My builder says putting more insulation into a house than that required by the Australian Building Code is uneconomic.

When you continue adding insulation to a building beyond what seems economic, there is a definable level of efficiency where a full-sized furnace is no longer required because sufficient heat can be delivered to the building by other means. This allows capital cost savings to be realised on the heating and cooling system. Savings that can be put towards extra insulation and higher efficiency windows. This “definable point” is how the Passive House Standard is measured and achieved.