The NSW Government has released a consultation paper outlining property-based options to replace the emergency services levy on insurance, as it moves forward with funding reforms.

Treasurer Daniel Mookhey and Emergency Services Minister Jihad Dib say the consultation is designed to ensure new arrangements deliver the best outcome.

“The time has come for NSW to reform the emergency services funding system, but reform requires a clear objective, good faith and respect for all parties who will be affected by change,” the ministers say in the paper.

“The NSW Labor Government has learned from the mistakes of the former government, which did not proceed with its fire and emergency services levy in 2017.”

Options include models based on property capital improved values, unimproved values and gross rental values. The paper also suggests a fixed charges option that could vary depending on residential, commercial, industrial and farm land use categories, or reflect services costs.

The Government says emergency services funding needs are expected to rise as climate change drives more frequent and intense extreme weather events, and a rising levy under current arrangements would make insurance more unaffordable.

NSW Treasury estimates the total annual cost to the economy of flood and bushfire will increase from $7 billion in 2020-21 to $24 billion by 2070-71.

The consultation paper also seeks feedback on arrangements to ensure the removal of the levy on insurance is passed on through lower premiums, and asks about the length of the transition period and whether other arrangements should be considered.

“To address concerns that insurance companies would not fully pass on the benefit of removing the emergency services levy to consumers, the NSW Government will establish an insurance monitor,” it says.

Mr Mookhey says public feedback is an important step in the reform.

“We’re encouraging industry stakeholders and the wider community to express their views now so the new funding model for emergency services in NSW is fair, efficient, simple and adapted to the future impacts of climate change.”

Emergency services agencies are estimated to require contributions of $1.9 billion to fund their operations in 2023-24, with the levy on insurance premiums providing $1.4. billion.

The consultation paper is open for feedback until May 22. More details can be found here.