It is my pleasure to follow Senator Watt, who raised significant issues with this Treasury Laws Amendment (Cyclone and Flood Damage Reinsurance Pool) Bill 2022 -
Labor supports this bill and knows that something needs to be done to combat the rise in insurance premiums that North Queenslanders face due to the growing threat of natural disasters through that region. We have seen between 2007 and 2019 average home insurance premiums rise in real terms by 178 per cent in northern Australia, and combined house and contents rose by 122 per cent in northern Australia but decreased by three per cent in real terms in the rest of Australia. That gives you a real sense of the challenge facing those in North Queensland. The government tasked the ACCC with looking at what can be done, and the ACCC had an inquiry into insurance in northern Australia and recommended a number of measures to improve insurance affordability. However, it's important to note that they did argue against creating a reinsurance pool. The government has taken up none of those recommendations of the ACCC report and has instead gone ahead with the reinsurance pool. Many of those ACCC recommendations would have made a difference to insurance premiums over the course of this government. The LNP government have had nine long years to do something to reduce insurance premiums and yet they have acted only in the final days of parliament and days before an election is called.
After all this time we still can't get any details from the government about the supposed savings to average insurance holders. Australians know that they just can't trust this government's claims when it comes to this. The PM said first that it would save those people in North Queensland 10 per cent on their premiums. Now you have Minister Sukkar saying people will save 46 per cent for home and contents insurance and 58 per cent for strata insurance. Although the government have been using the language that those savings would apply to people with the most acute cost pressures, they still won't detail or define how many people would fit in this category, so we have no idea how many people they're claiming would benefit from these savings. We had the Prime Minister saying first that it would be 10 per cent and we have Minister Sukkar now saying something different, and they won't actually release any modelling or detail to give proof to their claims.
The government have been very secretive about the modelling that underpins these apparent savings claims. Despite the Senate Economics Legislation Committee inquiry into this legislation, the government continues to claim public interest immunity. The government's refusal to release this critical information has made it extremely difficult for the insurance companies to assess these claims and model the impacts on their customers in North Queensland. We heard this in the Senate economics committee inquiry into this bill. A number of witnesses raised concerns about the lack of transparency on this modelling. The RACQ submitted to the committee:
To date, 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 from the Australian Reinsurance Pool Corporation.
During hearings, representatives of the RACQ confirmed that they still hadn't heard anything regarding the modelling and said:
… the reality is that we cannot determine the savings at this point in time until we see more information and that includes the price from the ARPC. We need to understand what the pool is going to cover.
Similarly, the Northern Australian Insurance Lobby said it would like to see the modelling, as it was uncertain who would actually see the savings. They said:
We would love to see the modelling and how that will impact policyholders, because it says 'up to 46 per cent'. Are 90 per cent of people going to get a five per cent saving and only 10 per cent get the 46 per cent saving?
Sure Insurance, which has a lot of coverage in North Queensland, were concerned that these changes could result in their policyholders actually receiving an increase in insurance premiums. They said:
The prospect of some policy holders being potentially handed a non-negotiable price rise because of the pool's introduction is clearly not acceptable for Sure's customers, and may potentially be viewed as a failure of government policy in its stated public commitment to insurance affordability.
That is a business grown in North Queensland, providing affordable insurance to those people, saying that they are nervous that this could actually lead to an increase in premiums for their customers.
As you can see, it's not only Labor that has been calling for transparency on the modelling; it is the companies that are providing insurance to North Queenslanders, which makes it more outrageous that, while North Queenslanders are paying record prices for insurance, this government claims it is not in the public interest to release this information. How can North Queenslanders trust this government, which still hasn't acted on the findings of the ACCC report and, having has spent nine long years in power, has done nothing to ease the cost of living and is now trying to pass reinsurance legislation in the last moments of parliament and yet won't release the critical modelling underpinning this legislation?
In the economics committee Labor raised concerns about the claims period. Currently the legislation has a 48-hour claims period following the downgrade of a cyclone by the Bureau of Meteorology. Many groups are saying that this is completely inadequate. These calls are represented in the report. They were made by groups like the RACQ, the Insurance Council of Australia, the National Insurance Brokers Association, the Northern Territory Chamber of Commerce, the Australian Small Business and Family Enterprise Ombudsman, the Council of Small Business Australia and the North Queensland Regional Organisation of Councils. So a wide array of organisations are concerned about the limiting nature of this legislation for insurance claims as well. This is best evidenced by the North Queensland Regional Organisation of Councils, which stated in its submission to the committee that, in its opinion, 'a claim period of 48 hours is inadequately short'. It went on to say:
For example, the Herbert River and the Burdekin River catchments cover 132,330 km², or about 7.6% of Queensland. In catchments this size, it takes several days for the full effect of cyclone related floods to be felt.
It would be unfair for communities affected by TC-related floods to miss out on the benefits of this legislation, simply because they live in a large catchment where flood waters take more than 48 hours to reach them.
For North Queensland, a 48-hour claim caveat is inadequate and needs to be extended.
Labor has called on the government to spend more on mitigation as well. Labor is committed to spending $200 million a year on disaster prevention and mitigation. The Morrison government set up a $4 billion emergency response fund. It's now got $4.7 billion in it and has accrued $750 million in interest while the government has not spent a cent on mitigation projects.
I've seen firsthand how crucial these mitigation projects are. In April last year I travelled to Roma with Labor's shadow assistant minister for financial services, Matt Thistlethwaite, and we met with Mayor Tyson Golder, who showed us the benefits the flood levee has brought to Roma and how it has led to reductions in insurance premiums for those in town. The levee was a great example of how governments can deliver important infrastructure projects that prevent flood damage to houses and businesses and lead to ongoing savings in insurance premiums. These are the kinds of projects we need to see the government invest in to protect businesses and households and also help reduce the cost of insurance premiums in North Queensland.
Unfortunately, as we've seen with the reinsurance pool and the issue of the ongoing exorbitant costs of insurance in North Queensland, this is a government that has had nine years to act. It finally try to act now before parliament finishes and days from an election being called, but you can still have little confidence that this is going to lead to a reduction in insurance premiums for those people in North Queensland who need it the most.