Poor land planning decisions and limited building codes are pushing housing costs higher, Insurance Council of Australia (ICA) CEO Andrew Hall says.

Robust planning controls are key to making housing more accessible, Mr Hall said in an opening statement to the parliamentary inquiry into housing affordability and supply in Australia, and consideration of natural hazards should be central to supply-side policy discussions.

“The pressures on release of land to enable ongoing development too often supersedes the adequate and necessary review of whether it is safe to put homes there at all,” Mr Hall said.

“The evidence of the impacts of poor planning decisions have been seen across decades of summer bushfire or flooding disasters.

“The National Construction Code should be amended to ensure greater resilience for homes, and have stronger durability against extreme weather incorporated into building design and construction requirements,” he said.

Sub-par building codes and standards can have a “devastating impact on housing affordability,” he says, and reforms to construction codes, more insurer guidance around retrofitting and better communication of natural hazard risk information need to remain “top of mind when making any further recommendations about the availability of land and the impact of housing”.

Current building in Australia occurs to a minimum standard mandated to ensure life preservation but “not constructed with property preservation as a core consideration,” Mr Hall says, noting estimates $6.2 billion is needed to address building defects and safety issues in Australia.

Immediate action on a nationally consistent basis is needed to address the required building reforms, he says.

Noting insurers are facing a shortage of tradespeople to complete repairs due to the closure of borders during COVID, the ICA cautioned that any uplift in activity on the supply side “must be undertaken and assessed with robust planning arrangements and stronger building certification requirements in place if we are to positively impact housing affordability in the long run”.

Mr Hall also says levies imposed on insurance are retrograde revenue measures that numerous inquiries have found lead to household underinsurance or non-insurance. Total government taxes and duties on homeowners ranged up to 40% on top of the cost of the premium.

General insurers provide Australians 43 million policies each year and pay more than $166 million in claims every day.

“Insurance prices the risk to any asset, and ensuring that those risks are mitigated to the best of our ability is key for both protecting the home and positively impacting housing affordability,” Mr Hall said.