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Berejiklian drops another shot at ESL reform

January 22, 2019

The NSW Government has rejected introducing a property-based levy to fund emergency services if it wins the March election, leaving NSW as the only mainland state to continue raising the funds through insurance.

In a response to a parliamentary committee report on the issue, the government of Premier Gladys Berejiklian says it “has no plans to introduce a revised fire and emergency services levy in the next term of government”.

The Insurance Council of Australia (ICA) has expressed its disappointment at the Government’s decision to back away from the “unfair and inequitable” emergency services levy (ESL) for the foreseeable future.

“Changing the ESL from an impost on insurance customers to a more efficient, broader-based charge would significantly benefit the NSW economy and insured households and businesses,” ICA spokesman Campbell Fuller told insuranceNEWS.com.au.

“It would reduce non-insurance and underinsurance and lower community reliance on government support after natural disasters.”

A planned switch from the insurance-based levy to a property-based charge was halted in mid-2017 after some businesses and landowners protested at the eleventh hour that they would be significantly worse off.

ICA estimates the backflip cost the industry some $40 million, while NSW customers are currently paying the highest proportion of taxes on household insurance policies in Australia due to the ESL. It typically adds 21% to household premiums and 45% to small business premiums.

In November a Legislative Council committee report on the issue said it believed the Coalition Government would still likely introduce a new property-based levy should it be re-elected.

The report made a series of recommendations for how any proposal could be made fair, equitable and transparent.

Treasurer Dominic Perrottet welcomed the report and a spokesman said the Treasurer was committed to maintaining an equitable and efficient funding model to support the work of fire and emergency services workers.

“The report makes a number of recommendations which the Government will consider as part of its longer-term plan to improve the fairness and efficiency of the NSW tax system,” the spokesman told insuranceNEWS.com.au.

After the reform backflip in 2017 Mr Perrottet said the fire and emergency services levy proposal in its existing form was “dead, buried and cremated” but the Government remained “completely committed to the principle of moving away from a levy on insurance”.

ICA said in a submission to the committee that if a property-based levy couldn’t be made to operate equitably, alternatives could include providing funds from state consolidated revenue. A fixed-rate levy on policies currently liable for ESL would also be preferable to existing arrangements, it said.

NSW will go the polls on March 23 with Ms Berejiklian facing a tough challenge to win a Coalition majority for a third term. 

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