Tuesday, 20 June 2023
Northern Australia Joint Select Committee; Report
I rise today to speak about the inquiry into the reinsurance pool and the first report. I would like to start by acknowledging and thanking our chair, the member for Lingiari, Marion Scrymgour, for her fine work and the inclusivity of what she's done for this report and, indeed, on how the chair runs the committee. I would also like to thank the co-chair, Mr Warren Entsch, the member for Leichhardt, for his experience in this regard and all the members on the committee for their collaborative approach to try to make this reinsurance pool as good as it can possibly be.
Here's a little history lesson. This started as a coalition initiative, and it received bipartisan support from the then in opposition Labor Party. It has now, in the same spirit, been taken forward by the current Labor government and enjoys the support of the opposition. The reason for this is that the insurance industry is so important so our constituents can actually purchase insurance and purchase insurance at an affordable price, because the prices they are currently paying in North Queensland and in northern Australia are just way too high, and it's not acceptable. So we need to do something about that, and hopefully this reinsurance pool will work towards that.
This is all about creating liveability for our constituents, providing them with the comfort to make sure that they can insure their homes, their businesses and everything they do at a reasonable price, at an affordable price. Currently, we're paying circa 2½ times more in northern Australia than what they are in southern Australia, and this is not sustainable. It is certainly something that needs to be addressed, and it needs to be addressed sooner rather than later.
I'm sure those opposite, like me, have people coming to their offices and are seeing them at markets, telling them, 'I've had insurance premiums go up 30 per cent.' This is 30 per cent year-on-year, and this is just not acceptable and not sustainable.
This has led to some people doing self-insurance. Self-insurance might sound like not a bad idea. It's when people put money aside that they were going to pay for premiums and put it in a kitty, and then, if they have something go wrong, take their money out. Unfortunately, what happens is priorities get in the way of that. You might need a new washing machine or your dryer blows up or something like that, so you end up spending that money. Then, in times of need, that money is not there.
The other thing people are coming to me about is the need for affordable insurance, because insurance premiums in the North have just gone through the roof. As you would be aware, the only thing worse than really expensive premiums is not being offered insurance at all, and that is what's happening as well. We've got people in our area who are not being offered insurance at all. The main objective of this pool is to lower insurance premiums for households and small businesses that have high cyclone and related flood damage by allowing insurers to reinsure cyclone risks at a lower cost than would be the case if insurers reinsured from a private market. The pool commenced its operation on 1 July 2022, but unfortunately many consumers are still waiting for their insurance providers to come onboard. Large insurers have until 31 December 2023, and those that have under $300 million have until 31 December 2024. We encourage these insurers to get onboard. As of February 2023 two insurers, Allianz Australia and Sure Insurance, have joined the pool, but there are still 14 more to go.
Why is this so important? Without affordable insurance in northern Australia, people will simply not be able to live there. Businesses will be deterred from expanding and investors will be deterred from investing. Developers will not take on projects, and banks will simply not finance projects that it's not possible to get insurance for. This will cause rents to increase and will also exacerbate the housing problem. It's something we cannot have. And this is for northern Australia, the region that has 40 per cent of the landmass that contributes so much to Australia's finances, to our export dollars—through iron ore, through coal. This pool will cover 3.3 million households, 220,000 small businesses and 140,000 residential strata units.
In my electorate of Dawson, which is the biggest sugar-growing region in the whole country, we need to keep people on their farms and we need to keep people in their houses, and the way we can do this is to make sure they can afford insurance. The region is also the winter salad bowl of Australia. If we want people to continue to feed the nation, we need to make sure they can live in northern Australia and thrive. Again, it's why we have to make sure they can live there with affordable insurance. We have ports, we have Bowen mangoes, we have cattle spread throughout, we have mining and we have tourism. If Australians are genuinely all about growing Australia, and if they're genuinely all about making sure we keep all these people who are working in business and looking after Australia, then we need to make sure we all work together collaboratively to give them the right insurance at the right price.
The Joint Select Committee on Northern Australia, of which I am a proud member, started its inquiry last October, and we've made numerous recommendations to improve the rollout of the scheme over the next few years. However, in view of the evidence given during the inquiry, the committee considered it premature to recommend significant changes, because we didn't want delays. We need to let this insurance pool start. We need to let the insurers be involved and encourage more people to be involved so that the savings can start to follow through. We didn't want to put extra changes or more impediments on the insurers to make their life more difficult.
So, next steps for this: as I've said before, the major insurers will be onboard by the end of December 2023. We need to encourage all the second-tier insurers to get involved and be on board by December 2024. After this, in about 12 months time, it will be up to the chair. We will need to review. We will need to have a look at exactly where we are in this whole scheme of things. We need to make sure we see how effective the reinsurance pool is, because it's so important that we get this right to bring down the prices of insurance in North Queensland. So I am committed to fighting to reduce all insurance premiums, be they for households, business, marine or strata. I think we can particularly do more in those last segments, but let's start off with what we're doing and then tweak it, make some adjustments from there, and make sure we can continue building on this.
Then I'd like to tackle the public liability. It's something our tourism operators are facing each and every day when they take people out for adventure tourism in particular. They take them out for fantastic experiences—that's what we have in Australia; we have lots of experiences. People can go out there and enjoy the Great Barrier Reef, enjoy our beaches, enjoy the mountain walks, enjoy the natural wildlife and the natural flora and fauna that we have. We just need to make sure that our tourism industry can afford to do that, so let's have a good look into the public liability and see what we can do for that.
It's for those reasons I commend this report to the House. It's a very good report. I would like to again thank my committee members for the way they've interacted and the way that they've worked together. Let's make sure that we bring down the cost of insurance premiums for northern Australia.