Speaking at the Northern Rivers NSW Business Economic Breakfast recently, Alan Kohler AM noted that the Insurance Council of Australia (ICA) has questioned the continuing government practice of approving the construction of houses in flood zones – a practice that is creating an increasing number of homes and businesses in Australia that can’t, or can’t afford to, get insurance cover. The owners of flooded, but uninsured, properties often have little recourse but to seek government assistance, a burden on all taxpayers.
The devastating 2022 floods came at an estimated insurance cost of approximately $6.4 billion in insured losses for South East Queensland and Northern NSW. As a result, every currently insured person or business in the area has seen their insurance go up significantly, with premiums sometimes doubling even tripling – that is if they can even get any.
It is estimated that more than one million homes will be in a ‘high-risk area’ by 2050. The ICA has repeatedly called for councils to stop approving houses on floodplains since the 2022 floods. Yet we continue to see earth trucked in to fill wetland areas for housing.
Some of these developments have historical approvals in place; some areas are listed in land release documents, and therefore there is a strong push from developers to ensure that these lands remain in these planned releases and remain available for future development.
The ICA said in their 2024-25 Insurance Catastrophe Resilience Report that ‘the financial cost of insured extreme weather over the past five years is estimated to be around $22.5 billion, a 67 per cent jump from the previous five-year period.’ To deal with this they say the government needs to step forward with ‘the creation of a $30.15 billion, ten-year Flood Defence Fund ‘to deliver new flood defence infrastructure, strengthen or remove properties in harm’s way, and future-proof existing flood mitigation infrastructure.’ It is estimated that this fund would protect around 1.2 million properties.
But, as The Echo has repeatedly said, the NSW government needs to do more than this. It needs to step forward and look at planning approvals that have yet to be built, and planning documents that allow development in floodplains, and remove these sites from the potential future housing development market. In conjunction with the federal government and local governments, it needs to step up and reform land use practices across NSW (which are replicated across Australia). This reform is critical to reduce extreme weather risk.
It is not just the physical damage to property and loss of property that needs to be considered. As the ICA points out, it is also the ‘real economic and productivity damage [that] runs much deeper with disrupted supply chains, closed businesses, cut-off workers, and agricultural land left unusable. This is not to mention the often-overlooked psychological toll these events have on people and communities, which are enduring.’ These impacts are coupled with the ever-increasing cost of labour, materials and construction costs, that have risen between 30 and 40 per cent between 2020 and 2024.
‘Too many homes are in the direct line of flood, fire, or are at risk from the sea, because at the time of planning and approval, not enough account was given to the extreme weather risk,’ stated the ICA in the lead-up to the last federal election.
‘The threshold of acceptable risk must change – considering not only the probability of extreme events but also their consequences. Building on floodplains must end.’
Aslan Shand, editor
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