Fire levy hosed down

HouseFireFor many years NSW has had a Fire Levy to fund firefighting and emergency services (such as the SES). The levy has been collected by insurance companies as a component of home insurance policies. This meant that only people paying home insurance were funding the services that are free to all households.

In a move to a more equitable scheme, the State government introduced a new form of the levy that would apply to all properties in NSW. The levy was to be based on the land value of a property (not its resale value). However, due to protests about the cost of the new levy, the government has decided to scrap it.

As an example as to why people were protesting about the new levy one household fronting high risk bushland in Chatswood was paying $91 p.a added to their home insurance. Under the new levy they would be paying $332 – nearly four time more.

The government has claimed that under the insurance base levy, premiums paid covered 80% of the cost of the service with 20% being directly funded by the government. The new levy was to be ‘revenue neutral’ meaning 100% of the costs would be raised by the levy. Do the math.  The same household would expect to pay around $110. Yet the new levy was three times higher than that.

It is obvious that there were glaring flaws in the levy as it was legislated. However, the equity principle of charging all households, not just some, has merit as does the concept of a ‘revenue neutral’ levy (similar in fact to how our Council garbage collections are funded).

Let us hope that in any new legislation the government gets it right.

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