New South Wales fails New South Wales business and home owners

Two pieces of news staggered me yesterday. The first was reported to me by one of our readers, thanks Margo, stating that the New South Wales government are requiring employers to include the Job Keeper payments in the Workers Compensation wages calculation.

This means those employers that have embraced the scheme to help their employees and get them some wages even though they are not working, are going to be penalised for doing their bit. Come on!

Does this mean that someone sitting at home because it is not safe to go to work, but is collecting wages through the Job Keeper program, is covered by WorkCover?

While I am singling out New South Wales on this unfair situation, it is probably the same in other states. If anyone has received an official announcement on this, can you please share it with me via the comments section below or at my email: allan.manning@lmigroup.com?

Erratum: Since writing this post, the current position is that in New South Wales Jobkeeper payments paid to those that are not working are not to be included in Workers’ Compensation premiums. ACT and Queensland appear to have the same common sense rules. Refer my post of 1 May 2020.

The second thing is, that while the premier has agreed to contribute 32.8 million dollars to assist councils meet the cost of the FY2020/21 increase in the Emergency Services Levy.

A link to the full article is here.

No relief was mentioned for those prudent to insure their businesses and homes, who are slugged the majority of the costs of funding the Emergency Services.

I will return to this point shortly, but I share my real fright when I did the maths.

For the 2019-20 financial year, the Emergency Services went up by 15% to $897 million.

You do have to search around for this, as the Emergency Services Levy Insurance Monitors website is a year behind in some areas, reporting the 2018-2019 figures. Link here, at the date of writing.

Local Authorities pay 11.7% of the Emergency Services Levy.

Now to the maths. In 2019-2020, the Emergency Services Levy went up by a whopping $115,000,000 (working backwards from the current figure of $897 million ($897- ($897 ÷ 115%)). Something does not quite balance, either the dollar figures or the percent are rounded one way or the other as it is reported that the figure for 2018-2019 is $5 million lower than this simple equation.

11.7% of $115 million increase is $13,455,000, and yet the Premier announced a contribution to next year’s increase of $32.8 million.

If the increase in the local authorities contribution is $32.8 million, then the overall increase is going to be in the order of $270 to $275 million. This is a 30% increase, on top of the 15% increase last year.

As Insured’s contribute 73.7% on top of the amount collected through their rates, the amount that will need to be added to insurance premiums in New South Wales for the year 2020-2021 will be, based on the information above, somewhere between $860,000,000 and $865,000,000.

You have to remember that it does not stop here, as you pay GST on this figure and then New South Wales Stamp duty on the premium, the Emergency Services Levy and the GST.

This at a time when so many home and business owners are genuinely hurting.

The hidden tax is cruel in the good times. An increase of this magnitude is simply unsustainable and will lead to even more people cancelling or reducing their insurance.

Worse still, when you penalise business owners for helping distribute social security, bearing in mind the business has to fund the payments in advance and then tax insurance –an essential protection for every business–, you will see more businesses fail.

I simply cannot understand the logic. Shame on you New South Wales government.

Two quotations come to mind:

The purpose of government, according to Locke in the *2nd Treatise*, is to protect our state of nature rights to life, liberty, and property.

Locke recognizes that in order to do so government must tax us (I.e., must infringe on our rights to life, liberty, and property). Locke also recognizes that sometimes the government will overstep and tax us more than is proper.

Peter Stillman, former Professor, Political Science/Environmental Studies (1970-2017)

I believe that the New South Wales has well and truly overstepped the mark before this intended increase.

The second, is from Ronald Reagan. In his inaugural address after taking the oath of office on January 20, 1981, Reagan called upon Americans to “begin an era of national renewal”. In response to the serious problems facing the country, both foreign and domestic, he asserted his familiar campaign phrase: “Government is not the solution to our problem(…)”

I would have thought that Australia is in an era requiring national renewal.