While welcoming the announcement from the state of Victoria's funding of A$517 million (US$401 million), which will be allocated across several bushfire risk reduction projects,the Insurance Council of Australia (ICA), which represents general insurers, warned that the government taxes are 'unsustainable'.
The ICA emphasized that the projected growth in taxes on insurance were unsustainable and meant Victorians would continue to be underinsured or not insured at all.
The federal government’s allocation of A$1.2 billion (US$931 million) over five years to improve Australia’s capability to prepare for, respond to, and recover from natural disasters and now the Victorian government’s A$517 million investment in bushfire specific resilience initiatives will protect communities vulnerable to the impact of extreme weather and natural disasters,the ICA said in a statement.
“This welcome news is tempered, however, by the Victorian budget’s projections that revenue from insurance stamp duty will increase by almost one-third over the budget estimates, rising 29% from A$1.517 billion in 2020-21 to A$1.959 billion [US$1.519 billion] in 2024-25,” the ICA explained.
“Insurers have been calling for some time for this scale of investment in resilience and mitigation measures, and it’s pleasing to see the Victorian government has heard those calls,” commented ICA CEO Andrew Hall.
“More resilient communities, businesses, and households mean less disruption to life and faster recovery after a major natural disaster,” he added.
“However, the effectiveness of this welcome budget measure is tempered by the Treasurer’s own projections that stamp duty on insurance will rise by 29% over the forward estimates to almost A$2 billion [US$1.6 billion],” Hall said.
“Stamp duty on insurance is a retrograde revenue measure that numerous inquiries and reviews have found leads to household underinsurance or non-insurance,” he continued.
“It’s disappointing that not only does this budget fail to reform this problem, in fact the budget papers show an increasing reliance on insurance stamp duty.”
The ICA urges all state and territory governments to advance tax reform and remove stamp duty on insurance products to increase insurance affordability for all Australians.