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Inquiry Details

Fire Services Funding

The Royal Commission report on the failure of the HIH Insurance Group was tabled in Federal Parliament by the Honourable Mr Justice Owen on 16 April 2003. One of the recommendations by the Commissioner was Recommendation 56, which stated: "I recommend that the states that have not already done so abolish fire service levies on insurers." In response to the HIH report, the New South Wales Treasurer, Michael Egan, released a media statement on the same day, stating that the Government would consider an alternative to the fire service levy. New South Wales is serviced by two fire services, the NSW Fire Brigades and the Rural Fire Service. The NSW Fire Brigades protect 90 percent of the State’s population from fire emergencies, motor accidents and hazardous material emergencies. The Rural Fire Service is responsible for fighting fires in over 90 percent of the State and property protection in 1,200 towns and villages. The current funding arrangements for the provision of theses fire services is mainly drawn from the fire service levy - accounting for 73.7 percent of total fire service funding - imposed on insurance premiums. The levy is expected to raise $379 million combined in 2003-04 for both services. The remainder of the funding for the fire services comes from local councils - 12.3 percent for NSW Fire Brigades and 13.3 percent for Rural Fire Service - and state government - 14 percent for NSW Fire Brigades and 13 percent for Rural Fire Service. To help individuals and organisations in writing submissions, the website contains a list of useful reference material and links to relevant reports and documents. Reference material - Review of funding arrangements for the Fire Service of New South Wales - Ken Robson (see additional information for report) · Report of the Select Committee on the Emergency Services Levy - Parliament of South Australia, August 1999 · Emergency Services - A Fairer System for All - Fire and Emergency Services Authority of Western Australia, August 2002 · Local Government’s Role in the Provision of Fire Services in NSW - a Discussion Paper, LGov NSW, January 2003 · Submission to Victorian Government - Review of Fire Services Funding, Insurance Council of Australia, February 2003 Links · http://www.revenuesa.sa.gov.au/esl/esl.html - Emergency Service Levy in South Australia · http://www.dtf.vic.gov.au/Servlet/rwp-ps?/DTF/RWP323.nsf/Web+Pages/6403B4D1BB145806CA256D7300140402?OpenDocument - Victorian Fire Services Funding Review · http://www.fesa.wa.gov.au/Emergency_Services_Levy/index.asp - Fire and Emergency Services Authority of Western Australia · http://www.fire.qld.gov.au/about/fire_levies.asp - Queensland Fire and Rescue Service Latest Information: 23 June 2004, the Committee has deferred consideration of the report until its next meeting in August 2004. On 18 May 2004, the Committee resolved to defer the FINAL REPORTING DATE UNTIL 10 June 2004. On 4 May 2003 the Committee released the final version of consultants' report from PFS "Quantitative Modelling of NSW FSL Funding Methods" see below. This was updated after public comments. The Committee is holding final public hearing on 7 May 2004 (See under Inquiry Activities for a list of witnesses). On 16 March 2004 the Committee released for public comment a consultants' report from PFS "Quantitative Modelling of NSW FSL Funding Methods"(please refer submission 65). Comments close on 16 April 2004. There will be a public meeting about the report at Parliament House on 29th March 2004 at 10:00 am. Please contact the secretariat if you like to attend.
The Treasurer, the Hon M R Egan MLC Prepare a report evaluating the current fire services funding arrangements and alternative funding arrangements. The report should present recommendations on future funding arrangements that meet the current and prospective needs of the fire services and would be as near as possible to cost neutral; provide detailed information on how the recommended arrangements would apply to facilitate their possible implementation in 2004-05; and identify any administrative and compliance issues associated with the current and recommended funding arrangements, including transitional issues and the earliest practical commencement date for the proposed reforms. In conducting the inquiry, the Committee should consider the impact of current and proposed funding arrangements on decisions by households and businesses to insure; consider the funding approaches adopted in Queensland and South Australia and soon to come into effect in Western Australia as well as the findings of the Victorian review of fire service funding; consider the implications of any changed fire service funding arrangements for the role of local governments in funding and facilitating the provision of fire services, particularly in rural NSW; consider how the State government's contribution to funding the fire services should be determined within any new funding framework; undertake modelling of the impact of the proposed funding arrangements on taxpayers to assist in determining proposed funding arrangements; not consider general taxation issues such as the GST and stamp duty on insurance unless these issues affect the operation of fire services funding arrangements; and not consider issues that relate to the cost of fire service provision or its cost effectiveness. The Committee's proposed funding arrangements should ensure, to the maximum extent possible, that all those that benefit from the provision of fire services contribute to funding the fire services; broadly match funding contributions to the level of service provided to the taxpayer and/or the risk of fire affecting each taxpayer; be difficult to avoid through changed taxpayer behaviour; and provide a stable base for funding fire services. The report should also consider the appropriate funding arrangements for meeting the extraordinary costs associated with fighting major bushfires. In particular, the Committee should examine the possible development of a fire fighting reserve - funded by a fire service levy - to assist in meeting future extraordinary costs associated with major bushfires. The Committee is to report by 29 February 2004.

Prepare a report evaluating the current fire services funding arrangements and alternative funding arrangements. The report should present recommendations on future funding arrangements that meet the current and prospective needs of the fire services and would be as near as possible to cost neutral; provide detailed information on how the recommended arrangements would apply to facilitate their possible implementation in 2004-05; and identify any administrative and compliance issues associated with the current and recommended funding arrangements, including transitional issues and the earliest practical commencement date for the proposed reforms. In conducting the inquiry, the Committee should consider the impact of current and proposed funding arrangements on decisions by households and businesses to insure; consider the funding approaches adopted in Queensland and South Australia and soon to come into effect in Western Australia as well as the findings of the Victorian review of fire service funding; consider the implications of any changed fire service funding arrangements for the role of local governments in funding and facilitating the provision of fire services, particularly in rural NSW; consider how the State government's contribution to funding the fire services should be determined within any new funding framework; undertake modelling of the impact of the proposed funding arrangements on taxpayers to assist in determining proposed funding arrangements; not consider general taxation issues such as the GST and stamp duty on insurance unless these issues affect the operation of fire services funding arrangements; and not consider issues that relate to the cost of fire service provision or its cost effectiveness. The Committee's proposed funding arrangements should ensure, to the maximum extent possible, that all those that benefit from the provision of fire services contribute to funding the fire services; broadly match funding contributions to the level of service provided to the taxpayer and/or the risk of fire affecting each taxpayer; be difficult to avoid through changed taxpayer behaviour; and provide a stable base for funding fire services. The report should also consider the appropriate funding arrangements for meeting the extraordinary costs associated with fighting major bushfires. In particular, the Committee should examine the possible development of a fire fighting reserve - funded by a fire service levy - to assist in meeting future extraordinary costs associated with major bushfires. The Committee is to report by 29 February 2004.


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