, if you've got an event that damages your property, the policy says, well, let's build back to the way it was when really you now know what the water levels are going to be.
You now know what the cyclone risk is. You now know what the fire danger is. That might involve more work, which could be more expensive, but that's a like-for-right replacement. If you are struck and you do make a claim, you can actually build back to the standard that best sets you up for the future. So, there are some of the recommendations that we've touched on.
I don't reckon there'll be many small business owners not nodding their heads right now. Good idea, good idea. We shall see what makes it through and becomes some sort of laws through the land.
We will persevere, we will persevere.
Always good to chat Bruce Billson, thanks so much for your time this morning.
Take care. Best wishes to you and your listeners.
Bruce Billson there. So, he is the Ombudsman for the Australian Small Business and Family Enterprise organisation. It's a government organisation. Those recommendations put to Parliament late last year, 16 of them. Will we see something happen? I hope so.