State and local governments must push through land use reforms and stop reapproving decades-old “zombie” developments in flood zones, the Insurance Council of Australia says.

CEO Andrew Hall says “nothing much has happened” since a 2022 national cabinet decision to no longer build on floodplains – despite it being a “very good” call.

And he urges the winner of the May 3 federal election to allocate significant funding for flood defences over 10 years, and to reform land use.  

“State and local governments must work to improve this system, especially as they tackle the challenges of a housing shortage amid surging population growth in our major cities,” Mr Hall said.

“You would never want even a 1% chance that your house will flood each year. Why would you put people’s … homes at risk? Great question.”

The comments come in response to an Australian Financial Review article on zombie applications that details a NSW development that broke ground in January. It was signed off by Hawkesbury City Council more than 27 years ago under previous flood policies.

“We are hearing more cases like this where a so-called zombie development application – approved way back when Bob Carr was premier of NSW – is suddenly activated,” Mr Hall said.  

More than 220,000 homes have been built in areas with a 2%-5% annual risk of flooding, ICA says.  

Mr Hall notes that as premiums rise, insurance penetration rates “drop enormously”, and while the broader market is about 60% insured, in floodplain communities it is 23%. “It’s fewer than one in four can afford insurance in these flood zones.”

The Hawkesbury development in Dight Street, Richmond, “is probably another example of an outdated development application”, he says.

“We’re continuing to repeat mistakes of the past.”

A council spokesperson told the AFR development consent was granted under previous planning controls and the application “has been enlivened; that is, enough work has been done to keep the approval valid ... The proposed subdivision is predominantly located within a portion of the site that is not impacted by flooding.”

The original subdivision was assessed and approved by the council in 1997, based on flood data and policies available at the time.

Modifications were made in 2019 and also last year, to build a wall to protect an electricity substation from flooding.

Mr Hall says development in western Sydney’s “extremely flood-prone community of Richmond is an example of why state and local governments must act on land use planning reforms and cease building homes in high-risk areas”.

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