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Insurers, brokers back Tasmania fire levy reform

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Insurers and brokers have backed a Tasmanian shift to a property-based levy to fund fire and emergency services in submissions lodged ahead of a deadline last week.

“The current funding model for fire and emergency services in Tasmania is a poorly targeted mechanism for distributing the cost of fire and emergency services,” IAG says.

“A broad-based property levy is the most equitable and efficient funding option and should replace the current funding regime.”

Tasmania’s fire service funding model currently involves a property tax collected by local government, a fixed fee applied to motor vehicle registrations and a levy on commercial, marine and cargo and aviation insurance policies.

Options to reform the funding arrangements were set out in a Treasury paper, as part of a wider review of the Fire Service Act.

The National Insurance Brokers Association (NIBA) says businesses that own their premises pay both a fire service contribution on their council rates and a levy on their premiums for the same property under the current model.

“The burden placed on businesses to fund the states fire services is not proportionate to the risk they pose,” it says in a submission.

NIBA supports moving to a single-rate property levy while also continuing a motor vehicle levy, given the fire services’ role in responding to road accidents.

A proposed additional charge for bushfire-prone areas is also supported to underpin resourcing to protect homes.

A review completed by Mike Blake last year, and released with the latest discussion documents, found underinsurance was an unintended consequence of the fire service levy.

“It is an issue which is only becoming more pressing with the increasing incidence of extreme weather events and longer fire seasons as a result of climate change,” the Insurance Council of Australia says.

“Addressing underinsurance is one of the many strong policy reasons why across Australia there has been a move away from funding emergency fire services via a levy on insurance premiums.”