Source: Interest.co.nz website 12 August 2014
The Insurance Council of New Zealand (ICNZ) is pushing for change to the way the Fire Service is funded, arguing the existing Fire Service Levy unfairly places the burden on insurers rather than the Government for the provision of a public good.
ICNZ, the lobby group for insurers, commissioned the New Zealand Institute of Economic Research (NZIER) to identify alternatives to the existing levy on insurance to fund the New Zealand Fire Service. The levy is applied at 7.6 cents per $100 of premiums on insured property.
Instead, ICNZ proposed New Zealand should adopt international best practise that’s fairer and more efficient, and provides sustainable funding for the Fire Service. Among the options put forward were a levy collected on property by local councils via rates.
“Internationally, the levy is out of step with best practise and should be changed,” says ICNZ.
Australian states are moving from insurance-based levies to property-based levies to fund their fire and emergency services.
Tax funding the best option
NZIER says its analysis suggests the best option for New Zealand is having the Fire Service funded entirely from general taxation. The next best option is to apply a mixed model that includes some general taxation combined with levies on rateable values of property.
“The Fire Service’s prime focus in a fire is to save life not property. These days most of the Fire Service’s activities are directed to other emergency responses, not putting out fires. This means that despite being called a ‘Fire’ Service, the flimsy rationale for linking the Fire Service Levy to insurance premiums on property is more remote now than it ever has been,” ICNZ adds.