QUESTION: Bushfire recovery

In Question Time, Mark asked the Treasurer about bushfire recovery and what processes are being put in place to prioritise urgent and essential additional expenditure involving rebuilding ahead of the resolution of insurance claims.

The Hon. M.C. PARNELL: As everyone now knows, the vast majority of Flinders Chase National Park was destroyed in the recent fires. Included in the losses are most of the buildings and other assets that are used for park management and visitor management, such as the campgrounds, the toilets and the shelters. I understand that the park headquarters at Rocky River were completely destroyed, along with the staff accommodation; in fact, pretty well everything has gone. The local Friends of Parks group also lost all their tools and other equipment, and they are keen to get back to work to help replan and rebuild this wonderful park.

In relation to insurance cover for government assets, the South Australian Government Financing Authority maintains a separate insurance arm known as SAicorp. SAicorp receive insurance premiums from agencies and they pay claims, but that is subject to an agreed agency excess. They also pay premiums for the government's catastrophe reinsurance program.

My questions of the minister are:

1. What excess applies to the Department for Environment and Water in relation to its bushfire insurance arrangements?

2. Does this insurance also cover the assets that were lost by others, such as the Friends of Parks group, or will the government otherwise commit to replacing that lost equipment?

3. When does the government expect to have a firmer idea of the extent of its insured and uninsured losses?

4. Given that we now have some months until the next state budget, what processes are being put in place to prioritise urgent and essential additional expenditure involving rebuilding ahead of the resolution of insurance claims, which I imagine could take a considerable amount of time to finalise?

The Hon. R.I. LUCAS (Treasurer): The Premier and I and other ministers—in relation to the financial issues, I have spoken on behalf of the government—have indicated that the costs of bushfire recovery will be given the highest priority in terms of government expenditure for the remainder of this financial year. I have been quoted as saying that, whilst the government would still wish to be able to present a balanced budget and meet the challenges of GST writedowns and the costs of bushfire recovery, the highest priority will be given to the costs of bushfire recovery. That means, inevitably, a small deficit in 2019-20. The government believes that's necessary, and we think the community would support that as well.

The specific answers to the honourable member's questions in relation to will the government, in essence—he didn't use these words—wait for all the other issues to be resolved before it takes action, the answer is no. The government, led by the Premier and with the assistance of Margot Forster, who is the coordinator for the government in DPC in terms of she oversights what I think might be called the consequences committee but it is actually an interdepartmental working group of all the key agencies, which obviously includes environment and water department representatives, are working as quickly as they can to try to quantify the extent of the losses and damage, which is difficult in and of itself—it is not a simple task—and then to try to estimate what the cost of replacement of those particular assets might be.

In some cases, there is a debate going on as to certain assets, not necessarily the ones to which the member has referred but nevertheless environment and water assets, as to whether or not like-for-like replacement in exactly the same location is the best response. Clearly, the quickest response is likely to be like-for-like in the same area, but there is a debate that will go on inevitably to say, 'Well, maybe this location was an accident of history 50 years ago. Now that the site has been destroyed is there a better location somewhere in the park for that particular facility?'

That is an issue which will have to be discussed and debated. It doesn't directly relate to some of the issues the honourable member has raised but, nevertheless, in relation to some other issues, which I'm sure the honourable member would be interested in, in relation to facilities within parks, it is an important issue that the government, the minister and the department will have to address.

The simplest answer to the honourable member's question is: we will not be delaying everything for the inevitable argy-bargy of resolving insurance issues. Yes, they are important, but the government, through the Premier, through Margot Forster and the interdepartmental working group that works with her, will work as quickly as we can in terms of trying to assess the damage to the assets, work out what needs to be replaced, what the cost of that replacement is, and the highest priority will be given to that sort of expenditure.

For the issues in relation to catastrophe reinsurance, I don't know the specific answer to what is in essence the deductible that an individual department might have, in particular environment and water, but overall the government's catastrophe-type insurance or reinsurance program is structured in broad terms such that we, the taxpayer—it's not we, the government—have to meet approximately the first $15 million of any particular claim or series of claims. Let me be imprecise there because there will be a better description of the words for insurance purposes and, if I need to clarify those exact words, I will place the correct version on the record at a later stage. But in broad terms, taxpayers are up for around about $15 million in terms of something like this bushfire, and clearly the total costs are way in excess of $15 million. The insurers are generally liable for the remainder of the claim.

Response received on 3 March 2020: 

The Hon. R.I. LUCAS (Treasurer): I have been provided the following advice:

1. The Department for Environment and Water has a $20,000 excess in relation to any bushfire event.

2. The South Australian government self-insurance arrangements only apply to assets owned by government agencies or for which they have a responsibility to insure. As Friends of Parks groups are separately incorporated groups, property which they own is not covered under these arrangements and should be insured by the groups.

Groups in affected areas may also be eligible for a 'Non-profit Organisation Grant', which is an assistance measure made under agreement between the Commonwealth and South Australian governments.

3. Insurance assessors were appointed by SAFA in early January and visited the affected areas as soon as it was deemed safe to do so. Due to size and nature of Flinders Chase National Park it may take some time to understand the full extent of the loss, but the assessors are working very closely with the affected agencies to ensure that all losses arising from the fire are identified and included in the insurance claim.

It is anticipated that the assessors will provide their first report in mid-March and this will give a firmer idea of the extent of the insured losses. Agencies have been advised to speak with their Department of Treasury and Finance account manager in respect of uninsured losses.

4. For insured losses, SAFA as the captive insurer for the government has sufficient reserves to settle expected claims with affected agencies. Progress payments will be made as lost/damaged infrastructure is assessed and replacement/repair costs are substantiated. SAFA and the assessors will work with agencies to prioritise payments as expeditiously as possible.

Should agencies require funding in advance of insurance payments or the budget process, additional expenditure can be approved by cabinet.