(Image: AAP Image/Dan Peled)

The economic cost of the bushfires is bigger than first thought, according to revised figures provided to Crikey.

Economists now say the bushfires will cost the Australian economy between $4 billion and $8 billion in property, productivity, consumer spending and business losses. 

While costs are still being calculated, Crikey takes an early look into what’s been lost.

The losses

How did we get here?

Anecdotally, land razed is anywhere between the size of Belgium and South Korea. For a more scientific approach, Crikey turned to rural tech startup Digital Agricultural Services (DAS).

Using satellite imagery, the CSIRO-funded company calculated 8.6 million hectares of land has been impacted by the bushfires — 2.4 million hectares of this is agricultural land, with an estimated 58,200 buildings impacted. 

Of those 58,200 buildings, insurance claims have been made for less than 10,000. A spokesperson for the Insurance Council of Australia told Crikey 23,300 claims have been lodged so far, totalling $1.9 billion — they say about 75% of Australians are insured.

The vast majority of claims are for domestic losses, including 9892 claims for home building, 5837 for home contents, and 1537 for domestic motor vehicles. 

Given a recent survey found nearly 80% of Australians were affected in some way by the bushfires, with 14.4% directly exposed through property damage or evacuations, it’s no surprise that figure is so high.

There are other costs, too: Telstra says bushfires have cost the company around $50 million in damage to infrastructure, and the Australian Tourism Export Council claims the sector will lose $4.5 billion (a figure much larger than some economic models predict).

Economists claim the country’s GDP will take a 0.3% hit as the country splurges on recovery (though given things like military evacuations have a positive effect on GDP, it’s not the best tool to use). 

What’s our best guess? 

So how should we tally all these costs up? Economists at SGS Economics and Planning had a stab at it, estimating the fires will cost the economy between $4 billion and $8 billion.

Terry Rawnsley, a partner at the company, told Crikey their methodology combines insurable losses with economic ones. 

“$100 of insurable losses might be $300-500 in economic losses … your business burnt down so you’re not purchasing things, you lost a tractor which means you can’t farm a crop or milk your remaining cows,” Rawnsley said. 

In the retail and tourism sector, there are often zero insurable losses, but the economy still takes a huge hit. Sydney’s retail spending, for instance, plummeted when locals donned face masks. It turns out not many felt like shopping when they could hardly breathe. 

“People were not going to work, they were being evacuated [with] fire alarms, they weren’t going out for drinks after work … Looking at retail trade numbers for December, NSW had an obvious drop in spending,” he said. 

The huge variation in the $4-8 billion figure is partly dependent on how quickly we start to rebuild. “We just don’t have enough information to get a more precise number,” Rawnsley said.

When the bushfire season comes to an end, and as people return and make plans to rebuild, we’ll have a better idea of what the total bushfire bill will be.