Sunday, 2 December 2007

The freeloaders !

The fire services in this state - the New South Wales Fire Brigade - which serves metropolitan areas - and the Rural Fire Service cost $ 484 million a year to maintain. Unfortunately, this cost is not spread over all users !

Due to a curious arrangement the fire service gets government grants - but the main source of income is a hefty levy imposed on all household insurance policies.
The problem is that many people simply do not bother to insure their property - and as a result these freeloaders get the services of the fire brigades for free !

When the fire alarm rings the brigades do not look up a list of those insured before responding. All property receives the same service and therefore a disproportionate share of the cost falls on those to have an insurance policy.

Local councils have raised a proposal to share the load equally. They propose abolishing the fire levy on insurance policies and add it to the rates applicable to all property.

It sounds good in theory, but many will be suspicious. The councils will probably require a hefty administration fee to administer this levy - and the insurance industry is known for dirty tricks. Many fear that the old levy would not be completely abolished - and rather given a new name and absorbed under a new guise !

There is no doubt that the old levy on insurance premiums is both inefficient and unfair. Conversion to a property tax would achieve uniformity - but before we rush into such a scheme it would be wise to examine all the loop holes - and ensure that insurance premiums receive the full reduction once the levy ceases !

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