Key Points
Drought Deepens Economic Divide
In 2025, Australia’s agricultural sector is facing one of its worst droughts in recent memory.
Parts of Victoria, South Australia, Tasmania and inland New South Wales are seeing record-low rainfall.
Crops are failing, stock losses are mounting, and water supplies are running dangerously low. [1]
Many farmers are being forced to sell off livestock and equipment to stay afloat. Rural towns that rely on agriculture are watching their local economies contract.
While some have tried adaptation measures like switching crops or water-saving technology, the pace and scale of the drought have overwhelmed efforts.
Farmers and economists are calling for long-term national policies to help bridge the growing divide between rural hardship and urban prosperity. [1]
Insurance Costs Soar Amid Climate Risks
Rising global temperatures are pushing insurance premiums higher across Australia.
Regions hit by fire, floods, and cyclones, such as the northern coast and flood-prone river basins, are seeing increases of over 30% in household insurance rates.
In some areas, entire communities are being priced out of basic home cover.
The global reinsurance market, reacting to events like the 2025 California wildfires, is passing risk down to domestic providers. [2]
This rising financial burden, particularly on lower-income households, is compounding Australia’s already stressed cost-of-living crisis.
Investors Push for Climate Accountability
Australia’s investment community is increasingly aligning with global climate finance goals.
The Investor Group on Climate Change (IGCC) released its 2025 report showing that superannuation funds and institutional investors are prioritising climate risk disclosure.
Companies are being pressured to set clear net-zero targets and disclose the physical climate risks to their operations. [3]
For many investors, climate performance is no longer an ethical issue, it’s a material financial risk that directly affects returns and long-term viability.
Government Initiatives and Policy Measures
The Albanese government has announced a major boost to marine and biodiversity protections.
By 2030, Australia aims to classify 30% of its ocean territory as “highly protected,” banning industrial fishing and seabed mining in these zones. [4]
In parallel, the federal climate strategy remains centred on achieving a 43% reduction in emissions by 2030, and net-zero by 2050.
Speaking in Canberra, Prime Minister Anthony Albanese reiterated that “climate targets are not ideological, they’re based on scientific and economic reality.” [5]
Yet critics say these measures still fall short of the urgent cuts required, particularly in sectors like transport and fossil fuel exports.
Footnotes
- [1] The Guardian: Parts of Australia are suffering another devastating drought
- [2] The Australia Institute: Cost-of-Living and the Climate Crisis (PDF)
- [3] IGCC: Australia’s 2025 State of Net Zero Investment Report
- [4] The Guardian: Ocean Protections by 2030
- [5] News.com.au: Albanese on Climate Targets
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