Fire and Emergency Services Levy Bill 2017

28th March 2017

Mr GREG PIPER ( Lake Macquarie ) ( 17:03 :26 ): I contribute briefly to debate on the Fire and Emergency Services Levy Bill 2017 and state upfront that I support the bill which I believe will create a fairer system and make home insurance costs more affordable for more people. Removing the existing emergency services levy [ESL] from home insurance premiums and adding a fire and emergency services levy [FESL] to the council rates on privately-owned properties will spread the cost of funding our emergency services more equitably. I had several initial concerns about this bill, mainly because I wanted to see safeguards in place that ensure insurance companies pass on the savings to their policyholders, that no significant costs are passed on to local councils that will now collect the levy, and that a proper strategy is in place to educate people about the changes. I believe that this bill will deliver those safeguards.

An officer of Lake Macquarie City Council reported that the legislation is generally sound and there has been good communication and engagement from the Government regarding impending changes. Some will see the rise in their council rates as a new cost burden or price gouge from local government, but the levy will be listed on the rates notices of property owners as a separate line item, while the Government will be sending letters to all property owners to explain the change. The council was quite complimentary of the level of engagement from the State Government, which is unusual. The council also told me that any added costs to council created by the new scheme have so far been satisfactorily met by Treasury.

I also note that the bill requires insurance companies to wholly remove the existing ESL from home insurance policies. One of my constituents who received his new home insurance policy this week said it already included details of the impending change and the amount by which his premium will reduce, should this bill pass through the Parliament and take effect from 1 July as planned. The Insurance Council of Australia has also indicated to me that the new scheme will make insurance more affordable and, more importantly, reduce the number of people who underinsure their homes, or do not insure them at all. On the Insurance Council's estimates, the average household will be $47 a year better off and I understand that has been the case when similar schemes have been implemented in other States.

I commend the Government for appointing Professor Allan Fels and Professor David Cousins as insurance monitors who will oversee the transition. Their experience in similar roles during the changeover in Victoria in 2013 will ensure the full benefits of abolishing the ESL from insurance policies are realised. I also note, however, that Insurance Council of Australia Chief Executive Officer Rob Whelan said that his own organisation will ensure that households gain the full financial benefit of shifting to the new system. While that is welcomed, with due respect to the Insurance Council of Australia I take that with a grain of salt. I hope it lives up to its words. I firmly believe this system is a fairer system and that it will spread the cost of providing emergency services to the people of this State. No longer will the cost of providing emergency services be a burden for only those with home and contents insurance. Rather, that cost will be spread across all property owners.

As a consequence, more people will be able to afford to insure their properties. It is concerning that about 5 per cent of all homes in New South Wales are not insured at all. I am told that in my electorate that figure is higher. Further, about two in five households do not have home contents insurance, meaning an unexpected event such as a bushfire could destroy more than a family's home, destroying livelihoods and leaving families with nothing. This bill will make insurance premiums more affordable and that can only be a good thing.

I note a number of the concerns raised by members of the Opposition about inequity in the burden that might be shared by people at the lower end of the income scale in particular. While I appreciate that this is a concern, if there is an overall reduction in the burden of insurances I think that will give more people an opportunity to afford to buy into insurance and that has to be a good thing. With due respect to members of the Opposition, Labor was in government for 16 years and it dealt with a number of issues that were difficult to manage. When we start to apply a cost to ratepayers or to people across the board there will be winners and there will be losers but we should try to reduce costs.

I do not know whether we can have a situation in which there will not be some burden on some party. However, this bill seems to have built into it a number of safeguards that should try to reduce that cost. I will listen intently to debate on the shadow Treasurer's foreshadowed amendments. It may well be that they could be adopted by the Government. Of course we know that is not going to happen, and we will deal with the bill as it stands. While there may be some good amendments which I might support on their merits, I would still then continue to support this bill. Overall, I applaud the Government on this reform, although I note that New South Wales has lagged behind other States, which began similar schemes several decades ago. Modernising the funding model for our emergency services is long overdue. I commend the bill to the House.

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