Bold $30b call to combat cost of living pressure

As the cost of living continues to bite everyday Aussies, one sector is calling on Anthony Albanese and Peter Dutton for a staggering investment as a potential fix.

A $30 billion fighting fund should be set up to better protect Australians from devastating floods and help reduce skyrocketing insurance premiums.

The Insurance Council of Australia (ICA) is calling for the establishment of a Flood Defence Fund ahead of the upcoming federal election.

After record-breaking floods along the east coast in 2022 saw insured losses of up to $6.4 billion, agencies warn vulnerable areas are no better prepared for extreme weather events because the federal government dedicates only three per cent of disaster money on preventive infrastructure, while 97 per cent is spent on clean-up.

This structure, they argue, is to blame for soaring insurance bills, pricing everyday Australians out of getting insurance while the desperate few who do take out cover are left footing the extent of the bill.

ICA CEO Andrew Hall said he had been in talks with both the government and opposition to secure a pre-election pledge.

The Leader of the Opposition Peter Dutton has vowed to fight cost of living pressures ahead of the election. Picture: NewsWire / John Gass

Prime Minister Anthony Albanese has made a Medicare overhaul his key election policy. Picture: NewsWire / Nikki Short

“Both sides [of parliament] are very much aware of the affordability issues that are happening at the moment, and also the high level of the exposure that a number of communities have to the flood risk,” Mr Hall told news.com.au.

“The challenge, always, is there are a lot of competing demands on government during an election period. This problem isn’t going to go away though.

“Insurance premiums have risen over the past few years through a perfect storm of high inflation, taxes and regulations, extreme weather events and every increasing risk factors.

“Insurers stand ready to play their part in this important reform, but significant new government investment is the only way to reduce extreme weather risk.”

Among the 24 catchments deemed the most at-risk include Lismore, where business and homeowners are among those leading the call for action.

Many locals were left out of pocket millions of dollars when record 14.4m floods decimated their city in February 2022. Many residents were unable to afford insurance, while others were not eligible to be covered.

The ICA’s proposal suggests splitting the investment over 10 years between the federal and state governments of NSW, Queensland and Victoria, where there are the most at-risk properties.

Of the more than one million properties facing flood risk, over half don’t meet flood resilience standards.

Under the recommendations, the ICA’s key ask is for $15 billion to aid in developing flood defence infrastructure.

More broadly, multiple agencies have argued mitigation expenditure between both federal and state governments is crucial to driving down insurance costs.

Mr Hall said decision makers needed to reframe views on weather events as critical expenditure, much like roads.

He argued the “revenue was already there” to make this happen, saying the government collected more than $8 billion per year from taxes on insurance.

Insurance Council of Australia CEO Andrew Hall.

“We need to look at increasing investment into resiliency mitigation, because it does have a significant return on investment,” Mr Hall said.

“If we think about this the same way we have thought about road and rail infrastructure in this country, I think we can develop some solid cases for doing work that will be meaningful in reducing risk for a whole raft of homes and small businesses.”

Meanwhile, in NSW, pressure is on the state government to overhaul a controversial tax – the Emergency Services Levy (ESL) – which slugs policy holders to help fund the state’s emergency services.

It can add at least $2,000 more to a policyholder’s premiums.

Originally published as Bold $30b call to combat cost of living pressure