Brokers are furious over the Victorian Government’s lack of response to their concerns raised over a decision to raise fire service levies (FSL) in regional areas by 30%, according to risk expert and industry tax campaigner Allan Manning.

“This couldn’t have come at a worse time for regional businesses with insurance rates already going up,” Dr Manning, the MD of LMI Group, told insuranceNEWS.com.au. “They are really hurting.

“A lot of brokers have rung in this week really incensed over this. It’s a real kick in the guts to regional businesses.”

The Government has also quietly deferred the transition of the FSL to a property-based system by 12 months to July 2013. Dr Manning says it’s surprising the opposition Labor Party hasn’t jumped on the issue, considering it approved the removal of the FSL while in government.

“I at least thought the Federal Government would jump onto the issue, as the Victorian Premier has been talking about the carbon tax taking away jobs,” he said. “But what is this increase going to do to commercial insurance? The politicians have been very ordinary.”

The National Insurance Brokers Association (NIBA) spoke to state Treasury officials in Melbourne last week about the increases, but CEO Dallas Booth says he “didn’t get much of a response”.

He says the Victorian Government seems to have made its decisions in a budgetary context and there is little left to discuss.

He says the Treasury officers agreed to take NIBA’s concerns back to the minister, but he is not confident that will lead to anything.

NIBA also spoke to Treasury about deferral of the FSL transition to a property-based model.

“We have no real significant concerns about the preferred model, but the challenge is what is happening in the meantime with these rate rises,’ Mr Booth told insuranceNEWS.com.au.

The Municipal Association of Victoria (MAV) also met last week to discuss the implications of the new model, raising concerns over how it will be priced.

MAV President Bill McArthur says the State Government needs to maintain an equitable contribution for everyone in the framing of the levy.

The MAV and the Victorian Farmers’ Federation are also questioning whether the new levy should also be applied to motor vehicles, given that a large percentage of fire services’ work is related to road rescues.

Treasurer Kim Wells says there is no plan to extend the FSL revenue stream to motor vehicles.

He says the 2009 Victorian Bushfires Royal Commission only recommended the replacement of the FSL with a property-based levy and concessions for low-income earners.

He says the roll-out of the new system will commence in July next year to allow the insurance industry to completely phase out the tax by July 2013.

Insurance Council of Australia GM Risk and Disaster Planning Karl Sullivan says many different combinations could be applied in the transition.

“The fundamental point is that the insurance industry shouldn’t have to collect it and pass it on,” he told insuranceNEWS.com.au. “We are still working on a taskforce to resolve the transition arrangements, but it’s quite complicated.”

Individuals, businesses and residents have until September 30 to make submissions on the property-based levy proposals.