The Insurance Council of New Zealand says the Government has ruled out the fairest, most cost effective and sustainable way of funding the Fire Service in the release of its Fire Services review discussion document today.
ICNZ CEO Tim Grafton said only two narrow alternative options were being consulted on, effectively shutting down ‘free and frank public discussion about the best way to fund New Zealand’s fire services’.
By doing this, Grafton said: “The Government has made a mockery of genuine consultation.”
The review listed two options for funding the Fire Service.
Option one would continue to be based on insurance with a change in how it is calculated in order to make the amount needing to be paid easier to understand.
Suggestions included attaching the levy to all insurance contracts for material damage by either the amount of the sum insured or the insurance premium. These could be by fixed rate, a fixed charge or a variable rate, and either capped or uncapped.
Option two would be a mixed funding model with contributions from insurance (excluding vehicle insurance); Government contributions for non-fire activities and to reflect the under-insurance of Crown properties for fire damage; and contributions from the motor vehicle sector.
But Grafton was damning in his view of the options.
“Insurers have been arguing for 20 years that the fairest way to fund the Fire Service is from general taxation, but the Government has dismissed that again, despite its advisers stating it is fairer, more cost-effective, easy to administer and provides a stable and predictable funding base.
“By sticking with a levy on insurance, the Government’s review reads like a shame-faced apology with a narrow set of options that suffer either from creating unfairness, complexity, additional compliance costs or potential avoidance loopholes.”
Grafton said firefighters were highly valued and needed to be supported by a modern, efficient structure, not one that hadn’t fundamentally changed for 70 years.
He cited over 16 independent reports on the Fire Service in the past 20 years, almost all of which had recommended shifting away from a levy on insurance
“It is 150 years since the UK Government took over the running and funding of brigades,” he said.
“Australia has also thrown out a levy on insurance leaving New Zealand out of step with the rest of the world.”
He said despite the shortcomings, ICNZ would encourage the Government to make an unfair system a little fairer.
“To do that, the Government must up its contribution to funding the Fire Service and reduce the burden on those who bear a disproportionate burden of the costs.
“It needs to shift the levy off comprehensive motor insurance to car registration which would hardly be noticed with the massive cuts to ACC.
ICNZ also wanted to see many of the ambiguities and complexities of the present collection systems sorted out.
Read more here
for the conclusions drawn from an ICNZ-commissioned report by the New Zealand Institute of Economic Research (NZI