A few months (months!) ago, we explored in a blog the news that almost all Australian states and territories had agreed to abandon levies on insurance policies to finance emergency services in favour of a property-based charge. Now, this is a pretty hot topic. The Fire and Emergency Services Levy Act was supposed to come into effect on July 1st for New South Wales, as the last mainland state to use an insurance-linked levy.
However, according to a report from Insurance News, the New South Wales Parliament has passed legislation to reinstate the insurance-linked emergency services levy. This came after the Government suddenly backtracked from the move to a property-based charge last month. The legislation gives no indication of how long the insurance-based levy will stay. It no doubt came as a pretty big shock to the insurance industry.
So why the sudden back flip? Well, like most things, it has quite a lot to do with revenue. According to budget papers, the insurance-linked levy is expected to generate over $794 million in revenue. On the other hand, the deferral of the levy was estimated to reduce revenue by $894 million.
Now, I’m no mathematician by any means, but I can certainly crunch those numbers. Apparently so can New South Wales Premier Gladys Berejiklian. But the decision also came after backlash from residential and commercial ratepayers who were worried about unfair hikes in bill payments. It’s a divisive issue, that’s for sure. And it seems like no matter the decision, someone is going to be in the firing line. Stay tuned for the finale of this one, friends.
Words by Skye Jamieson