Fire Service review rules out fairest option

Insurance Council Chief Executive Tim Grafton says “the Government has made a mockery of genuine consultation by ruling out the fairest, most cost effective and sustainable way of funding the Fire Service” in its release of the Fire Services review discussion document.

As only two narrow alternative options are being consulted on, free and frank public discussion about the best way to fund New Zealand’s fire services has been shut down.

Much of what the Fire Service does is a public good that all Kiwis benefit from, and is becoming less to do with putting out fires so all New Zealanders should make a contribution. “The current system of funding pings everyone who insures their property so those who don’t insure free-ride and expect firefighters to rescue them when it counts” he said.

Grafton says “one of the biggest free-riders of all is the government itself. Many government agencies don’t bother to contribute, or minimise their contribution, and so shift higher costs to people who do insure their home, contents and motor vehicles”.

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 either suffer from creating unfairness, complexity, additional compliance costs or potential avoidance loopholes” says Grafton.

Firefighters are highly valued and need to be supported by a modern, efficient structure, not one that fundamentally hasn’t changed for 70 years. There have been over 16 independent reports on the Fire Service over the past 20 years and almost all have recommended shifting away from a levy on insurance.

It is 150 years since the UK Government took over the running and funding of brigades. Australia has also thrown out a levy on insurance leaving New Zealand out of step with the rest of the world.

Despite these significant shortcomings, the Insurance Council will 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. Grafton says “it needs to shift the levy off comprehensive motor insurance to car registration which would hardly be noticed with the massive cuts to ACC”.

The Insurance Council also want to see many of the ambiguities and complexities of the present collection systems sorted out.

ENDS

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