NIBA calls for NSW ESL to be scrapped

The National Insurance Brokers Association of Australia (NIBA) has made very strong points to scrap the NSW ESL in its submission to the inquiry into the fire and emergency services levy.

The submission states the important role insurance brokers play in Australia and then goes on to say that property owners who insure property located in New South Wales pay three taxes and charges to the Federal and State Governments which have been described as a “tax on a tax on a tax”.

NIBA CEO, Dallas Booth states in the submission that the Royal Commissions (HIH Royal Commission, Victorian Bushfires Royal Commission, others), Inquiries (Henry Tax Review, others) and numerous Parliamentary and other investigations have consistently found these taxes to be unfair, inequitable, and totally contrary to good public policy

All mainland States and Territories, other than New South Wales, have abolished their fire and emergency services levies, with Victoria being the most recent in 2013, following strong recommendations from the Victorian Bush Fire Royal Commission. The Australian Capital Territory has taken one step further and has abolished stamp duty on insurance policies in that jurisdiction.

Following the Government’s initial announcement to remove the levy on insurance premiums as from 1 July 2017, virtually all insurers had removed the levy on insurance premiums by April 2017. As a result, policyholders – domestic and commercial – who took out or renewed policies during April, May and June 2017 paid little or no ESL levy on their insurance premiums. The insurance industry had fulfilled its commitment to remove the levy by 30 June 2017.

NIBA believes that following the Government’s decision to defer the introduction of the ESL property levy, and continue the ESL on insurance premiums, those who paid little or no levy in April, May and June 2017 will face significant “bill shock” in April, May and June 2018.

This “bill shock” will occur at a time when insurance premiums are increasing across the board because of losses sustained in property insurance markets in recent years.

NIBA has submitted that there are at least two funding models – Victoria and Western Australia – which are clear and successful precedents for the introduction of an emergency services property levy in New South Wales.

NIBA has expressed serious concerns that those who have previously received the benefit of the emergency services across NSW without paying a contribution towards the cost of those services, still continue to have the benefit of this very favourable position. Other domestic and commercial policyholders have no such benefit.

NIBA has categorically maintained that it does not seen any justification for the maintenance of a seriously unfair and inequitable statutory levy. There have been no responses to the serious issues and concerns set out in this submission by any party.