Australians seeking to buy a home or business should be given information about the climate risks relating to their new property.
That’s one of the ideas in a landmark 1000-page Productivity Commission report, which has given federal, state and local governments food for thought on policy changes to improve the economy.
The commission said Australia would have to prepare for some degree of further global warming on top of the 1.1 degrees Celcius average temperature rise since the industrial revolution, regardless of the speed of global emissions abatement.
This would increase the severity and frequency of bush and forest fires and raise the risk of flooding in some regions.
The report said the compulsory disclosure of climate risks “may be warranted in some cases”.
“The pre-sale disclosure of the climate-related exposures of individual residential and commercial properties is a clear candidate,” the report said.
“Mandatory disclosure of the climate-related risks facing a property—such as the likelihood of coastal inundation, riverine flooding, subsidence, destructive winds, bushfire and other natural disasters—would help potential buyers of a property make more informed decisions.”
It noted some owners might not voluntarily release such information due to the risk of “subsequent reductions in the values of particularly climate-exposed properties”.
“Compulsory disclosure could also limit the degree to which government is called upon to become an insurer of last resort for particularly exposed properties, first by making these exposures clear to potential buyers, and second by helping private insurance companies to more accurately price climate risk.”
A study published in 2022 by Climate Valuation found there were at least 17 Australian suburbs where more than half of its properties would be uninsurable by 2030.
The commission report said increasingly detailed climate risk projections were making it easier to help insurers price climate risks.
It recommended the government scrap subsidised insurance schemes.
Such schemes risk encouraging people to move “into harm’s way” and increase overall adaptation costs, it said.
Treasurer Jim Chalmers said the government would work its way through the 71 recommendations in the report, which as well as climate covered the areas of workforce change, digital technology, education and transport.
“While we won’t be taking up every idea ... we are progressing, in some form, more than two-thirds of the 29 reform directives outlined in the report,” Chalmers said.
Chalmers will discuss the report with state and territory treasurers in June 2023.
