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By Ben Cubby
The climate change-related floods and fires that have plagued eastern Australia in recent years have had one little-publicised side effect – the “catastrophe business” is booming.
Private enterprise that specialises in disaster recovery has found a profitable niche by taking on roles that were once assumed by government, but in some disaster-hit communities resentment is growing over outsourcing of the reconstruction process.
When thousands were left homeless by devastating floods on the state’s north coast in February and March, the state government turned to catastrophe specialists to handle the damage assessment and demolition process
When Lismore flooded, the state government turned to the private sector for help.Credit:Getty
ASX-listed Johns Lyng Group beat three other bidders in a whirlwind competitive tender process to land the contract to manage the state’s Flood Property Assessment Program.
It means a for-profit company now has the key roles of assessing damage, making repairs and recommending demolition of private homes. That sits uneasily with some who, five months on, are still living in the wreckage.
“People like Johns Lyng Group are making a lot of money out of people’s misery, while people are living in squalid conditions,” said Isaac Campbell, a Lismore youth worker whose home was recommended for demolition by Johns Lyng assessors.
“Everyone around here is broke and everyone is in debt,” Campbell said. “And now we’re being told we have to engage with a private company which has got a contract to assess our homes. It feels abusive.”
The state government said people could opt out of the property assessments whenever they wished, and that only homeowners could decide to have a damaged house demolished.
Campbell is one of those who opted out. He got a second opinion from a structural engineer who endorsed his decision not to demolish his home, and is now living in a caravan with his wife and two children and selling what possessions he has left to fund repairs himself.
Isaac Campbell’s home was recommended for demolition by Johns Lyng assessors.Credit: Natalie Grono
“They reckoned it was going to cost $450,000 to rebuild. I’d only just bought it a year ago for $410,000. Ridiculous. I could fix up the whole place for $50,000, and I’d probably have change.”
Many residents the Herald spoke to said a formal report recommending demolition could destroy their ability to sell their home, even if fully repaired, or prevent them getting insurance. Getting repairs done by trained professionals is also tough, because much of the region’s skilled workforce has been absorbed by Johns Lyng in subcontracting roles, forcing up costs for the remaining independent tradespeople.
The Northern Rivers Reconstruction Corporation, established by the state government to coordinate the rebuilding efforts of several government departments as well as private contractors, said 2,334 property assessments had been carried out so far.
“Property owners are also provided with an estimate of repair costs, which takes into account the rising costs across the building and construction sector due to national trade and material shortages,” a spokesperson said. Staff from the NSW Public Works Agency were checking the work of the Johns Lyng assessors and carrying out on-site audits, they said.
The corporation defended the work of Johns Lyng Group in the region.
“The NSW government strongly refutes claims that Johns Lyng Group (JLG) is profiteering from disaster recovery operations,” a spokesperson said in a statement.
Isaac Campbell decided to get a second opinion and will rebuild his home.Credit:Natalie Grono
No one has claimed Johns Lyng Group is profiteering. But it is profiting. Since listing on the stock exchange in 2017, it has seen about 15 per cent growth each year, and the company now has a market capitalisation of around $1.6 billion. The initial phase of flood recovery work is worth $142 million.
Its most recent investor presentation, from April, says catastrophic events “offer significant revenue and margin upside”. The company last year gained a foothold in the North American disaster recovery market by buying a company there.
In a statement, the company said all questions about the damage assessments should be directed to the government.
“All staff and contractors undergo vulnerability training to ensure our engagement with the community is compassionate and understanding,” a Johns Lyng spokesperson said.
“JLG utilises as many local tradies and builders as possible given their knowledge of the impacted community. For instance, 79 per cent of our flood property assessment workers are locals to the flood-affected regions.”
Scott Didier was an admirer of Donald Trump’s book.Credit:SMH
The company’s founder and chief executive, Scott Didier, did not return the Herald’s calls.
Didier, who has spoken of being inspired by former US president Donald Trump’s book The Art of the Deal in the past and still has companies with the name “Trump” in their titles, has helped drive the solid growth of Johns Lyng Group by buying smaller building firms and pushing into the strata management business.
But catastrophes, or “CAT events” as they are known in the industry, remain a key part of the company’s business, he has previously said.
The catastrophe business is not new but, driven by climate change, it is growing. According to the World Meteorological Organisation’s 50-year study,  climate-related disasters are increasing, with an average cost of AU$293 million a day worldwide.
“With more disasters, there’s a space that’s opened up for the market to play a role,” said Tim Heffernan, an expert in disaster management and community recovery at the University of NSW. “It is happening around the world, not just here – from the clean-up to the recovery and all aspects of the reconstruction phases.
“There are things the private sector can bring in terms of efficiency or technical expertise that benefit communities. The key thing is how they engage with the community.”
Climate-related disasters are increasing: a wildfire burning in southwestern France.Credit:AP
Heffernan said his research showed disaster management tended to be heavily “bureaucratised”, with large government agencies and private entities applying a one-size-fits-all approach.
“Councils and local community tend to be pushed out of the road,” he said. “What people want to see is members of the community and local council being informed, sharing information, being key to the process.”
Many people in the community felt sidelined or confused by the slowness of the damage assessment process in Lismore, said Greens MP and resident Sue Higginson.
“My view is that we shouldn’t be privatising disaster recovery,” Higginson said. “We know from all the expert material that the most successful recovery is community-led recovery.
“There are serious questions about accountability and transparency. The outsourcing was always going to be problematic. I totally understand that there are businesses that are going to be involved. But the way the process has gone, it’s just compounding the trauma.”
The Labor MP for Lismore, Janelle Saffin, said she had also received complaints from flood-affected people about the property assessment process and had raised them with the minister for emergency services, Steph Cooke. She has raised “the lack of clarity around the Johns Lyng Group’s role in flood recovery” in parliament.
Misinformation is rife. Residents described a bewildering labyrinth of bureaucracy around the assessments and disaster relief grants. Some the Herald spoke to held the view that to receive a disaster relief grant people had to participate in the home damage assessment program run by Johns Lyng Group.
Residents do not have to participate in the home damage assessment program run by Johns Lyng Group to held the view that to receive a disaster relief grant.Credit:Dan Peled
This is incorrect, a government spokesman confirmed. The confusion seems to have stemmed from media coverage and a poorly worded passage on the government’s Flood Property Assessment Program website.
Another widespread but inaccurate view in the community was that people needed to be part of the Johns Lyng Group assessment process to be eligible for a potential home buyback scheme. The details of the scheme are set to be released next week.
Binnie O’Dwyer, a lawyer whose Lismore home was swamped in February and March, asked a Johns Lyng representative if she needed to be assessed in order to be eligible for a buyback, but was told they didn’t know.
Her emails to the Northern Rivers Reconstruction Corporation, which has no publicly available phone number, received no reply, and the phone number listed on the relevant Service NSW website was disconnected. While waiting to find out what to do, she paid for repairs herself with savings and an appeal on the GoFundMe website.
“It just seems like disaster capitalism gone mad — I don’t want to waste people’s time by getting Johns Lyng Group to do an assessment when there are people who are much more vulnerable than me,” O’Dwyer said. “It’s like Monty Python’s circus. You’re just going round and round in circles.”
The NSW Council of Social Service called for more transparency and better communication in the flood zones.
“These people have been through hell, they’re living in precarious situations, and in some cases they’re not getting a lot of sleep, and then having to make life-changing decisions,” said Joanna Quilty, the peak body’s chief executive.
“It is really concerning that, five months on from the floods, people are still having to put up with these precarious and unsafe arrangements.”
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