The report identifies three key areas where the climate crisis is directly driving up costs for Australians: insurance, food, and energy.
These sectors combined have accounted for over a fifth of the consumer price inflation experienced in Australia since 2022.
Key findings:
- Insurance premiums have soared due to an increase in natural disasters, with some households now spending over seven weeks of gross income just to cover home insurance
- Food prices have risen by 20% since 2020, with climate-related disruptions wiping out harvests and making it harder for some regions to grow food
- Energy costs remain high due to a reliance on fossil fuels, underinvestment in renewables, and fossil fuel exports forcing Australians to compete with the global market for Australia's resources
- The impacts of the climate crisis are disproportionately affecting lower-income and regional households, who are already feeling the financial strain more severely
The report underscores the need for urgent climate action to protect Australian households from these escalating costs. Addressing the root causes of climate change is essential to lowering future risks and alleviating the economic strain that millions of Australians are facing.
"Insurance costs keep on rising and, while competition across big business sectors is needed, the thing that is driving insurance costs is climate change," said Richard Dennis, Executive Director at The Australia Institute.
"The only way to keep insurance costs down is to keep fossil fuel emissions down. The more we heat the climate, the more expensive storms, floods and fires will be and, in turn, the more insurance will cost. It's time we started to tax the fossil fuel companies to fund the damage that their previous emissions are already causing."
As the world's second-largest fossil fuel exporter and fifth largest producer, Australia's actions are making a significant contribution to the problem.
"The increasing frequency and severity of natural disasters driven by climate change have resulted in higher payouts for insurance companies and rising premiums for homeowners," said Mark Ogge, Principal Advisor at The Australia Institute.
"One in 20 Australian households now spend more than seven weeks' worth of gross income just to pay for home insurance and in many regional areas, where household incomes are lower, the burden is even heavier.
"As climate change continues to fuel more frequent disasters, entire suburbs or towns could become uninsurable.
"Food prices have also surged and in some regions growing certain crops is becoming harder and harder, making food insecurity worse, and even without price-gouging by retailers like Coles and Woolworths, prices are expected to keep rising due to the ongoing climate crisis."
"Meanwhile, Australia's energy sector keeps using expensive fossil fuels and there is serious underinvestment in renewable energy solutions which provide far cheaper electricity
"Exposure to global prices for fossil fuels due to coal and gas exports has driven up local electricity costs and even if Australia moves away from international pricing, the continued risk of climate disasters damaging critical infrastructure will ensure that energy prices remain high for the foreseeable future."
