Treasurer Jim Chalmers said his federal budget begins the “hard yards” of budget repair. “It provides cost-of-living relief which is responsible, not reckless,” said Chalmers to parliament. “It targets investments in a stronger, more resilient, more modern economy.”
What’s the reaction of insurance industry stakeholders to this Labor government’s first major economic statement?
“My general reaction to the budget is that it paints a sobering picture of the economic landscape for the Australian public and businesses community over the next few years,” said Daniel Gronert (pictured above), CEO of finance company Arteva Funding.
Gronert expressed concern about the rising costs impacting both Australians generally and business owners.
“Rising energy costs, wages, inflation pressures and funding costs are likely to negatively impact business productivity, business investment and growth, resulting in rising unemployment in 2023,” he said. “Despite the bleak economic outlook, there really aren’t any attractive stimulus incentives for business in the budget, unlike what we have been used to in recent COVID recovery years.”
Gronert said a positive takeaway for the insurance industry is the government’s $1 billion commitment (over five years) to invest in measures to protect homes and communities from extreme weather events.
“This financial commitment from the government is an invaluable starting point that will hopefully contribute to longer term initiatives that will reduce these occurrences in future,” he said.
Despite noting the challenges, Laurence Basell (pictured below), COO of Honan Insurance, was more positive about the economic indicators in the Treasurer’s budget.
“The Australian economy is performing better than forecast,” said the Melbourne based COO in commentary provided by the brokerage. “The main driver of this is higher commodity prices that have helped to tip an additional $164.1 billion of revenue into the federal government’s pockets over the next four years, a big improvement on the official forecasts released just six months ago.”
Basell said that despite there being “limited policy directly aimed at the insurance sector,” there were some budget announcements that were “well received”.
He included the $22.1 billion of initiatives to promote cleaner and cheaper energy and $660 million towards climate and disaster resilience, readiness and recovery initiatives.
Basell also noted measures that he said his brokerage flagged before the release of the budget that were not addressed but would have benefitted the economy and the insurance industry.
These included targeted spending increases on cyber security. “We hoped for spending directed at combating the recent threats with a small business focus,” he said.
Honan, he said, would also like to see measures to help make home and strata insurance affordable and accessible in “high risk regions.”
In a media release, the Actuaries Institute, was generally very positive about the budget.
“Standout features we commend in this budget are the further strengthening of commitment to address climate change to improve resilience, support for greater access to housing, and setting the stage for the move to well-being budgets in future,” said Annette King, Actuaries Institute president.
The Institute also said it “strongly supports” the $15 billion investment in Data and the Digital Economy.
“At the same time, it is essential that the government, industry and consumers continue to strengthen cyber protections and resilience,” said the Institute’s president.
Overall, King said, the budget showed a commitment to fairness and equity.
The Insurance Council of Australia (ICA) welcomed the budget’s extreme weather measures and said it was a “a historic shift in the right direction to better protect homes and communities from the impacts of extreme weather.”
ICA CEO Andrew Hall said it laid the foundations for a “significant and bold new start” to the government’s approach to improving community and household resilience.
The ICA noted a budget package worth $22.6 million of “positive measures”, including the creation of a Hazards Insurance Partnership and a national dataset on insurance affordability issues to help with policy decision making.
The ICA also noted that this budget package aims to develop standard insurance definitions for key natural hazards.
“Given the impacts of worsening extreme weather that are being felt all over the country, the community expects industry, governments, and stakeholders to work together,” said Hall. “There is much detail to work out and we look forward to working collaboratively with both the federal and state governments on this very strong start to solving a long-term problem.”