Land use planning is the “problem child” of natural disaster management, according to Productivity Commissioner Karen Chester.

Some councils approve building projects on floodplains and other high-risk areas because they fear being sued by developers, she told an Australian and New Zealand Institute of Insurance and Finance forum in Sydney last week.

Ms Chester says Gold Coast City Council recently approved a 970-home complex on a floodplain because it “did not feel it had the legal standing to decline the development application”.

However, the authority was “cognisant of the natural disaster risk, because it was on a floodplain”.

The council made the developer provide an evacuation helipad, a tractor, a three-day supply of emergency food and two lifeboats.

Ms Chester says the commission’s recent report on natural disaster funding recommends that “state governments provide advice to local governments on their legal liability concerns, so we don’t see helipads being required for building development on the Gold Coast”.

Local and state government agencies often oppose projects, but developers can object in tribunals.

“This is where the legal issues get a little bit difficult, particularly in Queensland, where the state legislation… has a clause called injurious affection, which means if you’re a developer and feel you are hard done by, you can sue the council,” Ms Chester told the forum.

This leads to a reluctance to make tough decisions.

The commission’s report says state governments should embed natural disaster risk programs into state and local government planning policies.

Ms Chester says the commission has also found “much evidence of governments kicking the can down the road by not making the tough land use decisions early enough. Hawkesbury-Nepean was a very potent example of [this].”

The NSW Government has set up a taskforce to review land-use planning in the western Sydney flood-risk area, where 43,000 properties have been built at the base of the Warragamba Dam, and the population is increasing.