The Insurance Council of Australia (ICA) has welcomed new funding in NSW to improve disaster resilience, while also urging that insurance taxes be addressed to encourage greater uptake of cover. 

Stamp Duty and an Emergency Services Levy (ESL) “must be dealt with in future budgets,” the ICA says.

NSW’s latest state budget reveals it expects to collect $11.9 billion from insurance customers over the next four years, or around $1 in every $15 of all forecast tax revenue. 

“The best way to improve disaster resilience is to improve insurance coverage, and today’s budget is a missed opportunity to progress much needed reform of insurance taxes in NSW,” ICA Acting CEO Kylie Macfarlane said.

NSW has the highest rate of insurance taxes in Australia, with customers paying 20-40% in state taxes on top of their premium, the ICA says. Stamp duty is forecast to raise $6.8 billion, and the ESL $5.1 billion.

NSW is the only mainland state to still impose an ESL to fund emergency services, and insurance customers there pay nearly three times the amount of state taxes as their Victorian counterparts, contributing to an estimated 13% of NSW households being uninsured – double the rate in Victoria.

Ms Macfarlane welcomed new government funding for initiatives to improve disaster resilience, including a new $150 million Community Restoration Flood Fund to support disaster impacted communities in the Northern Rivers and Central West.

“While the focus on new housing is welcome, it is incumbent on all governments to take practical steps to end development on floodplains,” she said. 

“With the Hawkesbury-Nepean floodplain Australia’s largest unmitigated flood risk, the government’s focus on housing affordability and construction of new homes must account for extreme weather risk in development planning to ensure residents of new housing in Western Sydney and across the state are not placed in harm’s way,” the ICA said. 

The NSW Government says it “recognises that recovery is not a short-term fix and requires evidence-based planning and community leadership,” and added that the 2022 floods exposed several ongoing risks "due to the changing climate and long-standing land uses”. 

The flood fund will help development of Priority Disaster Adaptation Plans, work on bridges and roads, financing the ongoing Resilient Homes Program in the Northern Rivers, and aiding further housing programs. 

Funding was also made available for early warning systems for fires and floods, bushfire reduction teams, and deployable internet and mobile phone coverage during and after disasters. 

The NSW government says it has allocated $2.3 billion over five years to improve natural disaster resilience. More than 60 declared disasters since 2019 have cost the state $5 billion. Last year, 20,000 homes were damaged.

“Natural disasters are becoming more frequent and more severe as we deal with the impacts of climate change,” the government said. “The financial cost of responding to natural disasters is only increasing with about 97% of the funding for natural disasters spent after the event.”

Community groups expressed disappointment over the $150 million pledge, the Lismore App saying the $100 million Tranche 2 funding allocated for the Resilient Homes Program was “definitely an underwhelming amount when the community expectation was $700 million”.