18 September 2023

Doorstop interview, Canberra


Subjects: affordability of insurance, Pay Day Super, paid parental leave


We know Australians are doing it tough with cost‑of‑living pressures, which is why the government is 100 per cent focused on providing sensible relief in areas where we can; our energy bill price relief, our medicines price relief, the additional money we're putting into aged care, into childcare, into wages in the aged care sector is all a part of us focusing on cost of living issues.

We also know that insurance costs are going up for households and businesses across the economy. Now, the drivers of this are largely outside the government's control. A flood event in Europe or a bushfire in the United States can impact on the cost of insurance in Australia because of the global markets.

We also know that inflation in the economy is driving up the costs of building repairs, house rise increases also increases the cost of rebuilding a property once it's damaged. All of these things are having an impact on affordability of insurance, and the government's got a plan to do what we can to ensure that we can help households and businesses.

It is about reducing risk, which is why our Disaster Ready Fund, which is about ensuring that we can, over a 10year period, allocate a billion dollars towards practical measures that are going to reduce risks in communities to ensure that we reduce the underlying risk which is driving premium increases.

An important part of our program is also a Hazard Insurance Partnership, working with the insurance industry in ensuring that we can have a data set with practical measures that households and business can take, which will reduce their insurance premiums.

All of these things are an important part to the process. But there is one area that we need to focus on, and it's the cost of reinsurance, because reinsurance is a big factor in the overall cost that consumers and businesses are paying for their household and business premiums.

Now there's about five large companies that are providing reinsurance across the entire globe, and over the course of the next week they'll be taking a delegation of Australian insurers up to Europe where they're all based, so they'll be going to London, they'll be going to Munich, to meet with all of the large reinsurance companies to spell out to them why Australia is taking practical steps to reduce its overall risk and why we think these factors should be taken into place when pricing the Australian market.

We don't think enough consideration has been given to the steps that the Australian Government, Australian communities, Australian businesses are taking to reduce the overall risk. We want to work with the industry to ensure that this part of the price pressure is being dealt with and being dealt with appropriately.

We know that there is no silver bullet in this area. We know that it is a significant pressure to households and businesses, and we know we need an overall strategy, which is about reducing risk, ensuring that insurers are doing the right thing as well.

There were some stories about over the weekend about promises made and not being delivered. Well, a hard message to the insurance industry: promises must be delivered on, and we expect the regulators to double down on their efforts in this area.

The things that the government can do is work with industry and communities to reduce the underlying risk, and we've got a program at work to do that, and to ensure that we're doing our bit with the global reinsurers to help them understand the practical steps that we're taking in Australia, which should make Australia a better jurisdiction for them to be investing in.

Happy to take your questions.


Minister, you just mentioned that you were going to go and talk to these reinsurers about some of the things that Australia's doing to reduce risk. What sort of steps are we taking? 


The sorts of things that the Australian Government already has in place is the Hazard Insurance Partnership, which was about getting the data from local governments, State Governments and insurers about the things that work and where the risks exist, practical for on households, communities and businesses been put in place to reduce their exposure to hazards.

What's the household equivalent to putting locks on your doors and bars on your windows when it comes to mitigating risk of fire or flood? So there's a bunch of simple things that insurers agree will reduce the cost of rebuild or replacement. We want that information to be factored into households' decision making, and when they make those changes, it should be reflected in their insurance premium. That's one simple measure.

Better planning. We shouldn't be building the wrong houses in the wrong places. So we've got to take steps around firming up existing communities with a clear message to State and local governments, we shouldn't be continuing to make the problem worse by building the wrong houses in the wrong places. So that's about planning, and that's a project at work that National Cabinet's got on to ensure that we can reduce the overall risk with better planning decisions.


To that point, the Insurance Council of Australia said a couple of years ago, and I'm sure that they've repeated the point, that certain parts of Western Sydney in the flood plain are simply uninsurable because of the dangers there. Do you agree? 


What I agree with is the fact that insurance is not the answer to everything, and the better planning decisions are going to have to be made. We shouldn't be building houses in flood plains, and we shouldn't be building the wrong houses in the wrong areas, houses that aren't resistant to cyclones and storm events, houses that aren't built properly to deal with, or designed properly to deal with bushfire events.

So these are practical decisions that Councils and local communities can make and should make, and the very clear message is, we cannot continue to do the same things and expect that we're going to reduce the overall risk and reduce our overall insurance premiums, 'cause that won't work.

So yes, I agree, we should not be continuing to build the wrong houses in the wrong places.


On another of your portfolios, you said several times you want nonpayment of superannuation to be treated the same as wage theft. Why did the government not include super and wage theft offences in the Closing the Loopholes Bill, and what are you doing about the fact that the ATO has never used its existing criminal powers? 


A couple of things in the area of nonpayment of superannuation, Pay Day Super is all about reducing to zero the amount of unpaid superannuation. The problem with the current arrangements is it can be a minimum of three months; it could be as much as six months before we work out somebody hasn't paid their superannuation.

There's existing laws that provide for a minimum reportable payments. A problem could have gone on for a long period of time before you work it out, that it's been a problem. Pay Day Super, phased in in 2026, should reduce the problem to zero because the wages and superannuation are being paid at the same point in time.

We'll look at whether we need to align all the other laws once we have that in place, but addressing the underlying issue of having super and wages paid at the same time will fix the overwhelming majority of this issue to ensure that it isn't  hasn't gone on for months and months and months before it's actually detected.

In Opposition I gave a pretty clear message to the ATO that I didn't think they were doing enough and acting quick enough on chasing down unpaid superannuation, plus the targets and expectations on the ATO to do a better job of recovery.

When I raise this with them, they say overwhelmingly, "The stuff that we're trying to chase or that is unpaid involves an insolvency event or a business that's in administration." So a whole bunch of things need to be put in place, including the Director ID program, which is about ensuring that if you've got recidivist behaviour in that minority number of employers, and they're identified, and action to be followed up there.

But we've got a whole program of work right across various portfolios to reduce the issue of unpaid superannuation, one step at a time. Yes, we can look at the overall penalties that are involved once we get all these other building blocks in place.


You mentioned insolvency, but when will the government add superannuation to the Fair Entitlement Guarantee, 'cause that's a commitment that Labor has made in its platform, but there doesn't seem to be any legislation in trying to do that? 


Look, I don't think anyone, Paul, could say this government has been inactive in any of the areas that we're [indistinct]. We've got a whole bunch of work that we're doing, some of these questions are probably better put to Tony Burke, who's the Minister responsible in that area, but I don't think anyone can fairly look at what we're doing across the area of superannuation, industrial relations reform, workers' rights, dealing with wage theft, I don't think anyone can say that we have not been very, very active in addressing these issues, we've got an ongoing program at work, all these things are constantly under review.


We've seen the government during negotiations with the Greens pull out billions extra for social housing. Why not find the money in the budget to put super on paid parental leave as well. The Greens argued that, in the scheme of things, even though we can find [indistinct] where we need it, it wouldn't be that expensive.


This is something the government wants to do, and in our first budget we looked at what we could do in the area of improving the economic circumstances for families when they're having a child, and we focused on our first budget increasing paid maternity leave and parental leave.

So let's look at the overall things that we're doing to improve families, take care families when they're having a baby. Our focus and consultation with the ACTU and others in our first budget, we're still looking at improving paid parental leave, and we've done that; significant improvements, we've made no secret of the fact that we want to move when we can, when there's headroom on superannuation through paid maternity leave, and I think that we [indistinct] with them, and will be when circumstances allow.


Just on another topic in the news overnight. The CEO of Qatar Airways said that the airline was treated unfairly by Minister King's decision in rejecting their bid for increased flights, due to the fact that they actually played a large role in repatriating Australians during the pandemic [indistinct].


Look, I think these questions are best put to Catherine King, she was the decision maker in this area. As the Prime Minister and as the Minister have said, the decision was made on a range of factors based on the national interest, and I've got nothing to add to that.

Thanks very much guys.