In early 2023, the Auckland Anniversary floods and Cyclone Gabrielle inflicted $14.5 billion in losses across the upper North Island and East Coast.
Despite these events, Budget 2025 offered little indication of a serious shift toward climate adaptation, according to Kris Faafoi, chief executive of the Insurance Council of New Zealand.
In an opinion piece for The Post, Faafoi said the risks from climate change are only growing.
“We need to start treating climate resilience not as an optional extra, but as core infrastructure,” Faafoi said.
New Zealand’s exposure to earthquakes, floods, and coastal erosion is well known. Climate change is intensifying these threats, driving up both frequency and cost.
Reserve Bank stress tests suggest a major Hikurangi Subduction Zone event could cause up to $125 billion in losses – around 30% of GDP – with the government potentially on the hook for $75 billion in recovery, Faafoi said.
“These aren’t just numbers. They represent homes, jobs, businesses, and lives,” he said.
“Yes, successive governments have kept public debt low to prepare for a rainy day. But being ready means more than balancing the books. It means investing ahead of time to reduce the impact of these inevitable disasters.”
Research consistently shows that every dollar spent on adaptation yields strong returns – boosting jobs, strengthening the economy, and protecting communities.
Reducing exposure to natural hazards is more cost-effective than reactive recovery, Faafoi said.
He said that future budgets must address the climate crisis head-on. Governments should outline not just how they plan to grow the economy, but how they’ll prepare for shocks—and how they’ll invest to reduce risk before it's too late, Faafoi said.
“We should treat climate resilience the way we treat roads, hospitals, and schools – as essential,” he said.
“That means integrating resilience planning across sectors: in housing, transport, water systems, and agriculture. It also means long-term, sustained funding – not reactive, short-term fixes.”
