Fire services levy to double, congestion charge expanded as state deficit grows by $1.4b

Victorian property owners will be slugged with a doubling of the fire services levy rate as the government uses it to help pay other emergency services.

Motorists are also being stung with a rise in the congestion levy, which applies to parking fees, and its use will be expanded to inner-eastern suburbs.

Victorian Treasurer Tim Pallas.Credit: Getty

The tax hikes come as a budget update shows Victoria’s deficit has grown by $1.4 billion for this financial year. Despite this, the Allan government maintains it will record an operating surplus the year after, even though it has to spend more money on the Metro Tunnel and the state’s hospitals.

The fire services levy will be renamed the emergency services and volunteers fund [ESVF] and retooled to provide money towards the State Emergency Service, Triple Zero Victoria, the State Control Centre, Forest Fire Management Victoria and Emergency Recovery Victoria.

The charge, which appears on rates notices, will grow from 8.7 cents for every $1000 of a property’s capital improved value, to 17.3 cents next financial year.

The fixed-cost part of the charge will also remain but will rise in line with inflation, going from $132 this year to $136 in 2025-26.

It is forecast that by 2028 this levy will collect $1.8 billion in revenue, compared with $1.033 billion collected by the fire services levy at present.

The median cost per household, according to the government’s expectations, would rise from $191 to $254.

But other types of properties will be hit even harder. Commercial properties will pay $492 more on average while primary producers such as farmers will pay more than double, rising from $621 to $1299.

On the website outlining the changes, the government says every dollar raised will go towards “vital life-saving equipment, vehicles, staff, training for volunteers, community education, and recovery support for when Victorians need it most”.

“Variable rates will be higher under the ESVF than the FSPL [fire services levy] to account for the ESVF’s larger scope.”

Treasurer Tim Pallas also confirmed that the state’s congestion levy, a tax on private and public car park operators around the inner city, would be expanded and rise in line with a similar charge in Sydney.

The charge on category 1 areas, which include Melbourne CBD, Southbank, Domain, Docklands and East Melbourne, will go up from $1690 to $3030. The category 2 zone will be expanded to include inner-eastern suburbs along Hoddle Street and Punt Road that are not currently subject to the levy. They include areas in Richmond, Prahran and South Yarra.

The costs are passed directly on to consumers who use the car parks.

From January 1, 2026, zero and low-emission vehicles will also no longer receive a $100 discount on their registration. By 2027-28 this is expected to bring an extra $93 million into the state’s coffers.

The mid-year budget update, released on Friday, reported Victoria’s deficit, forecast in May for the 2024-25 financial year at $2.2 billion, has grown to $3.6 billion.

However, the document says the budget is still on track to record an operating surplus in 2025-26, and is forecasting a $100 million improvement, with a surplus of $1.6 billion.

Speaking on Friday, Pallas denied that the changes to levies were designed to protect his budget surplus, pointing to more frequent natural disasters straining resources and a need to reduce car dependence while making congestion charges fairer.

He said the emergency services levy would cost the typical household about $60 a year extra or a “cup of coffee a month”.

Premier Jacinta Allan surveying bushfires earlier this year.

“Victoria is now seeing net debt as a proportion of the economy fall for the first time since 2017 in this budget update,” Pallas said.

“Net debt and net debt as a proportion of the economy are improved … Overall, net debt is down again now to 25 per cent of the size of the economy by the end of the estimates.”

Net debt is now forecast to be $187.3 billion in 2028, an improvement of $500 million.

This financial year, net debt will be $155.2 billion, compared with a budget forecast of $156.2 billion.

Shadow Treasurer Brad Rowswell said Pallas’ comments about the cost of a cup of coffee showed a failure to grasp the cost-of-living pressures being faced by Victorians.

“If you can’t understand that, it’s time to go, it is the biggest issue facing Victorians at the minute,” he said.

“Victoria still has the highest debt of any state in the country … even New South Wales has $48 billion of debt less than Victoria does.”

The fire levy changes came as Emergency Services Minister Jaclyn Symes announced a funding boost of more than $250 million for the Country Fire Authority and the state emergency services, including $70 million to replace trucks, tankers and pumpers.

Symes said the changes to the levy would require legislation, with the intention it would take effect by July 2025.

“I’m hoping that other political parties will see the benefit in the support that this brings to Victorians and emergency service volunteers,” she said.

“Communities are asking more of their local SES volunteers than they ever have before, which is why we’re giving them more funding, new trucks and the latest technology.

“Our emergency services put their lives on the line without a second thought. This package is about making sure they have what they need to keep all of us safe.”

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