Fire Services Funding Review Secretariat
Level 11
2 Macarthur Street
MELBOURNE   VIC    3002

Dear Sir,

This submission is made by the National Party of Australia – Victoria.

The National Party welcomes this review.  We believe the cost of funding fire services must be shared equitably across the entire community.  We believe a stable and adequate funding mechanism needs to be achieved for the provision of fire services.  In addition we believe funding for rescue services should also be shared by the entire community. 

We note that Queensland and South Australia abolished their property insurance based funding schemes in 1984 and 1999 respectively and Western Australia will be changing its scheme from July 1, 2003.  With the ACT and Northern Territory funding their fire services from consolidated revenue, it is only Victoria, NSW and Tasmania that still fund fire services on a property based insurance scheme.

The Need for Change

The National Party believes there are convincing arguments as to why there is a need for change.

·                    The Fire Services Levy (FSL) is not shared equitably across the community as only those people and organisations which choose to take responsibility for managing their own property risk by arranging insurance cover pay the FSL. Those who chose not to insure, to insure off-shore or those who under insure are not contributing fairly to the essential community service provided by our fire services.

·                    Rural electorates are seriously disadvantaged by the current funding system because FSL rates in CFA areas are significantly higher than for the metropolitan areas serviced by MFESB.  This is particularly galling when many of the major fires in country areas start on public land, land that is set aside for the purported good of the whole community.

·                    The addition of State taxes, Federal taxes and FSL to property insurance adds approximately 40-80% on the premium and this discourages people from taking out insurance.  This means the funding for fire services unfairly falls on fewer.

·                    The presence of a FSL is a major cost burden to businesses in Victoria and a direct disincentive to continuing investment in this State.

What should be Funded

The National Party believes there is no compelling reason to change the current structure of fire services in Victoria.  We believe the CFA and MFSEB should remain separate organisations.  However we believe there should be a pooling of funds collected under any new scheme and a distribution of these funds to ensure that both organisations receive appropriate funding.

Further the National Party believes a stable funding base is required to fund emergency services such as those provided by the State Emergency Services and marine rescue services.   We would request financial modelling be undertaken on various funding options.  We believe these models should include, but not restricted to, funding direct from consolidated revenue, an addition to the fire services levy, a levy on vehicle and boat registration (as occurs in South Australia), or a combination of the above. 

The National Party is concerned with the terms of reference as described in 3 (a) which states that any alternative funding arrangements “will have a broadly neutral impact on the State’s total expenditure on fire services.”   In the quest to maintain excellence with fire services we do not believe the State should be restricted to its current 20-25% contribution to cost of fire services.  The bushfires that are currently ravaging parts of Victoria demonstrate the prudence in the State ensuring well equipped fire services are available at all times. Again the fact of those fires occurring as a matter of course on publically owned and administered land further highlights the equity and justification for the State increasing its funding contribution.

Alternative Funding Mechanisms

The National Party does not have the resources nor access to the data necessary to undertake financial modelling of various funding mechanisms.   However having considered the South Australian and Western Australian models, we believe a levy applied to property ownership, as against to property insurance, would be a far more equitable means of spreading the cost of fire and emergency services across the entire community.

We are aware that the SA and WA models use a levy on property ownership with properties being categorised on a fire-risk basis, thus resulting in a variance between the levy paid depending on the location of the property.  While not outrightly opposed to this method, the National Party has preference to a uniformly applied levy across the entire State.

Detailed financial modelling is required to determine whether risk categorisation is desirable or not.

The National Party is of the view that any new fire levy should be applicable on the value of the property’s added assets only.  The value of the added assets is determined by the difference between the Capital Improved Value (CIV) and the Site Value (SV). 

Both these values are already calculated by local government for the purpose of determining local government rates.

The value of the added assets is a logical basis on which to determine a fire services levy as it is the added assets on the property that need to be protected in the event of fire.

For reasons of efficiency, the National Party believes that local government is best positioned to collect a fire services levy for the State Government as a line item on annual rate notices.   The National Party encourages the Government to negotiate with local government on this matter with a view to reaching an agreement that offers benefits to both local government and the State.

We also believe the Government should offer pensioners and self-funded retirees a concession on the payment of a fire services levy.

Moreover, we are of the strong belief that State Government should fully fund a 100% concession to those property owners who are volunteer members of the Country Fire Authority, and who have completed the minimum training requirements that allows them to be involved in active fire fighting.     We see this as at least some recognition of the outstanding contribution and personal sacrifice these men and women make in fighting fires on a volunteer basis.

The National Party is not averse to further consideration of a membership type model to assist the funding of fire services.  We would consider a model analogous to that of ambulance services in Victoria, where citizens prescribe to membership of an ambulance service as a means of insuring against the cost of using that service. However a membership type model should only apply to call-outs and services provided to property, and not to the cost of providing fire service infrastructure, employment and other unrecoverable and fixed costs which we expect would be funded from a broad bases property levy as described earlier in this submission.

A definitive view on this could only be reached with the assistance of detailed financial modelling.

The Need for Financial Modelling

As stated throughout this submission, the National Party stresses the need for the Government to undertake financial modelling of the various models that will no doubt arise from this review.  We believe it is appropriate for the Government to undertake this task and further consult with the public once this information is available.

The National Party is not prepared to lock itself into a definitive position on a new funding structure until such time as we have had the benefit of considering various financial models.  However in this submission we have outlined the need for change and expressed a view on the general direction in which change could be pursued. 

We trust our comments will be earnestly considered and stand ready to work with the Government in further consideration of this matter.

Yours sincerely,

PETER HALL MLC
MEMBER FOR GIPPSLAND PROVINCE

FOR AND ON BEHALF OF THE NATIONAL PARTY OF AUSTRALIA-VICTORIA.