"You don't have to prove that you have $20m in liability when driving on a public road,"
Compulsory Third Party (CTP) Insurance in most States is heard in Magistrate's Court for up to $100,000 - but can be heard in Crown Court for Unlimited amounts...
So if your car is registered, then you are covered. Even third party property insurance for cars is around £30 million limit for liability.
Those laws have been enacted in most states since the 1950s.
I'm guessing that Local Councillors, not knowing anything about aviation, have simply grabbed those numbers from the auto industry for running aviation assets.
Perhaps it's time we had a compulsory scheme for aircraft registration - everything except the physical aircraft asset to be insured?