Parliamentary Speeches
State Revenue Legislation Further Amendment Bill 2009 (23/06/2009)
Mr DONALD PAGE (Ballina) [8.44 p.m.]: As the shadow Minister for Small Business I make it plain that I oppose the State Revenue Further Amendment Bill 2009. The bill incorporates a number of changes to current legislation which I believe are not in the interests of small businesses and the people of New South Wales. In particular I bring to the attention of the House the introduction of an emergency services levy to be treated as part of the premium of an insurance policy for duty purposes. This means that the State Emergency Service in New South Wales will be funded by a levy that will be paid by insurance companies, in the first instance. Of course, insurance companies will add that levy to premiums, resulting in an increase in the cost of policies.
I state clearly up front that I strongly support the State Emergency Service and the extraordinary volunteers who give thousands of hours every year to helping people in times of need and distress. Indeed, I made a speech recently in this place thanking the State Emergency Service and others for their terrific efforts during the recent storms and floods on the North Coast. The State Emergency Service certainly deserves to be funded, but my primary point is that I do not believe that adding a levy to insurance premiums is the way to go.
The State Government tells us that this emergency services levy is consistent with the approach for the fire services levy—that is, this new way of funding the State Emergency Service, of raising some $39 million, is consistent with the way the Government currently funds metropolitan and rural fire services. I believe that these levies should not be added to insurance premiums. The National Insurance Brokers Association believes that the cost of policies is escalating because of added levies and taxes, and there are growing concerns that people cannot afford adequate insurance, or are opting out of insurance altogether. I will provide the House with some figures on that in a moment.
My biggest concern is that home insurance policies and business insurance policies are becoming so expensive with the addition of levies, stamp duty and GST that people are not able to afford them. We have only to look to the recent bushfires in Victoria to see how dangerous this policy is. The National Insurance Brokers Association tells us that as many as 30 per cent of the people who lost their homes in the Victorian bushfires had no insurance at all. Is this a situation we want to see repeated in New South Wales? Victoria is even worse than New South Wales: its premiums are the highest in the world by a long way. That is because these levies are added on. The Government needs to take into consideration the fact that up to 50 per cent of the levy that people pay on insurance premiums comprises State taxes. It also includes a GST component, but it is basically State taxes. The GST component, which is levied by the Commonwealth, comes back to the States in any event.
I am very concerned about the imposition of an additional tax on insurance premiums. As I indicated, we have the massive fire services levy to start with, then we have 10 per cent GST, and then we have stamp duty on top of that. So it is a tax, on a tax, on a tax. As said, it is a disgrace that up to 50 per cent of the premium is basically taxation. That is a huge problem in terms of people being prepared to take out insurance. If 30 per cent of Victorian bushfire victims were not insured there is obviously a big issue there. The other point is that many people do not pay insurance at all yet they get the benefit of the services that are provided. So those who do pay for insurance are subsidising those who do not. Fundamentally, that is an inequitable state of affairs. The National Insurance Brokers Association supports the recommendation of the New South Wales Independent Pricing and Regulatory Tribunal Review of State Taxation in 2008, which, in reference to the Fire services levy, said:
In the short term, the statutory contributions by insurance companies to fund Fire services should be replaced by an equivalent, transparent property-based levy collected by local councils.
That means that the levy would appear on people's rates notices. Whether one argues, as the Independent Pricing and Regulatory Tribunal did, that it should be levied through local government, or whether one argues that it should come out of the Consolidated Fund, or whatever the source of the funding is, the State Emergency Service needs to be funded. My concern is that if we continue to fund the State Emergency Service, the Rural Fire Service and the metropolitan fire brigades through taxes on insurance inevitably we will force people away from taking out insurance because they cannot afford the premiums and they are prepared to take a risk.
That creates two problems. One is that they are not insured. The second is the inequity that exists between those who pay insurance premiums and, therefore, pay for protection, which the community generally considers appropriate, and those who do not pay any premiums and are subsidised. An issue of principle is involved, quite apart from the implications for businesses, in particular, which are being hit by more and more taxation. This bill hits small business by increasing their insurance premiums. It is another tax on a tax on a tax. It also impacts on household insurance policies. These extra taxes mean that many people will think twice about taking out insurance. It is a $39 million tax grab by the Government. Thirty per cent of the people whose houses were destroyed in the Victoria fires did not have any insurance. It was not because they mistakenly omitted to do so; they did not take out insurance because the insurance premiums in Victoria are even higher than premiums in New South Wales. They are the highest in the world. There is a connection between insurance premiums and the amount of people who take out insurance. My plea to the Government is to look at this issue more intelligently and not to continue to see insurance premiums as a milch cow for government revenue. Other implications that flow from the bill are negative for householders, insurance coverage, small business and, ultimately, the taxpayer. That is one of many reasons why I oppose this legislation.
