Web_fire-serviceI write to clarify some critical points raised in your paper regarding the Victorian Coalition Government’s reformed fire services property levy (August 27). The Bushfires Royal Commission recommended that the old system, which funded our fire services through an insurance levy, be replaced with a fairer property-based levy. Under the old system, only those who were properly insured contributed towards funding our fire services. Those who didn’t insure, or insured overseas, paid nothing while still being protected by the Country Fire Authority (CFA).

Insurers decided behind closed doors how to charge the levy, meaning similar properties were often charged vastly different amounts. The Coalition Government has reformed the levy and now all property owners, not just those with home and contents insurance, contribute to funding our fire services. We have also removed the ‘tax-on-tax’ which previously applied on top of the levy. This, together with the new $50 concession for pensioners and veterans, will save around $100 million per year for Victorian households and businesses. Crucially, the reformed levy rates have been set so that the levy payable by the average household, business and farm is less than under the insurance-based system. The rates are determined based on the value of the property and whether it is a household, business or farm. This means that similar properties right across country Victoria will now pay the same amount. The average CFA household contribution falls from $262 in 2011-12, to $142 in 2013-14.

The average business levy in the CFA area (both commercial and industrial) will also fall under the new system. When calculating what levy was paid under the insurance based system it is important to include the levy from both building and contents insurance, as well as the GST and stamp duty that was also charged. Farmers have historically been the strongest supporters of a property based levy. The abolition of the ‘tax on tax’ will save Victorian farmers around $17 million annually, with the average farm contribution dropping from $725 in 2011-12 to $399 in 2013-14. This saving does not include the impact of the single farm enterprise exemption boundaries, which is broader than the exemption for municipal rates as it applies across councils. These vital reforms support our fire services and ensure that the cost of doing so is fairer across the community.

The Hon Michael O’Brien MP, Treasurer.