Opposition Allegations Totally Baseless

  • Jack Elder

The Opposition has been unable to come up with any facts in its personal vendetta against the Chairman of the Fire Service Commission, Internal Affairs Minister Jack Elder said today.

"All the allegations made in Parliament yesterday have been made before, and answered before," he said.

"Firstly, as has been pointed out a number of times, Mr Estall is not, and never has been, an insurance broker. He is a risk management assessor and fire engineer, and a former professional firefighter."

In addition, as Chairman, Mr Estall has stood aside from all involvement with Fire Service levy issues, and delegated responsibility to the Deputy Chairman, Mr Elder said.

Alliance MP Grant Gillon claims the company of which Mr Estall was a director was promoting a fire service levy avoidance scheme, Mr Elder said.

"To claim in Parliament fraud has been committed when an insurance broker recommends legal and tax advice be sought by a client is ludicrous."

Mr Gillon also claims that Coopers and Lybrand were sacked as independent auditors trying to assess the amount of levy avoidance.

This is wrong.

The previous Fire Service Commission received legal advice that there were some levy avoidance practices that exploited a loophole in the Fire Service Act; that is, they were legal, and a law change would be needed to plug them.

It appointed Coopers and Lybrand to audit brokers in the belief they may be using this suspected loophole.

Subsequently, the new Commission sought a Crown Law Office opinion on whether in fact there were any loopholes. This opinion was that there were not, meaning any person or company using these practices was breaking the law and could be dealt with by the courts.

This meant that the Coopers and Lybrand investigation was no longer needed, and appropriately, it was ended.

"The current Fire Service Commission is actively dealing with this issue," said Mr Elder.

In response to the Crown Law Office opinion, the Commission is discussing with the insurance industry ways of ensuring all due levy payments are collected and if agreement cannot be reached, levy audits of large corporates and potentially legal action may be undertaken.

Mr Gillon also claimed that the internal audit staff at the Commission had been slashed.

"Firstly, the Commission has never had any audit staff - they have always been employed by the Fire Service. Secondly, as I told Mr Gillon in a written question, there has been a reduction of one - from three to two."

This Commission has adopted a more aggressive approach to levy enforcement than the previous one. The number of audits of insurance locations has increased from 11 in 1996/97 to 18 in 1997/98.

Mr Gillon claims that based on the amount of fire and general insured property, up to $150 million is lost each year because of illegal and unethical levy avoidance schemes.

He fails to understand the levy system which works on the basis that:

- the fire and general insurance pool is at replacement value, while the Fire Service Levy is calculated on indemnity value, which is typically between one third and two thirds of replacement value;
- the levy is only on insurance which includes cover for fire. This means that a number of insurances in the fire and general insurance pool are not levied;
- house and contents insurance is capped at $100,000 for residential and $20,000 for residential contents; and,
- marine insurance is not included.

"Mr Gillon cheerfully ignores these facts in his efforts to undermine public confidence in the Fire Service," Mr Elder said.

"The Labour, United and Alliance continued parroting of discredited personal allegations reflect badly on them, and waste Parliament's time," said Mr Elder.