March 10-16, 2024: Issue 617


Millions Lost Through Cost Shifting: NSW Government announces Expert Panel To Guide Emergency Services Levy Reform

Ratepayers across current LGA were out of pocket $39 million or the equivalent of $379 per ratepayer, in the 2021/22 financial year due to cost shifting from the NSW Government, the Council has stated 

The figures were derived using the methodology from the latest cost shifting report produced by independent consultants, Morrison Low on behalf of LGNSW for the 2021/22 financial year which calculated an amount of $1.36 billion in costs has been passed on to councils across NSW. 

See; 2021–22 Cost Shifting Survey

This is an increase of $540 million since the last report from the 2017/18 financial year under the previous coalition government. 

The Minns NSW Government announced on March 5, 2024 a newly formed Stakeholder Reference Group will advise the NSW Government as it reforms the way emergency services are funded.

The group will provide a broad range of expert perspectives on a new model to replace the existing Emergency Services Levy (ESL), which is paid through insurance premiums.

The Cost Shifting Report states Council paid the highest Emergency Services Levy in 2021/22 at $6.4 million ($62 per ratepayer), which is 28% more than the next highest Council (Central Coast Council at $5.0 million). Council’s Emergency Services Levy has increased to $9.3 million this financial year, equivalent to $90 per ratepayer.

Council has stated it will write to the Premier, the NSW Treasurer and the NSW Minister for Local Government requesting that they urgently seek to address the costs through a combination of regulatory reform, budgetary provision and appropriate funding.

Mayor Sue Heins said increasing cost shifting put a huge burden on the financial stability of local government. 

“Every dollar we pay in levies and subsidies to the state government, is one less dollar we can put into our local roads and footpaths, our parks and community centres or our libraries and events programs. 

“Put simply it constrains our ability to maintain our community infrastructure and sustain the same level of service to our community. Our Asset Management Plan (2022-2032) identifies an infrastructure funding gap of $151 million over 10 years. 

“This is further exacerbated by recent high inflation and the $3.1 million increase in costs to Council associated with the Emergency Services Levy this financial year.

“Our community deserve better and this must stop. 

“I encourage the government to consider how this cost shifting is resulting in lost services, lost opportunity and lost amenity for NSW residents and businesses and do something to fix it.”

Mayor Sue Heins

The community can review the summary and full reports on the LGNSW webpage

President of Local Government NSW, Cr Darriea Turley AM, said the findings of the report are alarming and should shock every ratepayer.

“It’s just not acceptable for the State Government to use local councils as a piggy bank for State programs and services,” Cr Turley said.

“This is effectively a $1.36 billion dollar tax on every ratepayer in NSW.

“At a time when councils are still rebuilding after the natural disasters of the past few years, the last thing they need to be doing is paying for State Government obligations too.”

The increase in cost shifting has been accelerated by various State Government policies, with the most significant examples of cost shifting in 2021–22 being:
  • The waste levy, which remains the largest single contributor to cost shifting in NSW, totalling $292.9 million.
  • The Emergency Services Levy and associated emergency service contributions, which totalled $165.4 million and represented the largest direct cost shift to local councils.
  • The NSW Government’s failure to fully reimburse local councils for mandatory pensioner rate rebates, resulting in councils losing $55.2 million.
  • The NSW Government’s failure to cover the originally committed 50 per cent of the cost of libraries, resulting in an additional $156.7 million in costs to councils.
Cr Turley said the cost shift amounted to a rate burden of $460.67 on every ratepayer in NSW which is up to 50 percent of their total rates bill in some local government areas.

Councils hardest hit include Berrigan Shire Council in the Southern Riverina, Clarence Valley in the state’s north, and Inner West, Lane Cove and Woollahra councils, all in Sydney.

Expert Panel To Guide Emergency Services Levy Reform

The NSW Government announced on March 5, 2024 a newly formed Stakeholder Reference Group will advise the NSW Government as it reforms the way emergency services are funded.

The group will provide a broad range of expert perspectives on a new model to replace the existing Emergency Services Levy (ESL), which is paid through insurance premiums.

Chaired by Treasurer Daniel Mookhey, the Stakeholder Reference Group is made up of: 
  • Andrew Hall – CEO, Insurance Council of Australia 
  • Darriea Turley – President, Local Government NSW 
  • Katie Stevenson – NSW Executive Director, Property Council of Australia 
  • Tim McKibbin – CEO, Real Estate Institute of New South Wales 
  • Angus Nardi – CEO, Shopping Centre Council of Australia 
  • Rob Rogers – Commissioner, Rural Fire Service 
  • Stacey Tannos – Former Commissioner, Marine Rescue NSW
  • Leighton Drury – Secretary, Fire Brigade Employees Union 
  • Graeme Kelly – General Secretary, United Services Union 
  • Troy Green – General Manager, Tweed Shire Council 
  • Daniel Hunter – CEO, Business NSW 
The NSW Government is committed to lasting reform that ensures the State can sustainably fund emergency services into the future, while driving down the cost of insurance premiums. 

The Stakeholder Reference Group will provide ongoing advice to the NSW Government. Public input will also be sought through the release of a consultation paper later this month. 

NSW is the only mainland state to fund its emergency services by taxing insurance and has the highest average insurance premiums in any state apart from cyclone-prone Queensland. 

The current model increases the cost of residential insurance by around 18 per cent on average and commercial premiums by around 34 per cent. 

It’s also led to NSW having the lowest rate of home and contents insurance in Australia, with 35 per cent of households not having contents insurance and 5 per cent of homeowners not having building insurance.

As fewer people take out insurance policies, the emergency services levy burden increases for those who have cover

Treasurer Daniel Mookhey said:
“I’m pleased to have so many voices at the table to ensure we arrive at a sustainable, lasting and fair way to fund our emergency services into the future. 

“The ESL on insurance has led to NSW having one of the highest average insurance costs for businesses and households in the country. 

“We need to get the balance right to ensure that NSW can fairly and sustainably fund the State’s emergency services, while bringing down insurance bills. 

“I want to thank the emergency services and the Fire Brigade Employees Union for their support in helping the NSW government with this critical reform.”