Flood Levy – Who Benefits and Who should pay?

The intent of the levy sounds very worthy, ie, the victims of these extraordinary floods in several States, Queensland, NSW, Victoria and Carnarvon WA. Many need immediate relief; many find that their house and contents insurance doesn’t cover these flood events, and hence they may suffer a long term financial loss, some so severe that they cannot funds repairs and hence could suffer a permanent loss in their property value and even  devaluation by their bank, etc.

It seems that Insurance companies have already made money from house and home policies paid over many years, but now the small print will enable them to renege on these customers in need. It seems Banks could also lose from the attitude of these Insurance companies, and hence it would be good to see them putting pressure on them.

In addition to households, there will be huge expenditure required to repair Federal and State infrastructure.

The massive rebuild and repair will see a huge shift in funds from these households to the construction industry, domestic and infrastructure and subsequently to furniture and furnishing, whitegoods and appliances manufacturers and retailers. Ironically I expect to see Insurance policies changed and prices rise to the companies benefit. If a Levy is established, then this will effectively be a switch of money from the levy payers to these industries, manufacturers and retailers. Hence, is there a case that they should be the primary Levy payers?

A bigger more complex question also needs to be considered, are these properties and communities established in viable locations? Are there more suitable places on poorer soils but higher land, less prone to future floods?

Is this a State or Federal responsibility? Which has benefited in the past and will do so in the future? If primarily a State issue, then maybe the Federal assistance ought to be based on, say, a low interest Loan principle.

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One Response to Flood Levy – Who Benefits and Who should pay?

  1. freoview says:

    I think it is essential to check if it is safe to rebuilt some of these communities in the same locations. We cannot ignore global warming and believe everything will be as it was.

    I am in two minds about insurances here. Is it fine print, or are people to mean to insurance against something that might never happen, then it happens and they blame insurers for not being insured. Do insurances have moral obligations to pay out money for something the property owners are not insured for?

    Good to see another Fremantle based blog, Paul. I’ll link it to my Freoview blog.

    Roel

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