On November 18, the Australia Institute (AI) proposed to establish a National Climate Disaster Fund to reduce the financial impacts of climate-induced disasters on taxpayers, businesses and households.
A levy of $1 per tonne of carbon dioxide will be placed on exporters of oil, coal and gas in Australia raising around $1.5 billion annually to pay for the damages of climate change. Preliminary estimates of the cost of the 2019-2020 Summer Bushfires suggest an amount of between $100 billion - $230 billion in tangible and intangible costs, without counting the cost of 3 billion native animals and hundreds of billions of insects which are estimated to have died, or the lost ecosystems.
Australia's State of the Climate 2020 report says that Australia's climate has warmed on average by 1.44 degrees Celsius (plus-minus 0.24 degrees) since national records began in 1910 increasing the frequency of extreme heat events, including extreme fire weather. It finds the fire season has lengthened since the 1950s, especially in southern Australia. Australia's ocean temperatures have increased around 1 degree Celsius since 1910 meaning longer and more frequent marine heatwaves. All of this is likely to intensify in the future and, although the number of tropical cyclones decreases, they are projected to be mostly of high intensity.
I support the AI's basic proposition especially as there is no Carbon Price Mechanism in Australia. In 2013, I proposed the establishment of an international fossil fuel-funded Climate Disaster Response Fund to compensate victims in developing countries. The idea that corporations should pay into a fund to pay for clean ups and compensation relating to their hazardous activities is nothing new. My proposal drew from existing domestic and international legal regimes that already apply to toxic chemicals, global oil pollution, asbestos and nuclear accidents.
In the US, the federal government operates a 'Superfund' financed primarily by levies on petroleum and chemical feedstocks to enable the government to pay for clean ups of hazardous chemicals which endanger public health or the environment. Here in Australia, James Hardie was required to establish an asbestos fund for current and future civil liability. Yet another scheme is the Global Oil Pollution Fund, where contributions are levied on oil companies (private or public) in a Fund-Member State to compensate victims of major oil spills. Each year, a decision is made on the total amount that should be levied to cover operating expenses and an anticipated amount for major pollution incidents. The common thread here is that all of these activities are hazardous and civil litigation for apportioning liability and awarding climate-induced damages have not been successful.
Of course there are many details that need to be resolved including: governance of the Fund; the amount of and changes to the levy; whether there should be any limitations on, or exclusions from, the liability to pay a levy; the categories of damage that are claimable; and who precisely the claimants are.
Without such a fund, victims of climate-induced disaster are left stranded. Government post-disaster payments are woefully inadequate. After the fires, Terry Carney and I showed that the 13-week Disaster Recovery Allowance for loss of employment or other income is pegged to not exceed the already below poverty line rate of unemployment payment (Newstart) - lower still if under 22. The one-off lump sum "recovery" payment of $1000 plus $440 for each child is restricted to the declared areas and applies a stringent test of being 'adversely affected'.
What about insurance? Typically, many property owners are not insured and insurers have issued embargoes on providing insurance in bushfire and flood affected areas. The ability of charities to take care of communities is limited. Why should the burden be shifted to them anyway? There are many aspects of AI's proposal that can be debated including whether a $1 levy is sufficient in light of the cost of climate-induced disasters but as a compensatory mechanism-the basic proposition is a sound one.
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