NICHOLL Investors have asked about the impact of the recent bushfires. A couple of years ago, when there were large floods and cyclones in Queensland, the effect on GDP was about 0.6 per cent. This is large but it includes factors such as mine closures and other business interruptions. These events are complex and unique so it is difficult to make generalisations on outcomes.

TRIGONA New South Wales (NSW) has been one of the worst-affected states and we are still very much in the assessment phase.

There are a few disaster funding arrangements. One is the disaster-relief funding aspect of the Commonwealth and state cost-sharing arrangement. This was announced with the prime minister’s A$2 billion (US$1.4 billion) relief package. All the states that need it will benefit from this.

There is also the NSW disaster-relief account, which is a primary fund for natural disaster-related expenditure. The Office of Emergency Management administers this. Appropriated funds of A$91.6 million go into it every year and this is already part of the government’s yearly funding.

The final one in NSW is a Treasury-managed fund that is, essentially, self-insurance. This scheme covers the state’s assets. The fund is protected from large-scale insurance losses and has a comprehensive reinsurance programme. All three forms of funding will help with the repairs.

FAJARDO Generally, investors are aware of Queensland’s long history of effectively managing cyclones, floods, droughts and bushfires. When we talk with investors, we emphasise the diverse economic base and solid financial position of the state – such that one single event should not have too broad an impact.

It is then about understanding the federal-state relationship around natural disaster recovery funding. Up to 75 per cent of eligible recovery funding is reimbursed to the states. But timing differences could lead to some necessary short-term funding. We have found that investors are generally comfortable with this once it has been explained.

TRIGONA Offshore investors often do not get the whole picture from the media. We have had questions around what the bushfires mean for our credit rating and for Australia’s credit rating. This is not to downplay the impact of the bushfires on affected areas, but in the grand scheme, the overall effect on the economy will probably be minimal.

We need to be mindful of how we approach investors to ensure they get the most factual information. Australia is exposed to natural disasters and we need to manage this with investors.

NICHOLL We have always highlighted with offshore investors that the fiscal arrangements between the Commonwealth and states ensure that the country gets the benefit of national risk absorption. Many well-worn mechanisms are in place to get funds flowing quickly from the Commonwealth to the states should they be deemed necessary.

We are not finding the need to do anything specific in response to the bushfires, given we always carry adequate cash reserves for unanticipated fiscal risks from the revenue and outlays side.

This said, it is easy to imagine that, if recent trends of drought, storms, flooding and fires persist, offshore investors may start to wonder at some point about the cumulative economic impact.