Good politicians learn early in their careers how to turn a backflip into a display of leadership. And so it was on Friday morning when Victorian Premier John Brumby stunned everyone by announcing the abolition of the insurance-based fire services levy (FSL).

It’s a significant backdown by a man who has steadfastly resisted previous attempts to move the state’s fire services funding to a more realistic footing.

So while we all have every right to raise a glass and toast a rare victory for political common sense, we should consider exactly what drove Mr Brumby and his government to do an about-turn and concede that a better way to fund fire services really does exist.

The FSL issue has been a hot potato in regional Victoria for the past 10 years, and the ALP government has previously displayed considerable skill at finding a way past it.

Despite the soulful comments on Friday by State Treasurer John Lenders about “taking the squeeze off the cost of property insurance”, the politicians have been aware for many years that their FSL was the cause of the squeeze.

They’ve held the line against the recommendations of six high-level inquiries and reports – including the HIH Royal Commission in 2003 – which all called for the abolition of the FSL.

Mr Lenders says the existing state government inquiry and the royal commission’s findings “have provided the Government with enough evidence to move to a property levy” – which makes one wonder what they have discovered now that wasn’t obvious before. They’re also going to examine alternative funding systems…

Despite the power of the economic, social and equity arguments successive Victorian governments have had to withstand, political expediency is the main reason Mr Brumby has accepted Recommendation 64. Put simply, he needs the regional electorates to get his party re-elected on November 27, and the extraordinary cost of the FSL has become an important issue in the rural areas.

Popular Liberal premier Jeff Kennett was tipped out of office when the regional electorates turned against him in 1999. The strategist who recognised country voters’ unhappiness and built the ALP’s rural power base was John Brumby.

In 2002 then-Premier Steve Bracks headed off a well-funded and focused pre-election FSL campaign by a coalition of insurance, business and rural interests when he announced an inquiry into the FSL – with the results to be released a few months after the election.

It stopped the campaign dead, but the inquiry that resulted was concentrated within the state treasury, with insurers’ offers to supply detailed research declined. It came down solidly on the side of retaining the FSL, which made it a standout among official inquiries. The Treasurer at the time was John Brumby.

Then there’s the Victorian Opposition, which Mr Brumby must neutralise if he’s to retain the ALP’s popularity in rural areas in November. The Liberal/National coalition, in power and in opposition, has long shared the view that taxes on insurance premiums are a wonderful cash cow. But this time around Opposition Leader Ted Bailleau has sniffed the changing rural winds and embraced every one of the Bushfires Royal Commission’s findings – including, of course, Recommendation 64.

Mr Brumby, whose government has yet another inquiry into the FSL running at present – with the results coming out four months after the next election – has found himself caught between the Opposition rock and the hard place of regional voters paying world-record premium taxes.

As electors have proved at the federal level, they’ll take only so much. Mr Brumby would have found it very difficult to brazen his way through the next state election using the excuse of yet another FSL inquiry, especially now the Opposition isn’t playing the game.

Much better, then, to show leadership by throwing the Government’s full support behind the royal commission’s call for the abolition of the FSL.

July 1 2012 is the date set for the implementation of the new funding system, which we can confidently predict Mr Lenders will discover from all the submissions to successive government inquiries should be based around local government property taxes. 

That date is a convenient two years out from the 2014 election. That will hopefully be long enough for all those who have been dodging the FSL by not insuring to have absorbed the financial pain and moved on.

While Tasmania has a limited form of FSL, it’s small enough not to cause the sort of policyholder angst the largest two mainland states feel. So the next area of concentration for the insurance industry’s anti-FSL efforts must logically be NSW, although it’s going to be tough to get that state’s coalition opposition to commit to such a reform.

With the ALP government of Kristina Keneally fractured, Opposition Leader and premier-in-waiting Barry O’Farrell has no political reason to abandon the emergency services levies cash cow. Not yet, anyway.

In the meantime, let’s toast the impending abolition of the Victorian FSL – no matter what brought it about – and congratulations to all who worked so hard for its downfall.