John Pask

Published: August 16, 2021

Submitting To: Department of Internal Affairs (DIA)

Issue for Business: The way in which fire services are funded has changed significantly over recent times with the establishment of a universal fire service under the banner of Fire and Emergency NZ (FENZ). The key issue for the business community is that the costs are currently unfairly apportioned with those having high levels of insurance are paying a disproportionate share of the cost of running the fire service, particularly given that many users of fire services do not have fire insurance and the scope of the fire service has increased significantly over the years away from traditional firefighting activity to a whole lot of other emergency work (e.g. floods and medical events etc).

Action: After significant lobbying from a range of business organisations, the Government has set up a Fire and Emergency NZ funding review reference group, which includes BusinessNZ, and some other large business organisations and insurers. BusinessNZ has consistently pushed for a “risk-based approach” to the funding of Fire and Emergency (i.e costs should in general be reasonably commensurate with the likely risk/cost imposed on the fire service over time through similar risk groupings – a bit like how the ACC scheme works in respect to workplace accidents. (see submission below) The Government has made the decision that a risk-based approach to levies is too difficult to implement and is therefore more inclined to look at possibly retaining the status quo or some variation of it – i.e. levy on insurance contacts for fire damage. While no firm decisions have been made, BusinessNZ is still pushing to ensure that any system finally agreed upon is transparent and reflects relative risks to the extent possible within the constraints of the current government policy decisions already made.

Outcome: Cabinet has approved two key changes to FENZ's funding regime: 1. The FENZ levy will be charged on insurance policies for fire damage instead of policies for any material damage, for example, flood or earthquake; and 2. the levy will be calculated on the 'sum insured' rather than the ''amount insured' in a contract, to align better with how insurance policies are written in NZ.