The National Insurance Affordability Initiative will be scrapped under changes outlined in the Federal Budget last week.

“The Government will not proceed with the… initiative and will instead focus on addressing the issue of insurance affordability in north Queensland, consistent with our election commitments,” a spokesman for Treasurer Joe Hockey told insuranceNEWS.com.au.

Costs associated with the north Queensland measures will be offset by savings of $72.2 million over two years from 2013/14 as a result of ending the affordability project, the Budget papers say.

The Budget maintains affordability initiative funding of $17 million for flood mitigation works in Ipswich and Roma over three years starting 2013/14, but a proposed Labor allocation of $50 million for Warragamba Dam mitigation work in NSW is missing.

A NSW Government taskforce is currently investigating options to reduce flood risk in the heavily populated Hawkesbury-Nepean Valley west of Sydney, including a proposal to raise the wall of the Warragamba Dam.

The previous federal government said last year the initiative would invest $100 million over two years in flood and other mitigation measures. The project also proposed setting up a National Insurance Affordability Council to make future recommendations and to play a co-ordinating role.