Brought to you by:
Berkshire Hathaway Specialty Insurance
Berkshire Hathaway Specialty Insurance

Unreformed and rising: ESL payments set to jump

Facebook Twitter LinkedIn Google

NSW emergency services levy (ESL) payments are set to surge as the state government improves firefighter access to workers’ compensation and buys more aircraft ahead of the next bushfire season.

ESL levy contributions will jump from $780 million this financial year to $967 million next year and to $1.131 billion in the following 12 months, a half-year budget review shows.

NSW continues to fund more than 80% of the cost of fire and emergency services through a levy on insurance after dropping a plan to switch to a property-based charge collected by local councils in 2017.

The budget update says the increase in workers’ compensation costs will be largely recovered through gains in the ESL collection, insurance duty and local government contributions, increasing revenue by $602.9 million over the four years to 2021-22.

The state is also acquiring a large air tanker and two twin-engine aircraft for the Rural Fire Service.

The ESL and insurance duty is expected to increase by a one-off $21.3 million in 2020-21, while councils’ contribution is forecast to increase by $3.1 million next financial year to help meet the aircraft costs.

The workers’ compensation changes will make it easier for firefighters to receive benefits if they are diagnosed with one of 12 specified cancers. The legislative amendments mean they no longer have to show the cancer was caused through their work, leaving the employer with an option to prove that wasn’t the case.

“The onus has historically been on firefighters and it is a difficult task when all the science, all the studies and all the understanding is that all firefighters go into unknown hazardous situations,” NSW Emergency Services Minister Troy Grant said last year.

Funding of emergency services through insurance is set to continue indefinitely after the Government earlier this month rejected the concept of reintroducing a property-based levy if it wins the March election.

In a response to a parliamentary committee report on the issue, the government of Premier Gladys Berejiklian says it “has no plans to introduce a revised fire and emergency services levy in the next term of government”.

The Insurance Council of Australia (ICA) says its members are assessing the impact the increases will have on insurers and customers.

"ICA is in discussion with NSW Treasury on the implications," a spokesman told insuranceNEWS.com.au.

"ICA continues to advocate for a fairer and more equitable funding model for NSW’s emergency services. It notes NSW customers pay the highest level of tax on policies of any state. At present, the addition of ESL, GST and stamp duties typically adds 45% to the base premium for a NSW household policy."