The Bushfires Royal Commission has for the first time estimated the cost of the Black Saturday disaster. The commission's final report estimates the cost at $4.4 billion and says this is a "conservative" figure.
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One of the biggest contributors to the $4.4 billion estimate is the figure put on the 173 lives lost - which has been calculated at $645 million. The commission said it used "the method of valuing life accepted by Commonwealth and Victorian government agencies for a variety of purposes" to calculate the number.
The total estimated cost does not include an assessment of the costs of the vast number of injuries sustained in the fires. This would have required detailed data on hospitalisation costs, estimates of long-term treatment costs and of lost work time.
A detailed calculation contained in the report shows that the biggest expense from the fires has been insurance claims paid out, which the Insurance Council of Australia said totalled about $1.2 billion. Of these 84 per cent are property or contents claims, the remaining 16 per cent are motor vehicle claims.
But there are significant signs that the $1.2 billion figure does not fully capture the total costs of property and assets damaged on Black Saturday.
The report said that as much as 13 per cent of residential properties destroyed by bushfires on the day could have been without any insurance cover. "In addition, there is ample evidence of under-insurance, when that is defined as a situation in which the sum insured is below the rebuilding cost," the report said.
"The commission considers that, on balance, the level of insurance claims is likely to underestimate the true extent of property losses, but it is unable to calculate the extent of this underestimation," the report said.
Other substantial costs not included in the staggering $4.4 billion estimate are the vast agricultural losses that occurred, as well as the massive curbs the fires put on agricultural production in following seasons.
Livestock losses - mainly sheep, cattle, horses and goats - are estimated at more than 11,800 head. The report did not include lost grazing pasture or feed production. Early estimates from the Victorian Department of Primary Industries after the fires put grazing pasture losses at 62,000 hectares and hay/silage (feed) losses at a massive 32,000 tonnes.
Key points
* About 13 per cent of destroyed homes may have been without insurance.
* Insurance claims have totalled about $1.2 billion.
* 98,932 hectares of Victorian parks were damaged by fire, with 90 per cent of this being National Park.
* The RSPCA estimates that more than 1 million animals died in the fires.
