Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

by leave—I move Australian Greens amendments (1) to (33) on sheet 1559 standing in my name, together:

(1) Title, page 1 (line 2), omit "related", substitute "flood".

(2) Schedule 1, heading, page 3 (line 2), omit "related", substitute "flood".

(3) Schedule 1, item 1, page 3 (line 8), omit "Cyclone", substitute "Natural Disaster".

(4) Schedule 1, item 1, page 3 (line 11), omit "Cyclone", substitute "Natural Disaster".

(5) Schedule 1, item 1, page 3 (after line 18), after section 127F, insert:

127G Civil penalty for contravening section 8AA of the Terrorism and Natural Disaster Insurance Act 2003

A person commits a separate contravention of this section for each calendar year during all or part of which the person fails to comply with subsection 8AA(1) of the Terrorism and Natural Disaster Insurance Act 2003.

Note: That subsection requires most general insurers to reinsure specified flood risks with the Australian Reinsurance Pool Corporation. It also applies to syndicates of Lloyd's underwriters, and to unauthorised foreign insurers, who choose to reinsure such risks with the Corporation.

Civil penalty: 1,000 penalty units.

(6) Schedule 1, item 2, page 3 (lines 20 and 21), omit the item, substitute:

2 Title

After "acts,", insert "cyclone damage and flood damage,".

(7) Schedule 1, item 3, page 3 (line 25), omit "Cyclone", substitute "Natural Disaster".

(8) Schedule 1, item 5, page 4, omit the definition of cyclone reinsurance contract in section 3, substitute:

cyclone or flood reinsurance contract means a contract of reinsurance that the Corporation enters into as reinsurer under Part 2A.

(9) Schedule 1, item 5, page 4, omit the definition of cyclone reinsurance scheme in section 3, substitute:

cyclone and flood reinsurance scheme means:

(a) the scheme operated by the Corporation in performing its function under paragraph 10(b) (cyclone and flood damage reinsurance); and

(b) any other activities the Corporation undertakes for the purposes of performing that function.

(10) Schedule 1, item 5, page 4 (after line 29), after the definition of eligible cyclone loss in section 3, insert:

eligible flood loss means a loss arising from a flood (as defined by subsection 34(1) of the Insurance Contracts Regulations 2017 for the purposes of paragraph 37B(2)(a) of the Insurance Contracts Act 1984), other than a flood caused by a weather system in relation to which a cyclone event is declared under subsection 8F(1).

(11) Schedule 1, item 9, page 6 (line 11), omit "related".

(12) Schedule 1, item 9, page 8 (after line 17), after section 8A, insert:

8AA When flood risks must be reinsured with the Corporation

(1) If a general insurer carries on insurance business that includes undertaking liability, under pool insurance contracts, in respect of eligible flood losses, the insurer must maintain contracts of reinsurance with the Corporation that:

(a) cover the insurer's liability, under all pool insurance contracts that it enters into, in respect of all eligible flood losses; and

(b) insure against 100% of the insurer's liability, under each of those pool insurance contracts, in respect of all eligible flood losses.

Note: A pecuniary penalty may be imposed for a contravention of this subsection: see section 127G of the Insurance Act 1973.

(2) Subsection (1) has effect subject to a direction that is in force under section 38 and provides for the extent to which risk is to be retained by reinsureds under the relevant contracts of reinsurance.

(3) Subsection (1) has effect even if the general insurer has entered into a contract of reinsurance otherwise than with the Corporation.

(4) The Corporation may enter into contracts of reinsurance that insure against the reinsureds' liability, under pool insurance contracts, in respect of eligible flood losses arising on and after 1 July 2022.

Exception where premium income is below prescribed threshold in previous financial year

(5) Subsection (1) does not apply to a general insurer during a calendar year if the amount worked out under subsection (6) does not exceed the threshold amount prescribed by the regulations.

(6) For the purposes of subsection (5), the amount is the total gross written premiums that the reporting standard prescribed by the regulations for the purposes of this subsection would require the general insurer to report to APRA:

(a) in respect of the last financial year of the general insurer that ended before the start of the calendar year referred to in subsection (5); and

(b) for a class of direct business consisting of contracts of insurance:

(i) that the general insurer enters into as insurer; and

(ii) that are wholly or partly pool insurance contracts; and

(iii) under which the insurer undertakes any liability in respect of eligible flood losses (whether or not the contracts cover other risks) other than eligible flood losses arising at a place covered by a determination in force under subsection (7);

if such contracts were a distinct class of direct insurance business.

(7) The Corporation may, by notifiable instrument, determine areas where, in its opinion, the risk of eligible flood losses arising is so small as to be negligible.

One in, all in rule for exempt general insurer

(8) However, if a general insurer enters into a contract of reinsurance with the Corporation that insures against the insurer's liability under a pool insurance contract in respect of eligible flood losses, subsection (5) does not apply to the general insurer while that contract of reinsurance is in force.

How this section applies to a Lloyd's syndicate

(9) If a syndicate of Lloyd's underwriters enter into a contract of reinsurance with the Corporation that insures against their liability under a pool insurance contract in respect of eligible flood losses, then, while that contract of reinsurance is in force, subsections (1), (2) and (3) apply to:

(a) the syndicate; and

(b) each Lloyd's underwriter who is a member of the syndicate, when acting in that capacity;

in the same way as those subsections apply to a general insurer.

How this section applies to an unauthorised foreign insurer

(10) If an unauthorised foreign insurer enters into a contract of reinsurance with the Corporation that insures against the liability of the foreign insurer under a pool insurance contract in respect of eligible flood losses, then, while that contract of reinsurance is in force, subsections (1), (2) and (3) apply to that foreign insurer in the same way as those subsections apply to a general insurer.

(13) Schedule 1, item 9, page 11 (line 24), after "cyclone", insert "or flood".

(14) Schedule 1, item 9, page 12 (line 2), after "cyclone", insert "and flood".

(15) Schedule 1, item 14, page 15 (line 5), after "cyclone", insert "and flood".

(16) Schedule 1, item 15, page 16 (line 24), after "cyclone", insert "and flood".

(17) Schedule 1, item 15, page 17 (line 7), after "cyclone", insert "or flood".

(18) Schedule 1, item 15, page 17 (line 20), after "cyclone", insert "and flood".

(19) Schedule 1, item 16, page 18 (line 2), after "cyclone", insert "or flood".

(20) Schedule 1, item 17, page 18 (line 6), after "cyclone", insert "or flood".

(21) Schedule 1, item 18, page 18 (line 8), after "cyclone", insert "or flood".

(22) Schedule 1, item 19, page 18 (line 12), after "cyclone", insert "or flood".

(23) Schedule 1, item 19, page 18 (line 16), after "cyclone", insert "or flood".

(24) Schedule 1, item 19, page 18 (line 17), after "cyclone", insert "or flood".

(25) Schedule 1, item 19, page 18 (line 26), after "cyclone", insert "or flood".

(26) Schedule 1, item 19, page 19 (line 7), after "cyclone", insert "or flood".

(27) Schedule 1, item 21, page 19 (lines 16 and 17), omit the item, substitute:

21 Paragraph 38(2)(d)

After "insurance", insert "(except cyclone or flood reinsurance contracts)".

(28) Schedule 1, item 27, page 21 (line 2), omit "Cyclone", substitute "Natural Disaster".

(29) Schedule 1, item 27, page 21 (line 4), omit "Cyclone", substitute "Natural Disaster".

(30) Schedule 1, item 27, page 21 (line 15), omit "Cyclone", substitute "Natural Disaster".

(31) Schedule 1, page 21 (after line 21), after item 27, insert:

27A Application of section 8AA of the Terrorism and Natural Disaster Insurance Act 2003

(1) Subsections 8AA(1) to (3) and (5) to (8) of the Terrorism and Natural Disaster Insurance Act 2003, as inserted by item 9 of this Schedule, apply to a general insurer from the start of:

(a) unless paragraph (b) applies—the 2024 calendar year; or

(b) if the total gross written premiums for the householders class of direct business, as reported to APRA:

(i) under the reporting standard prescribed for the purposes of subsection 8AA(6) of that Act, as so inserted; and

(ii) in respect of the last financial year of the insurer to end before 31 December 2022;

is less than $300 million—the 2025 calendar year.

(2) The following provisions of the Terrorism and Natural Disaster Insurance Act 2003, as inserted by item 9 of this Schedule, apply in relation to a Lloyd's underwriter or unauthorised foreign insurer from the start of the 2024 calendar year:

(a) subsections 8AA(9) and (10);

(b) subsections 8AA(1) to (3), as applying because of subsections 8AA(9) and (10).

(32) Schedule 1, item 28, page 21 (line 22), omit "Cyclone", substitute "Natural Disaster".

(33) Schedule 1, item 28, page 21 (line 24), omit "Cyclone", substitute "Natural Disaster".

These amendments have been circulated. I want to make it very clear that it would be more equitable for more Australians to get the benefit of cheaper insurance through a government not-for-profit reinsurance scheme, which is what these amendments propose. If passed, these amendments also mean it would be less administratively burdensome, because the amended bill wouldn't require insurers to distinguish between the risk of non-cyclone-related floods and the risk of cyclone related floods, and it wouldn't require them to seek private market insurance for non-cyclone-related floods. In other words, all reinsurance for all flood damage would be covered under this scheme.

So these amendments expand the scope of the scheme, they make it more equitable and they mean that more Australians would benefit through lower insurance premiums, which are only going keep climbing, because of the climate emergency that we are living in—the breakdown of our planet's climate—which is being turbocharged by this government. Not least of the ways in which they have turbocharged the climate emergency is in the budget they released last night, which contains about $10 billion per year to encourage the accelerated burning and extraction of fossil fuels! Make no mistake, the budget is a budget brought down by a government that is turbocharging the climate crisis.

I observe that every single dollar of those public subsidies to encourage the extraction and burning of fossil fuels is also supported by the Australian Labor Party. And what are we now about to see here in this chamber? Both major parties colluding to vote down these Greens amendments that would mean that more Australians get the benefit of a reduction in their insurance premiums as a result of nationalising reinsurance. As we move forward, we will see that more and more Australians need this benefit.

I'll conclude by making a prediction. At some stage, in the not too distant future, the Senate will be here doing exactly what this amendment does: it will be increasing the scope of this scheme until, ultimately—and this will be a great thing if it happens—this country nationalises reinsurance for all climate-related so-called natural disasters. That would mean that we nationalise reinsurance with regard to floods, with regard to rising sea levels and with regard to bushfires, and that can't happen quickly enough. It will happen one day, mark my words.

Jenny McAllister (NSW, Australian Labor Party, Shadow Cabinet Secretary) Share this | Link to this | Hansard source

I want to place on the record Labor's voting position on this amendment: Labor won't be supporting this amendment. But I want to reiterate some of the views I put during the second reading debate. It is not as though this government has not been warned by insurance companies for very many years about the risks posed by climate change to the frequency and intensity of natural disasters. In fact, after our second reading debate, I went upstairs and had a bit of a look, because I remember when IAG—back in 2006!— took a national leadership role, undertook research and put a very public position about what climate change would cost, what it would mean for premiums and what it would mean for the economy. And what did the Howard government do? What did the Abbott government do? What did the Turnbull government do? What did the Morrison government do? Absolutely nothing of substance to address climate change. And here we are, 15 years later—15 years after the insurance companies first started ringing the bell about what climate change would mean for premiums, what it would mean for communities and what it would mean for the economy. Here we are, even in this term of government, with report after report having been provided to this government—privately commissioned and publicly commissioned reviews about the costs and risks, the problems of underinsurance that arise from that and the economic challenges that that presents to communities, particularly in northern Australia. Here we are, probably in the very last day of the Senate sitting before the election, and the government are finally getting around to legislating their promise, but not with any data on the public record, of course, and not with any data on the table—they just all voted against putting on the table the data that underpins their policy decision—but wanting this Senate to support their position.

Well, we will support the legislation; we'll vote for it. We want the relief that is promised by the government to flow through to communities as quickly as possible. We don't intend to hold up this bill by supporting the Greens amendments. The Greens amendments are a very, very significant change indeed to the scope of the program that's proposed by government. They are of uncertain cost. We have no information about what the Greens' proposal would cost for the scheme, and we've got no information about what it would mean for policyholders and consumers. We're not prepared to hold up the bill. Labor would look at the inclusion of flood coverage as one of the terms in the statutory review that will already take place as a consequence of this legislation's passage, but we do not intend to vote for the amendments today.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

tor RICE (—) (): I want to put on the record Labor's excuse for not voting for this bill and how their excuse is not supported by the communication and the discussion that the Greens had had with the Labor Party. In fact, Labor asked us: what would be the additional cost to government? We replied that there would be no additional cost. As was noted in the speech on the bill, the scheme has been designed to be cost neutral to the government over time because, basically, although this is government reinsurance changing who pays for the insurance, there will still be insurance purchased by people. It will reduce the cost of insurance from these massive events by, essentially, nationalising that insurance, but the cost is designed to be neutral over time. Expanding the scope of the scheme to include all flood damage wouldn't impact upon this objective. The Australian Reinsurance Pool Corporation would price the additional flood damage risk on a cost-neutral basis.

Insurance is a really interesting representative of the issues that we are facing by living in a climate emergency, and the issues are not going to go away. The costs to Australian society and the costs globally of our climate emergency are going to continue to increase, and the reality of the floods that we have been experiencing over the past months are just an indicator of what we face in this country. It's not just flood damage from cyclones, as has been shown with the floods across Queensland and New South Wales in recent months. None of these would have been eligible for this insurance scheme because they're not cyclone related. But we know that the impact of the climate emergency is going to be increasing intensity and increasing frequency of flood events not just from cyclones but from those heavy downpours. Frankly the science shows why they are happening. It's because we have got a warmer climate and there is more moisture in the atmosphere, so there is more ability for these flood events to occur.

What we need—and this is the only way to be dealing with this—is for Australia to be playing its part globally, to be acting at emergency speed, to be safeguarding our future and to be reducing the damage from our climate emergency, and that means we've got to get out of the mining, the burning and the export of coal, gas and oil—full stop. That is what the science says. It's the only way that we're going to tackle the damage and the loss that is being felt by Australians and that is being felt around the world. Any government that is trying to delude themselves that there is any other way out is just that—deluded—and they are misrepresenting the situation to the Australian community.

It is very clear that we do not have a carbon budget left. There is no time to waste. We need to have an emergency shift and an emergency transition to get out of the mining, the burning and the export of coal, gas and oil. That is the reality that humanity is facing, and that's what this parliament needs to face up to. We need to work out how to do it in the way that best supports workers in that shift, and the Greens have got plans on the table as to how we would support workers who are currently working in those industries to be transitioned into new industries. We need to work out how to cope with the fact that there is already that climate change which is locked in. We're going to see floods, fires and other natural disasters due to the climate emergency continuing. Hence, measures like this reinsurance pool are important, but the reality is that they're not going to be enough. The only thing that is going to be taking the required action is to be getting out of the mining, the burning and export of fossil fuel, and both parties in this government need to realise that and need to be joining the Greens in taking the action that's required, if we are going to safeguard our future.

Jane Hume (Victoria, Liberal Party, Minister for Superannuation, Financial Services and the Digital Economy) Share this | Link to this | Hansard source

I thank senators for that searing insight into what a Labor-Greens coalition might look like. Along with the Senate Economics Legislation Committee, the government supports the passage of this bill without amendment and, therefore, will be opposing this amendment. Insurance affordability from cyclones has been a longstanding issue in the north of our country. The ACCC found that the main driver of high premiums in northern Australia was a higher natural hazard risk primarily driven by cyclones. Including all flood damage in a reinsurance pool would likely reduce the premium reductions available to residents in northern Australia, and we know that in other jurisdictions, such as the United Kingdom, flood reinsurance pools have required a levy to ensure financial viability. We will be opposing the amendment.

The Chair:

The question is that amendments (1) to (33) on sheet 1559, moved together by leave by Senator McKim, be agreed to.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

by leave—I move Australians Greens amendments (1) and (2) on sheet 1569:

(1) Schedule 1, page 5 (after line 26), after item 4, insert:

4A Subsection 501(2)

Omit "The Minister may", substitute "Subject to subsection (5A), the Minister may".

4B Subsection 501(3)

Omit "The Minister may", substitute "Subject to subsection (5A), the Minister may".

4C Subsection 501(3A)

Omit "The Minister must", substitute "Subject to subsection (5A), the Minister must".

4D After subsection 501(5)

Insert:

(5A) The Minister may not, under this section, cancel a visa that has been granted to a person if the person:

(a) has resided in Australia for a continuous period of at least 10 years; or

(b) arrived in Australia from overseas when the person was less than 10 years old.

(2) Schedule 1, page 5 (after line 30), after item 5, insert:

5A After subsection 501(6)

Insert:

(6A) Conduct that was engaged in by a person when the person was less than 18 years old must not be taken into account in determining whether the person passes the character test.

The Chair:

The question is that the amendments on sheet 1569, (1) and (2), moved together by leave by Senator McKim be agreed to.

Question negatived.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move amendment (1) on sheet 1570, standing in my name.

(1) Schedule 1, item 26, page 20 (lines 15 to 20), omit section 41, substitute:

41 Review of Act

(1) The Minister must prepare a report that reviews the need:

(a) to extend the cyclone reinsurance scheme to cover loss or damage caused by any and all natural disasters, including bushfires, storms and hail; and

(b) for this Act to continue in operation.

(2) The report must be prepared:

(a) as soon as practicable after 1 July 2025; and

(b) at least once every 5 years after that day.

The Chair:

The question is that amendment (1) on sheet 1570, revised, as moved by Senator McKim be agreed to.