NSW Government ignores Emergency Services Levy issues

The NSW Government believes there is no need to change the NSW Emergency Services Levy arrangements, according statements quoted in the Australian Financial Review today.

Despite 15 years of recommendations that this unfair and unjust levy should change, including recommendations from the Victorian Black Saturday Bushfires Royal Commission, the NSW Treasurer believes there is no need to change the current system. The Victorian Government accepted the Royal Commission recommendation, and changed the emergency services funding from a levy on insurance premiums to a levy on property, as all other mainland States and Territories have done except New South Wales.

Strong concerns that the cost of property insurance taxes and levies in NSW are leading to under-insurance and non-insurance are being ignored.

And to make things worse, the ESL levy in 2020/2021 will raise over $1.1 billion from insurance policyholders (NOT the broad range of property owners), an increase of 45 per cent on the amount raised in 2018/2019.

NIBA wrote to the NSW Premier and the NSW Treasurer earlier this week, calling on the Government to complete the reform of the Emergency Services Levy that was started in 2016, but was deferred in 2017 (read the letter here). We made it very clear that we do not need to wait for another Royal Commission to recommend the reform of this unfair and unjust revenue stream.  It was extremely disappointing to read the Treasurer’s comments today.

The current NSW ESL levy will raise $898 million from insurance policyholders in the 2019/2020 financial year. The Government has indicated it proposes to collect $1,143 million from policyholders in the 2020/2021 financial year. This is a massive impost, and will be 45 per cent higher than the amount raised in 2018/2019.

NIBA will work with the Insurance Council of Australia to keep up the pressure on the NSW Government to follow the lead of the other States and Territories, follow the recommendations of any number of Royal Commissions, reviews and inquiries, and abolish this unfair and unjust levy.

In the meantime, insurance brokers will need to warn clients to expect a significantly higher ESL levy on their insurance premiums in the 2020/2021  financial year.