Brokers have urged NSW to adopt an emergency services levy replacement model with enough finely graduated tiers to prevent “material liability cliffs”.

The National Insurance Brokers Association also proposes safeguards so the levy cannot “quietly increase once decoupled from insurance”. It calls for targeted protections for certain households and businesses, and says the reform process should recognise and protect against broker exposure.

A NSW parliamentary inquiry into removing the insurance-based ESL has published 87 submissions concerning an options paper that outlines five possible models based on property value tiers.

NIBA’s submission says it backs a structure such as the six-tier “option C” approach or an even finer graduation, while warning land value alone does not reflect capacity to pay.

“A higher land value threshold or an additional measure may be necessary so that asset-rich but income-poor owners – for example, long-term residents in areas where land values have risen sharply – are not unfairly burdened,” it says.

The levy should differentiate by property type but not geography, and the submission backs the need to consider concessions and transitional relief for groups such as pensioners and low-income households, small businesses, primary producers, and first home buyers and tenants.

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NIBA says emergency services capital spending is uneven and funding should be on a rolling three-year basis. Legislation could explicitly link the new levy to actual costs, to maintain public trust and ensure the arrangement does not become an easy way to lift revenue.

Reforms should simultaneously remove the 11.7% of funding that is collected through council rates, NIBA says.

It adds a clear end date with sufficient lead time for system updates is needed, and it calls for recognition of the role of brokers – who are responsible for collecting and passing through the levy, as well as calculating and processing its removal.

“Brokers will handle the removal of this levy locally, and their experience demonstrates it can be done smoothly – with a definite cessation date, a straightforward per-policy refund procedure, sufficient systems lead time and clear acknowledgment of the exposure brokers bear,” the association says.

See the submission here.