NSW State Government Backs Down on the Fire and Emergency Services Levy

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Last week the Lane Cove Council sent out an email advising ratepayers the new FESL will be included in their next rates bill.   In our week in review, ITC advised ratepayers to be prepared for “bill shock” when they received their next rates notice.  The NSW State Government had instructed councils across NSW to collect the levy which was then paid to the State Government. The levy was to be used to support the work of Fire and Rescue NSW, the NSW Rural Fire Service and the NSW State Emergency Service in protecting the community from fire, flood, storms and other natural disasters.  You can find out more about its intended operation here.

The NSW Premier announced today (30 May 2017) that the State Government will delay the introduction of the Fire and Emergency Services Levy after voter backlash from residential and commercial ratepayers. This backdown came up after media reports highlighted that many ratepayers could face levy increases of three or more times.  This is in direct contrast to the government’s plan to spread the cost of funding essential services by introducing this new levy.

Below is the Media Statement released today by the NSW Treasurer and NSW Premier:

FIRE AND EMERGENCY SERVICES LEVY TO BE REVIEWED TO ENSURE FAIRNESS

The NSW Government will defer the introduction of the Fire and Emergency Services Levy (FESL) to ensure small to medium businesses do not face an unreasonable burden in their contribution to the State’s fire and emergency services, Premier Gladys Berejiklian and Treasurer Dominic Perrottet announced today.

Ms Berejiklian said that in the majority of cases across NSW, fully insured people would be better off under the new system, however it had become clear that some fully insured businesses were facing unintended consequences.

“We are a Government that listens, and we have heard the concerns from the community, and we will take the time to get this right,”Ms Berejiklian said. “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.”

Mr Perrottet said that in a number of cases identified so far, the lived experience has not matched the intention of the reform for commercial and industrial sectors, particularly for small and medium businesses. “The FESL is a complex reform and we always knew there would be challenges during the transition phase,” Mr Perrottet said. “It’s not enough for this reform to work on paper – its real-life implementation has real life consequences for families and businesses, and we need to make sure they are not placed under unfair strain.

“We are committed to reducing NSW’s high rates of under insurance and to making the funding of our fire and emergency services fairer – but we want to get this right.” The NSW Government will work with local government, fire and emergency services, the insurance industry and other stakeholders to find a better and fairer path forward.

The Fire and Emergency Services Levy will continue to be collected via insurance policies until the NSW Government has completed its review of the policy, and the funding requirements of fire and emergency services agencies will be met in full. The FESL is revenue neutral, raising no more than the amount required to fund the State’s fire and emergency services. The Insurance Monitor will oversee a smooth continuation of the existing system and ensure insurance companies collect only the amounts necessary to meet fire and emergency services funding requirements.

The National Insurance Broker Association CEO Dallas Booth said:

“It is not yet clear what will happen in relation to ESL levy on insurance premiums after 1 July 2017.  NIBA expects to attend a meeting with the Government and insurers later this week to discuss the issue.”

NSW would have been the last mainland state to abolish the ESL, which has accounted for a 20 per cent increase in insurance premiums for NSW households, driving the cost of home and contents cover higher than any other state or territory in Australia.

The government will now work with local government, fire and emergency services, the insurance industry and other stakeholders to find a “better and fairer path forward”.

In summary:

Lane Cove Council ratepayers will NOT be charged the Fire and Emergency Services Levy (FESL) when they receive their 2017-18 rates notice In July. The deferral of FESL for the 2017-18 period is not expected to delay the printing and sending of notices to Lane Cove City ratepayers as the announcement occurred before the rates notices were finalised.


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