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Insurance premium discounts of over 50 per cent promised by the Northern Australia Cyclone Reinsurance Pool now seem highly unlikely, as the scheme’s modelling has revealed.
The Albanese government blasted the former leadership for “deceit and deception” in its handling of the scheme by promising savings that the measure is unlikely to deliver.
Assistant Treasurer and Minister for Financial Services Stephen Jones decided to release the program’s financial framework last week — a move it had called for prior to the bill’s passage.
“Labor sought the release of the modelling at the time Parliament was considering the legislation. The then government refused. We now know why,” Mr Jones said.
“The promise of a premium reduction of up to 58 per cent was simply not true and they knew it.”
At the time of the plan’s passage in Parliament, the Morrison government touted savings for home owners of 46 per cent, strata properties up to 58 per cent and SMEs up to 34 per cent.
The newly released figures indicate that savings, on average, will be more in the realm of 15 per cent, while some communities may actually see their premiums rise.
The details of the modelling come as a blow to strata communities in the top end, for whom insurance is mandatory.
Queensland’s Strata Community Association president Kristi Kinast said the organisation was “extremely disappointed to learn that relief from the reinsurance pool won’t go anywhere near delivering equity for consumers in north Queensland.
“Our members in far north Queensland feel they have been led up the garden path on this issue. Earlier in the year it was announced that strata homeowners could expect premium reductions on strata insurance of up to 58 per cent. By any measure, 15 per cent is much closer to zero than 58 per cent and this has left our members feeling very disappointed.
“A 15 per cent reduction brings them to nowhere near the national average in terms of premium costs,” she noted.
It’s estimated that insurance premiums in northern Queensland are, on average, nearly 2.7 times higher than elsewhere.
Kristian Marlow, the body’s policy officer, told REB that if the government genuinely wants to help lower premiums, it must address the taxation structures around insurance.
Taxation accounts for roughly a third of strata insurance premium costs in Queensland.
“Every time that premium goes up, tax goes up in commensurate value, so you really get slugged with a double whammy,” Mr Marlow said.
“It’s a bit like if there were a toll road just to get out of your driveway and every six or 12 months it goes up,” he added.
The body is ultimately pushing for the abolition of stamp duty on strata premiums permanently, but in the short term, they feel that temporary relief is essential, given the cost of living pressures facing Australians, as well as the windfall the state government has received this year from coal royalties — in large part thanks to northern Queensland workers.
“We propose that they use some of that windfall to fund stamp duty relief to north Queensland residents on their insurance premiums,” Ms Kinast said.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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