The Tasmanian Government has opened consultations on proposed fire and emergency services reforms that include ending funding provided through a levy on insurance premiums.
The levy on certain classes of business insurance varies according to the type of cover but the amount added to premiums ranges from 2-28%.
“This levy can have unintended consequences, including under-insured properties and, in some cases property holders paying more than one levy,” the Blake Fire Service Act Review published with the consultation details says.
The levy raised $21.39 million in the 2019 financial year, providing 25% of Tasmania Fire Service funds.
The collectible amount is not predictable and the levy doesn’t satisfy sustainability, stability, simplicity or equitable tests, the review says.
Dropping the levy would see Tasmania follow the trend in other states, with NSW currently the last mainland state still taxing insurers to fund fire and emergency services.
The report recommends replacing the insurance levy with a property-based alternative or another funding source, with transition arrangements to remain until a new system is in place.
Recommendations include engaging with the Insurance Council of Australia and property owners to quantify benefits from lower insurance premiums and consider how these might be shared with the broader community.
“It may well be reasonable to expect that, should commercial property insurance premiums decrease, those property owners be expected to pay a higher property levy,” the report says. “This should be explored as part of the transition arrangements.”
The Blake review makes 45 recommendations, including that the Tasmania Fire Service and the SES be integrated into a new Tasmania Fire and Emergency Services organisation.
Police, Fire and Emergency Services Minister Jacquie Petrusma says the Department of Treasury and Finance will release a separate options paper on potential funding models.
“The current Act is now 42 years old, and we want to ensure that the Tasmania Fire Service is underpinned by contemporary legislation that reflects the service delivery that is expected by the community now and into the future,” she said.
Michael Stevens, a policy professional who was Bushfire Recovery Coordinator for the devastating 2013 and 2019 bushfires, will lead the next stage of the reform work.
The Blake review built on previous work undertaken by the House of Assembly Standing Committee Inquiry into the State Fire Commission.