The Victorian Government has “let down” and “betrayed” voters by loading the Country Fire Authority’s budget with $250 million in capital expenditure before the introduction of a new property-based fire services levy (FSL), says tax reform campaigner Allan Manning.

Dr Manning, MD of LMI Group, made the comments in his submission to the Victorian Government’s options paper on the proposed property-based levy.

“It’s against every accounting standard,” Dr Manning said.

Interested parties have until Friday to comment on the options paper, and a number of lobby groups are understood to still be preparing their submissions.

The new property-based system to fund the Country Fire Authority (CFA) will replace the levy on property insurance premiums.

The need for a new system was one of the key recommendations to emerge from the 2009 Victorian Bushfires Royal Commission.

It had been flagged to start in the middle of next year, but Deputy Premier and Emergency Services Minister Peter Ryan says the rollout of the new collection system will be delayed until 2013 because of its complexity.

The delay has caused a furore in the insurance industry and regional Victoria and raised questions about the state government’s commitment to the new model – not least because this year’s FSL for regional Victoria has risen by 30%.

This year insurers will contribute $416 million of the CFA’s $536 million budget.

Dr Manning says loading 20 years of capital expenditure into the CFA’s budget has added “an enormous burden” onto home owners and business operators who are already facing steep hikes in their premiums due to a year of global natural catastrophes.

He recommends removing the capital expenditure component when calculating the new levy to avoid artificially lowering it.

Broadly, Dr Manning is in support of the new levy and recommends keeping it simple and easy to administer.

“Don’t over-complicate it. Keep it simple so people can’t avoid it,” he said.

He supports the collection of the levy via municipal rates but suggests councils should receive some sort of compensation for the extra work.

The Victorian Farmers Federation (VFF) is opposed to the old system but has reservations about the way the new one is likely to be imposed.

It proposes that any new levy should be applied to building assets rather than land value and that a sliding risk scale should be used to calculate the charge based on geography and use.

It has also called for a single fund to cover both the Metropolitan Fire and Emergency Services Board as well as the CFA to increase efficiency, transparency and accountability.

The farmers’ lobby group has also suggested the Government collect the new levy using information held by the Valuer-General, rather than through council rates and it should be exempt from stamp duty.