Public input has been invited on the Fire and Emergency New Zealand Bill (FENZ Bill) to create a unified fire service and on the regulations which will inform the regime.
Submissions on both close on 18 August 2016. The levy rate will be consulted on separately later this year.
The Bill is now before the Government Administration Committee and is due to be reported back to the House on 5 January next year, a date that seems almost certain to be changed as the House is unlikely to be in session so early in the New Year.
The Bill will rename the New Zealand Fire Service Commission Fire and Emergency New Zealand (FENZ) which will be funded principally from levies. These will include insurance for material damage as well as fire damage and will be subject to review every three years.
In addition to the functions currently performed by the Fire Service Commission, FENZ will also be responsible (where resources permit) for:
- responding to medical emergencies
- performing technical rescues
- providing assistance at crash scenes
- responding to weather related and other natural hazard events, and
- promoting safe practices regarding hazardous substances.
FENZ is also tasked with developing a dispute resolution scheme (including for levies), to be approved by the Minister.
Scope of regulations
The proposed regulations include:
- the ability to set different fire service rates for residential and non-residential users, and to cap levy payments
- the removal of the levy exemption on a range of property (e.g. notably forests and crops; electricity and telephone poles, lines and cables; roading; ships; aircraft; dams; mines and quarries), and
- insurance information requirements for levy payers.
New levy regime and exemptions
The levy will be based on insurance covering physical damage to - or loss of - property, rather than being limited to fire damage. This change will come into effect on 1 July 2018. The rationale for the change is that:
- fire services also respond to non-fire related threats
- it makes it more difficult to avoid contributions by separating out fire insurance from other forms of insurance, and
- it is relatively easy to administer.
A cap is intended to provide transitional relief to large policy-holders (government agencies, big business) which may face potentially significant levy increases.
A separate levy will be applied to motor vehicles weighing less than 3.5 tonnes. This will insure against physical damage to the vehicle and to a third party.
Currently there is a range of exemptions. The discussion document proposes retaining them only for water reticulation piping, offshore oil installations and cable and pipelines on the sea floor.
The proposed test for allowing an exemption is that the Minister is satisfied there is no potential for FENZ’s services to be required at the property.
Input is invited on whether other properties should also be exempt.
Insurance companies are now required to provide data only on aggregate levy payments across different property types although most voluntarily provide more detailed information on clients paying levies over $1000 a year.
Four change options are proposed;
- the status quo supported by a memorandum of understanding between FENZ and the insurance sector (through the Insurance Council and the Insurance Brokers Association)
- annual audits of all insurance providers
- a detailing of the disclosure required above the $1000 threshold (policy type, start and end dates, invoice date, amount insured, insured’s name and levy paid), and
- a requirement that this information be provided on all levy payments over $100 (rather than $1000). This is the government’s preferred option.
The FENZ Bill is expected to commence on 1 April 2017 and the FENZ structure to begin operation on 1 July. The implementation will be phased in, ending in 2020. Further regulations may be made over the course of the transition. These would also be opened for consultation.
Chapman Tripp’s earlier commentary on the Bill is available here.