It was the backflip to end all backflips; the day NSW Premier Gladys Berejiklian and Treasurer Dominic Perrottet pulled the rug out from under anticipated reforms on the Fire and Emergency Services Levy (ESL), one month before it was due to begin.

Despite two years of ironing out the kinks – begun in 2015 when Ms Berejiklian was treasurer – and despite passing legislation (the Fire and Emergency Services Levy Act 2017 No 9) in March this year, to ensure the reform would progress, the state government got cold feet and put the deferral down to ensuring “property owners, especially small to medium businesses do not face an unreasonable burden in their contribution to the state’s fire and emergency services.”

This shock about face was despite local government, who were to be tasked with collecting ESL payments from property rates, racking up their own costs to communicate how the ESL reform would impact relevant rate payers.

In fact, many insurers had already removed the levy and adjusted their systems only to have to reverse the process, adding further costs.

For now, and for an unspecified time period, insurance premiums will continue to be taxed as before and policyholders will continue to bare the cost – while the uninsured and underinsured do not – despite assurances the total cost of insurance after June 30 would drop.

All other mainland states in Australia have already abolished ESL’s on insurance recognising that it’s an unfair & unjust tax burden on those prudent enough to purchase insurance, particularly small business. So why not NSW?

A 2011 Insurance Council report showed 45% of residential and 49% of commercial property owners contributed the ESL via their insurance premium but via property valuation calculation residential contribution will increase to 58% and commercial property owners reduce to 26.6% Sounds like a better deal for business.

Consumers who had already seen significant reductions in the ESL charged on their insurance now have that indefinitely reversed.

The uninsured and underinsured continue to avoid contributing to the $950 million emergency services upkeep but like anyone facing an emergency will be the first to call for help.

The NSW Parliament passed legislation in June 2017, to reinstate the insurance-linked ESL.

The legislation gives no definite timeline for how long the insurance-based levy will remain in place.

The new bill says the switch has been postponed to “a start date appointed by the regulations”

“Any such regulation must be published on the NSW legislation website at least one year before the start date,” an explanatory note says.

Budget papers show the insurance-based ESL is expected to generate revenue of $794 million next financial year, plus an additional duty of $79 million.

Deferral of the fire and emergency services levy was estimated to reduce revenue by $894 million.

Further reading from Prof. Allan Manning:

“NSW Businesses to pay 40% more for commercial property insurance than businesses in QLD & VIC”:

NSW Government continue to bend the facts to hide their ineptitude.