Zali Steggall (Warringah, Independent) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes that:

(a) the frequency of severe weather events is the dominant reason home insurance premiums are skyrocketing, fast becoming unaffordable and in turn, fuelling inflation;

(b) severe weather events are already costing the Australian economy over $38 billion a year and this cost is predicted to rise to at least $73 billion per year by 2050 if climate change continues unmitigated;

(c) over 12 per cent of households are facing extreme insurance stress, paying more than four weeks of gross income to home insurance premiums, risking underinsurance of their properties;

(d) every $1 invested in climate adaptation measures can save up to $11 in disaster recovery; and

(e) the Government continues to allocate significantly less funding to resilience and adaptation than to disaster response and recovery, with less than ten per cent of Australian homes being climate risk resilient; and

(2) calls on the Government to:

(a) allocate funding to:

(i) the Resilient Building Council to expand the home and business resilience ratings scheme to incentivise home adaptation measures and put downward pressure on insurance; and

(ii) expand the Australian sustainable finance taxonomy to include adaptation, to unlock global capital for private sector led resilience;

(b) include climate resilience and adaptation as a matter of priority in upcoming updates to the National Construction Code and require resilience for all government investments;

(c) accelerate the development of a national standard for climate adapted planning controls; and

(d) ensure equitable access to insurance by helping lower income households and communities facing home insurance stress and underinsurance in high risk areas.

Climate risks are a problem we are facing now. They're impacting the safety of our communities, costing ordinary Australians and fuelling inflation. Severe weather events are already costing the Australian economy over $38 billion a year, which is predicted to rise to at least $73 billion per year by 2050 if climate change continues unmitigated.

We are in the grip of 'heatflation'; in Australia we are facing increasingly extreme events, from floods to bushfires to cyclones, damaging our homes, infrastructure and communities. Impact from extreme weather is driving insurance costs through the roof, and that is fast outpacing inflation, which in turn is fuelling the cost-of-living crisis. In Warringah, local Facebook group chats are alive with people realising that insurance premiums are up a median of 28 per cent across the board. Putting downward pressure on insurance can be achieved by investing in adaptation, but we don't hear much of that from the government and certainly not from the opposition.

We know that, for every $1 invested in adaptation and resilience building, we get a return of $11, yet historically there has been a 97 per cent allocation of funds to disaster recovery rather than prevention because we know that, if you under-report and underacknowledge the risks and the impact that is coming, you don't have to deal with the cause. For too long that has been the case, so I'm calling on the government to reverse this, to plan ahead, to act now, to prioritise adaptation and resilience building and to make sure we are keeping our communities safe.

Insurance has risen across the board for all Australians, but it's astronomical for those in disaster zones and high-risk areas. When I went doorknocking in flood impacted pockets just in my community in Warringah, I found some constituents' insurance had jumped by double-figure marks or been completely denied. These people fall into the 12 per cent of Australians who are facing insurance stress as their home insurance is as much as two months salary and is simply unaffordable or unavailable. Across Australia, those areas at the highest risk of underinsurance are too often low-socioeconomic areas, those that can least afford it.

Today the Insurance Council of Australia released its annual catastrophe report, which showed that the last year of extreme weather events had collectively led to almost 157,000 claims and $2.2 billion in insured losses, highlighting the risk of underinsurance. Over the past five years, Australia has reached an average of $4.5 billion a year in losses, with floods being the main driver of this increase.

So we urgently need to reduce and limit warming by mitigating emissions. You cannot acknowledge the scale of this problem and then do nothing for years on end. But we also must now protect communities, and especially small businesses, by being clear about the scale of the challenges that they face with accelerating climate risk. In my electorate of Warringah, there are flood impacted zones where some of my constituents have invested to make their homes more resilient, only to face—because this is not recognised by insurers—extortionate insurance costs, leading to underinsurance, or no insurance being available.

Meanwhile, we have the Resilient Building Council joining the dots and using its Resilience Rating tool to provide insurers who have committed to the scheme, such as IAG and Suncorp, with the confidence and certification needed to in turn reduce insurance costs. Programs like this and the inclusion of adaptation in the sustainable finance taxonomy must be funded to help families make their homes resilient and unlock private capital.

Likewise, we need to ensure that the millions of new homes being built are built to withstand the new world they will be existing in. Communities need to be safe. They must be climate resilient and, in particular, heat resilient. There must be changes to the National Construction Code to include adaptation and minimum resilience standards for public housing, and we must accelerate national, state and territory coordination to ensure that no house is built in a high-risk disaster zone. Tomorrow I will hold a roundtable discussion with stakeholders, including economists like Guy Debelle, about what is needed to manage climate risks and the escalating costs. I call on the government to do more in this space.

Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source

Is the motion seconded?

Kylea Tink (North Sydney, Independent) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Jerome Laxale (Bennelong, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Warringah for bringing this motion to parliament, and I acknowledge her significant contribution to our national discourse about action on climate change. She knows, like all of us on the side of the House, that climate change isn't a distant threat. It's here, it's now, and it's reshaping our environment in ways that have profound implications for all of us. The extreme weather events that used to be rare are becoming more frequent and more severe, and they're driving up the cost of living in ways we can no longer ignore.

These events don't just damage our homes and infrastructure; they are primary drivers of the skyrocketing insurance premiums that so many Australians are struggling to afford. We know that insurance premiums are a contributing factor to stubbornly high inflation across the world. It's no surprise, then, that we see the impact of high premiums in areas most acutely impacted by climate change. In these areas across the country, some residents have seen increases of over 80 per cent to their insurance prices. This is not just an economic burden; it's a threat to the very security of these communities' resilience and livability.

The fundamental issue here is clear: as the climate crisis intensifies, so too does the financial strain on all of us. According to the Climate Council, insurance premiums across Australia are on a steep incline, with many households now facing the grim reality of being underinsured or even uninsured. The very nature of insurance—being a pool to support every policyholder—means that this is a problem for all of us. The rising frequency of natural disasters means that more and more Australians are finding it difficult to afford insurance that they need to protect their homes and their businesses.

The solution to this problem isn't simple, but it begins with acknowledging the root cause: climate change. Now, I say that with a caveat. It's simple for the government to understand that. It's simple for the member for Warringah and the crossbench to understand that. But this is something that the Liberals and the Nationals still do not understand. I'll spell it out for them: to address inflation and to address the cost of insurance, we must address climate change. Every dollar invested in resilience, whether it be through better infrastructure, improved building standards or community education, can save us up to $11 in disaster recovery. The Albanese government is aware of this challenge, and it has taken steps to address it, but we must acknowledge that these actions are part of a broader effort to combat the effects of climate change.

In 2022 Australia witnessed one of the most devastating flood events in our recent history. The sheer scale of the destruction was matched only by the profound impact it had on those affected. As a member of the parliamentary inquiry into insurers' responses to these floods, I had the privilege of hearing directly from the people whose lives were turned upside down by this disaster. What became abundantly clear throughout this inquiry is that the insurance system as it currently stands is not fully equipped to deal with the increasing frequency and severity of climate related disasters. The findings and recommendations that will come from this inquiry are critical, not just for improving how insurers respond to future disasters but also for ensuring that Australians can have confidence that their policies will protect them when they need it most. This inquiry has reinforced the importance of government action in addressing the challenges posed by climate change and its impact on the insurance sector. One of the most significant steps we can take is integrating climate resilience into our national construction code and land use planning. In June 2024, Australian building ministers agreed to add climate resilience as an objective of the Australian Building Codes Board. This paved the way for them to consider future standards to incorporate climate resilience.

It's important, though, to acknowledge that these measures alone are not enough and there's much more to do. The member for Warringah's calls for more action are reasonable and measured. Having worked in insurance and having listened to councils and policyholders, I know that we are heading towards a really terrible economic and ecological situation. Governments will need to work out what to do when insurers increasingly refuse to insure or price insurance out of consideration. Unlike the Liberals, who have their heads in the sand on climate change and action, the sensible people in this place must remain committed to the broader systemic changes that address the root causes of climate change and invest in climate resilience.

Kylea Tink (North Sydney, Independent) Share this | Link to this | Hansard source

As I've said before in this place, it's not enough to be the lucky country; we must be smart as well. When it comes to our changing climate, smart governance means making decisions now that will allow future generations to cope with climate change in a way that is both sustainable and equitable. I want to thank the member for Warringah for moving this motion today. For us to pursue that goal means recognising that Australia is on the front line of climate change and integrating climate risk assessment and management into our land use, planning and building processes.

We know extreme weather events are now the new normal. In fact, it was almost five years ago that the then head of the Australian Defence Force, General Angus Campbell, sought to warn us that Australia is in the most natural disaster prone region in the world and that climate change is predicted to make disasters more extreme and more common. Weather extremes are projected to worsen as the climate warms further. These include increasing temperatures, more frequent heat waves, more storm events, less rainfall in many places and increased storm surges in others. With worsening extreme weather comes rising costs, costs that currently full on ordinary Australians, including rising insurance premiums, declining property values and a large mental health toll. Not only are these costs borne by ordinary households and businesses but they are more likely to fall on regional and rural Australians and lower income households who are least able to afford them.

My community of North Sydney and indeed many Australians are acutely aware that severe weather events are already costing the Australian economy, and they believe it is untenable and unethical for these increasing costs to continue to be borne by those on the front line. They have long called for strong action to improve the resilience and adaptation of Australian communities, homes and infrastructure. It's for this reason that I wholeheartedly support the motion moved by the member for Warringah, a motion that calls on the government to implement sensible, practical and achievable measures to improve Australia's climate resilience, including by ensuring building codes are fit for purpose, incentivising home adaptation measures, unlocking global capital for private-sector-led resilience and ensuring equitable access to insurance. Failing to plan, invest and act now is tantamount to putting our fingers in our ears and ignoring the science that tells us climate impacts will worsen.

Of course the first line of defence against climate impacts is reducing emissions. There's a long way to go on that front, but adaptation and resilience measures must be considered alongside strong mitigation plans and, to date, they've not been afforded the focus they deserve. We must start making climate informed decisions when it comes to the investment, location, insurance and design of our buildings. That means funding the organisations with a proven track record of helping to increase resilience of the built environment. This includes the Resilient Building Council, which operates on the principle that everyone has the right to safe, healthy, secure housing, and whose mission it is to realise that, right through a resilience revolution, better housing for all contributes to a thriving, sustainable community.

It means ensuring our building codes are fit for purpose because decisions made about homes today will continue to have consequences for many decades. The average life of a brick home in this country at the moment is 88 years, while a timber home will last 58 years. Many homes last much longer than this, and public buildings, particularly, are asked to stand well into the next century. To futureproof these homes and buildings we need a robust national standard for adaptation decision-making that considers climate risk as part of our land use planning and building reform processes, as previously proposed by the National Cabinet.

Additionally, climate resilience and adaptation must be included as a matter of priority in the upcoming update to the National Construction Code. Organisations across the world are currently updating standards or writing new ones that take future climate into consideration, and it's time Australia followed suit. Smart governance in a changing climate also means putting adaptations squarely within the remit of the sustainable finance taxonomy to enable cross-border flows of sustainable finance and accelerate the flow of capital into investments that not only support Australia's transition to net zero but also unlock private sector led resilience and adaptation measures.

Importantly, we must ensure equitable access to insurance, financial services and support, so lower-income households and regional Australians in high-risk areas are not left behind. As we've heard, the adaptation measures we take today pay dividends in the future. Every dollar spent on adaptation measures now returns an order of magnitude more in the years ahead and in direct and indirect benefits. Just last week experts from government, financial services, property and community gathered at the National Industry Roundtable on Land Use Planning and Resilience to say the time is now for action on land use planning and reforms. The informed measures proposed by the member for Warringah would help avoid the impacts of disasters when they occur. I commend the motion to the House.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I welcome the opportunity to speak briefly on this matter, because rising insurance costs across all sectors of insurance are directly contributing to cost-of-living pressures, inflation and household financial stress. For years climate scientists have been warning that extreme weather events are going to become more frequent and more severe. The warnings have become reality. Across the world, fires, floods, hurricanes, tornadoes and drought are constantly with us, including here in Australia.

Wherever they occur throughout the world also affects us because most of the insurers insure with global insurance companies who spread their risks right across the world. Every year now our nation seems to react to one or more natural disasters that cause extensive destruction and loss of lives, property and infrastructure. Such destruction increases insurance claims, as other speakers have already said, and ultimately results in higher insurance premiums.

Secondly, the increased risks associated with extreme weather events which have been forecast directly increase the cost of insurance. If the risk is greater, the insurance premium is greater. Increased risks also lead to more people dropping out of insurance cover at a time when, in fact, it is needed the most. I understand that right now, based on the latest figures, somewhere between 15 and 25 per cent of Australian households have no insurance at all.

What has also been notable is that the insurance costs have lifted to a point where they are simply unaffordable for so many families. In fact, according to one report, between 2020 and 2023, Allianz, one of our biggest insurers, increased their costs by some 56 per cent. Adding to the extreme weather issues, the current high construction costs and high repair costs, once the damage occurs, become another additional cost that has to be borne by the homeowner and by the insurance company on top of those costs. And, again, we see an increase in insurance premiums.

The insurance issue is being talked about each and every day in the community, and I'm pleased to see that it is also the subject of a parliamentary inquiry led by the member for Fraser. I look forward to the findings of that report. I believe the member for Bennelong mentioned it as a sitting member of that committee as well. Their contribution will certainly help guide us.

There are measures that can be taken—and, again, other members have spoken about this—to minimise the risk. Changing and strengthening the building code and the planning regulations, undergrounding powerlines, implementing flood levies and improving disaster preparedness to minimise destruction are things we can do.

I want to point to one example in my own community. Only earlier this year, in a community led initiative following the devastating 2015 Sampson Flat bushfires, Jan Verrall and Denise Elland spearheaded a drive to establish a water tank in their region in the Upper Hermitage area so that when a future fire occurs, unlike in the last case, the CFS trucks are able to access water to put out those fires. It was a community led initiative. It was opened only a couple of months ago, and I commend that local committee for doing so.

Having said all that, I also believe that the insurance companies are profiteering. Across all insurance sectors, over the last four financial years, the insurance sector, according to one report, made $7.3 billion in profit. So, whilst the home insurance areas might be struggling, across all sectors they made $7.3 billion in profit. I suspect they've done that because they push up their premiums on the argument that everything is going up, when the truth of the matter is that they should also spread their risk.

The government is responding. As has been said, we have the Hazards Insurance Partnership, where the government and the insurance sector are sharing data. There is a $4 billion disaster resilience, recovery and readiness funding in place. National planning and building codes are being discussed right now across the country. The insurance readiness and self-assessment rating scheme, which also helps lower insurance, is currently underway. This is an issue that requires the collaboration of all three levels of government, the insurance sector and the broader community. I believe that the message is out there loud and clear, and that is happening right now.

Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source

The time allotted for this debate has expired. The debate is adjourned, and the resumption of the debate will be made an order of the day for the next sitting.