At present, three-quarters of the annual $950 million cost of funding Fire and Rescue NSW, the Rural Fire Service and the State Emergency Service is paid for by a tax on insurance companies, passed onto customers via higher premiums for home contents insurance. The rest is funded by the state and a tax on local councils. The government wants to overhaul the system, which it argues is unfair as it allows those without insurance the benefit of fire and emergency services without having to pay for them. It also increases the price of insurance. The owners of the estimated 810,000, or 36 per cent, of NSW properties that do not have home contents insurance would be forced to share the funding load for the first time, as the system moves from an insurance- to a property-based levy. It is understood the government felt that to proceed with the levy it first needed to instil confidence in the land valuation system on which it would be based.

The parliamentary report proposes that landowners be given more power to appeal against official valuations and calls for a rethink on how council rates are determined to remove discrepancies in the size of the bills issued to owners of similar land. ''This is a system that has systemic issues, particularly regarding the fairness in the way landholders are treated and the transparency surrounding how land is valued,'' said the chairman, Hornsby MP Matt Kean, in his foreword. The report finds a lack of transparency in the valuation system because the guidelines used to value land are confusing and not readily available to the public. It says the independence of the valuer-general's office has been undermined by its relationship with the Department of Land and Property Information, whose officials are sometimes involved in valuations. It recommends abolishing the office and replacing it with a valuation commission. A chief valuation commissioner would issue clear public guidelines about how land was valued. The report says council rates should be calculated on the average of the past three years of valuations - as land tax is - to ''dampen'' big fluctuations in land tax bills and rates notices.

Land-holders should also be entitled to request a valuation review within three months, and would be able to make a submission to the review. This would include the right to a ''conference'' with the valuer to discuss their submission. After three months, the land-holder would be eligible to apply to the NSW Civil and Administrative Tribunal or the Land and Environment Court. A discussion paper on the fire services levy released last year proposed an annual charge of up to $267 on land valued at $250,000, based on applying an ad valorem rate of $1.07 per $1000 of land value. The median value of metropolitan residential land in NSW is $280,000 which would mean an annual levy of about $300. For rural residential land the median value is $144,000, which would equate to an annual levy of $154. The paper argues that removing the levy on insurers would save the average household with house and contents insurance about $250 a year.