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‘Hundreds, possibly thousands, of businesses will go under’

Adam Zuchetti
Adam Zuchetti
09 January 2020 5 minute readShare
Bushfire damage

Potentially thousands of businesses will not survive the current bushfire crisis, with indirect losses often falling between the cracks in terms of receiving assistance, an emergency management expert has warned.

In a post on his LinkedIn account this week, Tigertail Australia managing director Rick Stone — who consults to various government agencies and businesses on crisis preparation and response — postured that the government should “get serious about recovery” and introduce more definitive, direct assistance to support those affected.

“The Australian government announces their resources, primarily the ADF, will take a ‘more proactive posture’. (Presumably consistent with the Constitution) But I doubt that the National Security Committee of Cabinet actually asked ‘what do you need from us?’,” Mr Stone wrote.

“Sadly, this looks like a classic ‘announceable’. What is the skill set offered by the call-out (that wasn’t already available)?

“Minister Reynolds talked about ‘opening Defence establishments if people need a meal’. Surely this isn’t really helping; it risks confusing things when state agencies have already established evacuation centres.

“The response apparently includes ‘medical support’. Presumably taking reservists from their civil roles! Classic double-counting.”

He continued: “Will [government] be proactive and supplement Centrelink with sufficient staff and resources for the inevitable increase in requests for assistance from people who’s [sic] businesses have failed after the bushfires, or who’ve been laid off?”

‘Money would be spent anyway’

Elaborating on his comments, Mr Stone told My Business that while “announceables” have some value in restoring public confidence, more direct and targeted action is needed to properly assist those businesses and people affected on the ground.

He argued that the recent multi-billion dollar relief announcements of the federal and NSW governments is money that would need to be spent anyway and the number attached is merely symbolic.

“When they say, ‘I’ve committed $2 billion’, it just means they’ve drawn a line through this and are just saying a number. They don’t know how much it’s going to cost,” he said.

“The NSW government knows it’s going to rebuild the schools that have burned down, and it’s going to rebuild the bridges that need to be rebuilt.

“These activities are a really important part of local community recovery, so long as local contractors are used to do as much of the work as possible. But they’re going to do that anyhow.”

Not all businesses will survive

Sadly, Mr Stone believes that many small businesses will never recover from the disaster, including those that weren’t directly damaged by the flames.

“Regrettably, probably a lot [will fail],” he said.

“If you just think about the cafe, the caravan park, the local mechanic, the little retailer... down in a lot of these communities, the little tourist operator... a lot of farmers.

“Like around Batlow [in NSW], they’ve lost orchards — that’s going to take them a decade to get back to productivity.

“The likelihood is that hundreds, possibly thousands, of businesses will go under because their cash flow has been interrupted, and really significantly interrupted, and that’s tragic.”

Mr Stone urged impacted businesses to look at the grants available for disaster relief as well as keep abreast of their insurance coverage. However, he warned that many businesses “fall between the cracks” if their losses are an indirect result of the fires.

“One of the areas of complexity around some of these [assistance] schemes [is] they tend to target people who have suffered direct loss,” he said.

“The people who suffered indirect loss can often fall between the cracks. You see the same thing with the targeted payments to bushfire fighters that the government announced — there are all sorts of people to whom that payment does not apply.

“Those who are indirectly affected — and there are a lot of those who are indirectly affected — may not have access to some of these payments. That’s a real issue for government to explore and to see what it is they can do.”

What is needed to help bushfire-affected communities recover?

Of course, recovery efforts will take many weeks, months and years, and that assistance will be needed in various forms.

The primary aspects of recovery will revolve around encouraging people to spend locally, to continue visiting and doing business with affected communities, to ensure money continues to flow into them.

“One of the first and most important things is to encourage local expenditure and money back into the local community. So that’s things like avoiding donating goods, because for every fridge you donate... the local shop is not getting paid to provide that material,” Mr Stone said.

As such, he urged others wishing to support bushfire victims to donate cash, which can then be spent within those local communities.

Another aspect is assistance for local business cash flows, in the form of tax deferrals — as have already been announced by the ATO — and the work currently being undertaken by banks to ease the burden of repayments on loans.

However, the emergency management consultant questioned whether the likes of Services Australia (Centrelink) are being sufficiently resourced to deal with the fallout from the bushfires.

“I think it’s a significant challenge for that organisation. By definition, an emergency is something that you can’t cope with, with your normal resources,” Mr Stone explained.

“That means that Centrelink won’t be able to cope with the sudden spike and surge in demand for its services without some significant additional supplementation.

“I don’t know how it’s going to get that, particularly under this government’s policy which has been to cut back on public servants and privatise many of those functions.”

Australia well placed to support recovery

Nevertheless, the good news for bushfire-ravaged towns, according to Mr Stone, is that Australia has a strong system already in place to aid recovery from natural disasters, whether they be fires, floods, storms or cyclones.

“Australia’s got a really solid foundation — policy foundation — for helping to support communities, and it’s very much based around local communities leading their own recovery, with support from the highest level necessary,” he said, citing the Australian Institute for Disaster Resilience as a key source of information and resources on the matter.

“We’re pretty good at helping local communities get back on their feet.”

Resources for bushfire victims

More information on government support measures for people affected by the ongoing bushfires can be found on the federal Department of Human Services website.

People directly impacted — those whose homes have been destroyed or rendered uninhabitable, those who have been injured or have lost an immediate family member — are also eligible for a one-off Disaster Recovery Payment of $1,000 per adult and $400 per child below the age of 16.

Meanwhile, the Australian Red Cross is also offering grants of $5,000 for each household whose home has been destroyed or rendered uninhabitable.

Disaster assistance is also available from the following state authorities:

‘Hundreds, possibly thousands, of businesses will go under’
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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