Government Can’t Be the De Facto Insurer of Property After Weather Events – Matt Whineray

New Zealand is at a crossroads in its response to the growing threat of climate change, particularly as it relates to property damage caused by extreme weather events. Matt Whineray, chair of the Independent Reference Group advising the Ministry for the Environment, argues that the government cannot and should not continue to act as the default insurer for property owners after such events. This perspective has emerged in the wake of a report recommending a shift away from government buyouts of private homes affected by extreme weather, a move aimed at creating a more equitable and sustainable approach to climate adaptation.

Currently, there is no formal policy in place for government buyouts following extreme weather, leading to inconsistent responses across different regions. For example, properties in Port Waikato and Bluecliffs, which have been severely impacted by coastal erosion and rising sea levels, have been treated differently than those damaged by single events like Cyclone Gabrielle and the Auckland Anniversary flooding in 2023. This lack of consistency has created an unfair burden for some communities and has placed a significant financial strain on both central and local governments.

The report suggests a 20-year transition period to move away from these buyouts and instead focus on alleviating hardship based on need, not property value. This approach would mean that assistance is provided equally to all affected individuals, regardless of the value of their homes. For instance, a beachfront mansion owner and a small householder in a flood-prone area would receive the same capped level of support, ensuring a more equitable distribution of resources.

This shift in strategy would also require a rethinking of how adaptation plans are funded. Local and regional authorities would need to prioritize adaptation activities and use the Para framework—protect, accommodate, retreat, and avoid—to develop strategies. Funding would come from a mix of central and local government, as well as property and infrastructure owners, with contributions reflecting the benefits each party receives. Importantly, this must be balanced with the ability to pay, ensuring that those who cannot afford to contribute are not left behind.

As banks and insurers begin to factor climate risks into their decisions, we can expect to see changes in lending and insurance practices. This could lead to higher deposits required for mortgages, increased insurance premiums, or even the exclusion of certain risks from policies. These changes will likely be the first tangible impact of climate change on property markets, signaling a broader shift in how risk is perceived and managed.

The scale of the challenge is immense. For example, South Dunedin’s recent assessment of climate change and flooding highlights the potential cost of adaptation, ranging from $2 billion to $7.1 billion for different scenarios. This underscores the need for long-term, strategic planning rather than short-sighted solutions.

Ultimately, the conversation around climate adaptation must transcend political cycles and focus on sustainable, equitable solutions. While individuals will inevitably make their own choices about risk, the government should not be expected to underwrite those decisions indefinitely. As the waters rise and the risks grow, transparency in hazard and risk information becomes more important than ever—though it cannot change the physical reality of climate change.