UFBA agrees on need for change to fire levy

by Maryvonne Gray 25 Mar 2015

UFBA agrees on need for change to fire levy

The CEO of the United Fire Brigades’ Association of New Zealand agrees with those in the insurance industry that there are better ways to fund the Fire Service than through a fire levy on insurance premiums.

But George Verry says he is still unhappy that people are finding ways to avoid paying it – the legalities of which are still awaiting a Supreme Court decision.

Verry told Insurance Business that the organisation, which represents every New Zealand fire brigade, is considerably impacted by any shortfall.

“We are very concerned about the fact that this levy is creating a problem by what we’d call tax levy avoidance.

“What people are doing is rearranging their affairs in a way that enables them to pay less or none so the Fire Service finds it harder to fund us than it would do otherwise.”

Verry said the UFBA was looking at various alternative funding options and had commissioned a report by PwC to use as an advocacy tool.

“We think it should be based on property, another option could be to reflect the way the fire and rescue people are now doing motor vehicle accidents maybe there should be a claim on the health sector, ACC or even on the Ministry of Transport,” he said.

“What we’re looking for is something consistent so the Fire Service and ourselves can plan, and that is adequate, so that we can do our work with the best possible gear and safety, as long as it meets those three criteria.

“But something that more accurately reflects the use of the Fire Service would be the more logical approach.”

Meanwhile those within the industry are predicting the imminent Supreme Court decision will have a major impact whichever way the decision goes.

“If the Supreme Court overturns the High Court and the Court of Appeal that will be significant because that will mean the Fire Service was right all along and there may be some nervous brokers out there,” said one legal expert, familiar with the subject.

“The penalty regime for levies is capricious and if the Fire Service Commission enforces the regime, insureds will find they’ve got this large amount of money to pay as penalty interest.

“The insureds will be in the gun and if it wasn’t made clear to them how risky this was, they’ll say the brokers were negligent and they may be held liable because of poor advice.

“Equally, if the Supreme Court find in favour of the lower courts’ decisions then the legislation is flawed and will have to be changed because it’s not achieving the intention it was designed for. Then how that plays out and whether they carry on with levying insurance will be on the line.”