The decision to defer the Fire and Emergency Services Levy by the NSW government has been welcomed by property owners, but it has insurers fuming.
The Property Council of Australia has applauded the NSW’s government’s decision to defer the Fire and Emergency Services Levy (FESL), but the Insurance Council of Australia has criticised the move, saying it is “shocked and disappointed”.
The proposed changes had meant that the Emergency Services Levy (ESL) would not be collected by insurance companies as part of premiums and the FESL would be collected by local councils from property owners, moves which NSW Premier Gladys Berejiklian admitted would result in making some people “worse off”.
“While the new system produces fairer outcomes in the majority of cases, some people – particularly in the commercial and industrial sectors – are worse off by too much under the current model, and that is not what we intended,” Ms Berejiklian said.
The Property Council regarded itself as part of the group that would be worse off.
“The Property Council has had serious concerns about the FESL model with some commercial, inner city and industrial property owners reporting bill rises of nearly 600 per cent,” Cheryl Thomas, NSW deputy executive director of the Property Council, said.
“The model lacked nuance and would have had a serious impact on the cost of property and doing business in NSW.
“We welcome the courage of the government to admit the model isn’t right and to look for alternatives that will both fund our essential services, yet are fair on property and the community.”
The government is reviewing what action it should take with the FESL. Until then, the ESL will continue to be collected through insurance policies.
Ms Thomas said the Property Council proposed amending the FESL through consolidated revenue, which would cost the government approximately $730 million more per year under the current model.
“With a $4 billion surplus in the bank and record stamp duty revenue, this is an option that is both financially viable and fair. It is a public good, let’s fund it through the public purse,” she said.
“Other essential services in NSW such as police and health services are funded through consolidated revenue. There is no reason to deviate from this source of funding for fire and emergency services.
“We would welcome the chance to work with the government on a new approach to funding fire and emergency services through this approach.”
While property owners are celebrating the decision, insurers said it was made without their consultation.
“Insurance companies are shocked and disappointed with the Berejiklian government’s decision to delay the introduction of the FESL on properties,” Insurance Council of Australia spokesperson Campbell Fuller said.
“[The] announcement has come without consultation with insurers. The government now requires insurance companies to continue collecting the old Emergency Services Levy beyond June 30, for an unspecified portion of the 2017-18 financial year. It is concerning that no deadline has been set for recommencement of the reform.”