It’s as audacious as a raid could be. In order to find $100 million to extend dam walls in Sydney and Brisbane the Gillard government is raiding the equivalent of its coffee jar.
Even better, it’s taking out more than it needs - $150 million, directing the extra $50 million to cutting its deficit. Who could possibly complain?
“A whole lot of suits in Switzerland” is how one government source puts it. After the September 11 US terrorist attacks in 2001 the Howard rammed through the Terrorism Insurance Act. Australian insurers were refusing to insure big city buildings against the same sort of attack here. The Act forced them to offer the insurance and forced them to contribute to a newly established Australian Reinsurance Pool Corporation which would meet the claims.
Backed by an Australian government guarantee of $10 billion, the Corporation has been also been spending buying international insurance, spending for $75 million per year.
No more. Its $75 million per year contributions will stop for at least two years. Instead they’ll be paid to government as extra dividends (on top of a special dividend announced in the last budget). It’ll bank $25 million per year and spend $50 per year on worthwhile projects such as extending dam walls.
The Insurance Council of Australia won’t complain. It welcomes the spending because it’ll make it easier to insure homes at risk of flooding.
“It will certainly reduce the upward pressure on premiums, but we also expect them to go down in areas where there has been a major flood risk,” said chief executive Rob Whelan Thursday.
Looked at another way it’s a heist from the the CBD (which houses the buildings at risk of terrorist attack) to the suburbs at risk from the Warragamba Dam. It’s sneaky, its popular, and it’ll save money.
In today's Sydney Morning Herald
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