Though the insurance industry has rightly welcomed the recommendations of the 2009 Victorian Bushfires Royal Commission released at the weekend, actions will speak louder than words.

For the insurance industry, no recommendation resonated more strongly than number 64 of the royal commission’s final report: “The state replace the fire services levy with a property-based levy and introduce concessions for low-income earners.”

Commentary around recommendation 64 shows Commissioners Bernard Teague, Susan Pascoe and Ron McLeod carefully considered the arguments of insurers and others in opposition to the existing system. And on the key points, they have agreed.

The existing system used to fund around three-quarters of the fire services budget is roundly condemned in the final report, with the commissioners using words like “inequity”, “disproportionate” and “unreasonable”.

“A disproportionate share of the cost of providing fire services benefitting the entire community falls on insurance policyholders,” the commissioners said, summing up the industry’s argument in concise fashion.

But moving to a property-based system isn’t as easy as it might sound. It’s a tough sell politically, because local councils don’t want to end up as the state’s tax collector through property rates, while political parties know the introduction of any new tax is likely to cost them votes. And there’s a state election due on November 27.

Despite increased publicity and growing opposition to the fire services levy, it largely remains an obscure “hidden” tax buried away in the minutiae of insurance policy disclosure.

Imagine the likely response if the Victorian Government instead moves to tack a new levy on car registration fees, which are already higher than comparable jurisdictions. And rising property rates are already the lifeblood issue of the suburban newspapers.

Their front pages will be puce with outrage if rates were to rise dramatically to include the levy, and the Victorian Government knows it.

As the royal commission itself acknowledges, the existing system is “a stable source of revenue, is simple to administer and has low administration and compliance costs”. That is, at least, for the recipient of all that money.

That doesn’t mean the governments of Victoria, NSW and Tasmania have no other option other than to put the issue in the too-hard basket. After all, they need only look at WA and SA for inspiration. Those states dropped the levy and moved across to a property-based funding model. The royal commission heard direct evidence from the WA and SA schemes in particular, and notes that although local opposition was met, the two states’ arrangements “had a strong measure of public acceptance”.

It is hard to disagree with the strong sentiments of Allianz MD Terry Towell, who says the Victorian Government is “well aware of the shortcomings of the current fire services system”.

Ministers can’t have missed the conclusion of other previous inquiries which have reached much the same conclusion as this latest royal commission. The reviews of the HIH Royal Commission, the NSW Independent Pricing and Regulatory Tribunal and the Henry Tax Review are just three relatively recent examples in a long line of reviews that criticise the fire services levy for putting the onus of funding on those responsible enough to take out insurance.

There’s a strong belief that if Victoria changed its levy system, NSW would feel obliged to follow suit. Tasmania’s limited collection is less controversial, and NSW’s political woes are a major disincentive to near-term change.

But the Victorian Governments is swimming against a strong tide, and its one trick of defending the levy on the basis it adequately aligns fire risk with the cost didn’t win over the royal commissioners.

“Fire and bushfire risk is only one of many risks factored into the calculation of insurance premiums,” the final report states. “Domestic property premiums are a very imperfect proxy for fire and bushfire risk.”

The commissioners also disagree “with the state’s suggestion that, in the absence of further data on insurance levels, the state is not in a position to conclude that a change to a more equitable model is necessary”.

“In the royal commission’s view, it is sufficiently clear from studies conducted by the Australian Securities and Investments Commission and the Insurance Council of Australia, and from evidence tendered to the royal commission, that a proportion of homes are not covered by building insurance, a much greater proportion of householders do not have contents insurance, and many households are underinsured.”

Its final report gives the Brumby government a powerful reason to replace the fire services levy with a property-based system. And Victorian Liberal Party leader Ted Baillieu gave Mr Brumby another reason at the weekend when he promised to implement all 67 of the commissioner’s recommendations should his party win the November election. That’s a big call from a party which has been silent on the issue for many years.

Whatever its form, it’s time for the Victorian Government to do what elected representatives are supposed to do: act in the interests of the people.