National MP Stuart Smith is chairman of the Finance and Expenditure Select Committee, which produced the report.
He said the Government could not afford to keep bailing out flood-hit residents from cyclones such as Gabrielle and Hale on a regular basis.
Hotter air holds more moisture, and the ex-tropical cyclones that cause billions of dollars of damage here are expected to get more intense, according to projections. Insurers say they are already paying out more claims - and much of the damage is not privately insured - leaving it to the taxpayer or residents to shoulder the cost.
Smith told Nine to Noon some communities would need to consider their futures.
National MP Stuart Smith.
“Unfortunately, after the Auckland Anniversary floods there have been a number of houses built in areas that are low-lying and subject to flooding,” he told the programme.
“We really should avoid that sort of thing happening all around the country and the sooner we get on top of that, the better.
“Where we have existing issues with people living in those areas, the reality is we can not afford to continue along the path of giving out support to types of events like Cyclone Gabrielle and the Auckland Anniversary floods on a regular basis.
“We need to ensure those places are shored up, and where places should not have been built upon, we need to consider their future.”
The cross-party committee was supposed to agree on the financial principles for protecting and compensating people living in flood zones.
Treasury has warned ongoing bailouts could become financially unsustainable if nothing happens to lower the risk, and the Government continues to be seen as the insurer of last resort.
MPs also looked at principles for managing disaster risk, for example, giving councils more tools to prevent development in flood zones.
One recommendation MPs agreed on was that people who had “fair warning” of risk had less case for publicly-funded compensation.
“Individuals should be responsible for managing their own natural hazard risk when making decisions ... the longer the information about the risk has been available, the less case there is for socialising the cost if the risk is realised,” the report said.
The frequency and severity of flooding is increasing. Photo / Brett Phibbs
MPs also said they “broadly” agreed with the principles put forward by an expert working group on managing retreat from flood zones.
But they had not formed a view on the specific proposals.
These specific proposals included offering no compensation for holiday homes, and compensating people for their primary homes either on a per sq m basis (up to, say, the first 180m2) or up to the full RV of a property, for 80% or 90% of homes.
However, MPs agreed with the working group that the focus should be providing “adequate housing” for people who had to relocate - including renters.
They said the focus of compensation was not “preserving people’s wealth or protecting property owners from the risks of property ownership”.
The report said the current system was ad hoc and likely to lead to unfair outcomes.
MPs also called for a single public agency to manage adapting to climate change.
Although the committee was aiming for cross-party consensus, the report’s preamble said some of the committee’s own members believe its recommendations are vague, contradictory in places, and avoid some of the most challenging questions - such as exactly how to decide “who pays”.
Smith told Nine to Noon there was consensus on the matters in the report.
“This is a bit of a rub point between parties but I think we’ve done well on what we set out to achieve.
“I think we have landed with a framework the minister can go forward with and draft up a bill next year.”
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