The Federal Budget 2023-2024 lacks insurance initiatives for rising premiums and hard-to-place insurance in flood and bushfire-prone areas but introduces various climate change and disaster response measures.
In its Quarterly Market Update Q3 FY23, Honan Insurance Group points out that the budget, unveiled on 9 May 2023 for the fiscal year starting on 1 July 2023, does introduce measures to decrease red tape for insurance companies, which may result in minor premium reductions due to more efficient reporting requirements and less duplication.
Budget provisions
Honan noted that the government has committed A$236m ($158m) to establish a reliable national flood warning system and A$231.8m to advance emergency response capabilities.
Furthermore, the budget provides for significant investment for cyber security, including A$46.5m allocated over four years to establish a National Cyber Security Coordinator, providing leadership across the Australian Public Service in coordinating action in response to major cybersecurity incidents.
Other spending initiatives include a A$14.6bn cost-of-living relief package, allocating A$1.5bn for power bill rebates for households and small businesses, aiming to alleviate living cost pressures.
The government unveiled its 2023-24 budget, forecasting a surplus of A$4.2bn this fiscal year – the first in over 15 years. However, the economy is expected to slow over the next two years due to the Reserve Bank of Australia’s cash rate increases to counter inflation, which will impact household consumption and investment. Inflation is predicted to decrease from 6% this year to 3.25% in 2023-24, in line with the RBA’s forecasts.
The budget has a strong focus on service sector expenditures, such as aged care, health care, training, and education, which could put upward pressure on services inflation, particularly given tight labour markets. A