Prior to my retirement in 2007, I held a senior executive position with the NSW Rural Fire Service for more than 30 years. I have an intimate knowledge of the manner in which the service is funded and the needs of the volunteers.
I have no doubt the government proposal to replace the existing funding arrangements with a property based levy (ie property tax) for all emergency services, will jeopardise the tradition, culture and independence of the NSW Rural Fire Service, which has been fundamental in its development as a world leader in excellence and service delivery.
The present system operating in NSW is based on a mixture of private and public funding is envied by volunteer emergency service workers in other states and territories because of its independence, flexibility and brigade-level involvement.
Insurance policy holders provide the bulk of the funding through levies collected by all companies providing coverage for various forms of insurance throughout NSW, including motor vehicle insurance.
This partnership of funding was established over 60 years ago in recognition of the unique co-operative nature of bush fire management in NSW.
Each year the overall expenditure is met from three sources:
• State Government – 14.6 per cent;
• Local Government – 11.7pc;
• Insurance Industry – 73.7pc.
Insurance policy holders are major beneficiaries of our emergency services in that claims for property loss are minimised by an efficient organisation and savings in this regard are reflected in premium costs and claims experience. The argument for the withdrawal of the insurance industry from the partnership is centered around a perception that household insurance policy holders are subsidising those within the community who choose to not insure.
Is this a valid argument? I don't believe it is for the following reasons:
• Data provided by the Australian Bureau of Statistics from the Household Expenditure Survey confirms that over 90pc of home owners in NSW carry building insurance. [In some cases it is a requirement of lending institutions to indemnify assets which are mortgaged].
• Homeowners who choose not to insure are captured, in part through local council rates and state government taxes (the other partners in the current scheme).
• The competitive nature of the insurance industry allows homeowners to test the market for low premiums which include statutory contributions to emergency services.
• Any new tax payable by the community will be determined by the government annually.
Government would have to recover the loss of stamp duty and GST on insurance policies, unpaid rates if it is to be collected by local councils on behalf of the government, costs associated with all emergency services as well as administrative charges levied by local government councils for collecting the levy on behalf of the government.
• Funding allocations would be very much influenced by “fixed charges” (ie. capital works programs, salary and wages of all emergency service agencies, including paid fire fighters to the detriment of volunteer brigades and SES units.
It is important to note that the figure of 36pc uninsured quoted consistently by those with a vested interest relates only to contents insurance and not building insurance.
I recall that when the state government introduced land tax some years ago we ignored it as it was directed at those who could afford a second property valued at more than a threshold amount determined by the Office of State Revenue. As inflation and property values increased more properties were captured every year.
Land tax assessments now apply to hundreds of thousands of properties in NSW.
The proposed tax will now form part of land rates as assessed and collected by local government councils.
Will it capture the “true cost” of providing this service to the public (ie. local fundraising, indirect costs met by councils?)
Furthermore, why should all landowners meet the cost of providing emergency services when more than 25pc of reported incidents attended by the NSW RFS are motor vehicle related and currently captured by the contributions levied on insurance companies for motor vehicle and motor cycle insurance policies.
I fear for our community and the future of the “volunteer” emergency services as we know and respect them today if major changes to the funding arrangements are introduced. Yes, I agree that some improvements could be made to the current system, but why throw the baby out with the bath water in an effort to capture five to 10pc of households that are uninsured and risk premium adjustments not reflecting the true savings to the insurance industry.