Fire and Emergency New Zealand Funding review – high-level impact of changing funding model
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The Government wants to know if there is a better way to fund Fire and Emergency New Zealand (Fire and Emergency). The funding review will proceed in two stages.
In this first phase, we’re looking at the high-level funding approach for Fire and Emergency. This could include sticking with the existing insurance-based levy approach (with some improvements) or moving to an alternative model like a property-based levy.
In the second phase of the review, we’ll be looking at the impacts of the Government’s preferred option in more detail, and how to design the system so it is fair. We’ll also be consulting during the second phase of the review, so you’ll be able to have your say then on any possible impacts for you. In the meantime, the levy amount and who it applies to won’t change.
More detailed information is available in the discussion document on the Department of Internal Affairs website: www.dia.govt.nz/firefundingreview
Who is currently paying the levy?
The Fire and Emergency levy is collected on businesses, households and motorists through their insurance. For businesses, households or motorists without insurance, they are not required to pay the Fire and Emergency levy. There are also several exemptions that apply.
How will changing the funding approach affect how people contribute to the levy?
This is a key question for the Government during this first phase of the review. We have identified the following potential impacts:
- Uninsured businesses, households or motorists – are likely to face an increase in costs. This is because they are not currently contributing to the levy. There will be some exceptions to this (for example, where a landlord is paying insurance).
- Insured households or motorists – are unlikely to face a big change in cost. This is because they are currently paying the Fire and Emergency levy so any increase in cost will be offset by lower insurance costs.
- Insured businesses – are harder to assess due to more complicated insurance arrangements. Generally, businesses with lower levels of insurance are more likely to face cost increases than those with more comprehensive insurance.
It is important for us to understand potential impacts now so they can be factored into the second phase of the review.
In the next phase of the review we’ll look at the actual levy rate and what kind of caps or exemptions might be appropriate. While it is difficult to say at this point what the cost impacts will be, there will be an opportunity to have your say on the new rate and possible exemptions in the future. In the meantime, the levy rate and who it applies to won’t change.
