NSW to get new Emergency Services Property Levy in 2017

The NSW Government has recently announced that a new property tax is to be introduced to help fund the fire and emergency services which includes firefighters and SES workers.

From 1 July 2017, the NSW Government will eradicate the Emergency Services Levy (ESL) on insurance policies and will replace it with an Emergency Services Property Levy (ESPL) that will be paid alongside council rates.

Currently, the funding of the fire and emergency services comes down to those with property insurance, but this new reform will mean this responsibility will fall on to all landowners, creating a much fairer system as not everyone has property insurance.

“Under the current funding model, NSW property owners who insure their properties are subsidising households who don’t purchase contents or building insurance,” NSW Treasurer Gladys Berejiklian said.

“Fire does not discriminate and the community rightly expects that firefighting and SES services will be available to everyone in their time of need. It is also fair to expect all property owners to pay their share for these vital services.”

So how will this new reform affect residential property owners? According to the NSW Government, the vast majority of insured residential property owners under the new ESPL reform will actually be better off, and the average insured property owner will actually save approximately $40 per year rather than be out of pocket.

According to modelling, property insurance premiums under the new reform is expected to fall by around $200 on average every year, whilst the average cost of the ESPL will be approximately $160.

It is important to note though that the new ESPL will not reduce levels of funding to the State’s fire and emergency services and it will also be budget neutral, meaning that no extra revenue will be raised for NSW.

This new reform will allow NSW to move into line with all other mainland states, whilst introduce a fairer system of funding the fire and emergency services which will help to reduce the high levels of underinsurance across the state.

Victoria introduced a property levy in July 2013 with its aim to help reduce the level of under-insurance within the state.

It is estimated that 810,000, or 36 per cent of properties in NSW do not have home and contents insurance.

Professor Allan Fels AO will be appointed as Emergency Services Levy Insurance Monitor by the Government, and it will be his responsibility to make sure insurance companies are actually passing on these cost savings to the consumer. For insurance companies that offer unreasonable prices, they will face fines of up to $10 million which is effective immediately until 31 December 2018.

Professor David Cousins AM will also be appointed as Deputy Monitor.

Minister for Emergency Services David Elliott said the ESPL would support the State’s emergency services and make sure they had the resources required to continue to protect homes and save lives.

“The safety of our communities is what matters most and our frontline emergency service workers will show up at your house regardless of whether you are insured or not,” Mr Elliott said.

He also stated that “This reform will ensure we all share the cost of that life-saving service.”

Following extensive public consultation in 2012, the NSW Government will now consult with key stakeholders, such as the insurance industry and local government, on the implementation of the reforms.

The local government will have the responsibility of collecting the new levy on behalf of the State, and unimproved land values will determine what this levy is. Depending on the category of the land, this will determine different property-levy rates and the Government is also considering land classifications such as residential, commercial, farmland and public benefit land.

New legislation to enact the reforms is expected to be introduced during the first half of 2016 and discounts will be made available to concession cardholders and pensioners.
Published on 15th of December 2015 by Marty Stanowich
Marty Stanowich
Marty Stanowich

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