Acknowledgements
I would like to acknowledge the Gadigal people of the Eora Nation on whose lands we meet today and pay my respects to their elders past, present and emerging.
The Albanese Government’s commitment to First Nations reconciliation can be seen through our Uluru Statement from the Heart. I warmly welcome any First Nations Australians present with us today.
Thanks so much Phillip Kewin and team at the National Insurance Brokers Association for organising today’s event and inviting me along.
Introduction – Economic Resilience
In a little under a fortnight, the Albanese Government will deliver its first budget.
This is an important moment for our government.
It will set the direction of our economic policy for the years ahead.
And it’s an important moment for the millions of Australian households and businesses that are relying on us to get the settings right.
We will deliver a budget that builds economic resilience - appropriately considering the global and local economic situation.
- We must hold at bay the growing risks we see emerging in the global economy whilst ensuring we support our economy to prosper.
Central banks are tightening monetary policy at unprecedented speed, hitting households hard. But we are seeing:
- inflation continuing to grow
- supply‑chain constraints persisting, and
- The Ukraine war pushing energy and food prices higher.
It was not a surprise when the OECD recently observed that recession in major world economies has moved from possible to probable.
Australia is not immune from these risks, but we are well‑placed to manage them.
Our responsible and disciplined budget will:
- address household hardships without adding to inflation
- delete wasteful spending and ensure every dollar is put toward a productive use
- begin to repair the structural deficit our predecessors created - the trillion‑dollar debt we inherited.
These are all necessary measures to build resilience in our economy and in our community.
Climate Change Risk
Australians are paying a high price for the previous government’s failure to build climate resilience.
Our predecessors spent a decade fighting themselves and science instead of landing an energy policy.
Over their term in office four gigawatts of dispatchable power left the grid
- it was replaced by just one gigawatt of cheaper renewable power.
This has left us vulnerable to the international energy shock resulting from the Ukraine war.
One of the first things we did when coming to Government was to deliver a credible, legislated emissions abatement target.
This will bring cheaper and cleaner renewable energy into the system faster, but it will still take time.
The cost of the former government’s inaction cannot be measured in power prices alone.
It can also be seen in the rising cost, both financial and emotional, of extreme natural disasters, from fires to floods.
You saw that first‑hand as you helped devastated Australians in the aftermath of these disasters.
I know many of you offered that help as you were dealing with damage and destruction at your own properties.
But it’s not just those in the path of these disasters who bear this cost.
The whole community shares the burden through rising insurance premiums.
This is another consequence of the previous government’s denial of climate change.
They failed to mitigate against the increasing risk of natural disasters because they didn’t believe the science.
And now families, already grappling with higher cost of living expenses, must find a way to pay more for their insurance too.
- This is forcing many Australians to be uninsured or under‑insured
- And it only further increases the community’s vulnerability to the rising risk of natural disaster.
Reducing the Burden
Some suggest the way to address this vulnerability is to subsidise premiums.
Subsidies offer short‑term financial relief, but they won’t secure long‑term resilience.
We think that’s treating the symptom, not the illness.
We must all think deeply and broadly about how implement effective solutions to lower risk that will reduce premiums.
We need to have an honest and open dialogue across industry, the community and government on this significant issue.
This is not always the politically convenient path, but it is the right one – and it will take time.
This means looking at the real impact of climate change on premiums by:
- Finding effective solutions to lowering the cost of insurance that could lie outside of the insurance industry itself.
- Looking at how risk mitigation by property and business owners may effectively allow the insurance industry to lower premiums
- Considering changes to planning and building codes.
This is in contrast to the previous government. Who:
- grossly exaggerated the benefits of the government‑backed cyclone reinsurance pool for short‑term political gain.
- failed to invest a single cent on risk mitigation in disaster zones, despite establishing a $4.5 billion fund.
The Albanese Government will not shirk our responsibility to do everything we can to protect communities and build resilience.
Our Resilience Plan
We get that mitigating disaster risk is a job for everyone, including the commonwealth.
Our Disaster Ready Fund will spend $200 million each and every year on mitigation measures such as levees and seawalls, fire breaks and cyclone shelters.
This will protect communities but also, in time, put downward pressure on insurance premiums.
And then there is the human side of natural disaster.
We must work together to protect our communities from the devastating financial, physical and emotional cost of disasters.
Investing in making sure our communities are disaster ready is one of the most productive uses of taxpayer money there is.
A report in August from the Actuaries Institute found spending on disaster mitigation infrastructure can yield savings of 10 times the initial investment.
- A good example of this is the Roma Levy, built around the city of the same name in the Southwest Queensland following a catastrophic flood in 2012.
- The Actuaries Institute estimates the $28 million initial cost of the levy has already produced savings of $130 million for the local community and counting.
- It also resulted in an average 45 percent insurance premium reduction for more than 500 local properties.
This is what practical, long‑term resilience and risk mitigation looks like.
Unlike our predecessors, we are committed to action.
If there is rent seeking or market failures occurring in premium increases ‑ we have to call this out.
But if the real issue is related to poor development, poor building standards, or poor infrastructure not fit for a changing climate ‑ then these should be the things we focus on.
We are committed to working with industry and the community to find solutions.
Conclusion
As intermediaries between insurance companies and policy holders, you have a critical role in these conversations.
Insurance providers are more data‑driven than ever.
They are increasingly needing to see clear and measurable risk mitigation strategies in place before offering a product.
And so, policy holders need help to demonstrate their risk management approach to insurers.
I am encouraged by the great work I already see from your industry to get this message across.
Our best hope to tackle the challenges in insurance is for government, industry and the community to work together.