Treasury officials appearing at a NSW parliamentary committee inquiry into emergency services funding reform have highlighted trade-offs in property-based levy options. 

The committee put questions to Treasury, which produced a paper with five options for the inquiry, after insurers, business and other groups appeared during two days of hearings last week. 

Concerns raised included potential cost “cliffs” between property tiers, the use of unimproved land values as a capacity-to-pay indicator, impacts on commercial and industrial companies and whether an ad-valorem component should be included. 

Treasury economic strategy and productivity group deputy secretary Alex Heath said income data is held federally through the Australian Taxation Office. 

“The question then becomes, ‘what information is available in New South Wales that's best correlated with that ability to pay’, and I think we feel quite comfortable that, in where we are today, the unimproved land value is the best proxy that we have,” she said. 

The options paper also considers assistance through concessions for pensioners, hardship arrangements and transition arrangements, she said. 

Groups including the Property Council of Australia and Business NSW have criticised increased costs for commercial and industrial properties under the options. 

“It seems to us that the options paper’s stated design principles of ‘cost recovery, equity, efficiency, simplicity and sustainability’ are only achieved by reallocating costs to businesses to protect other cohorts,” the Business NSW submission says. 

Ms Heath said the incorporation of feedback in design decisions will be a matter for the government. 

“The purpose of this paper is to encourage these kinds of discussions, and so the value of getting those reactions through this committee, I think, has been proven,” she said. 

Treasury officials said the options paper provides greater transparency, taking into account lessons from the ESL reform effort abandoned in 2017, while modelling this time includes more extensive insurance industry and local government data and options based on tiers of fixed charges. 

NSW Treasury director property and revenue initiatives Ben Fitzgerald said fixed charge and ad valorem combinations are “conceptually possible” but add complexity. 

“Clearly, the more differences you add as you go through a tax structure, the more complex it becomes for people to understand and also to administer,” he said. 

The committee was advised it could request, through the Treasurer, further modelling or data if required. 

The Shopping Centre Council of Australia told the hearings that the exclusion of motor vehicles and government land from the proposed revenue base was the most glaring omission. 

“Our recommendation is that Treasury should be ‘sent back to the drawing board’,” CEO Angus Nardi said.