News

Ombudsman’s new approach to small business disaster resilience tabled in Parliament

- November 16, 2022 4 MIN READ
Aerial view of flood water in Lismore NSW

When a natural disaster strikes, more certainty of response and certainty of support must be provided to small and family businesses, writes Australian Small Business and Family Enterprise Ombudsman, Bruce Billson.

In the aftermath of natural disasters, we typically see massive and heartbreaking clean-up efforts, a lengthy and hard-going recovery, and questions asked about how small and family businesses and communities will bounce back. And what, if anything, could have been done to better prepare.

Floods, bushfires, storms and droughts can shatter the long hours and the heart and soul that enterprising women and men have poured into their small business.

Disturbingly, only one in four small businesses have a current business continuity plan.

Every business should have one.

The Small Business Natural Disaster Preparedness and Resilience Inquiry

bushfire

Earlier this year, at the request of the Australian Government, my office conducted an inquiry into the small business disaster resilience following the rolling disasters of bushfires, drought and floods and the COVID-19 pandemic. We visited 36 communities across Australia to directly hear from small and family businesses impacted by natural disasters. In addition, an online survey attracted more than 2,000 respondents.

The Small Business Natural Disaster Preparedness and Resilience Inquiry report has now been tabled in Federal Parliament and it found that taking simple steps to be better prepared, sensible risk mitigation action and bolstering resilience can help small and family businesses to get back on their feet quicker after suffering the effects of a natural disaster.

It is clear from our work that preparation is key to small and family businesses building resilience and coming through natural disasters in the best possible shape. It is equally clear that small and family business owners cannot do this on their own and require clarity and certainty of the support available.

As a country, we have too much focus on the clean-up. Some 97 per cent of money spent by governments on disasters is after the event and only 3 per cent is on preparedness.

The report finds governments at all levels and the business community together, have a crucial role to play in ensuring small and family business owners have all the information and support they need to manage risks.

It highlights the central role local government can and do play in providing place-based advice and support to bolster small business resilience.

What became abundantly clear is that a strong sense of community connectedness, including collegiate business relationships – what we have called ‘socio-commercial capital’ – leads to more resilient and unified communities that learn from and support each other to work together to prepare for, and respond to, natural disasters.

Often it is small and family business owners who are the community leaders and the best guide to support their peers.

The report finds the building of socio-commercial capital can be done within existing structures, such as the Small Business Friendly Councils initiative run in conjunction with state Small Business Commissioners.

bushfire-disaster

Certainty of response and certainty of support

When a natural disaster strikes, certainty of response and certainty of support must be provided.

By this, we mean small business owners should automatically be engaged in local place-based planning and support services, and be elevated and ‘front of mind’ in disaster response, recovery and funding arrangements. This must include indirectly affected businesses.

A business hub should be established to provide a single point from which to seek help from government and non-government agencies. And we strongly recommend a ‘tell-us-once’ triage system should be adopted to save small business owners the trauma and time associated with repeating their story.

Businesses will be better prepared if they have their vital records in a safe place, so we also recommend creating an opt-in ‘My Business Record’ to allow a small business to digitally store all relevant government-held and other vital information it might need after a disaster.

Business continuity plan in case of natural disaster

The experiences of many hundreds of small and family businesses showed having a plan will help them be more able to bounce back after a natural disaster.

Simple steps to be ready include:

  • ensuring record-keeping is up to date
  • business processes and critical information are, where possible, digitised
  • payments to relevant bodies such as the ATO, lenders, and insurers are up to date

As the lifeblood of many communities, small business owners and employees are often the first to volunteer to fight bushfires or prepare for floods and help with the clean-up. One idea we have backed is for a government subsidy to be available when workers in a small business are called out for volunteer work for an extended period, or a business is required to scale back operations because of volunteer activities.

We also think that in the aftermath of a disaster it is important to have ongoing support. So, when a small business receives an Australian Government grant, an additional amount should be made available six to nine months later for a ‘business health check’.

There is a detailed section of the report that looks at the complex market dysfunction around insurance. Many small businesses are operating uninsured, underinsured, or with excesses payable that prohibit them making a claim.

We must have an integrated response to disaster risk management for identified disaster-prone areas that incorporates:

  • priority access to mitigation expenditure
  • coordinated planning across levels of government
  • infrastructure hardening
  • interest-free loans for asset and activity protection and relocation schemes
  • possible use of a dedicated reinsurance vehicle

As we have sadly seen too often, natural disasters can cause lasting harm to the enterprising women and men building businesses, employing local community members, and contributing to the Australian economy.

Small business creates vitality in our communities, employs two out of every five people with a private sector job, and contributes one-third of our GDP – so it is absolutely worth building its resilience.

The full report is available here.


This article was first published on Kochie’s Business Builders, read the original here.

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