SYDNEY property owners face a new annual levy of $300 and drivers could be hit with higher car registration costs under options being considered by the NSW government to overhaul how fire and emergency services are funded.
Three-quarters of the annual $950 million cost of funding Fire and Rescue NSW, the Rural Fire Service and the State Emergency Service, is paid for by a tax on insurance companies, which is passed on to customers via higher premiums. The rest is funded by the state government and a tax on local councils.
But the NSW government argues the system is unfair as it increases the price of insurance and allows those who are uninsured the full benefit of fire and emergency services without having to pay for them.Advertisement: Story continues below
The Insurance Council of Australia estimates that 810,000 NSW properties do not have insurance.
The abolition of taxes on insurance was recommended by the Henry tax review and the government committed to examining the levy in last month’s state budget.
In a discussion paper released yesterday, the Treasurer, Mike Baird, and the Police and Emergency Services Minister, Mike Gallacher, argue that if the system is to be changed a property-based levy ”would be the best alternative”. The paper seeks public input about how best to overhaul the system, including a new levy on all property owners.
It says an annual levy of up to $267 would have to be imposed on land valued at $250,000, based on applying an ”ad valorem” rate of $1.07 per $1000 of land value.
The median value of metropolitan residential land in NSW is $280,000 which would mean an annual levy of about $300. For rural residential land the median value is $144,000, which would equate to an annual levy of $154.
The paper argues that removing the levy on insurers would save the average household with house and contents insurance about $250 a year.
It says the government would ask the Independent Pricing and Regulatory Tribunal to monitor insurance premiums to ensure the savings are passed on by insurance companies.
The paper canvasses the possibility of a cap on the levy to protect the owners of the most expensive properties from paying excessively high levies, but notes that doing so would increase the amount that would have to be paid by owners of less valuable properties.
The paper also raises the prospect of an additional charge on vehicle registration to meet some of the funding, but does not suggest by how much. It says that on average motor vehicles account for 17 per cent of all call outs and suggests 17 per cent of the total funding could be met by increasing registration costs.
The chief executive of the Insurance Council of Australia, Rob Whelan, welcomed the discussion paper, noting that Western Australia, Queensland, South Australia and the ACT had abolished similar levies, while Victoria would do so next year.
The president of the Local Government Association of NSW, Keith Rhoades, said switching to a broad-based property levy would improve the transparency of the funding system and drive down insurance premiums.
A spokesman for the NRMA said it would oppose any increase in registration costs.
”The pockets of motorists are only so deep and the community would rightly assume that the considerable taxes they pay are collected to fund these very government services,” he said.
The government is inviting feedback on the discussion paper until October 8.
FBEU will be putting out info on why very soon…..