A controversial new levy which would have added hundreds of dollars to some Illawarra property owners annual rates bills has been indefinitely deferred by the NSW Government.
Premier Gladys Berejiklian announced on Tuesday that the Fire and Emergency Services Levy (FESL), which was to be collected through council rates and based on land value, would be put on hold pending a review.
The levy was due to begin from July 1 and was due to replace the previous system, which was a tax on insurance policies. It was touted by the government as a fairer system that would save the average fully insured property owner about $47 a year.
However, Ms Berejiklian said it “had become clear that some fully insured businesses were facing unintended consequences”.
“While the new system produces fairer outcomes in the majority of cases, some people – particularly in the commercial and industrial sectors – are worse off by too much under the current model, and that is not what we intended,” she said.
The levy will continue be collected by insurance providers until the government completes a “review”. There has been no timeline set, and Ms Berejiklian said the deferral would last “until we get a fairer system”.
Shadow Treasurer and Keira MP Ryan Park said the announcement showed the government was a "shambles" and "running scared".
"Let's be really clear about why this announcement has happened today: the upcoming council elections mean that this government knows it will be annihilated right across NSW if they continue to push through this unfair tax," he said.
But the peak local government group, LGNSW, welcomed the policy backflip, saying it provided a chance to get the levy right.
“Councils have already done a lot of work to comply with the Government’s FESL legislation, and there will now be a need to undo this work – not to mention the associated costs,” LGNSW president Keith Rhoades said.
“While this is regrettable, the chance to get the levy right should be our focus.”
Read more: Illawarra home owners to be slugged hundreds
Wollongong council said there had been no cost to the council to introduce the levy so far.
“We received $118,000 in funding from the NSW State Government to carry out preparatory work on our internal systems ahead of the levy’s introduction and, as a result, there has been no cost to council,” a spokeswoman said.
“Council’s 2017-18 rates notices, which were to include the Fire and Emergency Services Levy, are due to be issued in July.
“The rates notices have not been printed, and will be issued as normal in July.’’
At Shellharbour council, the $1200 it cost to print and undertake other communication has been reimbursed, as have the $28,000 in staff time and other resources.
Shellharbour Mayor Marianne Saliba said she was happy that the state government had withdrawn the proposal.
“I believed it was a flawed system and I was proven to be correct. It was an impost on our community,” she said.
She said the council would ensure rates notices were updated to reflect the deferred decision.