Reforming emergency services funding

The public is invited to have their say on the best path forward to reform the way emergency services are funded via a consultation paper, which is now online.

17 April 2024

 

THE NSW Government is encouraging views on the design and scope of a new model to replace the current system which places the burden of an Emergency Services Levy (ESL) on insurance premiums.

 

Currently, only households and businesses that pay for insurance are paying the levy to fund Fire and Rescue NSW, the NSW Rural Fire Service and the NSW State Emergency Service.

 

The NSW Government last November announced the levy would be removed from insurance and applied instead to property.

 

The ESL Consultation Paper is seeking feedback on four possible models to create a sustainable system that will spread the costs across all property owners.

 

The NSW Government is committed to ensuring any new model will include protections for pensioners and vulnerable members of the community. The model will also be revenue-neutral and continue to be determined solely by the funding needs of the three agencies.

 

As climate change increases the instances of natural disasters, the funding requirements of our emergency services are expected to continue rising, increasing the ESL, and making insurance more unaffordable.

 

In fact, NSW Treasury estimates that the total annual cost of flood and bushfire to the economy is projected to increase from $7 billion in 2020-21 to $24 billion by 2070-71 as climate change related extreme weather events become more frequent and intense.

 

The existing ESL has pushed insurance premiums in NSW up by around 18 per cent for residential property and around 34 per cent higher for commercial property.

 

Rising costs now mean more than one-third of households in NSW do not have home contents insurance – which is the highest rate of any state in the nation.

 

The Government is asking for feedback on a range of design features, including how levy rates should apply to different property types and locations, how the levy should be collected, and what protections should be provided for pensioners and other vulnerable groups.

 

Treasurer Daniel Mookhey said “Public feedback is an important step in reforming the way emergency services are funded into the future.

 

“I want to ensure that we create a lasting system where everyone contributes to the crucial emergency services we all rely on.

 

“We’re encouraging industry stakeholders and the wider community to express their views now so the new funding model for emergency services in NSW is fair, efficient, simple and adapted to the future impacts of climate change.”

 

The release of the Consultation Paper follows the announcement of a Stakeholder Reference Group which is providing the Government with a broad range of expert advice on a new model.

 

But while successive State governments have continued to cry for a fairer system to fund the Emergency Services Levy, because of the impact it has on rising premiums for home contents and building insurance, and the number of people who are no longer insuring because of these rising costs, there are other factors to also consider.

 

Goods and Services Tax (GST) and State Stamp Duty adds around twenty-fiver per cent to the annual cost of home contents and building policies.

 

The GST was introduced by the Howard Government in July 2000, replacing the previous federal wholesale sales tax system and designed to phase out a number of various State and Territory Government taxes, duties and levies such as banking taxes and stamp duty. State governments had seven years in which to phase out stamp duty - no surprises there, greedy successive state governments have still continued to bleed home owners seventeen years after the stamp duty phase-out date.

 

The stamp duty phase-out just didn't apply to insurance policies, it applied to everything that attracted this charge, including the purchase of the family home. If state and federal government were 'fair-dinkum' about reducing the cost of living there would be no argument about immediately abolishing this eroneous charge.

 

The Environment Services Levy Consultation Paper is open for feedback until 22 May 2024, and can be found here.

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