The Insurance Council of Australia (ICA) has welcomed the New South Wales Government’s announcement of a Parliamentary inquiry into reforming the Emergency Services Levy (ESL), describing it as a crucial step towards a fairer and more sustainable funding system.
Following extreme weather risks, taxation represents the second-largest component of insurance premiums in New South Wales, with the state projected to collect $1.3 billion directly from insurance policyholders through the ESL in 2024–25.
Currently, the levy is calculated proportionally to the cost of insurance premiums, meaning households facing higher exposure to extreme weather—such as floods or storms—pay significantly more in tax. This disproportionately impacts those with the least financial capacity: approximately 70% of households in the highest flood-risk zones are located in areas where the median income falls below the national average, while 35% reside in areas below the poverty line.
The Parliamentary inquiry, announced today by Treasurer Daniel Mookhey, aims to investigate ways to alleviate this burden. The ICA has emphasised that this represents a genuine opportunity to establish a more equitable system, recognising that emergency services benefit all residents of New South Wales, not solely property owners with insurance coverage.
Andrew Hall, CEO of the Insurance Council of Australia, stated:
“The announcement today by Treasurer Mookhey is an important next step towards fairer emergency services funding in New South Wales. The current system has repeatedly been found by multiple independent reviews to be both unfair and unsustainable. We are committed to working with the Government and Parliament to develop a model that improves affordability while sustainably funding emergency services.”
The ICA expressed its intention to participate actively in the inquiry, advocating for a system that balances affordability for households and businesses with reliable funding for the state’s emergency services.
Households Most Affected by ESL
| Risk Level | Median Income Below National Average | Median Income Below Poverty Line |
|---|---|---|
| Highest Flood Risk | 70% | 35% |
| Moderate Flood Risk | 45% | 15% |
| Low Flood Risk | 20% | 5% |
The Council emphasised that reform should be bipartisan, ensuring the burden of emergency services funding is shared more evenly across all residents rather than concentrated on high-risk property owners. By pursuing these changes, New South Wales has the potential to establish a model for equitable, sustainable funding that could serve as an example for other Australian states facing similar challenges.