The 2009 Victorian Bushfires catalysed reforms in the emergency management sector including a shift to community-led approaches to planning and decision-making. Reforms identified that building resilient communities is important in preparing for and responding to emergencies. The reforms acknowledge that economic vitality and strong social systems underpin local responses to emergencies and disruptions.

The role of economic recovery in ‘building back better’¹ has been demonstrated since 2009. The last two decades has also seen increasing frequency and costs of natural disasters and large-scale events. The total economic cost of natural disasters is forecast to grow by 3.4 per cent per year, reaching $39 billion per year by 2050 in present value terms². The forecast does not consider the impact of climate change, nor the costs of the COVID-19 global pandemic.

Positive economic recovery outcomes in emergency management can be strengthened through a place-based approach. Place matters because of variations in economic performance between locations and differences in the strength of local social systems. Responding to economic and social diversity – particularly at a time of rapid or acute economic transition – is critical to delivering the state government’s economic reform and growth objectives. Local economy transitions can quickly create new opportunities, alternatively it can lead to long-term unemployment, reduced workforce participation and entrenched disadvantage in communities. Where structural adjustment is beyond the capacity of the local economy and community to adapt, government assistance may be required to address distributional and equity concerns.

The economic recovery practice framework aims to guide practitioners to develop and implement economic recovery interventions that:

1. increase local resilience to future disasters and shocks, and
2. improve targeting and consistency of government support and actions for economic recovery.

The focus is to support economies, businesses and industries in the event of a natural disaster or significant disruption to the economy.

The economic recovery practice framework, summarised below, consists of:

• policy principles that should be considered in developing economic recovery actions
• economic recovery stages
• areas that government can support and stimulate economic recovery
• planning guidance to make the most of local strengths and long-term outcomes
• outlines implementation steps to aid decision-making, delivery and evaluation.

Economic Recovery Practice Framework

Framework objective

Support Victorians affected by economic shocks through:

1. Recovery actions that will increase local resilience to future disasters and shocks, and
2. Improving targeting and consistency of government support and actions for economic recovery

Policy principles

Government support and action for economic recovery must consider:

• Market failure: Intervention is required where market failures exist or market capacity is exceeded.
• Economic vitality: Economic activity underpins economic and community recovery.
• Community-led action: Community strengths and assets need to be acknowledged and built upon.

Recovery stages

Economic recovery starts immediately after response and relief actions, planning for recovery starts during response and relief.

Recovery areas

Government can support and stimulate economic activity areas.

Planning

Economic recovery planning must work with local strengths and optimise actions for long-term outcomes.

• Place-based
• Community-led
• Coordinated and complementary
• Strategic and targeted

Implementation

Coordinated and orderly implementation provides transparent decision-making, delivery and opportunity to learn from evaluating actions.

• Impact identification and analysis
• Design and implementation
• Monitoring and evaluation

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The Department of Jobs, Precincts and Regions (DJPR) prepared this economic recovery practice framework following significant cross-portfolio consultation. Elements of the framework have been applied to 2019-20 bushfire recovery and COVID-19 recovery considerations. This framework will continue to build community resilience and deliver on the expectations of the Victorian Government through the emergency management reform agenda.

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References

1 The Department of Global Communications, 2020. United Nations. [Online] Available at: https://www.un.org/en/un-coronavirus-communications-team/un-urges-count… [Accessed 05 May 2020].

2 Australian Business Roundtable for Disaster Resilience and Safer Communities, 2017. Building Resilience to Natural Disasters in our States and Territories, prepared by Deloitte Access Economics. Available at: http://australianbusinessroundtable.com.au/assets/documents/ABR_buildin… [Accessed 07 November 2020].

Emergency management in Victoria has undergone major reforms to implement an integrated and collaborative approach in preparing for, responding to and recovering from emergencies. Recovery is an important inclusion in emergency management. The focus of recovery is assisting people and communities affected by emergencies to achieve an effective level of functioning³. Increasingly more consideration is being given to the role of recovery activities in building resilience to future emergency events.

Emergency management by government is required for significant events that are sudden, unexpected or impending that may cause loss of life, injury, damage or interference with normal activities. This includes emergencies caused by weather or natural disasters, human or animal health, infrastructure failure and security emergencies⁴. Emergency events and associated impacts can challenge communities, businesses and industry. These challenges manifest as local stress or shock such as economic downturn, structural adjustment or economic crisis⁵.

Emergency management arrangements in Victoria are set out in the Emergency Management Act 2013 (the Act)⁶ and supported by the Emergency Management Manual Victoria (EMMV)⁷. Both the Act and EMMV have been amended as a result of significant State Government reforms in response to the Victorian Emergency Management Reform White Paper in December 2012⁸. These reforms continue to evolve, incorporating community development and consequence management more broadly.

Changes to emergency management arrangements are designed to drive collaboration and clarify responsibilities; The new arrangements recognise that while not all emergencies are controllable, the response to them should be.⁹

These arrangements include developing the Victorian Emergency Management Strategic Action Plan (SAP)¹⁰. The three-year rolling SAP drives the State Government’s emergency management reform agenda. It sets priorities and assists investment decisions to support Victoria in achieving its vision for safer and more resilient communities. The SAP provides a reform agenda for emergency management that is broader than first-responder agencies and is inclusive of whole of government.

In 2018, the Victorian Parliament passed amendments to the Act, requiring the Emergency Management Commissioner to prepare a Victorian State Emergency Management Plan (SEMP). The SEMP came into effect on 30 September 2020 and replaces the EMMV from 1 December 2020. It provides details of the roles and responsibilities of agencies in relation to emergency management.

Emergency management reform acknowledges that collaborative effort across government, business and community can reduce the likelihood, effect and consequences of emergencies in Victoria. It also highlights the connected contribution that economic vitality and strong social systems make to community resilience.

Victoria’s recovery system is based on the principles of managing locally, with the ability to scale up as needed. Councils lead in recovery as the closest to an affected community, with strong local knowledge and networks to deliver a range of recovery requirements. The Victorian Government supports councils in this role.

Emergency management reforms have included nominating departmental/ portfolio leads for recovery activities. Every recovery activity has a Victorian Government lead agency, often with several other supporting agencies. DJPR is responsible for economic recovery coordination considering the direct and indirect impacts that an event may have on local economics, businesses and agriculture. The impacts of the emergency and community needs will determine the types of recovery activities required.

The recovery system relies on multiple government agencies building on the leadership role of councils and community in recovery coordination and delivery in-place. The involvement of state agencies will depend on the nature and scale of the emergency event. Government has a role in ensuring that recovery services are effective and well-coordinated¹¹.

This economic recovery practice framework seeks to improve targeting and consistency of government support and actions for economic recovery following an emergency event. It has been developed alongside key activities under the emergency management reform agenda, including the Community Resilience Framework for Emergency Management¹² and Resilient Recovery Strategy¹³. These strategic documents by Emergency Management Victoria support resilience principles to strengthen and encourage communities, as well as informing outcomes frameworks for recovery.

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References

3 Emergency Management Victoria, 2018. Emergency Management Manual Victoria. [Online]
Available at: https://www.emv.vic.gov.au/policies/emmv [Accessed 05 May 2020].

4 Emergency Management Victoria, 2016. News: All Communities, All Emergencies. [Online]
Available at: https://web.archive.org/web/20190413191321/https://www.emv.vic.gov.au/l… [Accessed 05 May 2020].

5 Resilient Melbourne, 2019. 100 Resilient Cities. [Online] Available at: https://resilientmelbourne.com.au/100-
resilient-cities/ [Accessed 05 May 2020].

6 Government of Victoria, 2013. Emergency Management Act 2013. [Online] Available at: Available at:
https://www.legislation.vic.gov.au/in-force/acts/emergency-management-a… [Accessed 05 May 2020].

7 Emergency Management Victoria, 2018. Emergency Management Manual Victoria. [Online] Available at:
www.emv.vic.gov.au/policies/emmv [Accessed 05 May 2020].

8 Government of Victoria, 2012. Victorian Emergency Management Reform December 2012; White paper.
[Online] Available at: https://www.emv.vic.gov.au/publications/victorian-emergency-management-… [Accessed 05 May 2020].

9 Government of Victoria, 2012. Victorian Emergency Management Reform December 2012; White paper.
[Online] Available at: https://www.emv.vic.gov.au/publications/victorian-emergency-management-… [Accessed 05 May 2020].

10 Emergency Management Victoria, 2015. Emergency Management Strategic Action Plan. [Online] Available at:
https://www.emv.vic.gov.au/publications/victorian-emergency-management-…
[Accessed 05 May 2020].

11 Emergency Management Victoria, 2017. Community Resilience Framework for Emergency Management.
[Online] Available at: https://www.emv.vic.gov.au/CommunityResilienceFramework [Accessed: 14 December
2020].

12 Emergency Management Victoria, 2017. Community Resilience Framework for Emergency Management.
[Online] Available at: https://www.emv.vic.gov.au/CommunityResilienceFramework [Accessed: 16 November
2020].

13 Emergency Management Victoria, 2019. Resilient Recovery Strategy. [Online] Available at:
https://www.emv.vic.gov.au/how-we-help/resilient-recovery-strategy [Accessed: 16 November 2020].

Economic recovery is one of four recovery environments. The other recovery environments are social, built and natural. The interdependencies across recovery environments is important. Economic recovery is reliant on activities associated with recovery in the social, built and natural environments. Economic recovery outcomes are also dependent on relief and response activities. Relief, response and early recovery activities can set pathways and conditions that have a significant impact on the success of long-term recovery.

Economic recovery is critically linked to the built environment. Enabling business to re-open quickly relies on access to utilities such as power and water, as well as access to transport. Telecommunications, electronic funds transfers and access to the internet are central to business operating models¹⁴. Economic consequence management often includes government working with infrastructure providers to support economic recovery.

A critical impact of emergencies can be the destruction of housing. Where destruction is widespread, the consequence of population displacement in the affected region can undermine the capabilities of businesses to recover. Decisions made by government that impact on short and long-term temporary housing options, locations and rebuilding may influence the reinvestment decisions by businesses, or impact on the success of those businesses that do reinvest. While decisions associated with other recovery environments will need to be made, it is important that government consider the impacts of these decisions.

Reviews of disaster recovery have referred to the potential for well-meaning activities to undermine progress on economic recovery. For example, material donations, while an important mechanism for providing quick access to basic items such as toiletries, blankets and clothes, can undermine local economies by saturating it with a supply of free goods, adding further pressures to businesses already dealing with reduced cash-flows. This market over-supply can extend more broadly, depressing demand in businesses that were not impacted by the disaster in question and further extending the economic impact footprint¹⁵.

Another issue that may face communities is the focus on building infrastructure or facilities to demonstrate commitment and action, often on the assumption that economic development flows from construction. Evidence suggests that early commitment to rebuilding tends to lock-in pre-existing vulnerabilities and misses the opportunity to fundamentally redesign the future of a disaster-affected location, while failing to support long-term business recovery¹⁶.

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References

14 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disa… [Accessed 05 May 2020].

15 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disa… [Accessed 05 May 2020].

16 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disa… [Accessed 05 May 2020].

The economic recovery practice framework aims to guide practitioners to develop and implement economic recovery interventions that:

1. increase local resilience to future disasters and shocks, and
2. improve targeting and consistency of government support and actions for economic recovery.

This framework provides guidance to government to meet economic recovery responsibilities and support better outcomes for local businesses and communities. The economic recovery practice framework describes considerations to implementation by:

• describing the policy basis for the State Government’s role in supporting economic recovery from emergencies, natural disasters and other economic shocks and stressors, drawing on local and international evidence to demonstrate the role of government in economic recovery and that it is a crucial element of community recovery
• highlighting interdependencies between the economic recovery environment and recovery more broadly
• presenting a set of principles that can guide and effectively target the implementation of economic recovery activities, positioned in accepted economic policy principles and consistent with best practice from previous Victorian activities and experience from other jurisdictions
• noting the strong parallels between the rationale for and nature of the economic recovery response, with those associated with the government’s support for place-based structural adjustment and economic transition.

The economic recovery practice framework, summarised below, consists of:

• policy principles that should be considered in developing economic recovery actions
• economic recovery stages
• areas that government can support and stimulate economic recovery
• planning guidance to make the most of local strengths and long-term outcomes
• outlines implementation steps to aid decision-making, delivery and evaluation.

Economic Recovery Practice Framework

Framework objective

Support Victorians affected by economic shocks through:

1. Recovery actions that will increase local resilience to future disasters and shocks, and
2. Improving targeting and consistency of government support and actions for economic recovery

Policy principles

Government support and action for economic recovery must consider:

• Market failure: Intervention is required where market failures exist or market capacity is exceeded.
• Economic vitality: Economic activity underpins economic and community recovery.
• Community-led action: Community strengths and assets need to be acknowledged and built upon.

Recovery stages

Economic recovery starts immediately after response and relief actions, planning for recovery starts during response and relief.

Recovery areas

Government can support and stimulate economic activity areas.

Planning

Economic recovery planning must work with local strengths and optimise actions for long-term outcomes.

• Place-based
• Community-led
• Coordinated and complementary
• Strategic and targeted

Implementation

Coordinated and orderly implementation provides transparent decision-making, delivery and opportunity to learn from evaluating actions.

• Impact identification and analysis
• Design and implementation
• Monitoring and evaluation

Policy principles

Government support and action for economic recovery must consider:

• Market failure: Intervention is required where market failures exist or market capacity is exceeded.
• Economic vitality: Economic activity underpins economic and community recovery.
• Community-led action: Community strengths and assets need to be acknowledged and built upon.

The impacts of an emergency or economic shock are many and varied. In considering economic recovery, the primary role of government is to work alongside businesses and the community to revitalise the affected economy, including helping to address the consequences of an emergency or economic event on individuals and households, businesses, industry, tourism and the broader economy¹⁷.

The growing frequency of natural disasters in Australia is resulting in a substantial increase in public funding for relief and recovery activities. This in turn has led to greater scrutiny of the nature, level and sustainability of direct support for affected businesses and communities, most notably exemplified by the Productivity Commission Inquiry into Natural Disaster Funding Arrangements¹⁸. Although the Productivity Commission argues that in general, businesses are responsible for managing the risks they face, there are a number of justifications for government intervention in economic recovery:

• Market mechanisms that support disaster recovery may not fully address the economic impacts, which can be far-reaching and longer lasting than the immediate and direct damage to individual businesses and economic infrastructure.
• The degree to which a disaster impacts economically on a location varies considerably due to the spatial, social and economic characteristics of that location.
• There is a strong link between business recovery and overall community recovery.
• A combination of economic recovery responses by government that complement market mechanisms for managing and mitigating risk can create more effective economic and community recovery and resilience.
• Sound decision making following an emergency improves longer term recovery outcomes.

See Appendix 1 for a fuller discussion of the role of government in supporting economic recovery.

From this discussion, a number of guiding principles can enhance the effectiveness, efficiency and equity of economic recovery responses. To pursue a shared vision for a safer and more resilient community, the role of government in supporting businesses, industry and local economies to encourage long-term economic sustainability will complement short-term economic recovery adjustments made by market mechanisms.

Market principles

Businesses are responsible for using market mechanisms to manage and mitigate risks arising from emergency events and economic shocks

Government may support business impacted by an emergency or economic crisis; however, its economic recovery response should not replace or distort available market mechanisms. Nor should it provide disincentives for businesses to take responsibility for risk mitigation and business continuity arrangements.

Government intervention to support recovery will be considered where the economic impacts extend beyond the capacity of market mechanisms or where market failures exist

All relief and recovery agencies should be aware of, and consider as part of their decision-making processes, the economic consequences (positive and negative) of their activities. In order to prevent any unintended consequences, recovery planning requires coordination across all four recovery environments of social, natural, built and economic and the capabilities required of recovery managers to understand the interconnections between the four environments.

Indirect, intangible and longer-term economic impacts of an emergency event or economic shock are less likely to be addressed through market mechanisms and monitored at a community or regional level

Indirect and intangible, longer-term economic impacts of an emergency event or acute shock at a community or regional level are less obvious and therefore less likely to be addressed through market mechanisms. Accordingly, the economic recovery response should be largely focused to where the economic impacts of events extend beyond the capacity of market mechanisms or where market failures exist.

Where trauma exists, the economic recovery response will extend beyond the provision of information to provision of mechanisms that help to understand information and ensure informed decision making

This requires an understanding of the recovery journey of communities and a recognition that communities are not homogeneous and not all individuals are able to recover along the same timelines. This will mean that long-term planning for economic recovery should be closely aligned with the outcomes of social recovery.

Economic vitality principles

Government and emergency management agencies will be aware of the economic consequences of their actions and implications across all pillars of recovery

Recovery planning capabilities should be coordinated across all recovery environments and with an understanding of the interdependencies between built, economic, natural and social pillars. Lessons of the past should also be embedded into current practice to prevent unintended and/ or negative economic consequences.

Local business, industry and community are critical to understanding the economic impacts of an emergency event and ensuring the effective targeting of economic recovery actions

Activities should be responsive and flexible, engaging communities and empowering them to move forward through pre-existing groups, committees and networks. Economic recovery responses should align with the pre-existing relevant strategic, economic development, or emergency recovery plans. This is consistent with National Principles for Disaster Recovery:

• understand the context
• recognise complexity
• use community-led approaches
• coordinate all activities
• communicate effectively
• recognise and build capacity.

Government interventions will recognise the interrelationship between economic and overall recovery in communities

Community recovery can be accelerated and strengthened by timely, fair, equitable and flexible economic and business recovery interventions. Impact and needs assessments inform the changing needs of communities over time and the complex nature of community recovery. Where residents are displaced, there may be an increased focus on timely re-establishment of businesses or availability of workers. This must be considered alongside the economic profile of the area, including competitive advantages and any underlying issues.

Recovery agencies should seek to utilise, where possible and timely, local businesses in the delivery of recovery activities and/ or avoid, where possible, recovery actions that replicate services provided by local businesses.

Community action principles

Economic recovery responses are place-based and tailored to the economic and social characteristics of the affected location as well as the nature and scale of the event experienced

A place-based approach will:

• enable communities to deliver local solutions to local problems by bringing together local people, organisations, businesses and government
• leverage existing networks, activities and services already working within that community and strengthen community resilience into the future.

Interventions should focus both on ensuring the continued operation of directly affected businesses as well as maintaining economic activity for indirectly affected businesses. Activities should avoid masking deep-seated and ongoing impacts such as population decline and uncompetitive business performance.

Government interventions should recognise the interrelationship between economic and community recovery

Community recovery can be accelerated and strengthened by timely, fair, equitable and flexible economic and business recovery interventions. Recovery agencies should seek to utilise, where possible, local businesses in the delivery of recovery activities and/ or avoid, where possible, recovery actions that replicate services provided by local businesses. Events that result in a high level of resident displacement may require an increased focus on timely re-establishment of businesses.

Local participation and community are critical in enabling a clear understanding of the economic impacts of an emergency event and ensuring the effective targeting of the economic recovery actions

To the extent possible in the circumstances, local participation should:

• be through pre-existing groups, committees and networks
• seek to ensure that economic recovery responses align with the pre-existing relevant strategic, economic development, or emergency recovery plans
• a recovery group or engagement mechanism with representatives from local government, businesses, industry and employee groups that provide advice and direction on local recovery needs can also be a tool to ensure a two-way channel for communication and feedback on recovery actions.

The economic recovery response should incorporate a resilience framework

Emergency Management Victoria released the Community Resilience Framework and Resilient Recovery Strategy. This work encourages planning for resilience, placing community at the centre and identifies dynamic and diverse local economies as being key to building resilient communities. A focus on employment, skills and business continuity planning broadly aligns with existing community and regional development principles used to support economic growth and sustainability.

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References

17 Emergency Management Victoria, 2018. Emergency Management Manual Victoria. [Online] Available at: www.emv.vic.gov.au/policies/emmv [Accessed 05 May 2020].

18 Productivity Commission, 2014. Natural Disaster Funding Arrangements, Inquiry Report no. 74, Canberra. [Online] Available at: https://www.pc.gov.au/inquiries/completed/disaster-funding/report/disas… [Accessed 05 May 2020].

Recovery stages

Economic recovery starts immediately after response and relief actions, planning for recovery starts during response and relief.

Moving through recovery can be a long process, with phased planning used to assist in coordination across multiple levels of government and with community. These phases are dependent on the scale and needs of an emergency or shock. Recovery phases include addressing the short, medium and long-term recovery needs of communities through economic stabilisation, growth and resilience. In the case of large-scale, protracted and complex events, these phases may overlap or occur simultaneously in different areas across the state. Regardless, recovery planning and preparation begins immediately.

Stage 1: Stabilisation

Managing short-term impacts to ensure business survival for next three months

This phase addresses the immediate needs of impacted areas and communities, while longer term planning is underway and activities shift away from emergency response and relief. Examples of early recovery support services during this phase include:

• business advice and signposting to relevant services
• short-term planning to address immediate needs
• encouraging visitation, when safe to do so
• financial assistance and relief where activated, such as clean up and reinstatement, or direct support for businesses and primary producers.

Stage 2: Stimulus

Investment and stimulus to support recovery to a self-sufficient and sustainable ‘new normal

During this phase of approximately three to 12 months, further assessment and planning is underway while medium to long-term recovery activities begin. More targeted and locally-led recovery measures may occur during this time, including:

• tailored support to key business and industry sectors
• support for local jobs and business
• longer-term assessment and planning
• consumer and business confidence considerations.

Stage 3: Productivity and Resilience

Future-proofing against economic shocks and longer-term transitions

Depending on the nature of the emergency event, this may occur over a year or more. It is recognised that for significant events that recovery is a long term activity and includes more complex actions including:

• • strategic planning
• • long term plans for growth and resilience
• • consideration of underpinning infrastructure
• • re-skilling and industry transition
• • where relevant, returning to ‘business as usual’ for organisations and agencies.

Recovery areas

Government can support and stimulate economic activity areas.

Industry and business

Businesses are supported to survive in the short-term and thrive in the longer-term, building on the economic strengths and opportunities of their region, with a focus on tourism, agriculture, forestry and small business.

Short term outcomes ("stabilisation")

• Industry and businesses have the capacity to continue operations beyond three months
• Businesses have access to critical (banking and financial) services
• Local businesses have information and advice they need to recover from the disaster

Medium term outcomes ("new normal”)

• Key industry sectors for the community are restored
• Consumer and business confidence levels support business operations (both within and outside of the community)
• Businesses know and understand the risks and threats of operating in the area

Long term outcomes (“growth and resilience”)

• Economic activity is appropriately diverse
• Business models are appropriately adaptive to environmental conditions, market conditions and fluctuations
• Businesses have business continuity plans and dynamic organisational resilience practices that address relevant risks and threats
• Business insurance is accessible where viable

Employment

Workers are supported to participate in established and new employment opportunities, including through skills and training.

Short term outcomes ("stabilisation")

• Workers have the capacity to continue to work
• Displaced workers have access to support and employment services
• Employers are supported to return workers to work as soon as possible

Medium term outcomes ("new normal”)

• Workers have access to a diverse range of employment and training opportunities
• Businesses can access or attract appropriately skilled workers
• Individuals and households have sufficient financial security to allow them to take advantage of economic opportunities

Long term outcomes (“growth and resilience”)

• The workforce has transferable skills and access to appropriate training opportunities
• Workers are participating in and benefiting from a strong and prosperous economy
• Job opportunities are supported insurance is accessible where viable

Community resilience

Communities are meaningfully engaged in shaping their future economy and increasing their resilience to future shocks, underpinned by strong community cohesion

Short term outcomes ("stabilisation")

• Communities are involved in identifying their own economic recovery priorities
• Households have access to an adequate range of goods and services
• Not-for-profit community service organisations can continue to provide regular services

Medium term outcomes ("new normal”)

• Vulnerable groups are not further disadvantaged by the impact of the disaster, in terms of their ability to participate in the economic system (e.g. employment prospects, accessing credit)
• Communities have access to information to inform their own decision-making in how to recover and built long-term resilience

Long term outcomes (“growth and resilience”)

• Communities are socially connected
• Communities are actively adapting to environmental change
• Communities benefit from increased investment, visitors, and talent
• Communities benefit equitably from Victoria’s economic growth

Enabling infrastructure

Strategic economy-wide and region-wide investments support resilient and connected enabling infrastructure that will underpin economic recovery and development, aligned to a region’s economic strengths, challenges and opportunities.

Short term outcomes ("stabilisation")

• Communities are involved in identifying priority infrastructure needs for supporting regional economic growth

Medium term outcomes ("new normal”)

• Strategic enabling infrastructure planning is undertaken alongside economic development planning to accommodate regional needs and priorities
• Enabling infrastructure is aligned to local economic development priorities and is appropriate to the community and economic context

Long term outcomes (“growth and resilience”)

• Enabling infrastructure is resilient and adaptable – is designed to withstand future disaster events
• Enabling infrastructure supports economic growth
• Affected areas are well connected, attractive and equipped to support future growth

Planning

Economic recovery planning must work with local strengths and optimise actions for long-term outcomes.

• Place-based
• Community-led
• Coordinated and complementary
• Strategic and targeted

Wherever possible, economic recovery responses should align with existing relevant strategic, economic development, or recovery plans within the affected location. This will ensure that longer term trends impacting local industries are recognised and that investment in recovery interventions and projects is targeted to areas of competitive advantage that can create future opportunities and resilience. Equally, this will avoid masking deep-seated and ongoing impacts such as population decline and poor business performance. Additional considerations include:

• impact and needs assessments inform the changing needs of communities over time
• the provision of tailored advice to businesses to ensure informed decision making.

Place-based

Economic recovery responses should be place-based and tailored to the economic and social characteristics of the affected regions (noting that this extends beyond directly impacted areas) as well as the nature and scale of the event experienced.

Community-led

No one sector, community, institution or organisation can solve community recovery issues alone. Local business, industry and community are critical to understanding the economic impacts of an emergency event and effectively targeting economic recovery actions to community priorities and needs.
Councils, State Government and government agencies work in partnership with non-government organisations, community groups and businesses to deliver Victoria’s recovery programs and services. Service delivery is generally place-based and, where possible, led by councils in both delivery and coordination.

Coordinated and complementary

Government interventions will recognise the interrelationship between economic and community recovery, ensure their efforts reflect awareness of the economic consequences of their actions, and aim to be complementary to existing government policies and programs.

Strategic and targeted

Ensure good public policy principles are met (targeted, efficient, transparent, produces net benefits that are additional or increases equity, accountable). Economic recovery response looks beyond the objective of restoration (replacing) and focuses on a forward-looking economic development strategy and resilience based on the regions’ strengths and opportunities (build back better).

There is a strong parallel between economic consequence management following an emergency event and the rationale for government support for regional economic development and transition, particularly where such support is applied at a location-specific level in response to severe structural adjustment pressures. This suggests that economic recovery responsibilities in emergency management reform could be enhanced through alignment with the principles of the place-based investment approach (DJPR business-as-usual activities).

Variations in the economic performance between regions – particularly at a time of rapid or acute economic transition – are an important policy concern across Australia and other nations in the Organisation for Economic Co-operation and Development (OECD). Such variations are evident in Victoria, and effectively responding to this spatial diversity is critical to delivering on the Victorian Government’s economic reform and regional growth objectives.

There are three sound policy reasons why a place-based approach to regional development is important to future competitiveness and productivity:

• Efficiency – bottlenecks and under-utilisation of local infrastructure and labour markets lead to sub-optimal state and national economic performance.
• Economic resilience – strategies that strengthen and diversify regional economies reduce the risk that the negative effects of external shocks will be enduring and geographically concentrated.
• Equity – disparities between regions raise issues of equity and access to economic opportunity.

Place-based approaches to regional economic development are designed to address these problems by improving the competitiveness of regions, and in doing so, maximise state and national output. Effective place-based approaches to regional development generally have the following design features:

• Strong institutions for regional planning and coordination.
• Investment in infrastructure that improves connections to external markets.
• Human capital development.
• Promoting export orientated and innovative local value chains.
• Integration of effort across different policy areas that maximise the benefits of government investment and foster the economic growth of regional and rural areas.

Implementation

Coordinated and orderly implementation provides transparent decision-making, delivery and opportunity to learn from evaluating actions.

• Impact identification and analysis
• Design and implementation
• Monitoring and evaluation

The policy framework for economic recovery can be based closely on the existing community and regional development principles used to support transition, economic growth and sustainability. The main elements of this approach are outlined below.

The first point is that any interventions that government undertakes must meet good public policy principles¹⁹:

• effective targeting of the intervention
• intervention leads to additional activity
• programs are efficient for government; administration is not unduly prescriptive and the compliance burden on firms reasonable
• processes and policies should be transparent
• the benefits of the action/intervention outweigh the costs
• accountability through measurement of outcomes and proper evaluation.

The goal is for interventions to tackle clearly identified problems based on a good understanding of the cause of the problem and a strong rationale for government to intervene. The rationale will typically be the existence of market failures such as failures of competition (including concentration of market power as well as underdeveloped markets), information failures (where the flow of information is less than perfect and business or workers face barriers in accessing that information including high search costs), and externalities (where third parties such as businesses or society bear some of the costs or share in some of the benefit from certain types of activity)²⁰.

The economic impacts of emergencies vary widely. These events may introduce market failures into a local economy or may generate negative consequences that resemble the forms of market failure outlined above. Most importantly, there is a close parallel between the ‘shock’ effects of emergency and economic events (such as major company closures) and their capacity to trigger the structural adjustment impacts on surrounding areas.

The current approach to regional structural adjustment support applied by DJPR²¹ consists of three key steps which provide a useful framework when considering the consequence of natural disaster and emergency events. In general, the development of economic recovery responses can largely follow the following main steps.

Step 1: Impact identification and analysis

Clearly understanding and articulating the problem being faced is critical to the development of all policy. Understanding the drivers and impacts will assist in the development of a response by establishing whether government action is warranted; which type of response is appropriate; what the objective of that action is; who and where assistance needs to be targeted.

Step 2: Design and implementation

Well designed and implemented assistance can improve the efficiency and effectiveness of programs, creating positive outcomes for government and ensuring that future circumstances of government assistance remain well supported. Properly targeting the assistance by communicating with stakeholders to understand the key opportunities and challenges facing communities will assist the transition of the local economy.

Step 3: Monitoring and evaluation

Monitoring and evaluation play a critical role in policy - a well-structured framework can:

• provide important feedback on the success of the outcomes
• enable policy makers to alter programs or funding decisions to improve outcomes, and make decisions regarding the need to further programs or funding
• improve the accountability of government expenditure
• provide important information for future responses to emergency events.

Importantly, effective monitoring and evaluation can address the following key elements:

• Justification/problem: What is the evidence to support the continued need for the program, and what is the role for Government in delivering this program?
• Effectiveness: What is the evidence of the program’s progress toward its stated objectives and expected outcomes, including alignment between the program, its output, departmental objectives and Government priorities?
• Funding/delivery: Has the program been delivered within its scope, budget, expected timeframe, and in line with appropriate governance and risk management practices? What were the challenges in delivery of the program? How were these challenges addressed?
• Efficiency: Has efficiency in the delivery of the program been demonstrated?
• Risk: What would be the impact of ceasing funding for the program (for example - service impact, jobs, community) and what strategies have been identified to minimise negative impacts?
• If funding is continued: Reassess funding required to deliver the program using data collected through service delivery. Does the initial funding allocated reflect the true cost required to deliver the program? What level of efficiencies could be realised?

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References

19 See for example, VCEC, 2011. Victorian Manufacturing: Meeting the Challenges [Online] Available at: https://www.dtf.vic.gov.au/sites/default/files/2018-02/victorian-manufa… [Accessed 05 May 2020].

20 Department of Treasury and Finance, 2016. Victorian Guide to Regulation Toolkit 1. [Online] Available at: https://www.dtf.vic.gov.au/funds-programs-and-policies/victorian-guide-… [Accessed 05 May 2020].

21 Structural Adjustment Toolkit, Key considerations for policy makers, Regional Development Victoria Working Paper, October 2014

From an economic perspective, freely functioning competitive markets are generally accepted as providing the most efficient means of allocating goods and services to maximise well-being and help ensure the efficient production of a good or service. Government intervention may be justified where market failure results in the market not delivering the best outcomes for society. Potential market failures include:

• the existence and use of overwhelming market power or monopoly power
• inadequate information to inform good decision making
• the market not taking into account external costs and benefits (known as externalities)
• situations in which the market is likely to lead to an underproduction of public goods, such as schools and infrastructure, without government intervention.

Intervention may also result from service needs and be justified to address distributional or equity concerns²². Governments typically intervene in economic matters to address market failures or distributional and equity concerns by:

• providing regulation that promotes appropriate business operations and standards, while seeking to limit the regulatory and taxation burden on business²³
• providing or regulating key infrastructure such as transport, communications, energy and water infrastructure, that assists and enhances business competitiveness²⁴
• ensuring adequate access to services and amenities²⁵
• removing barriers to entry and trade, and ensuring competition
• providing information to promote informed business decision-making
• supporting education to increase workforce skills and qualifications²⁶
• boosting the innovation, sharing and absorption of new technologies²⁷ – there are typically ‘public good’ benefits arising from research and development (R&D) and consequently, businesses may under-invest in R&D during normal market conditions.²⁸

The impacts of an emergency or economic crisis are many and varied. In considering economic recovery, the primary role of government is to work alongside businesses and the community to revitalise the affected economy, including helping to address the consequences of an emergency or economic event on individuals and households, businesses, industry, tourism and the broader economy²⁹.

The growing frequency of natural disasters in Australia is resulting in a substantial increase in public funding for relief and recovery activities, including economic recovery. This in turn has led to greater scrutiny of the nature, level and sustainability of direct support for affected businesses and communities, most notably exemplified by the Productivity Commission Inquiry into Natural Disaster Funding Arrangements³⁰.

In its report, the Productivity Commission argues that the case for government assistance to businesses and primary producers after a natural disaster is weak. The basis for this view is that businesses are responsible for managing the risks they face, including natural disaster risks. Viable businesses should be able to manage these through market mechanisms including financial risk management and business continuity planning, insurance for machinery and buildings, business interruption insurance to offset any loss of revenue, and accessing credit through financial institutions. Separately, in its report on Transitioning Regional Economies, the Productivity Commission argues that there is a legitimate role for government in creating economic and community resilience through support for industries or sectors in which a particular region has a comparative or competitive advantage. However, it also noted the risks of government subsidising inherently unviable industries in such circumstances.³¹

The Productivity Commission highlights that the primary onus is on businesses to manage risk, and that market mechanisms exist that enable businesses to do so. However,, the government can support decision-making by businesses and communities to strengthen their preparedness for disasters, providing economic recovery support to individuals, businesses and communities following significant natural disasters, emergencies and acute shocks, and using broader levers available to government to support business growth and productivity (e.g. regulation and tax reform. In the context of limiting interference with freely functioning competitive markets and the obligation of businesses and industry to manage their own risks, five key elements of the role of government in economic recovery are explored below.

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References

22 Government of Victoria, 2016. Victorian Guide to Regulation. [Online] Available at: https://www.dtf.vic.gov.au/funds-programs-and-policies/victorian-guide-… [Accessed 05 May 2020].

23 Government of Victoria, 2016. Victorian Guide to Regulation. [Online] Available at: https://www.dtf.vic.gov.au/funds-programs-and-policies/victorian-guide-… [Accessed 05 May 2020].

24 Parliament of Australia, 2004. The Commonwealth Government's Role in Infrastructure Provision - Research Paper no. 8 2003-04 [Online] Available at: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parli… p08 [Accessed 05 May 2020].

25 Department of Regional Australia, Local Government, Arts and Sport, 2015. Regional Australia Standing Council: Framework for Regional Economic Development. [Online] Available at: https://web.archive.org/web/20150311070754/regional.gov.au/regional/pub… Regional_Economic_Development.pdf [Accessed 05 May 2020].

26 Department of Regional Australia, Local Government, Arts and Sport, 2015. Regional Australia Standing Council: Framework for Regional Economic Development. [Online] Available at: https://web.archive.org/web/20150311070754/regional.gov.au/regional/pub… Regional_Economic_Development.pdf [Accessed 05 May 2020].

27 Department of Regional Australia, Local Government, Arts and Sport, 2015. Regional Australia Standing Council: Framework for Regional Economic Development. [Online] Available at: https://web.archive.org/web/20150311070754/regional.gov.au/regional/pub… Regional_Economic_Development.pdf [Accessed 05 May 2020].

28 For a fuller discussion, see, for example, Industry Commission, 1995. Industry Commission Report into Research and Development, Vol 1, pp161-180 [Online] Available at:
https://www.pc.gov.au/inquiries/completed/research-and-development/44ra… [Accessed 05 May 2020].

29 Emergency Management Victoria, 2018. Emergency Management Manual Victoria. [Online] Available at: www.emv.vic.gov.au/policies/emmv [Accessed 05 May 2020].

30 Productivity Commission, 2014. Natural Disaster Funding Arrangements, Inquiry Report no. 74, Canberra. [Online] Available at: https://www.pc.gov.au/inquiries/completed/disaster-funding/report/disas… [Accessed 05 May 2020].

31 Productivity Commission, 2017. Transitioning Regional Economies, Productivity Commission Study Report, Canberra. [Online] Available at: https://www.pc.gov.au/inquiries/completed/transitioning-regions/report/… [Accessed 04 November 2020]

Market mechanisms that support disaster recovery may not fully address the economic impacts, which can be far-reaching and longer lasting than the immediate and direct damage to individual businesses and economic infrastructure.

In responding to the economic impacts of emergencies, market mechanisms typically focus on direct, tangible impacts such as physical damage to infrastructure or the impact to an individual business. While these are immediate and obvious economic consequences of an emergency, the economic effects can range far more widely in scale, timeframe and visibility.

The impacts range from immediate and intense, such as loss of personal income or damage to business premises, to long-term and chronic, including loss of workforce due to displacement, reluctance of tourists to travel to hazard-prone areas, or prolonged financial strain on communities due to industry downturn.

The Australian Institute for Disaster Resilience Community Recovery Handbook³² outlines a method to understand economic impacts, consequences and recovery management by evaluating the direct and indirect impacts across the following affected sectors:

• residents and households
• public infrastructure, community facilities and the natural environment
• business enterprises and supply networks (retailers, distributors, transporters, storage facilities and suppliers that participate in the production and delivery of a particular product), and other networks including peak bodies and not-for-profit sector
• government.

The direct and indirect impacts, as illustrated by the events that unfolded after the tragedy at Port Arthur in Tasmania on Sunday 28 April 1996, where 35 people were killed and 22 injured by a gunman, were significant for both the State and the Tasman municipality. Port Arthur itself was closed for three weeks and although some of the businesses suffered badly, others received additional business from the media and government agency personnel who came into the area. The estimated net effect of the loss of approximately 130,000 visitor nights meant $15.6 million less for the Tasmanian economy and the estimated loss of 400 jobs in the tourism sector. At a regional level, businesses were down around 28 per cent on the same period a year after the disaster which equates to approximately $5.32 million or 166 jobs.

Furthermore, although the State Government contributed to expenses incurred by the local council, residents experienced a rate rise, although it was acknowledged that everyone in the community was hurting and endeavoured to keep any increases down to a minimum:

Chronic impacts are less obvious, typically take longer to manifest, and can be more difficult to address. Examples include erosion of community services due to reduced property tax base; loss of workforce due to long-term displacement or voluntary relocation of workers and employers; reduced productivity of agricultural lands and fisheries; and a reluctance of new businesses to locate in hazard-prone areas.³³

These longer-term, often intangible, impacts are often overlooked by market mechanisms such as insurance, or by community recovery efforts, particularly where the impacts are felt by businesses or sectors of the economy not directly affected by the disaster itself. Evidence suggests that the costs of these impacts, although difficult to quantify, can be substantial and, in many cases, can cause a domino effect with profound impacts on communities long after the immediate impacts of a disaster have dissipated"

...from 2011 to 2013 the northern NSW fishing industry was severely impacted by a series of floods. The floods caused damage to fishing gear, equipment and fishing infrastructure. However, of more significant impact were the loss of income due to the flood’s impact on fish stocks and the health of the waterways. The financial assistance provided to the fishermen to recover from these impacts did little to address their actual needs. Fishermen are faced with a loss of weekly income due to the loss of fish stocks within the flooded waterways. However, the finance package provided covers for the loss of gear, infrastructure or cost of clean-up, not assistance to deal with the loss of income due to the floods impact on the waterways.³⁴

...the consequences of trading and production down-time can result in bankruptcy, forced sale, business closure, loss of experienced workers, a depleted customer base and population shrinkage. These consequences are exacerbated by community losses resulting in a reduction in disposable income.³⁵

This analysis provides some useful insights into the potential targeting and scale of the economic recovery response, suggesting that the desirable mix of interventions should focus both on ensuring the continued operation of directly affected businesses as well as maintaining economic activity across the affected location for indirectly affected businesses. In particular, the literature warns of the risk of a strong immediate focus on reconstruction of economic infrastructure that may mask deep-seated and ongoing impacts such as population decline and poor business performance, which, if not addressed, will impede economic recovery in the long term.³⁶ This suggests an important strategic opportunity within the economic recovery process to focus on ‘building back better’ rather than simply rebuilding what had previously existed, or ‘picking winners’.

Recognising that these long-term, widely dispersed economic impacts and consequences can often be the most severe has important implications for the case for economic and business recovery support. At one level, it confirms the Productivity Commission’s view that there is limited value in simply providing one-off recovery grants to businesses in response to infrastructure and property loss, as these are often not the major cause of ongoing economic loss. However, it counters its view about the weakness of the underlying business case for government provision of economic recovery support. Interventions that respond to these impacts are not generally provided by market mechanisms or by immediate relief efforts, yet they can be vital in aiding genuine, long-term economic recovery.

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References

32 Australian Institute for Disaster Resilience, 2018. Community Recovery Handbook 2. [Online] Available at: https://knowledge.aidr.org.au/resources/handbook-2-community-recovery/ [Accessed 05 May 2020].

33 Wemple, Chuck, 2011. ‘Challenges of Economic Recovery Following Natural Disasters – Insights Gleaned from Hurricane Ike’, PERI Symposium: Community Recovery from Disaster, Public Entity Risk Institute, March 2011.

34 Professional Fishermen’s Association, sub. 62, p. 1 quoted in Productivity Commission, 2014. Natural Disaster Funding Arrangements, Inquiry Report no. 74, Canberra. [Online] Available at: https://www.pc.gov.au/inquiries/completed/disaster-funding/report/disaster-funding-volume1.pdf [Accessed 05 May 2020].

35 Emergency Management Australia, 2002. Economic and Financial Aspects of Disaster Recovery. [Online]
Available at: https://doms.csu.edu.au/csu/file/78a6c5d7-fd8b-ff7e-fff3-2ffb78764ebe/1/resources/manuals/Manual-28.pdf [Accessed 05 May 2020].

36 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disaster-to-Renewal.pdf [Accessed 05 May 2020].

Geographic context, including the economic, social and cultural attributes of a location, affect economic and social behaviour for economic development and growth³⁷. While economic performance of the location is influenced by these attributes, so too is the economic impact of an emergency event. The severity of consequences stem from the nature of the event itself, however, the location is also important as the pre-existing economic conditions can influence the ease and speed of recovery³⁸.

The capacity of a diverse and well-performing economy to recover quickly and decisively from the economic impacts of a disaster or crises, characterised by strong and thriving businesses and communities, is likely to be much greater than in a weaker economy. From a business recovery perspective, locations with narrower economic bases, smaller numbers of key businesses, or those reliant on natural resources or agriculture that can easily be impacted by natural disasters and biosecurity hazards, are more vulnerable to economic downturn and longer recovery time-frames if these businesses are unable to return quickly to their previous levels of performance.³⁹

This disparity has implications for the economic recovery role of government. It suggests that the role should be tailored to the economic characteristics and conditions of the affected location, with consideration of distributional and equity issues, rather than a uniform approach being applied to consequence management.

Further, while the term ‘recovery' can sometimes imply that the approach should aim to support businesses and regions returning to their previous state, recovery inevitably comprises some form of transition to a new state …because the impact of the disaster will inescapably alter the lives of those experiencing it.⁴⁰ The recovery response from government should therefore focus as much on community and economic resilience …enabling and assisting the disaster affected community to renew, rebuild, adapt and thrive in the “new normal”.⁴¹ In the economic context, this can be seen not only as a desirable aspiration but even an opportunity, especially if the recovery response can stimulate new business activity, alleviate existing inequity, and/ or the recovery focus is on improved prevention and mitigation efforts:

Project investments should recognise the longer term trends happening within and across industries and reposition their economic development strategies to meet the new business demands being created by these changing market forces.⁴²

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^References

^{37 Department of Regional Australia, Local Government, Arts and Sport, 2015. Regional Australia Standing Council: Framework for Regional Economic Development. [Online] Available at: https://web.archive.org/web/20150311070754/regional.gov.au/regional/publications/files/RASC_Framework_For_ Regional_Economic_Development.pdf [Accessed 05 May 2020].}

^{38 See for example, National Association of Development Organisations Research Foundation, Disaster Recovery Peer Learning Forum, June 2011 and Restoring Regional Economies in the Wake of Disaster, December 2010.}

^{39 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disaster-to-Renewal.pdf [Accessed 05 May 2020].}

^{40 Norris et al, 2008. quoted in Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disaster-to-Renewal.pdf [Accessed 05 May 2020].}

^{41 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disaster-to-Renewal.pdf [Accessed 05 May 2020].}

^{42 Economic Development Administration, 2009. US Department of Commerce, East Missouri Economic Recovery Plan.}

There is considerable evidence in the literature regarding disaster recovery showing a strong link between economic and community recovery. In particular, the central premise of reports by the Regional Australia Institute (RAI) is that the restoration of and support for businesses in disaster-affected areas are integral to the achievement of community recovery and resilience, as well as economic recovery:

The process of business recovery, and its critical interconnections with community recovery, enables broader economic recovery in a disaster affected region. ‘Business recovery’ should therefore be regarded as the critical process with ‘economic recovery’ being the desired outcome in a disaster affected region.⁴³

The RAI identifies a strong inter-relationship between business recovery and population return post-disaster and argues that, in general, disaster recovery funding by governments should be designed and targeted so as to more strongly recognise this connection:

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 trend is not unique to Australia. International experiences highlight the abundance of support provided for community recovery (i.e. social/emotional), whilst a survey of the business disaster recovery literature shows a pattern of business failure and failed assistance programs extending for nearly 20 years. ⁴⁴

The RAI notes that:

… from the perspective of displaced residents, a key factor in the decision to return to a disaster-affected region is the extent to which businesses commit to rebuild and re-open, while promoting the rapid recovery of housing, along with keeping residents in the local area during the rebuilding process is central to facilitating business recovery.

The RAI suggests that the relationship is more heavily dependent on businesses re-opening, meaning that business re-opening will pull residents back into a disaster affected location.⁴⁵ Therefore, provided that economic recovery support is targeted to accelerating business reinstatement, the evidence suggests that this will have a positive and much broader impact on a community's recovery and resilience.

As the externalities of a positive nature associated with economic recovery are unlikely to be reflected in the behaviours of individual businesses or other market mechanisms, there is a role for government in accelerating business reinstatement, with a particular focus on emergencies that have a significant social and community impact.

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References

43 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disaster-to-Renewal.pdf [Accessed 05 May 2020].

44 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disaster-to-Renewal.pdf [Accessed 05 May 2020].

45 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disaster-to-Renewal.pdf [Accessed 05 May 2020].

Resilience may be described as the capacity of individuals, communities, institutions, businesses and systems…to survive, adapt, and grow no matter what kinds of chronic stresses and acute shocks they experience⁴⁶. Community and economic resilience do not just describe the capacity to survive and deal with the consequences of an emergency, but also the ability to adapt and become more able to withstand a range of risks into the future. A strong underlying theme in disaster recovery literature is that the most effective recovery arrangements are those developed in a resilience framework, which has the objective of moving beyond relief and reconstruction, to incorporating local renewal and adaptation to the post-disaster environment and aspires to create stronger and more vibrant communities and economies:

Building resilience to disasters is recognised worldwide as a significant contributor to a country’s ability to anticipate and respond to events that significantly threaten and damage communities, economies and the environment. Resilience can be defined as the ability to prepare and plan for, absorb, recover from, and more successfully adapt to adverse events.⁴⁷

As part of a whole-of-nation resilience-based approach to disaster management, Victoria adopted the 2011 National Strategy for Disaster Resilience which identifies resilience as a shared responsibility. Government, communities, businesses, households, and individuals all share responsibility and have a role in preparing for, responding to and recovering from emergencies⁴⁸. The sum of these roles is a disaster resilient community; however, these roles differ. Shared responsibility does not mean equal responsibility; there are some areas in which the State should assume greater responsibility⁴⁹. For example, emergency services are more capable in assessing some risks to the community and assume a different level of responsibility in carrying out their role⁵⁰.

Governments in Australia and around the world recognise the importance of local involvement and communities in emergency management, particularly in planning and mitigation:

Local knowledge on people, history, risks, vulnerability, operational requirements, infrastructure and services significantly enhances emergency preparation, response and recovery. Building community resilience requires collective action. Individuals must determine how to help themselves and each other in ways that best suit their circumstances. Governments can help greatly in bringing communities together. Support requirements will inevitably vary between communities. Government, emergency services organisations, essential services, local businesses and not-for-profit organisations must be ready to work with each community according to its needs.⁵¹

The role of government in providing information that can assist emergency management preparation and response, such as studies, maps and models that provide data regarding natural disaster risks, is particularly important:

Underpinning a disaster resilient community is knowledge and understanding of local disaster risks. We all share responsibility to understand these risks, and how they might affect us. ... By understanding the nature and extent of risks, we can seek to control their impacts and inform the way we prepare for and recover from them.⁵²

The implication of evidence in support of economic and business recovery planning is that economic consequence management needs to be incorporated into the resilience framework from the outset of an event, with the objectives of:

• business and industry activity being returned as early as possible
• identification of all segments of the business community which may be affected
• development of a shared vision for economic recovery as a key to long-term sustainability.

The evidence also suggests that an important part of effective economic recovery planning is the local involvement of business representatives, early and directly in the process. This can build on existing organisations and networks through the activation of available systems in the community. It can also identify opportunities for and encourage support of local trade and commerce, such as purchasing replacement goods and services via local businesses and tradespeople wherever practical. The early involvement of local business and industry can also develop a shared understanding of the prevailing economic conditions and, therefore, the most effective recovery responses.

The early involvement of local business and industry can also encourage all businesses, regardless of size, to have continuity plans.⁵³ Crisis management planning for business is vital for building the capability of businesses to survive the immediate impact of an emergency or disaster, and particularly to recover and resume business operations as quickly as possible. Measures taken to mitigate the impacts of future disaster on business continuity …form the foundation for a community's long-term strategy to reduce disaster losses and break the cycle of disaster damage, reconstruction, and repeated damage in the next disaster. The planning process is as important as the plan itself. It creates a framework for risk-based decision making to reduce damages to lives, property, and the economy from future disasters.⁵⁴

Finally, the development and implementation of a planned economic recovery and resilience strategy provides the opportunity for briefings and feedback sessions on the effectiveness and progress of the economic recovery program and the measurement of success based on indicators such as community support for the vision, creative solutions, sense of confidence and excitement about economic future. For government, this approach has additional value in terms of evaluating the effectiveness of economic recovery strategies and building an evidence base to inform future program improvements.

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References

46 100 Resilient Cities – Urban resilience. [Online] Available at: http://100resilientcities.org/resources/#section-1 [Accessed 05 May 2020].

47 Emergency Management Victoria, 2015. Emergency Management Strategic Action Plan. [Online] Available at: https://www.emv.vic.gov.au/publications/victorian-emergency-management-strategic-action-plan-2015-2018 [Accessed 05 May 2020].

48 Emergency Management Victoria, 2015. Emergency Management Strategic Action Plan. [Online] Available at: https://www.emv.vic.gov.au/publications/victorian-emergency-management-strategic-action-plan-2015-2018 [Accessed 05 May 2020].

49 2009 Victorian Bushfires Royal Commission, 2010. Volume II: Fire Preparation – Response and Recovery. [Online] Available at: http://royalcommission.vic.gov.au/Commission-Reports/Final-Report/Volume-2.html [Accessed: 18 May 2020].

50 Council of Australian Governments, 2011. National Strategy for Disaster Resilience: Building the resilience of our nation to disasters. [Online] Available at: https://knowledge.aidr.org.au/resources/national-strategy-fordisaster-resilience/ [Accessed 05 May 2020].

51 Government of Victoria, 2012. Victorian Emergency Management Reform December 2012; White paper. [Online] Available at: https://www.emv.vic.gov.au/publications/victorian-emergency-management-reform-whitepaper-dec-2012 [Accessed 05 May 2020].

52 Council of Australian Governments, 2011. National Strategy for Disaster Resilience: Building the resilience of our nation to disasters. [Online] Available at: https://knowledge.aidr.org.au/resources/national-strategy-fordisaster-resilience/ [Accessed 05 May 2020].

53 Wisconsin Economic Development Corporation, August 2011. Safeguarding your economy from disaster: Community Economic Recovery Guidebook. [Online] Available at: https://www.wistatedocuments.org/digital/collection/p267601coll4/id/3696/ [Accessed 05 May 2020].

54 WEM, 2010 (http://emergencymanagement.wi.gov/mitigation/planning.asp) Quoted in Post-disaster Economic Recovery Strategy for East Central Wisconsin, East Central Wisconsin Regional Planning Commission, 30 July 2010.

Emergencies may require individuals and businesses to make a number of important, difficult decisions that they would not ordinarily make or would have not been considered before an incident. Evidence suggests that good early decisions improve longer term recovery outcomes and/ or bad early decisions inhibit longer term recovery outcomes.⁵⁵

In this context, the role of government to facilitate the provision of relevant information to inform sound decision making is particularly important following an emergency. Information in relation to decisions associated with insurance claims and rights, government programs and other support, and dealing with employees, suppliers, clients, financers and other key partners is likely to be important. However, following an emergency, business owners may face stress and trauma associated with both business and personal impacts. This is particularly the case in regional and rural areas where the business owners are frequently affected twice over – as residents and then as business owners⁵⁶.

Significant evidence exists that trauma post-disaster affects the ability to process information and make decisions through reduced capacity for reasoning, strategic decision making, prioritising, setting long term goals, and lateral thinking. Decisions are often reactive and emotional rather than informed by logical thinking⁵⁷. In this context it may not be sufficient to simply provide information. Appropriate assistance may also be required to assist businesses and individuals understand choice, distil information, and help to ensure mechanisms for informed decision-making.

As the incidence of natural and economic shocks increases, it is important to note that this role of government in supporting sound business and community decision making can and should apply with the objective of generating greater community and industry preparedness and resilience, therefore either reducing or mitigating the need for government financial support in the event of future disasters, particularly any areas that are at higher risk of future disasters (e.g. more frequent bushfires).

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References

55 Australian Institute for Disaster Resilience, 2018. Community Recovery Handbook 2. [Online] Available a https://knowledge.aidr.org.au/resources/handbook-2-community-recovery/ [Accessed 05 May 2020].

56 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disaster-to-Renewal.pdf [Accessed 05 May 2020].

57 Gordon, Rob., 2013. Resilience & Recovery - How communities react to the impact of natural disaster & survive the stresses of recovery. [Online] Available at: https://web.archive.org/web/20150310035559/http://www.bushfirerecovery.tas.gov.au/__data/assets/pdf_file/0018/201276/Rob_Gordon_presentation_Tasmania_July_2013.pdf [Accessed 05 May 2020].