Industry bodies ramp up fire levy debate

by Maryvonne Gray 11 Mar 2015

Industry bodies ramp up fire levy debate

The Insurance Council of New Zealand (ICNZ) is making a fresh bid to lobby central government on how it funds the Fire Service with the aim of removing the levy from insurance premiums.

CEO Tim Grafton has called for the talking and procrastination to finally end in ICNZ’s latest newsletter – and now a spokesman for Internal Affairs Minister Peter Dunne has confirmed the legislative process is due to start later this year.

Grafton had reiterated how urgent the matter was, saying: “With the mounting body of expert opinion that funding the Fire Service through a levy on insurance premiums is unfair, outdated and out-of-step with the rest of the world, it’s time for the Government to act.”

While he wouldn’t outline exactly how ICNZ might up the pressure on the Government, he pointed to a report by the New Zealand Institute of Economic Research (NZIER) which ICNZ commissioned last year which came up with two alternative funding options.

He said that, plus more than a dozen reviews here as well as overseas, all point to change in New Zealand.

“The need for change is more pressing with the current review because the Fire Service Commission has a vision of transforming the service in the primary emergency response organisation which begs very obvious questions as to how such a service should be funded on a sustainable basis in the future,” he told Insurance Business.

Gary Young, CEO of the Insurance Brokers’ Association of New Zealand (IBANZ), said his organisation was on the same page as ICNZ on this issue.

“They’ve [ICNZ] said ‘enough’s enough’ which is no different to what we think so I’m sure if we can do anything together that helps the cause then we’ll do that,” he said.

“We’re both fed up with endless reviews that go nowhere,” he continued. “You can go back a couple of decades and there’s just constant reviews and every time the answer is the system is not good, it’s inefficient, it’s unfair, but nothing is done about it so it just drags on and on.

“People who are prepared to be responsible and take insurance are funding a service that everybody in the country uses, and it puts more and more responsibility on people like the insurance brokers to collect this levy to get it right, and if they don’t then they get penalised but in the meantime get nothing for doing the job.”

A spokesman for Internal Affairs Minister Peter Dunne confirmed the scope of the current review had been expanded to include the issues raised in the Swain Report – mandate, governance and funding (which includes the Levy) – plus funding and structure of rural and urban fire services, modernising the fire services legislation, the volunteer framework and workforce engagement, as well as fire services’ coordination with other emergency services.

Young welcomed the Department of Internal Affairs’ renewed look at the funding issue, but feared their response might not be significant enough.

“Even the Swain report said you’ve got the issue of freeloaders who don’t have insurance but still get the full service that those with insurance are paying for. Now, that’s totally unfair, and doesn’t recognise those who mitigate their risks.

“So, if you install sprinklers in your building you don’t get a reduced fire service levy, you still pay as much as those that have got buildings that are totally unsafe. That doesn’t even accord with the principles of insurance which is to rate as according to the risk. So fairness is hardly part of it.”

But the Minister’s spokesperson said the Minister is aiming for a discussion document to be released mid-2015 for public consultation, following discussions with stakeholders.

“The objective of the Review is to develop policy proposals for fire services fit for the 21st century,” he said.

“Following the consultation period, Cabinet will be asked to consider the policy proposals. The legislative process is expected to start later in 2015.”

The NZ Fire Service and the United Fire Brigades Association were also approached for comment but were unavailable at the time of publication.