February 17, 2022

I rise to support the amendment moved by the member for Kingsford Smith to the Treasury Laws Amendment (Cyclone and Flood Damage Reinsurance Pool) Bill 2022. We recognise that there have been significant rises in the cost of insurance for homes and small businesses, particularly in northern Australia, but what I want to draw the attention of the House to is the very thing that my colleague just mentioned, and that is that hopefully this is just the start of tackling insurance problems for places outside northern Australia.

The Hawkesbury and Blue Mountains residents are facing extraordinary increases in insurance costs, to a point that many cannot afford it, because of the increasing frequency and severity of fires and floods. I want to talk about how this sort of scheme, if it's implemented effectively, if it proves to achieve the objectives that are held with it—and I have to say that I don't think it is the only step that needs to be taken to help people manage insurance. We focus a lot on the cleaning up after a disaster but not as much on the planning and preparation for it.

In terms of floods, many insurers in the country do not insure people in the Hawkesbury. They're sitting on the Hawkesbury River on one of the plains most likely to flood. It always has flooded and always will flood. Either insurers don't offer insurance or, if they do, they price it so that people simply cannot afford it. During the floods last year I spoke to a lot of people about this, and some had seen the payments jump from $3,000 a year to $30,000 a year for a typical suburban home. That's a tenfold increase in insurance. When that happens, people have to make a choice. When they bought these houses they could afford insurance, but as the years and decades have gone on those prices have gone up, and they are being priced out of the market. I'd heard people say, 'Why do they live there if they can't buy insurance?' Well, they could buy insurance when they moved there. For many people that is the case.

The historical homes on the Hawkesbury, which were built in the 1800s, have survived many floods. The stone buildings can be hosed down, but the internals do have to be replaced. Residents have asked me why they can't have flood insurance that doesn't cover the replacement of the entire house, because they're confident their house is going to stand. What they do want to see is something that they can afford which will help cover the cost of the internals. It might be $50,000 or it might be $70,000, but for that they can get a new kitchen put in, they can replace the flooded gyprock, they can get the carpets done—all the things that they couldn't remove when the flood was coming. A small insurance package would give them the opportunity to do that.

As it stands, people have had to save up and use their savings or extend mortgages on homes to do it. It's been an expensive business. What they are doing, though, is making themselves more resilient, and they could do with help to achieve that. They're putting kitchens on wheels so that they can wheel them out. They're doing light fittings that are easily removed. They're not using timber or gyprock on the walls; they're using modular blocks with render or other alternatives that are a lot easier to hose out as the floodwaters recede.

What we need on top of talking about reinsurance is a place where people can go to find out how to do this. We need to empower people to be more resilient to these floods, and that also applies to fires and to storms, including cyclones. It applies to any of the natural disasters that our communities across the country face—greater access to information for people who want to retrofit their home for flood or bushfire, and greater access to information for people who are constructing.

The residents of homes that are more modern are feeling pressure. They're concerned that no-one tells them that they're not going to be able to get insurance when they're buying a house. Funnily enough, some real-estate agents just neglect to mention that bit. It's not until people are talking to mortgage lenders that they start to see some of the complication, and even then it often isn't apparent to people until it's too late. Not being able to get flood insurance of any type understandably makes people worry about the resale value of their homes, and they do deserve some sense of hope. This parliament should be working not just for northern Australia but for those living in the flood plains of the Hawkesbury and across the country.

More than anything, it needs to be a government-led conversation with the insurers about this. My community is very keen to have that. We have started discussions with the Insurance Council about what it could look like and how it could work, using our region as a model. Where will those discussions get? I can't predict, but what I do know is that people want to live in the Hawkesbury. People have lived there for thousands of years, and settlement has been there since the 1800s. People know that there needs to be a way to help them to help themselves to be more resilient. I'll continue to work with my community to do this. I live in one of the most disaster-prone places in the country. Floods, fires, storms—we get all three with regular monotony, and they always do damage.

In terms of the fire issues, I don't know if reinsurance is going to be the answer there, but I think that's another aspect we absolutely have to look at. In the Blue Mountains, people have been through a number of fires in the last few years, including the huge fires in 2013, when my house burnt down and 200 of us in a room were told, 'You are pretty much all underinsured to rebuild your homes to the new standards.' The insurers knew a couple of days after the fires that we were underinsured. We didn't know it until we were told and people started talking to builders about the cost of rebuilding to the new bushfire standards.

So it isn't enough just to say northern Australia needs a reinsurance pool, although we'll be supporting that. What we need to see is a much more continent-wide approach to this. Every single bushfire community is going to find itself underinsured to rebuild homes because of the standards that have come in following the Canberra bushfires. Homes cost hundreds of thousands of dollars more depending on your bushfire attack level rating. This is not something you can change. But what happens is that, even though you build a more resilient home, the insurers don't recognise that you've built in resilience, and they just charge you based on the cost of your home. So people are not getting recognised for the work that they're doing, whether it's putting in sprinkler systems, putting in shutters or, in my case, having a roof which looks like anybody else's corrugated roof but actually has six or seven layers to reduce the chance of any embers getting inside.

These are the things on which, as a parliament, we need to have a conversation with insurers so that the investment people are making to protect themselves better is reflected in the insurance that they pay. That's the only way that communities like mine in the Blue Mountains and the Hawkesbury, in bushfire areas, are going to be able to afford insurance. If they can't, it's this place that will be asked to solve the problem. So let's get on the front foot. Don't wait until we have another 10 bushfires where people are underinsured. Let's take steps to make sure that we are ahead of this and working with communities but, more importantly, working with insurers so that we can help our communities to help themselves.