Businesses reeling from 300 per cent levy hike

REELING from larger than expected charges under the new fire services levy, the commercial and industrial property sector has accused the Western Australian Government of corrupting the original intent of the newly implemented emergency services levy (ESL) legislation.

Touted as a more equitable method of collecting funds for emergency services, which would spread the revenue base and deliver insurance discounts to insured property owners, the new levy has instead increased fire services payments by more than 300 per cent for many businesses.

In the past the Fire and Emergency Services Authority was funded by a levy on insurance premiums and a percentage of council rates.

With only one in six houses and few owners of vacant land insured against fire, a new levy based on gross rental value has been introduced to ensure that the whole community pays for emergency services.

However, rather than being more equitable, many businesses are complaining that the Government has used the levy as an opportunity to raise funds to embark on a $20 million capital works program.

While industry accepts that the community needs to fund these services, many industry members were unaware that the new levy system would be used to raise the additional funds, believing instead that the new collection system would simply replace the old one.

Prior to the introduction of the ESL a modest mall off Hay Street with a gross rental value of around $610,000 paid a fire services levy of $2,030 in 2002-03. In 2003-04 the same mall will pay $6,643 – a 327 per cent increase and it has been estimated that it will pay $8,548 next year once the new levy is fully implemented and the old insurance levy is phased out.  

One commercial property manager, who manages three properties on St Georges Terrace, said his fire services levy had increased from $30,000 to $96,000 under the new regime and has calculated that it would increase to $150,000 next financial year.

“We expected the levy to be for the equivalent amount and possibly less but this is off the planet,” he told WA Business News.

Burgess Rawson director of property management Michael McCormick said he did not understand why the levy had increased so dramatically given the revenue base was being spread to all property owners.

“What I’d love to see is work done by the opposition to see what tax windfall the Government is collecting from this,” he said.

The Property Council of WA has estimated that the average increase for WA shopping centres will be around 236 per cent.

The industry body’s main concern is that an estimated additional $20 million was being raised for capital works through the levy.

Communications and policy officer Geoff Cooper said the original intention of the levy was to broaden the existing revenue base but instead the Government had used the levy to fund additional services,

Centro state regional manager Peter Pike said small business would wear the brunt of the Government’s fire services levy increase as shopping centre owners passed the increased costs to retailers.

Centro-owned centres Mandurah Forum, Galleria, Maddington Shopping Centre and Warwick Grove Shopping Centre will each pay $100,000 each in fees.

He said shopping centres were already required by legislation to spend thousands on fire prevention equipment, such as sprinklers and that these additional charges were unnecessary.

“In our sort of business you are forced by law, and rightly so, to spend huge amounts of money on fire protection,” Mr Pike said.

FESA chief executive Bob Mitchell said the new emergency services levy was paying for more services than the old system did.

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