Bushfires in the national accounts
Australia recently experienced unprecedented bushfire disasters, both in duration and geographic spread. The bushfires and associated smoke haze affected many Australians over the past six months, with disruption of economic activity and demand for additional services most evident in the March quarter 2020.
Government spending on natural disaster relief
The Australian Defence Force were deployed to clear roads, repair damaged infrastructure, assist bushfire coordination and evacuate areas isolated by bushfires. The 1.1% increase in total spending on national defence is partly driven by this increase in defence activity.
The National bushfire recovery agency was established to coordinate bushfire relief and administer the initial $2 billion allocation for the bushfire recovery fund. The 1.7% increase in national non-defence government expenditure is partly driven by the activity of this recovery agency.
Total state and local government expenditure increased 1.9%, with contributions by Victoria and NSW to the bushfire response.
Figure 1: Expenses related to firefighting and bushfire recovery, quarterly growth, current price values: original
Regional food sales decline
Tourism-related activity such as domestic travel, accommodation and food services declined in the affected areas. The fall in the number of people visiting regional areas and supply chain disruptions due to the bushfires, are evident in the scanner data for food in regional areas.
Food sales were stronger in capital cities than they were in regional areas across all of the states and territories that have significant regional populations, particularly New South Wales and Victoria.
Figure 2: Scanner data food volumes, quarterly growth, original
Insurance claims for loss of assets in the bushfire
Over 2,000 dwellings were destroyed in the fires. The economic activity associated with rebuilding destroyed or damaged dwellings as well as commercial buildings and infrastructure will be reflected in upcoming quarters. The most notable impact this quarter are the insurance claims attributed to the loss of assets, with a $1.4 billion increase paid to households, due to natural disasters.
Figure 3: Non-life insurance claims, current prices: seasonally adjusted