NSW Emergency Services Levy Reform: What the Options Paper Means for Brokers

NSW Treasury has released an options paper presenting five possible models for replacing the Emergency Services Levy (ESL).

NSW remains the last mainland state to fund emergency services through an insurance-based levy. The current ESL — which funds Fire and Rescue NSW, the NSW Rural Fire Service, and the NSW State Emergency Service — is paid predominantly by insured households and businesses, adding to the cost of insurance and contributing to underinsurance and non-insurance across the state.

The options paper has been prepared to assist the Legislative Assembly Select Committee on Emergency Services Funding Reform and its inquiry into replacement levy model options. The NSW Government's stated reform objectives are to reduce insurance costs for households, protect pensioners and vulnerable community members from cost-of-living pressures, and ensure a revenue-neutral model that sustainably funds emergency services agencies.

The paper presents five instructive examples of how a replacement levy — based on tiered fixed charges applied to property land values — could be structured:

Option A: Four tiers of fixed charges — A straightforward model that moderately increases levies across four tiers based on land values for each property sector.

Option B: Four tiers of fixed charges with greater escalation — Similar to Option A but with a wider spread of levy amounts, charging higher amounts to owners of the highest-value properties to fund reductions for those with lower land values.

Option C: Six tiers of fixed charges — Introduces two additional tiers to better align contributions with capacity to pay, lowering levies for owners of lower-value properties while increasing them at the top end.

Option D: Fixed charges with regional discounts — Builds on Option A with discounts of 20–50 per cent for properties located outside Greater Sydney, reflecting lower levels of emergency service provision in regional and rural areas.

Option E: Fixed charges with surcharges by property type — Introduces surcharges or alternative levy amounts for specific property types, including a $50 surcharge on residential units and a separate levy structure for mining properties within the industrial sector.

Modelling based on 2023-24 data indicates that around 55% of insured properties would have paid less under a replacement levy across all five options, with insured residential property owners saving an average of $65 per year.

Read NSW Treasury’s options paper here.