Tim Ayres (NSW, Australian Labor Party) | Hansard source

We know from Senator McDonald's speech that not only does she want the opposition to support this legislation, the Treasury Laws Amendment (Cyclone and Flood Damage Reinsurance Pool) Bill 2022, which we've indicated ahead of time that we will; she wants the opposition to give the government a pat on the back as we debate this piece of legislation in the last possible sitting of parliament. The government's had years to deal with this issue, and, in typical Morrison government form, this legislation is brought here at two minutes to midnight.

As of 8.30 this morning, New South Wales emergency services had issued six evacuation orders in the Northern Rivers, including for the Lismore central business district. You might laugh, Senator McDonald, but the circumstances there are desperate. This is a part of the world that I know well. They're tight-knit communities, and they are facing up to this crisis again. It's not yet been tallied how much last month's floods cost.

What we do know is that people in Lismore could not afford to insure their homes and businesses before the last flood, let alone before the recent ones, and certainly not in the intervening period between these two incidents. The costs will almost certainly spiral in the wake of this difficult summer. Many households and businesses will face a difficult question about whether they can afford to rebuild in such a flood-prone area.

It's not limited to the Northern Rivers. The towns that are rebuilding from the Black Summer bushfires face a similarly difficult set of issues. It's clear that there will need to be government effort to reduce the cost of insurance in parts of the country that are vulnerable to natural disasters. And of course the people of North Queensland have been disproportionately hit by the rising cost of disaster insurance.

On that basis, Labor will support this bill, but the measures are clearly insufficient and they are clearly flawed. They reflect a government that is far too focused on its narrow political priorities at the expense of serious long-term planning. As Labor senators on the Economics Legislation Committee noted, there are limited details on how this reinsurance pool will actually deliver any savings at all to people in North Queensland. The Treasury modelling which underpins this legislation hasn't been released, despite calls not just from Labor but from the insurance industry and key stakeholders. As the Royal Automobile Club of Queensland said in their submission:

… RACQ cannot assess the impact the pool will have on our member's home insurance premiums, primarily because we have not received proposed pricing rates or associated modelling …

Any public claims the Morrison government has made to the people of North Queensland—or will, undoubtedly, make ahead of the coming election—should be treated with the highest degree of scepticism.

When the scheme was launched, Minister Sukkar, who doesn't have a very good track record of following through on policy commitments, said it would provide savings of up to 10 per cent. When it made it to the House of Representatives, he claimed savings of 45 to 58 per cent, without releasing the modelling. It's utterly unreliable. Minister Sukkar has made all sorts of claims about this legislation—much like the bogus housing industry set of propositions that he was engaged in before, which promised a lot but delivered very little indeed.

There are also flaws in the government's decision to limit coverage to 48 hours after the declaration of a cyclone. That means much of the kind of damage from Queensland cyclones in the past few decades wouldn't be covered by this reinsurance, including the majority of the damage caused by Cyclone Debbie in 2017.

It's worth noting that the ACCC has argued against the creation of a reinsurance pool. The government ignored three core recommendations from the ACCC, including recommendations that would have made a substantial difference to the affordability of insurance. Instead, in the final hours of this squalid parliament, the Morrison government has produced last-minute, weak, half-baked legislation that is all about announcements in the lead-up to an election and has very little to do with actually delivering for the people of North Queensland.

Our insurance system more broadly is buckling under the weight of climate risk. It's clear that the impacts of climate change are driving up the cost of insurance premiums—not just in North Queensland but in the Northern Rivers of New South Wales, on the South Coast of New South Wales and in the north-western suburbs of Sydney. It's why you can't buy home and contents insurance in Bourke. It's why caravan parks on the South Coast of New South Wales have struggled to reopen in the wake of the fires. I chaired the Senate inquiry into the 2019-20 bushfires, which included an entire chapter on the effects of the fires on the insurance industry. I heard from communities directly about what impact premium rises were having on an already devastated community. As the committee's final report said:

That premiums can increase by a magnitude of 300 to 400 per cent following a natural disaster—particularly for commercial enterprises upon which a community may rely—is unsustainable and cannot occur after each natural disaster.

The centre of this problem is of course a market failure and an utter failure of this Morrison government to grapple with its responsibilities. Someone is going to have to pay for the increasing costs and risks of climate change. Taxpayers, policyholders and shareholders are all going to bear this burden. Currently, those costs are almost exclusively being born by policyholders, but, as insurance becomes more unaffordable, more people will be underinsured and uninsured. Government backed reinsurance pools do have a role to play here, but making the Australian government the insurer of last resort is not a long-term plan for or a sustainable approach to this problem. The restructuring of our system only goes so far. It's like rearranging deckchairs on the Titanic. At some point we actually have to deal with the risk.

The committee report found:

… insurance market failure should be addressed through increased expenditure on mitigation and resilience infrastructure to better address the risks that climate change and natural disasters pose to the community.

No amount of empty promises from this government on the price of insurance, as unbelievable as they are, can distract from their failure to invest in mitigation and resilience infrastructure. They have been repeatedly warned, by both the opposition and the insurance industry, that their investments are insufficient. They actually need to spend the money that they'd supposedly allocated to disaster mitigation, as my colleague Senator Watt has repeatedly insisted. The government has barely even touched the $4 billion fund that they established specifically for that purpose. They held that promise out to communities and then walked away from those communities. Instead, they've left the disaster recovery and resilience agency to their most blatantly political appointment yet, former CLP chief minister and Liberal Party president Shane Stone. We saw his performance on these issues in the wake of the Lismore floods. What did Mr Stone do? It's a pretty squalid week, really, for the government. Mr Stone blamed the victims, the victims themselves, the people who live in Lismore. The Prime Minister wouldn't get out of bed to do his job. They had to wait until he could present himself after his period of quarantine so that he could be there for the press conference to make the announcement. People waited for days and days and days for this government to do its job. Nothing says more about the priorities of this government than that.

Ultimately, though, the only way to reduce this risk over time is by taking meaningful action on climate change. For decades it has been obvious that we are facing more frequent and more severe natural disasters. Australia is the most vulnerable to climate change. Our regional communities are the most vulnerable in Australia. The insurance industry and insurance companies globally and here in Australia have produced extensive research and commentary on this issue. They've played a constructive role as a global stakeholder on these questions. As an example of the work, the IAG and the US National Center for Atmospheric Research produced a paper Severe weather in a changing climate. Its conclusions are clear and its impacts are diabolical for Australians, particularly Australians in the regions. Anyone who has read the report will be deeply saddened and disturbed by the scale of the floods in northern New South Wales and South-East Queensland, but they would not be surprised. The industry has been right to have been urging governments to spend more money on natural disaster mitigation and resilience infrastructure. They've been in the media recently, crowing about the success of their lobbying in this regard. But, let's face it, the biggest and most effective climate change mitigation measures available to us are to get our own climate and energy policies right. Instead we've been engaged in squalid climate wars and identity politics, on the government side, about this issue.

It is a little curious that the insurance industry in Australia has been so quiet on this question publicly. They have a very strong interest in limiting the rate and magnitude of these kinds of disasters and in public policy responses to do that. The industry should be right out there demanding rapid and deep action on these questions. So why haven't they been doing it? In the aftermath of the Black Summer bushfires, a senior executive of one of Australia's biggest general insurers, who I won't name, was asked why. She answered, quite frankly, that the insurers would be demanding stronger action from government on climate and energy policy but that it had been made clear to them by senior members of the Morrison government that any such demands by the industry would be met by regulatory retaliation from the government itself. They got the message from the Morrison government: 'Don't speak up; otherwise, we'll clean you up.'

It's disturbing on many levels. It's disturbing because there's still very little prospect of insurance consumers seeing anything other than escalating premiums for increasingly scarce insurance, including in North Queensland. It's disturbing because the Morrison government wields the power of government to bully its opponents, to bully industry into acting against the interests of its shareholders and customers. And it's disturbing because an industry run by very fine people, who know what they're doing, shouldn't be stood over by this government.

So, whilst there is some bipartisanship in this place about the need to pass this piece of legislation through this parliament—as half-baked as it is, as imperfect as it is, as last-minute as it is, as token as it is, as it is about an announcement and allowing Mr Morrison, Mr Stone and, no doubt, Senator McKenzie and others to pose in front of a rainwater tank at the back of some property in North Queensland and crow about the supposed benefits they're going to deliver for North Queensland—it is an empty promise with no publicly released modelling to support it.

What Australia really needs, what people in the regions need, is a government that actually has a plan to deal with the issues of adaptation and mitigation, the infrastructure that needs to be built and the proposals that need to be discussed with communities to deal with one of the greatest threats regional Australia faces.