The Australian Government’s Northern Australia agenda, represented by the Our North, Our Future: White Paper on Developing Northern Australia (the White Paper) and the various programs and commitments that flowed from it, is an important and substantial agenda.
There is no doubt that the Australian Government has begun the job of implementing its Northern Australia agenda and can point to various initiatives that have been undertaken in pursuit of the agenda. However, the committee received substantial evidence that:
progress with the agenda’s implementation had been slower than the community had expected;
the agenda had suffered from a lack of engagement with local communities, particularly First Nations communities; and
the agenda does not reflect the full range of industries and economic opportunities that exist in Northern Australia, nor does it address the social and environmental challenges and opportunities facing the region.
It is also clear that the COVID-19 pandemic has radically altered the Northern Australia landscape, as well as the whole nation. For these reasons, the committee believes it would be timely to undertake a refresh of the agenda to inject more urgency in the economic and social development of Northern Australia.
The report contains 29 recommendations. The Australian Labor Party and the Australian Greens Senators are supportive of all the recommendations contained in this report. Coalition Senators are supportive of 13 of the recommendations, and partly disagree with the remaining recommendations (as outlined in Coalition Senators' additional comments). Pauline Hanson’s One Nation Party Senator is supportive of 18 of the report’s recommendations, but does not support five of the report’s recommendations. There are a further six recommendations which are agreed with in part, in principle or disagreed with in part, and these are outlined in the dissenting report.
The committee recommends that the Australian Government refresh the Northern Australia agenda, in light of the new challenges and opportunities posed by COVID-19, with the goals of:
broadening the agenda to:
take advantage of a wider range of economic opportunities arising from value adding in traditional industries and from expanding new and emerging industries; and
address the social and environmental challenges and opportunities facing Northern Australia;
improve social and environmental outcomes in Northern Australia;
address the extensive and severe nature of First Nations Australians' socioeconomic disadvantage;
focus on the facilitation of First Nations Australians' participation in the Northern Australian economy;
a stronger emphasis on value adding to the north's traditional industries and capture new opportunities in emerging industries;
undertaking a serious examination of, and response to, the risks posed by climate change to the region; and
greater engagement with local communities, especially First Nations communities;
incorporating other recommendations made in this report.
Northern Australia Infrastructure Facility
In 2015, the Australian Government made a clear commitment to Northern Australia with the release of the White Paper. A key measure from the White Paper was the establishment of the Northern Australia Infrastructure Facility (NAIF) in June 2016.
To date, the NAIF has committed $2.8 billion in investment decisions. However as of 22 March 2021, five years after the NAIF was established, total payments of only $314 million have been drawn down. The NAIF's current projections are that proponents will have made a drawdown of $1.3 billion in NAIF funds by the end of 2023. The committee notes, as it did in its interim report, that it is still taking too long for NAIF funding to get out the door. This is a key contributor to community and business expectations established by the White Paper for Northern Australia are not being met.
To this end, in its interim report tabled on 3 December 2020, the committee made a number of recommendations aimed at accelerating NAIF's lending rate, expanding the scope of projects for eligible funding, increasing NAIF's risk appetite and strengthening its transparency and accountability framework. To date the Australian Government has not provided a response to the committee's interim report.
Following the release of the committee's interim report, the Australian Government released the Statutory Review of the Northern Australian Infrastructure Facility (the Statutory Review Report). The Statutory Review Report makes 28 recommendations many of which echo the intent of the recommendations contained in the committee's interim report.
The committee notes with concern the impact of COVID-19 on some communities and industries in Northern Australia. While the impact across sectors and localities has varied, it is apparent that COVID-19 has exacerbated and exposed the underlying structural issues in Northern Australia's economy. That is, a narrow industry base, dependency on exports, a lack of connecting infrastructure, a transient workforce, long and inefficient supply chains, and strong seasonal cycles.
The committee is of the view that NAIF should be central to supporting Northern Australia's economic recovery from the COVID-19 pandemic. However, to ensure it can support this recovery, it is critical that the NAIF has a range of financing tools that are suitably flexible and responsive to drive transformational growth in Northern Australia.
As it did in the interim report, the committee again emphasises that the NAIF receives bipartisan support, and the goal of all committee members is to ensure that the NAIF begins providing funding to projects in Northern Australia as soon as possible.
The committee recommends that the Australian Government prioritise the implementation of the recommendations arising from this inquiry’s interim report and also the Statutory Review of the Northern Australian Infrastructure Facility.
Additionally, the committee received evidence about the difficulties that some individuals and businesses faced when financing ventures in Northern Australia, despite international and domestic interest in investing in the region. In order to create a better investment environment, there must be greater strategic planning between governments and other stakeholders that will derisk investment in Northern Australia.
The committee recommends that the Australian Government facilitate strategic planning between all levels of government and other stakeholders, with a view to derisking the investment environment in Northern Australia.
The committee recommends that the Australian Government empower the Northern Australia Infrastructure Facility to open information sharing dialogues with commercial financiers, to improve investor confidence by allowing for region specific knowledge, experiences and learnings to be used to improve their understanding of investment risk and potential mitigants in Northern Australia.
The committee acknowledges the evidence received regarding the importance of, and the significant investment made by Australian and state and territory governments in transport infrastructure. Despite this investment, the committee heard a range of evidence regarding areas for improvement and highlighting ongoing challenges.
With regard to roads, a number of submitters called for greater coordination between governments and for longer-term, consistent funding for transport infrastructure and its maintenance in Northern Australia.
The committee also notes that while submitters offered their support for government investment in aviation infrastructure and maritime transport, it also received evidence in relation to the cost of air travel and maritime freight in Northern Australia, and the impact of limited services.
The committee recommends that the Australian Government, in consultation with the state and territory governments, develop and publish a timetable for the construction and maintenance of identified key freight routes.
It is the committee's view that, while gains have been made on updating localised portions of roads and other transportation links, a long-term funding and project strategy is required to fully recognise the economic and social potential of Northern Australia.
The committee recommends that the Australian Government, in partnership with the state and territory governments, outline a long-term strategy of road and rail funding for Northern Australia, with a view to creating a comprehensive and fit-for-purpose road and rail network.
Road improvements in Northern Australia remain of utmost importance and must be completed as soon as practicable. To this end, collaboration between the federal and state governments is critical for expediting the completion of road projects. The committee acknowledges that the Beef Roads project was largely completed on schedule and that the Northern Australia Roads Program (NARP) and the Northern Australia Beef Roads Program (Beef Roads) are well underway, however the Roads of Strategic Importance (ROSI) initiative and other roads programs must be expedited.
The ROSI program has work with forecasted funding out to 2027-28 (Alice Springs to Hall Creek), 2028-29 (Mount Isa to Rockhampton and Tennant Creek to Townsville) and 2029-30 (Newman to Katherine). Likewise, portions of the Bruce Highway Program will not be completed until 2026-27 (Mackay Ring Road [Stage 2] and Cairns Southern Access Corridor) and parts of the Outback Way will not be upgraded until 2028-29. The committee does not regard it as acceptable that many of these improvements will not be completed for many years and emphasises the necessity of expediting these works.
The committee recommends that the Australian Government work cooperatively with the states to expedite the completion of all announced road projects, including those in the 2019-20 and 2020-21 Federal Budgets.
Road upgrades are critical for increasing road safety in Northern Australia. The recently announced Road Safety Program, which has $2 billion of federal funding, seeks a 'fast roll out of lifesaving road safety treatments on rural and regional roads and greater protection for vulnerable road users, like cyclists and pedestrians, in urban areas'. Given the substantial road safety issues facing road users in Northern Australia, it is the committee's view that a portion of this program should be directly focused on improvements in Northern Australia.
The committee recommends that a portion of the funding from the next round of the Road Safety Program be committed to supporting projects that improve road safety in Northern Australia.
The committee notes that water and its proper management is critical to the growth of key northern industries like agriculture, aquaculture, mining, energy and tourism.
While submitters welcomed the existing initiatives to fund the development and improvement of water infrastructure in Northern Australia, including the establishment of a National Water Infrastructure Development Fund (NWIDF), many also acknowledged that further investment and research is required to support the development of water infrastructure.
The committee also heard calls for water infrastructure policy to acknowledge the value of water to other industries, and the importance of water security for remote and regional communities in Northern Australia. Evidence received indicated the precarious nature of basic water supply in many remote communities, especially for First Nations communities. To this end, there were calls for the NWIDF to expand its focus beyond economic priority areas related to agriculture.
Other submitters called for the NAIF to renew its focus on new investment for water infrastructure in the following areas:
large scale off stream flood harvesting in existing fresh produce and agricultural production areas;
expansion of existing water storage and irrigation schemes; and
new dams and pipelines which are integrated into regional economies and social infrastructure.
Other submitters suggested that the NAIF consider equity investments in new water infrastructure which supports economic and population growth in Northern Australia. The committee notes that the Statutory Review Report concluded 'on balance, it is worth Government considering lifting the prohibition on equity investment by the NAIF, on the basis that a diverse offering will ensure the NAIF is most effective, and able to respond to the impacts of the COVID-19 pandemic as they emerge.'
The committee also received considerable evidence about the environmental, social and cultural heritage risks that would arise from the over allocation of water from the sensitive Northern Australia environment. In addition, it is noted that while harvesting water may produce economic gains for some industries (such as cotton and sugar) or project proponents, it may also pose risks to other industries or businesses (such as fisheries) if not done in a sustainable manner.
The committee recommends that the Australian Government increase the research capacity of the National Water Infrastructure Development Fund and other water management agencies to improve decision-making regarding water policy.
The committee recommends that the Australian Government, in consultation with state and territory governments, consider expanding the remit of the National Water Infrastructure Development Fund beyond economic priority areas related to agriculture, including to areas including water security in towns, support of First Nations cultural heritage and a wider array of industries.
The committee recommends that the Australian Government update the Statement of Expectations for the Northern Australian Infrastructure Facility to ensure a renewed focus on investment in new water infrastructure.
The committee recommends that the Australian Government, in partnership with state and territory governments, seriously consider water supply options in Northern Australia that avoid adverse environmental, social and cultural heritage consequences and ensures that any new water harvesting that occurs in Northern Australia pays appropriate regard to those potential consequences.
The committee recommends that the Australian Government consider decreasing the review threshold for water infrastructure projects from $250 million to $100 million.
The committee recommends that the Australian Government, in partnership with state and territory governments, ensure the inclusion of First Nations' interests in water in jurisdictional planning and the management of water.
The committee recommends that the Australian Government, in partnership with state and territory governments, improve transparency of decision making when it comes to water infrastructure projects and publicly release assessments of projects against all National Water Initiative criteria.
Social infrastructure: housing
The committee notes the range of evidence received in relation to social infrastructure such as healthcare services, water and food security, education, housing, and employment, as it relates to the wellbeing and 'liveability' of northern communities.
The committee notes with concern the detrimental effects that a lack of social housing has, particularly on First Nations communities in terms of education, social and health outcomes. A number of witnesses observed that the lack of fit-for-purpose housing has reinforced intergenerational disadvantage.
Furthermore, the committee also heard evidence that the shortage of appropriate housing in northern communities is affecting the recruitment and retention of a skilled workforce.
It is the committee's view that housing is central to economic and social development. For communities located in regional and remote areas of Northern Australia, housing is a necessity in order to achieve improved education, social and health outcomes.
The committee notes the commitments various governments have made to date to address the housing shortage in Northern Australia. The committee also notes that government investment in building new houses, and refreshing existing housing stock could provide valuable employment opportunities for northern communities. However, the committee also notes that there continues to be funding shortfalls for First Nations housing.
The committee recommends that the Australian, State and Territory Governments increase investment in social housing in Northern Australia, in recognition of the lack of housing affordability in the region, its impact on social disadvantage and its effect on the recruitment and retention of skilled workers in the region.
The committee recommends that the Australian Government re-establish a National Partnership Agreement focused on remote First Nations housing and work with the jurisdictions to fund remote First Nations housing as a critical foundation for economic and social development in the North.
Social infrastructure: health care
The committee considers that access to both primary and allied healthcare is critically important in considering the development of Northern Australia. To this end, the committee received a range of evidence in relation to the need for improved access to healthcare services across Northern Australia. The importance of preventative health care is paramount, as it creates improved health outcomes over the long- and medium-term.
The committee heard that there is an 'immediate need' for the building of allied health and service capacity in Northern Australia. The committee also received evidence regarding the challenges of providing mental health and preventive services across Northern Australia. The committee notes that there are a range of issues related to healthcare delivery in Northern Australia, including that it is often delivered on a fly-in-fly-out (FIFO) basis; a lack of coordination between government agencies; and a lack of First Nations health professionals.
Despite these challenges, the committee notes that the healthcare industry is a potential source of significant employment opportunities for northern communities. Nationally the health and social assistance sector is projected to be the greatest source of employment growth and demand over the next five years, continuing the trend of the past decade.
The Cooperative Research Centre for Developing Northern Australia has recommended several identified solutions to improve health outcomes. It is the committee's view that these are practical and achievable recommendations, which the government ought to commit to.
The committee recommends that the Australian Government implement the recommendations of the Cooperative Research Centre for Developing Northern Australia, which include:
rural recruitment of rurally-based health professionals to assist with the retention of the local health workforce, particularly in medical "generalist" (and other health professional) roles.
investment in an Aboriginal and Torres Strait Islander health workforce to continue development strategies, including in innovative community roles and in leadership positions.
eHealth and telehealth training to ensure that health professionals in rural and remote areas can work to their full scope of practice in team-based models using tele-health.
strengthening of comprehensive primary health care to improve health outcomes and contain health care costs.
cross jurisdictional planning to establish a permanent cross-jurisdictional health service delivery and workforce network will enable shared strategic planning and implementation of new initiatives across the northern region and appropriately fund cross-jurisdictional systems.
continuing to expand Aboriginal Community Controlled Health Service models of community governance.
determining need and mechanisms to finance appropriate health service delivery models for rural and remote health service delivery.
Additionally, the Australian Government has previously conducted a number of reviews, including the National Rural Health Commissioner's 2020 Final Report and the 2020 Final Report from the Medicare Benefits Schedule (MBS) Review Taskforce. Both of these reports, which consider the matter of health in-depth, contain recommendations that the government ought to consider seriously as an utmost priority.
The committee recommends that the Australian Government consider, with a view to implementing, the recommendations of the National Rural Health Commissioner's 2020 Final Report and recommendations from the Medicare Benefits Schedule Review Taskforce's 2020 Final Report as soon as practicable, with particular focus on recommendations relating to telehealth, preventative health care, and healthcare workforce development.
Social infrastructure: telecommunications
The committee heard that there is a critical need for digital infrastructure to support connectivity in, and break down the remoteness of, Northern Australia. The committee is concerned that without improved telecommunications infrastructure, Northern Australians will be at a significant economic and social disadvantage.
The importance of telecommunication infrastructure in supporting cohesive and resilient communities in Northern Australia, particularly in the context of disaster preparedness and recovery was also highlighted. To this end, the committee heard that poor internet connectivity has an impact on students, and the provision of telehealth services. Submitters also observed that many areas in Northern Australia do not have mobile communication coverage, and are so-called 'black spots'. This has an impact on the safety, and economic development of northern communities. Given the particular dangers of black spots in Northern Australia, which can be very geographically disparate, it is the committee's view that this must be treated as an area of priority.
The committee recommends that the Australian Government develop a dedicated plan for improving digital connectivity and mobile 'black spots' in Northern Australia.
Given the importance of all forms of social infrastructure—including housing, health and telecommunications, amongst others— to the wellbeing of residents of Northern Australia, it is the committee's view that improvements in these areas must be a key priority of governments at all levels. The focus of the current Northern Australia agenda is the region’s economic development, which remains important. However, only with the development of appropriate, modernised social infrastructure will that economic development occur, along with broader social outcomes for those living in northern Australia. Only with a broader Northern Australia agenda will we begin to improve and accrue benefits for businesses, for the health and education sectors, and for individuals and families. In order for the full economic potential of Northern Australia to be realised, there must be a basis of fit-for-purpose social infrastructure.
Investment opportunities and engagement with First Nations peoples
The committee suggests that any assessment of the effectiveness of the Australian Government's Northern Australia agenda must examine the economic and social benefits which have arisen from investment in Northern Australia, particularly for First Nations people.
On this issue, the White Paper states that 'developing the north will need to be in full partnership with Indigenous Australians, with a focus on creating opportunities through education, job creation and economic development'.
The committee highlighted in its interim report that it was particularly concerned to receive evidence from Aboriginal Corporations and First Nations entrepreneurs regarding the challenges they face in accessing funding through the NAIF. First Nations enterprise in Northern Australia is critically important to Closing the Gap, and the Australian Government should make every effort to facilitate the reduction in barriers which prevent such enterprise.
Similarly, the Statutory Review Report concluded that while 'the NAIF can drive positive outcomes for First Nations Australians by financing Indigenous-led projects, finance may be inaccessible for some Indigenous businesses due to the unique challenges they face.' In light of this, the Statutory Review Report stated that NAIF 'could strengthen its collaboration and engagement with entities that have Indigenous outcomes as their core business'.
The committee received evidence from a range of First Nations organisations which largely expressed disappointment with the implementation and outcomes of the White Paper to date. Witnesses told the committee that there has been limited contact and consultation with the NAIF and the Office of Northern Australia.
The Indigenous Reference Group to the Ministerial Forum on Northern Development (IRG) told the committee that First Nations enterprises in Northern Australia face both the same structural challenges as all businesses in Northern Australia, as well as those unique to the circumstances and history of Indigenous people. The IRG explained that these unique challenges include limited inter-generational wealth transfer, relatively limited capacity to engage in the workforce and to own, successfully operate and grow commercial enterprise'.
The IRG recommended that both the Australian Government and state and territory governments 'elevate addressing the extensive and severe nature of Northern Australian Indigenous socioeconomic disadvantage through the facilitation of participation in the Northern Australian economy as a priority of the Northern Australia agenda'.
The committee emphasises the importance of on-country work opportunities for First Nations communities, including on-country ranger programs and cultural tourism. The committee heard that support for land and sea management has been highly successful in building long term social and economic development for remote families and communities. Moreover, establishing active local First Nations land management organisations provides a broad spectrum of benefits for individuals and their communities.
The committee recommends that the Australian Government allocate a proportion of Northern Australian Infrastructure Facility funds specifically for First Nations controlled projects.
The committee recommends that the Australian Government explore and develop business strategies for supporting and facilitating investment opportunities for First Nations projects, with a view to optimising First Nations economic development across Northern Australia, by:
establishing and funding an independent Indigenous Business Incubator;
ensuring that there is adequate provision of mentoring, business development and feasibility studies to support emerging First Nations businesses; and
reviewing the carbon industry model to ensure that benefits from the industry remain in Northern Australia and accrue to First Nations people where their land is providing carbon sequestration and emission abatement services.
The committee recommends that the Australian Government, in consultation with the Indigenous Land and Sea Corporation and Indigenous Business Australia, expand its investment in on-country work opportunities for First Nations communities, including on-country ranger programs, media, arts, and cultural tourism.
The committee recommends that the Australian Government elevate addressing the extensive and severe nature of Northern Australia’s First Nations people’s socioeconomic disadvantage through the facilitation of participation in the Northern Australian economy as a priority of the Northern Australia agenda.
Employment and education
Throughout the inquiry, the committee received evidence regarding the need for an appropriately skilled workforce in Northern Australia. Similarly, the White Paper noted that Northern Australia is hampered by high unemployment, localised worker shortages and high wage costs which deter investment. Retaining workers and better matching their skills will drive future growth in the north.
The committee acknowledges that the Australian Government and state and territory governments have implemented a number of strategies intended to develop a sustainable and appropriately skilled workforce and support a diversified economy in Northern Australia. Nevertheless, the committee notes that there is a growing body of research which indicates that regional areas of Australia, including across Northern Australia, do not achieve the same educational outcomes and attainment as metropolitan areas of Australia.
The committee received evidence in relation to difficulties sourcing labour in Northern Australia, and the support for skilled and temporary migration programs to address labour shortages.
The committee notes the evidence that the COVID-19 pandemic and the associated closure of borders has had on migration programs and how this is exacerbating and may continue to exacerbate future labour shortages in Northern Australia. Indeed, the COVID-19 pandemic has revealed the extent to which various industries in Northern Australia are reliant on temporary overseas labour to meet their workforce needs, especially for seasonal work. This matter has been considered by the Joint Standing Committee on Migration and the committee notes the Australian Government has not yet acted on the recommendations of that committee, in relation to the Working Holiday Maker program.
The committee also notes a range of submitters provided evidence regarding the use of FIFO workforces in Northern Australia and the effects of this type of workforce on northern communities with many noting that FIFO jobs in Northern Australia result in less money being spent locally.
A number of submitters highlighted the urgent need for employment opportunities particularly for the large number of well-educated young people residing in northern communities. While others noted the difficulty experienced in retaining and attracting an appropriately skilled workforce despite significantly high unemployment rates. The committee considers it to be a perverse outcome for many pockets of Northern Australia to experience high unemployment and youth unemployment at the same time as they experience skill shortages.
A range of submitters highlighted that the development of an appropriately skilled workforce requires a greater focus on education pathways, beginning with access to early childhood education and care; infrastructure that supports students to stay and succeed in school; pathways to training, employment and career opportunities; and partnerships with education providers.
Submitters made a range of suggestions regarding the types of education and training which should be facilitated in Northern Australia to best develop an appropriately skilled workforce. These suggestions included, a renewed focus on vocational education and training (VET) learning and skills shortages in a range of sectors including professional services, mining industries, and health care. To this end, a number of submitters, called for the restoration of funding for apprenticeships, traineeships, and the technical and further education (TAFE) system. Submitters also made clear that universities in Northern Australia have suffered very large decreases in revenue during the COVID-19 pandemic, especially as a result of the loss of international students. In the absence of government assistance, many universities in Northern Australia were forced to sack staff and close campuses.
The committee recommends that the Australian Government take urgent steps to meet the education and skills needs of Northern Australia, including by:
addressing the severe shortage of early childhood, primary and secondary education and care places in Northern Australia;
addressing the severe shortage of teachers and other educators in Northern Australia by working with state and territory governments to recruit locals and better encourage these workers to move to the region; and
providing additional support for apprenticeships, traineeships, vocational education and training, and tertiary institutions operating in Northern Australia to help them recover from the impact of COVID-19 and provide greater opportunities to study and train in regional communities.
The committee recommends that the Australian Government urgently prepare a post-COVID workforce strategy for Northern Australia that identifies mechanisms to access essential overseas labour, including from Pacific nations, on a sustainable basis, with proper protection from exploitation and wage theft, that preserves the integrity of Australia’s migration system.
A broader northern economy
The White Paper identified that 'more investment is needed in the north to diversify the economy as the investment phase of the mining boom transitions to its production phase'. As such, the White Paper stated:
The Commonwealth Government anticipates that five industries have bright growth prospects in the north: food and agribusiness; resources and energy; tourism and hospitality; international education; and healthcare, medical research and aged care.
However, the vast majority of the White Paper’s proposed actions related to two industries, namely resources and agribusiness. These two industries have been, and will remain, core contributors to jobs and economic development in Northern Australia. However, to deliver on the north’s full economic potential, effort is also required to value add to the region’s traditional industries and expand emerging industries.
To this end, the committee notes that a number of witnesses identified industries which were not referenced or prioritised in the White Paper, but may offer valuable opportunities across Northern Australia. These industries include the renewable energy sector. The committee heard a range of evidence about the potential for renewable energy to ameliorate future energy problems and create jobs in Northern Australia.
As noted in the committee’s interim report, whilst the NAIF may have been originally intended to fund large-scale, nation-building infrastructure projects, submitters presented evidence that Northern Australia is a unique environment and that small and medium enterprise businesses, Aboriginal Corporations, and innovative projects are also critical for the development of the region.
As noted earlier, over the last decade a number of inquiries have examined the issue of insurance affordability and availability in Northern Australia. In particular, the committee notes the Northern Australia Insurance Premiums Taskforce that was established under the White Paper; the recent inquires undertaken by the Australian Competition and Consumer Commission (ACCC) in relation to the supply of home, contents and strata insurance in Northern Australia; and the release of its reports in December 2018, December 2019 and December 2020.
Despite all of these inquiries and all of their recommendations, little has been done to address the high cost and lack of access to insurance in Northern Australia, relative to the rest of the country.
The committee notes that in December 2018, the ACCC urged governments to take quick action on the 15 recommendations contained in its first report. As yet, none have been delivered.
Similarly in December 2019, the ACCC urged governments to act quickly on the 28 recommendations contained in its second report. At this time the ACCC noted that 'the Australian Government is still considering its response to the first 15 recommendations contained in the First Interim Report'. At the time of writing, the Australian Government was yet to respond to the recommendations contained in the first and second ACCC insurance inquiry reports.
The ACCC's final report released in December 2020, contained 38 recommendations and found that:
home and contents insurance premiums are considerably higher, and have risen faster, in Northern Australia;
insurers are using more granular data and sophisticated pricing techniques, which is exacerbating affordability problems for some consumers;
higher and more volatile claims costs have led to poor profitability in Northern Australia;
unusual market dynamics are leading to soft competition;
high premiums are leading to a rise in the number of uninsured homes but there is little help available for customers experiencing payment difficulties;
while shopping around can help consumers find lower premiums, understanding and comparing policies is harder than it should be; and
reforms to land use planning and building standards can help reduce risks and costs in the longer term.
The committee is concerned about the Australian Government's inaction on the issue of affordable and available insurance and the devastating impact this is having on individuals, households, businesses and the development of Northern Australia. This probably is likely to get worse, with climate change predicted to increase the severity of natural disasters in Northern Australia in the years ahead.
This inaction is also reflected in the Australian Government's support for disaster mitigation. The committee received a range of evidence to illustrate how investment in mitigation could reduce both the social and economic costs, of natural disasters and reduce or stabilise insurance premiums. To this end, the Insurance Council of Australia advised the committee that it had provided a priority list of mitigation projects to the Australian Government, which could reduce insurance premiums across the country. At the time of writing, none of these projects have been funded. In addition, the Australian Government’s two year old, $4 billion Emergency Response Fund, which allows for an annual allocation of up to $200 million for disaster recovery and mitigation, has not yet been used.
The committee also notes that a number of submitters called for the expansion of the remit of the NAIF to include mitigation infrastructure and the funding of schemes such as the Queensland Government's Household Resilience Program (HRP).
A range of submitters highlighted the benefits of the HRP, including a reduction in insurance premiums and increased resilience for properties. It was suggested to the committee that government sponsored mitigation schemes have been successful internationally and a similar model to the HRP should be considered for Northern Australia, either through the provision of grants or a loan scheme via the NAIF.
The committee recommends that the Australian Government prioritise its response and consideration of the recommendations contained in the Australian Competition and Consumer Commission's December 2020 inquiry into insurance in Northern Australia.
The committee recommends that the Australian Government consider broadening the Northern Australian Infrastructure Facility's mandate criteria to allow for the funding of mitigation projects and schemes in Northern Australia.
The committee recommends that the Australian Government increase investment in disaster mitigation in Northern Australia, and research to improve mitigation options. This may include delivering funding committed through the Emergency Response Fund, and greater investment in household resilience programs.
Northern Australia contains invaluable environmental resources that are of enormous cultural significance. It is imperative that the region’s ecosystems are maintained for not only environmental, social and cultural reasons, but also economic: the agriculture and tourism industries are foundational to the Northern Australian economy. Without them, the economic development of Northern Australia could not be achieved.
We are only just starting to unlock the potential of Northern Australia. If appropriate investment was made in developing facilities at Kakadu National Park, the region could potentially see the same benefits that have been brought to the Wet Tropics of Queensland World Heritage Area, which bought in $5.2 billion annually to its regional economy pre-COVID-19.
However, Northern Australia risks losing this critical economic resource. Should the impacts of climate change further impact these unique natural sites, the agriculture and the tourism industries will never reach their full potential across Northern Australia more broadly.
Indeed, Northern Australia—with its volatile seasonal flooding and susceptibility to other natural disasters—is at particular risk of suffering extreme consequences due to climate change. Should the climate continue to worsen and the rate of natural disasters in the region increase, insurance for individuals, businesses and local governments will become even more unaffordable than it currently is (see chapter 9 for more detail on this matter).
In order to safeguard Northern Australia's sensitive ecosystems and the tourism, agricultural and aquaculture industries, which are dependent on environmental health, it is the committee's view that that Australian Government ought to consider climate change as an integral part of its Northern Australia agenda. This is essential in order to mitigate the potentially devastating impacts of climate change on the Northern Australian people, environment, and economy.