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Lawyers for Royal Commission into Victorian bushfires recommend Fire Services Levy be abolished

By Roslyn Atkinson

The long fight against Victoria’s Fire Services Levy (FSL) has received a significant boost, with a review of evidence at the Royal Commission into the Black Saturday bushfires concluding that the levy is unfair and should be abolished.

NIBA has welcomed the development as its puts further pressure on the Victorian Government to replace the levy with a broad-based property tax.

Lawyers working on behalf of the Royal Commission sifted through all the evidence about the FSL presented by insurers, industry bodies such as NIBA, experts and the Victorian Government.

The lawyers concluded that the levy – which collects $510 million a year to help fund firefighting services – is inequitable and should be replaced by a broad-based property levy.

“The Commission has heard sufficient evidence … to recommend the abandonment of the fire services levy,” wrote Counsel Assisting the commission, in a report submitted on Friday, 16 April.

“The property-based models (such as have been implemented by Western Australia or South Australia) are fairer and more transparent and should be preferred.”

Interestingly, Counsel Assisting made this recommendation despite concluding that removing the levy would not make much difference to the number of people who take up property insurance.

Nevertheless, the lawyers believed the burden of funding fire services should be spread more widely across the community, as long as there are “exemptions and concessions for those members of the community on low to middle incomes who would be disadvantaged by the imposition of a levy that they are not currently required to pay”.

The recommendations by Counsel Assisting are almost certain to be adopted the three commissioners led by the Hon. Benard Teague when they make their final report in July.

It adds to growing pressure on the Victorian Government to remove the unpopular levy. It is likely that the FSL will also come under attack by the Henry Tax Review, which is expected to be unveiled by the Rudd Government ahead of the Federal Budget on 11 May.