It's always a challenge installing t & g flooring on a verandah, although it was common practice in earlier times. Today decking is the preferred option. If floorboards are desired for character reasons the building owner would be advised to shield the verandah from the weather as much as possible, for example by growing a creeper, installing 'cafe blinds' or similar. Since swelling is more likely than shrinkage, given that flooring is a kiln-dried product, we would suggest leaving a 1 mm space between all boards, not just occasional boards.

Kwinana is a suburb of Perth but we are not familiar with kwinana as a type of timber. Perhaps your decking is a West Australian species, marketed as 'kwinana timber'. The recent heavy rain in Queensland no doubt increased the moisture content of the decking, but would not have made it more attractive to Lyctid borers. Lyctid borers actually attack seasoned timber, although they can infest timber with a moisture content up to about 24%. They only attack the sapwood of certain hardwoods, which is usually a relatively small edge or corner of a board.

While timber has much better insulating properties than concrete block, the usual timber linings (12 mm thick) will not create a dramatic improvement on their own. One way to insulate the block wall is to build the wall out with timber strips and then insulate between them. Standard 90 x 35 studs fitted on flat, or ripped in half to give you 2/45 x 35, will give you a 35 mm or 45 mm deep space, into which you can cut and fit foam insulation panels.