In late 2019, right before Australia’s east coast burned, the Morrison government unveiled a $4 billion Emergency Response Fund designed to “help Australians recover from natural disaster”.
There have been plenty of natural disasters since then. Lismore is under 14 metres of water in floods that have devastated northern NSW and south-east Queensland. But of that $4 billion, not a cent has been spent on disaster recovery, and no readiness projects have commenced construction.
Labor is on the attack. But the government’s Emergency Management Minister Bridget McKenzie says everything is working as planned.
So what’s going on?
A brief history of the fund
Labor wanted to fund both education and disaster relief, but eventually supported the government after reaching a deal to get some TAFE funding. Independent Senator Jacqui Lambie was furious, claiming Tasmania had been sold out by the deal.
The Emergency Response Fund’s story reads like another Morrison government thought bubble. Initially it almost didn’t get under way because the $4 billion was actually repurposed from money earmarked for education infrastructure projects, such as refurbishing TAFE facilities.
When the fund was introduced, the ministers responsible talked a big game, billing it as another plan to get disaster-hit communities “back on their feet” faster. In a media release, then-emergency minister David Littleproud said the fund would “put us on the front foot, making sure we’re better prepared for extreme events”.
For the people of flooded Lismore, it must be pretty frustrating to hear this after nearly three years of the government not doing very much with the fund. But it shouldn’t be all that surprising. From the start, the ERF, with its billions sitting dormant, has been a source of frustration for disaster-prone communities.
In 2020 it was revealed the $50 million annual fund put aside for disaster mitigation, secured by Labor during negotiations to get the ERF through Parliament, hadn’t been touched. This in a financial year which included the Black Summer bushfires.
Within a year of the fund’s creation, not a cent had been spent. In response to attacks from Labor, the government said Emergency Management Australia was still working out the funding guidelines.
By January last year, Queensland councils were wondering where the hell all the money was going, slamming the government for not releasing it for flood and fire mitigation.
The fine print
Littleproud says the money hadn’t been unlocked because of the fine print in the legislation — the ERF can allocate funds only once other spending measures have been exhausted.
This very important caveat never really featured in the initial announcement. But as criticism has ratcheted up, it’s become the government’s go-to defence. Head of the government’s National Recovery and Resilience Agency Shane Stone — a former Country Liberal Northern Territory chief minister — has repeatedly referred to the ERF as a fund of last resort.
“Put simply, the ERF is only intended to be used if other disaster funding that’s already available isn’t enough. It’s not supposed to be the first port of call when a disaster hits,” he said in a Q&A published by the agency.
In Senate estimates last month, Labor Senator Murray Watt, a frequent critic of the government’s emergency management, hit out at the fund, which had earned more than $800 million in interest since its creation despite not funding any disaster mitigation.
“Isn’t it clear that all this fund is doing is racking up money for your government rather than helping disaster victims?” he asked.
Watt renewed his attacks yesterday, as Defence Minister Peter Dutton announced a GoFundMe page for flood victims, despite being in government.
McKenzie has insisted the ERF is working as it should — as a fund of last resort.
“The emergency response fund was set up as a future fund to be used when all other sources of funding have been exhausted,” she said.
McKenzie is somewhat right. The fund is being used as it was intended. Either way, it just doesn’t seem like nearly enough.
The frustrating thing about this entire discussion is that the whole concept of a dedicated fund is nonsense. The federal government can no more run short of dollars than Coles can run short of Fly-Buys. Both entities are the respective sole issuer.
If Coles announced they were putting aside some Fly-Buys in a special fund just in case there was high demand for them at some undetermined point in the future – or if Qantas did the same with Frequent Flyer points – you would rightly think them mad. It is the same with the federal government: it can issue too much money to the wrong people for the wrong things, it can distort competition for scarce resources and drive the price up or down, and it can also issue too little and create unemployment and private sector debt.
The one thing it can never run out of is dollars.
So in an emergency scenario such as floods or fires, it can issue as much money as is necessary to repair and rebuild infrastructure and livelihoods, at the time the emergency occurs. What they can run out of are builders, or nurses, or emergency services workers, or raw materials. The limits are the REAL RESOURCES, not the dollars. You only need to look at the demand and markets for vaccines, ventilators, quality masks etc in the last couple of years as an example.
When you see it from this viewpoint, the ridiculousness of this entire debate is obvious.
“The emergency response fund was set up as a future fund to be used when all other sources of funding have been exhausted,”
That includes GoFundMe campaigns?
I guess all other sources of funding will have been exhausted only when Australia goes completely broke, after the government has seized and used up all the assets held privately or corporately in the country, cannot raise any money internally or from abroad, and is defaulting on its loans.
Or during an election campaign when there is a serious chance they might lose. That way they can blow the lot on pork barelling etc to try to reverse that and win, or if they do lose, it will be $4 billion that the winner never get’s their hands on to make them look good. What greater emergency can you think of than that?
Obviously.
So, the emergency response fund is not really there to respond to emergencies?!? I can’t help thinking, that Morrison and McKenzie will find an emergency or two, to respond to in a few months time. These will be in marginal seats and the emergencies will be the possibility of the LNP losing those seats.
Methinks that was the planned emergency all along.
Where (with whom and what) is the $4b invested?
Where would we go to find that out?
Ask the long term chair, the Once & Future Smirk.
NB not the current gurning pretender who just embarrasses the sideshow clown into whose mouth we used to put ping-pong balls.
Where (with whom and what) is the $4b invested? – hmmm, i’m guessing coal and gas
“$800 million in interest” is an outsized return for a 3 year investment of $4b in an era of 1% bank interest.
Proof that tories are better money managers?
Well, they are aren’t they? You can’t fault them when it comes to managing the country’s money towards their and their mates own benefit. And how can we criticize them for doing so? One of Morrison’s first remarks as PM was “We look after our mates”. It’s not his fault if we didn’t understand who it was he was referring to. Oh when are even some of the most apparently intelligent in the land going to learn to decipher the language of those that speak with a forked tongue? And pick it up straight away. There must be an end to giving politicians such as these the benefit of the doubt, i.e. Doubt everything, accept nothing as being truthful until proven so, instead of what is normally granted to the usually straightforward citizen.
No! ‘They’ are more devious, dishonest. Just as they withheld donated monies meant for Bushfire casualties; so they reinvested, re-directed monies meant for floods and livelihoods of those who now have nothing but charity clothing on their backs.
Bereft individuals, families, who’s lives have changed beyond belief. And those who have not survived.
Remember why . . . when we are asked to vote. And they seek to shake, hands?
Piketty’s book Capital explains in some detail how the return on capital increases with the amount of capital. The little people with little to invest will indeed get the sort of pitiful return you describe, not even matching inflation currently, but those who have a few billion to play with achieve several times as much. Contrary to the common belief, they also do it without much more risk. A 20% return over 3 years with that much invested is less than 6.5% p.a. compounded and really quite modest.
Could you give an example SSR? How would you invest $4b to yield 6.5%?
It’s very easy. Just look at the returns from a decent superannuation fund. Australian Super’s Balanced Fund, the default option, managed an annualised 9.73% over the past 10 years. It’s High Growth Fund, somewhat riskier, managed 10.64% p.a.. The low risk Stable Fund returned 6.44% p.a. Like I said, the return on the ERF is quite ordinary.
“The emergency response fund was set up as a future fund to be used when all other sources of funding have been exhausted,” she said.
Oh, that’s OK then. For a moment I thought it might have been another case of an announcement pretending to be an achievement.
Note to self: must get a magnifying glass to read the fine print.
Yeah they’ve got to exhaust the Funding from Peter Dutton’s Go Fund Me page first.