The insurance industry has welcomed a recommendation by the 2009 Victorian Bushfires Royal Commission to axe the fire services levy in favour of a property-based fire funding model.

The royal commission handed down a final report on Saturday after an 18-month inquiry that evaluated the causes and circumstances of the fires that devastated parts of Victoria in January and February 2009, killing 173 people.

The royal commissioners, Bernard Teague, Susan Pascoe and Ron McLeod, have made 67 recommendations to be considered by the Victorian Government and other stakeholders.

Number 64 recommends “the state replace the fire services levy with a property-based levy and introduce concessions for low-income earners”.

The commissioners have criticised the existing system as inequitable and opaque, and instead advocate a property-based system to replace the current model of fire services funding, which relies on insurance buyers to fund around three-quarters of the annual budget for Victorian fire services.

The Victorian Government has previously advised it will consider the inquiry’s findings in an ongoing state fire services funding review that is due to deliver a white paper by the end of February.

Allianz Australia MD Terry Towell responded to the royal commission’s report with a scathing attack on the Victorian Government, dismissing its ongoing fire services funding enquiry as a “smokescreen” used to delay responding to the concerns of the commission.

Mr Towell, who emphasised that he wasn’t speaking in his capacity as President of the Insurance Council of Australia (ICA), said the Brumby Government “is well aware of the shortcomings of the current fire services levy system, with the royal commission report simply the last in a long line of independent and expert reviews that have highlighted the flaws of taxing insurance to fund fire services”.

“The Government’s past refusal to countenance any real reform of the FSL represents a failure of policy leadership. However, the royal commission has given the Government an opportunity to move on from the past and regain some policy credibility.

“The question is, will the Government grasp this opportunity or continue its sorry record of policy failure on fire services levy reform?”

National Insurance Brokers Association CEO Noel Pettersen called on both sides of Victorian politics to champion a more equitable method of fire services funding ahead of the state election on November 27.

ICA CEO Rob Whelan meanwhile welcomed the findings.

“Recommendation 64 of the final report recognises the position that the general insurance industry has put forward for many years – namely that the levy is an unfair and economically inefficient tax that lacks transparency,” he said.

CGU CEO Duncan West also weighed in, calling on the Victorian Government to listen to the long-held concerns of the community and move to a fairer system of fire services funding.

“The fire services are an integral part of every safe community; as such they should be funded appropriately,” he said. “We believe that fire services funding should be drawn from property rates and motor vehicle registrations, a system that better reflects how the fire services are used.”

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