Business 'burnt' by fire levy
Introduced this month, the levy replaces the previous insurance-based system with a fixed charge of $100 for residential and $200 for non-residential assets, plus a variable percentage fee of the capital value depending on property type.
The levy is intended to be transparent, easier to implement, fairer and generate more revenue to fund the Metropolitan Fire Brigade and Country Fire Authority, the government maintains.
The financial burden from the levy was likely to fall more heavily on commercial and industrial properties than residential ones, according to assessments by the Australian Property Institute and Property Council of Australia.
A Jones Lang LaSalle benchmarking survey supports the claim. The firm analysed a range of properties within its management portfolio, which includes a substantial share of investment-grade office buildings in Melbourne's central business district, Docklands and Southbank.
About 40 of 150 properties were surveyed, the firm said.
"In almost all cases, the levy will impose higher costs, and in the case of some properties the extra costs range between about $10,000 per year to well over $100,000 per year," JLL head of asset management Bill Redfern said.
On average, commercial owners face an extra impost of $1.77 per square metre of net lettable area, JLL found.
"To put this in context, in one case within our management portfolio, we have a property where the insurance-based fire services levy was approximately $25,000, but in 2012-13 the owner and tenants are now facing charges of more than $130,000 in the first year under the FSPL [Fire Services Property Levy] - an extra cost of more than $100,000 per annum or an increase of $2.50 per square metre," Mr Redfern said.
But a state government spokeswoman said the modelling failed to account for reductions in stamp duty, GST and insurance premiums. "The average insured commercial business in both MFB and CFA areas would pay less under the reforms," she said.
In the past, those who failed to pay insurance premiums or were insured more cheaply overseas would still benefit from the local fire services.
The change to the levy - recommended by the Victorian Bushfires Royal Commission - ensured all property owners now contributed, the spokeswoman said.
Property owners in CFA localities pay different rates to those in MFB areas.
Frequently Asked Questions about this Article…
The Victorian fire services levy (FSPL) replaced the previous insurance‑based system with a fixed charge plus a variable fee. The new model charges a fixed $100 for residential assets and $200 for non‑residential assets, plus a variable percentage fee based on the property's capital value.
The FSPL is designed so all property owners contribute, including residential and commercial owners. In practice, higher levy costs for commercial buildings are often reflected in owner and tenant charges, as shown in industry examples where both owners and tenants faced substantially higher bills under the new levy.
Industry modelling and surveys indicate the financial burden falls more heavily on commercial and industrial properties than on residential ones. Assessments by groups such as the Australian Property Institute, Property Council of Australia and a JLL benchmarking survey found most commercial buildings will face higher costs — in some cases an extra $10,000 per year up to well over $100,000 per year.
JLL analysed properties in its management portfolio (including Melbourne CBD, Docklands and Southbank) and surveyed about 40 of 150 properties. On average commercial owners faced an extra impost of about $1.77 per square metre of net lettable area. JLL also highlighted an example where a property’s insurance‑based levy was roughly $25,000 but first‑year FSPL charges exceeded $130,000 — more than $100,000 extra or about $2.50 per square metre in that case.
Yes. The Victorian government says the new levy is intended to be more transparent, easier to implement, fairer and to generate more revenue to fund the Metropolitan Fire Brigade (MFB) and Country Fire Authority (CFA). The change follows recommendations from the Victorian Bushfires Royal Commission.
The government argues not necessarily. A state government spokeswoman said the modelling cited by industry groups did not take into account reductions in stamp duty, GST and insurance premiums, and that the average insured commercial business in both MFB and CFA areas would pay less under the reforms when those offsets are considered.
The switch was recommended by the Victorian Bushfires Royal Commission. The previous insurance‑based system meant people who didn’t pay local insurance premiums or were insured overseas could still receive local fire services. The new property‑based levy ensures all property owners contribute to funding fire services.
Yes. The article notes that property owners in CFA localities pay different rates compared with those in MFB areas, reflecting the different funding needs and responsibilities of the Country Fire Authority and the Metropolitan Fire Brigade.
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