Continuity Forum & Business Continuity Institute Meeting 10 September 2013

1. Continuity Forum & Business Continuity Institute Meeting 10 September 2013 Adjunct Professor Jim McGowan AM School of Government and International Relations “Disaster Management: An Emerging Public Policy Imperative”

2. Why Disaster Management is an emerging policy priority? • For most countries, coping with natural disasters has emerged as a policy priority. • Our Governments need to consider ways to mitigate and manage disasters, while also enhancing individual and community resilience. We need to build our policy capacity in emergency and disaster management WHY? • According to research from the Centre for Research on the Epidemiology of Disasters (CRED), there was a 233% increase in the number of natural disasters in the period 2000-2009 compared to 1980-89 and 67% when compared to 1998-99.

3. Impact and Costs of Disasters • More striking is the increase in the impact and costs of these events as a consequence of population growth, economic development and climate change. According to Munich Ra, the world’s largest re-insurer, global costs have risen from about $US 80 billion in 2011 dollars in 1980 to just under $400 billion in 2011. • The frequency of climate related disasters (tropical cyclones, typhoons and hurricanes) has increased tenfold since data was first collected in 1950. • We are neighbours in the Asia Pacific Region where there have been a large number of significant disaster events related mainly to climate and seismic activity. Climate change will make weather patterns less predictable and more extreme.

5. Resilience: COAG’s “National Strategy for Disaster Resilience” • Involves effective, practical steps to limit the impact of disasters on people, the environment (incl the built environment) and the economy. • Involves a move from the traditional approach focused on the response (our emergency services), to one of resilience where it is the shared responsibility of all sectors of the community including all levels of government to help prevent and mitigate disasters • Involves an “all hazards”, “all agencies” approach to risk across prevention, preparedness, response and recovery phases • Involves effective relationships to ensure community resilience activities are informed by local knowledge, can be undertaken safely, and complement the work of all with “skin in the game”.

6. The Policy Imperative: “Resilience” “Resilience is the ability to prepare and plan for, absorb, recover from and more successfully adapt to adverse events. Enhanced resilience allows better anticipation of disasters and better planning to reduce disaster losses—rather than waiting for an event to occur and paying for it afterward.” “The alternative, the status quo, in which the nation’s approaches to increasing disaster resilience remain unchanged, is a future in which disasters will continue to be very costly in terms of injury, loss of lives, homes and jobs, business interruption, and other damages.” (Disaster Resilience: A National Imperative; National Academy of Sciences, Washington. 2012)

7. If the policy imperatives are “Resilience” and improving individual and community understanding of risk, reframing the policy and funding frameworks for Disaster Management is the priority.

8. A Holistic Approach to PPRR • Building resilience requires the integration of all the Prevention, Preparedness, Response and Recovery (PPRR) phases. • Each of the four phases should provide feedback loops to improve performance, policy development and resourcing priorities with the broader objective of building resilience. • Currently these feedback loops are poorly developed, as evidenced by the disproportionate funding allocations between the response and recovery phases and the prevention and preparation phases. • Further within these phases, the relationships and interdependencies are not well understood.

9. Risk and Response Planning The experiences from hurricanes Sandy and Katrina and in Haiti, earthquakes and/or the resultant tsunamis in Japan, Aceh, Sumatra, Samoa and Christchurch and the oil spill in the Gulf of Mexico, floods and cyclones in Aust are evidence that our planning assumptions have been too narrow. Japan is recognised as being among the nations best prepared for earthquakes with widely acknowledged community education programs and strong building codes. And yet the impact in 2011 was devastating!! The traditional orthodoxy is no longer enough! “Good preparation is based on the realisation that each crisis and disaster is unique and may take on unknown (and unknowable) proportions.”(Boin and ‘t Hart)

10. New Models of Leadership • Ret Admiral Thad Allen has articulated the type of leadership needed when confronted with a fast moving and complex crisis. He believes that the “chain of command” model is inadequate. “In what I would call a ‘whole of government response’-to a hurricane, an oil spill, no matter it is- the chain of command doesn’t exist. You have to aggregate everybody’s capabilities to achieve a single purpose, taking into account that they have distinct authorities and responsibilities. That’s creating unity of effort rather than unity of command, and it’s a much more complex management challenge.”(“You Have to Lead from Everywhere”; An interview by Scott Berinatowith Ret. Admiral Thad Allen; Harvard Business Review 2010) • The first priority during and in the aftermath of an event is having clarity in relation to the operational leadership. The designation of the accountable person is critical to establishing the authority of the person. • A prompt and public appointment minimises the potential for confusion among the response agencies, reassures the public that the authorities are in control and reduces the capacity to “blame shift” in the event that deficiencies in the response are identified.

11. Communication and Public Information • Accurate, authoritative and up-to-date public information is now recognised as critical a function for the preparedness and response phases as is the deployment of emergency services personnel. • Retired US Admiral, Thad Allen, the National Incident Commander for the “Deepwater Horizon” oil spill in 2010. “There are two things one can always expect in a national crisis; media and politics…We live in a world right now where we will never have a major event that doesn’t have public participation. Failure to anticipate, include and respond to criticism.. will only impact on the credibility of the response.” (Thad Allen; Massachusetts Institute of Technology News, 27 May 2011).

12. Relationships: The Critical Success Factor • The best legislation, operational procedures and structural models won’t deliver a satisfactory response if relationships are fractured and communications are confused. • Relationships need to be developed during “peace time” so that roles and responsibilities of all agencies and response personnel are clear. “Effective crisis management includes the forging of relationships among response agencies, as well as media representatives, external stakeholders, and a variety of experts. Once a crisis has occurred, there is usually no time to look to the right people and interact with them on a basis of trust. Effective crisis response relies strongly on pre-existing cooperative networks built and maintained painstakingly during the preceding years” (Boin and ‘t Hart)

13. Issue: Prevention is a Policy Gap • A serious gap in disaster management policy in Australia is the need for integrated policy and funding frameworks focused on ‘all hazards’ and building resilience. • This lack of integration creates a significant policy gap in disaster management;- prevention (adaptation and mitigation) • The consequence is a distortion in resource allocations between the PPRR phases-the focus is on response and recovery.

14. “Building our nation’s resilience to natural disasters.”(paper by Deloitte Access Economics for Australian Business Roundtable for Disaster Resilience and Safer Communities, June 2013) “In 2012 alone, the total economic cost of natural disasters in Australia is estimated to have exceeded $6 billion. Further, these costs are expected to double by 2030 and to rise to an average of $23 billion per year by 2050, even without any consideration of the potential impact of climate. Each year an estimated $560 million is spent on post disaster relief and recovery by the Australian Government compared with an estimated consistent annual expenditure of $50 million on pre-disaster resilience: a ratio of more than $10 post-disaster for every $1 spent pre-disaster.” The Australian Business Roundtable for Disaster Resilience and Safer Communities was formed in Dec 2012 by the CEOs of: Australian Red Cross,Insurance Australia Group, Investa Property Group, Munich Re, Optus and Westpac Group.

15. Counter Terrorism v Emergency Management Policy The focus for counter terrorism is on Prevention and Preparation.

16. Prevention (mitigation and adaptation); the policy and funding gap The policy imbalance is staggering when one considers that in the year in which $15 billion was the estimated of the flooding and cyclonic events, Queensland’s allocation of funds for disaster mitigation was about $9 million. NDMP:$44M over 5 years, with equal contributions from the Qld and Australian governments. Progress: The Newman Government has increased funding for Flood mitigation with $40M over 4 years and a further $40M over 3 years to support local governments implement the Floods Commission recommendations “The evidence in support of change in Government policy with significantly greater injection of funds into mitigation and adaptation initiatives is overwhelming”. (McGowan: AJPA Sep 2012)

17. Reframing “Recovery” FROM DISASTER TO RENEWAL: THE CENTRALITY OF BUSINESS RECOVERY TO COMMUNITY RESILIENCE RAI Report, Aug 2013 Recovery has been too narrowly defined. Experiences in Australia and internationally often treat the recovery phase as having too short a time horizon, focusing predominantly on relief and reconstruction. Reinforced by the “reconstruction and recovery authorities” which are established with a 2-3 year timeframe.

18. “FROM DISASTER TO RENEWAL”: A CONCEPTUAL MODEL

19. “Adaptation to the new normal”: The missing element. “The concept of resilience, originating from both physics and ecology, incorporates the idea of ‘equilibrium’. On a day to day basis, ‘equilibrium’ could be considered the status quo of a community. The pre-disaster and post-disaster equilibria are likely to be qualitatively different, because the impact of the disaster will inescapably alter the lives of those experiencing it. In this context, recovery is the process of a community adapting to the disaster shock and establishing a ‘new normal’; resilience comprises the personal, community and economic attributes that enable this process.” (RAI: “From Disaster to Renewal) Inside the Recovery Phase (RAI: “From Disaster to Renewal) The overarching objective of recovery should be to assist communities to adapt to their new social and economic environments post-disaster.

20. Reconstruction must be integrated into to the economic recovery strategy The reconstruction stage of recovery is critically important but : • generally drives a significant influx of construction workers to the affected region. • can distort measures of a region’s economic performance and obscure the long-term challenges faced in achieving sustained economic recovery. • can also have the unintended consequence of furthering population displacement. In Marysville and Cardwell, the reconstruction boom drove a demand in a housing market with reduced stock causing rental spikes and serving to push out local residents in marginal financial circumstances and key workers such as teachers and nurses.

21. Business Recovery is a Pre-condition for Community Recovery “Well there is a decrease in houses. Leads to a decrease in population and a decrease in jobs….leads to a decrease in population…Just everything decreases, a total decrease in the town.” Cardwell resident The lack of funding for small business recovery reflects a lack of appreciation of the critical interdependencies between business recovery and community recovery, particularly in rural settings where the majority of businesses are owned and operated by local residents. This situation not unique to Australia. (RAI: “From Disaster to Renewal.)

22. ‘Thing’ Theory An excessive focus on building ‘things’ can result in over-expenditure on infrastructure that does not serve the long term needs of the community if it is not integrated with business recovery strategies • Economic development is presumed to flow from building “things”. • “Things” are seen to demonstrate commitment and action. • Governments have a difficult balance to strike between taking action to break the negative adaptation cycle caused by population displacement and investing in ‘things’ that exacerbate the reconstruction boom yet fail to support long-term business recovery.

23. Betterment is value for money In 2011 Griffith University was engaged by the Qld’s Dept of Community Safety to develop a framework to enable applications under the ‘betterment’ provision of the NDRRA program. Despite multi-billion dollar recovery bills and the inclusion of betterment provisions within the NDRRA program since 2007, these provisions have not been widely accessed. Government infrastructure and assets are still being rebuilt “like for like”; missing the opportunity to fundamentally rethink the vulnerability of key infrastructure The question of betterment is particularly salient in light of the Commonwealth’s requirement to provide value-for-money in the reconstruction phase. In this context value-for-money is not simply a cheaper reconstruction option or an effectively delivered reconstruction project; the lifecycle of the asset needs to be considered, including its likely exposure to future hazards and the costs of future reconstruction.

24. Community Led Recovery Requires Commitment Marysville Feb 2009 • Community led recovery is essential for local ownership of the outcomes and building community resilience. • Driving the recovery process requires a degree of institutional capability to coordinate, communicate and facilitate engagement with government and the broader community • The absence of well-documented disaster recovery tends to generate a leadership vacuum which may then be filled by a variety of competing groups • Local authorities which do not effectively engage with and involve the local community and community organisations not only risk their alienation from the process but also the loss of local knowledge and ownership. The Challenge: How do communities harness the institutional leadership and capacity of local/state authorities whilst encouraging community-led initiatives and local leadership which contribute to individual and community resilience?

25. Infrastructure Restoration is Business Support • The restoration of critical infrastructure such as power, telecommunications and rail and road networks is critical to business recovery • Road and rail closures have disproportionate impact by limiting the supply of stock and materials and access to external markets. • Telecommunications (internet access, electronic banking and EFTPOS) are critical to business. The speedy re-establishment of the physical and virtual networks is fundamental to business recovery and support a higher priority on prevention (ie mitigation programs including betterment).

26. Hardship Grants as a Business Recover Strategy $840 million was provided in $1000 payments to people affected by the 2010-11 floods and Cyclone Yasi. Just 10 percent of that $840M would have resulted in a tenfold increase in the funds for disaster mitigation programs in Qld! Governments rightly focus on the impact on individuals. “Hardship grants” are a priority and in contrast to small business assistance are provided with minimum bureaucracy. In our field work many raised concerns that hardship grants were creating an ‘entitlement mindset’, where people expected and relied upon ‘the government’ to come to their assistance. Hardship grants have the potential to undermine the community resilience objective of the NSDR. A more holistic approach would also see targeted and structured emergency assistance (“hardship”) grants as an integral component of a strategy to assist the economic recovery of local businesses.

27. The QFCOI – a Missed Opportunity The QFCOI ( and VBRC) opted for a very prescriptive set of recommendations and greater regulation. It focussed on operational issues: “ finding fault/blame” “…the oft-observed importance of ‘hardware’ (formal structures; technical equipment; legal frameworks) is overrated. It distracts attention from the often more salient and cost-effective, yet symbolically powerful ‘software’ factors (leadership, training, network building, organisational culture)……” (Boin and ‘t Hart (2010)). There are no recommendations on the major policy issues (resilience, shared responsibility, risk communications) or national funding arrangements “The missed opportunity of QFCOI to contribute to these important policy debates is lamentable.” (McGowan AJPA,Sep 2012)

28. Why aren’t these significant issues influencing the policy debate? • Political interest is in response and early recovery • Commissions of Inquiry have had a narrow, non policy focus • Pre-occupation with NDRRA • Budget/government processes • Uneven regional impact:- estimated costs through NDRRA for past disasters – between 12-13 to 15-16, the cost is $6.2B of which Qld’s share is $5.4B (or 87%) (Budget papers 2013-14). • Little academic interest in disaster management policy or policy implications; most recent cost benefit analysis on mitigation 2002; little work on recovery policy/practice • Limited engagement with the private sector- at least until the Australian Business Roundtable for Disaster Resilience and Safer Communities; call for a commitment “to long term annual consolidated funding for pre-disaster resilience”. “The trouble is that politicians at all levels tend to focus (and want to seen) after a disaster occurs because that’s when it has most media attention ... [and] there is a lot of money that goes into post- disaster compensation payments ...” (McClelland 2012) “Part of the problem is your pre-disaster expenditure is a budget line item. In circumstances where spending that money upfront is going to save money downstream but at a time when the Government is, understandably, trying to achieve a balanced budget, they don’t want budget line items that involve, you know, not insubstantial expense”. (McClelland 2012)

29. “Inherent in building the culture of resilience is the ability to incorporate scientific information, data, and observing systems to ensure the availability of reliable information, decision support tools, and data sources to decision makers”.(Disaster Resilience: A National Imperative; National Academy of Sciences 2012) Where to from here? • Policy Debate-what are the implications of a Resilience agenda? • Review of the NDRRA funding frameworks; through COAG to Productivity Commission • More interest by academics and “think tanks” on DM and Resilience • Need contemporary academic research on the economic benefits of mitigation strategies and projects. • Partnerships with the Private Sector • Collaborative research into the experiences in the Asia-Pacific, where the majority of disasters occur. • Build situational awareness and intelligence gathering capacity

30. Questions Jim McGowan AM School of Government & International Relations Griffith University