A NSW parliamentary inquiry into removing the insurance-based emergency services levy has called for submissions on an options paper with five alternative models.

The options each shift funding to property owners, with tiered fixed charges based on land values across residential, commercial, industrial, farm, public benefit and government categories.

“This inquiry is an opportunity to investigate and consider the different funding models proposed by the government to the current emergency services funding system,” committee chair Jacqui Scruby said. 

“The Committee wants to make sure that any potential changes to this model are fair, simple, efficient and sustainable.” 

The discussion paper says proposed changes ensure all property owners make a minimum contribution for funding emergency services and contributions are aligned to owners’ capacity to pay. The change would sever the link between the levy and premiums, removing a disincentive against taking out adequate cover. 

The options use land values as a measure of property owners’ capacity to pay, but concessions would be provided to pensions and consideration given to hardship provisions. 

The paper says around 55% of insured properties in NSW would have incurred a lower levy under the replacement compared to the ESL and insured residential property owners would have saved an average of $65 a year. 

“The Government is committed to a funding approach that is fairer, more sustainable, more transparent and improves insurance affordability in the face of a changing climate and rising costs,” it says. 

The ESL’s impact on decisions to not take out appropriate levels of insurance makes it one of the most economically damaging taxes in NSW, according to the paper. 

“It is estimated that, over time, replacing the ESL with a more efficient property levy would add around $1.8 billion to the NSW economy, in today’s terms, or the equivalent to increasing annual household incomes by around $300 on average,” it says. 

Submissions are due by June 19 and the committee is due to report by November 18. 

The options paper is available here.