NSW shadow treasurer Scott Farlow says the opposition is “very concerned” about the planned removal of the state’s emergency services levy.

The Labor government has committed to axing the ESL from insurance, with an inquiry looking at five options to replace it with “a more efficient property levy”.

The ESL has worsened insurance affordability challenges. The Insurance Council of Australia previously argued it can add 18% to a home premium and 40% to business premium.

The reform commitment has been welcomed by insurers and brokers following a failed attempt in 2017, which left NSW as the only mainland state with such a levy attached to insurance.

But now the opposition has raised concerns over “Labor’s plans for a new tax on every home”, as it describes the proposal.

“We in the Liberals and Nationals are always concerned about any tax increases, and increases in costs to families in NSW,” Mr Farlow said on LinkedIn. “Under these proposals we’re very concerned about people who are already paying insurance being charged even more.”

The warning comes despite the options paper saying about 55% of insured properties in NSW would have incurred a lower levy under the replacement compared with the ESL, and insured homeowners would have saved an average of $65 a year.

Treasurer Daniel Mookhey told 9News the reform “can only proceed with bipartisanship”.