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NZ’s contentious fire levy to get a ‘clean-slate’ review

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The New Zealand Government plans to issue a discussion paper that may lead to removal of the controversial insurance-based fire and emergency services funding levy.

Fire and Emergency New Zealand (FENZ) was formed in 2017 through the amalgamation of rural and urban authorities, but the introduction of revised levy arrangements was delayed.

Internal Affairs Minister Tracey Martin says the proposed changes, which are still based on a levy on insurance premiums, present problems for some businesses and property owners. So now it is time for a fresh look at the funding.

The review has been welcomed by the Insurance Council of New Zealand (ICNZ) and the Insurance Brokers Association of New Zealand (IBANZ), which have been outspoken opponents of the decision to continue with insurabnce-based funding.

“We have an opportunity to take a clean-slate approach rather than simply stick with the model we’ve had historically,” Ms Martin said.

“We will be looking to achieve a model that is stable, universal, fair and flexible. No single option will fully satisfy all of these criteria, but I think we can do better than what we currently have.”

She Martin says a number of funding regimes are used for fire services internationally, and there appears to be a trend away from insurance-based levies, including in Australia.

“FENZ, like the fire service before it, is funded by a levy on property insurance and there are flaws in insurance-based funding,” Ms Martin said.

ICNZ CEO Tim Grafton says the levy is “grossly unfair” because it is imposed only on people who insure their homes, contents, motor vehicles and other property.

“This is now an opportunity for the first time in many years to get this right,” he said. “Hopefully, all parties will support change to a fairer system.”

IBANZ CEO Gary Young says levy collection is a “huge imposition” and changing systems to meet the proposed new arrangements could have cost the industry about $NZ40-$NZ50 million ($37.9-$47.4 million).

He told insuranceNEWS.com.au that his association and ICNZ “have worked long and hard on this issue and it’s very rewarding to at last have the Government prepared to listen and act on our concerns”.

Levy changes due to be introduced under the FENZ Act will now be delayed until 2024, to allow time for all options to be considered.