“The reality is the money that we would spend on raising the Warragamba Dam wall, we probably should think about spending on claiming back some areas that never should have been developed in western Sydney,” he said.

But Mr Ayres said the option of buybacks had been assessed by the government and reported on in the recently released environmental impact statement into the project, with the report indicating raising the wall was the most effective flood-mitigation option.

Mr Ayres said buybacks “would require large scale compulsory acquisition of whole suburbs at a cost of many billions of dollars, cause massive social upheaval for tens of thousands of people and require new housing areas to be developed outside the floodplain.”

“It is difficult to escape the conclusion that the Insurance Council, by advocating for options that have already been assessed as less effective, is actively seeking to increase premiums at the expense of western Sydney communities,” he said.

The March floods caused widespread devastation and one death in western Sydney during the rain event that brought Nepean River levels to a 60-year high, and contributed to a climbing $650 million damage bill as a result of large swaths of NSW and south-east Queensland being inundated.

The development of suburbs in Sydney’s north-west growth area was paused last year due to flood risks and planning controls on flood plains were tightened this year so councils could refuse development occurring above the previously prescribed one-in-100 year flood line.

Sam Kernaghan, director of urban think-tank Committee for Sydney’s resilience program, said buybacks provided a voluntary pathway out for existing residents who were unable to afford the rising insurance premiums of living on the flood plain.

“This flood risk is not going to go away, so how might we actually approach this from a longer-term perspective, and incentivise the shift of property development right out the flood plain, and into areas that are safer?” he said.

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NSW Minister for Western Sydney, Stuart Ayres, who is heading the wall-raising proposal, told a parliamentary inquiry in June the cost of buying back 5000 homes below the one-in-100 flood level would cost more than $4.5 billion.

“That figure far exceeds any cost of raising the dam, so I think financially it is immediately at a disadvantage,” he said, adding it would have the added effect of increasing house prices because of the stock that had been taken out of supply.

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