Failing to reform the Emergency Services Levy (ESL) on insurance products in the New South Wales (NSW) State Budget forces home and car owners and small businesses to continue paying the most expensive insurance premiums in Australia, according to the Insurance Council of Australia (ICA).
The latest NSW State Budget ignored the possibility of scrapping the ESL on insurance products, with the Budget Papers revealing that insurance customers in the state will pay over $1 billion in ESL in 2022/23 to fund measures associated with the 2020 NSW Bushfire Inquiry and in response to the 2021 and 2022 floods. Including council contributions, ESL payments are estimated to be 10% higher, or $520 million more than forecast at last December's mid-year review.
Commenting on NSW's failure to reform the ESL on insurance products, the ICA emphasised that no other mainland state taxes insurance customers with the cost of delivering emergency services – with Tasmania still processing removing its levy – leaving NSW residents the only insurance customers paying tax that adds 30% to 50% to premium cost.
“We support the NSW government's positioning as a driver for major reform to the state's budget, but one of the most inefficient and punitive taxes being levied on insurance customers remains untouched,” said ICA CEO Andrew Hall. “New South Wales will soon be the only state to require those who insure to pay for the cost of delivering emergency services. This is not only unfair; it also has terrible public policy outcomes that discourage adequate insurance coverage.
The ICA previously called on the state and federal governments to invest $232 million in making homes and communities more resilient against extreme weather events, estimated to deliver a return on investment of $5.6 billion by 2050.
“In a state that is recovering from the worst flood and bushfire events in modern history, and with extreme weather events only getting worse, not better, we can't afford not to include insurance levies and taxes in the government's reform agenda,” Hall said.
