The NSW government has raised its forecast for emergency services levy collections due to increased disaster response spending, while committing to reforming the insurance-focused funding system. 

Today’s budget says the revenue from insurer levy and council contributions is forecast to increase by $324.7 million over the four years to 2028-29 compared to the 2024-25 half-yearly review figures. 

“This increase is primarily driven by additional expenditures to strengthen the frontline response to emergencies and natural disasters,” it says. 

ESL paid through residential property premiums increased $222 million, or 48%, from 2017-18 to 2023-24. The average ESL-related cost per insured residential property was around $285 in fiscal 2024, with goods and services tax and stamp duty on top. 

The government announced in November 2023 that it would overhaul the funding model and a consultation paper released in April last year discussed replacing the insurance-based system with a broader levy across property owners. 

The government today said it was “committed to reforming the emergency services funding system”. 

“The NSW Government continues to work to design a replacement levy that is budget neutral, informed by detailed tax modelling and the views of industry and stakeholders in the wider community,” it said. 

The budget papers say in the past year “several important steps” have been taken to advance the reform. 

The Independent Pricing and Regulatory Tribunal has continued work around its monitor role, including developing an approach to over-collections and prohibited conduct, engaging insurers to access data to monitor prices, and preparing a strategy and operating model for investigations and enforcement. 

As part of policy development, the Treasurer requested ESL-related data from insurers, and local councils performed preliminary land classifications to derive detailed property-level data. Treasury has compiled information from insurers, local councils and other sources to develop a database representative of all properties. 

The government is budgeting for emergency services levy collections of $1.396 billion in 2025-26, rising to $1.496 billion the next year.  

Figures today also show that since 2019-20, the NSW and federal governments have spent an average of $1.6 billion per year on disaster relief and recovery, compared to $154 million per year in the prior six years.