Fire and Emergency New Zealand (Levy) Amendment Bill

Thank you, Mr Chair. Thank you very much. Could I just acknowledge my honourable colleague and the questions that he has asked me—questions that, quite rightly, need to be answered, so thank you very much. So I will take a moment to talk about Supplementary Order Paper 205. If I could just recap, the main purpose of the original bill, as I’m sure my honourable colleague has already mentioned, was to amend the commencement date for the new levy regime, because currently in the legislation, when Fire and Emergency New Zealand was being amalgamated under the previous administration, 1 July was the day for a new levy to commence.

The Fire and Emergency is funded currently on property insurance. Since I sat in the seat, one of the things that has become clearer as the Department of Internal Affairs has been working with insurance companies and insurance brokers while they were planning on the implementation of this new levy is not only that there wasn’t going to be enough time for insurance companies to amend their computer systems and so on and so forth, hence the reason for the original bill, but what has since come to light is the fact that the Department of Internal Affairs was not previously given permission to pursue any other ways for the levy to be collected. Internationally, property insurance or through insurance companies is not the only way for a fire and emergency service to have that levy collected and funded.

There were two things that were really important when I took over this particular portfolio. One was that the levy would be fair to those who were paying the levy for the services that they were going to receive from Fire and Emergency New Zealand. The other was that Fire and Emergency New Zealand had enough funding to do the work that we as a society expect them to do. What came to light, and it was sort of alluded to previously, was that the current implementation, should we go forward with what is in the original bill, would not be fair. It would not be fair, for example, that a very large national property portfolio insured at, say, $4.5 billion against fire and $25 billion against material damage will have their levy rise under what is proposed from $4.7 million per year to $18.5 million per year. Now, that cannot be fair. This would be a large supermarket chain, for example—a very large organisation. But those large organisations also put in a reasonable amount of funding from their own purse to make sure that they meet all the fire restrictions, all the fire alarms and smoke detectors and sprinkler systems and so on and so forth. Under the current levy structure, there is no consideration of the upfront cost to, say, a large company and what they spend to try and minimise the damage or the requirement that they might need for fire and emergency services.

So I have requested and am requesting that the House support Supplementary Order Paper 205 to extend the time frame. The current levy in the current way that it is applied provides enough funds for Fire and Emergency New Zealand to continue the work that it is doing, to invest more in our rural fire service and our volunteer fire service, and to move across from the amalgamation and integration in the way that was originally envisaged by the previous Minister. So I have no concerns at all that they will not have enough funding if we just continue the status quo right now, but I do want to give the Department of Internal Affairs the time to really go through a first principles look at how and who should pay this levy, because I do think that fairness is just as important as the ability to make sure that the service is funded.

The second part of the Supplementary Order Paper is to remove the requirement of the defence force to have to pay the levy, and that is in recognition of the fact that they already have their own fire service and they also put cells on the ground in every emergency—Kaikōura, for example, they were there; Christchurch; Nelson-Tasman fires, they were there. So it’s in recognition that the defence force actually are part of the Fire and Emergency Services, and that they give us a whole lot of support, so therefore to levy them as well—again, we come back down to what is reasonable, practical, and fair. Kia ora.

Thank you, Mr Chair. My colleague Kanwaljit Bakshi, chair of the Governance and Administration Committee, asked the Minister a pretty fair question in his initial contribution, which was what might those funding sources for the levy be? I’d like to reiterate that question to the Minister, and I would like the Hon Tracey Martin to explain to the committee her initial thinking, perhaps, about what other forms of levy options will be considered. Would it be a levy on ratepayers, for example? Well, if that were so, that would require some very careful consideration, and from our point of view, costs on homeowners and always, ultimately, on people who are paying rent will have an inflationary effect. Now, I understand the, you know, ups and downs—if you set the levy at a certain point, you have to gather it from certain places, so there will be pluses and minuses in there—but I do need and would request and urge the Minister and her officials to think very carefully about just who they are going to strike this new levy from.

National does support Supplementary Order Paper (SOP) 205. National supports this work and commends the Minister for her approach to Fire and Emergency New Zealand. In the time that the Minister has been in charge of that role, I think that the changing times for Fire and Emergency New Zealand have been pretty smooth, considering the long amount of time that the change has stood in front of Fire and Emergency New Zealand personnel and volunteers and their communities, which is why I think in agreeing to this SOP to extend the time for implementation of the levy so that the Minister and her officials can develop some other options for the levy, we need to be assured that, while time is agreed to, timeliness of that consultation should be at the forefront of the Minister’s mind, and also the equity issues around just who is going to be levied to fund Fire and Emergency New Zealand.

Just before I give the call, I’m just going to let the member know that I’ve reset his number of calls back to zero, so this is his first call since the leave was taken.

Thank you, Mr Chair. First of all, I would like to thank the Minister for her prompt response to the questions raised by myself. I would, again, like to ask the Minister—the present regime is creating a huge surplus and we want to know where that surplus will be used in the future. That is an important part of this levy set-up, which is applicable right now and will be extended until 2024. So if we have got continuous surpluses in the levies, where is that money going to go? So that one clarification the Minister needs to make.

As my colleague the Hon Jacqui Dean has raised, what other options is the Minister considering to replace the present levy regime? That is equally important because the Minister has talked about fairness, and that fairness can only be brought in when there is equity for everyone contributing for this important role. The Minister needs to come up with the answer if she can tell us how she plans that, in the future—what options she has got for collecting the levy in the future for Fire and Emergency New Zealand (FENZ).

Lastly, about the road accidents—that is another avenue where we see there is increasing constant call-outs for FENZ, and they are doing a great job for the community. So if the Minister can address those questions, I’d really appreciate it.

Thank you very much, again. Thank you my learned colleague for the questions. First of all, to be upfront, I don’t actually have a preference, nor have I made any decision, with regard to where I think this levy should go. I just think that because the Department of Internal Affairs was not given the opportunity to truly have a look at all of the international options that we need to give them the time to do that. I hope that what I can do, from this moment forward, is continue to work with the honourable member and keep him briefed before we get to a stage where any suggestion is put forward to this House, because these services, as you have mentioned, are vital to New Zealanders. So, again, I think this is a place where—if the honourable member and myself can work together and keep in touch with each other so that whatever this House decides on, or whatever I finally bring to this House, we have a consensus that it is fair and that it does what it needs to do.

There are a couple of problems with what we’ve got now. People are able to—and I don’t like the word, but it’s a word that’s used a lot in the documentation—“freeload” by choosing not to insure their property and, therefore, are not paying their levy, but they still benefit from the services. It has increased insurance costs and it’s reduced incentives for people to properly insure their properties, and so they’re under-insuring and that doesn’t help anybody either.

The levy collection is complex to administer for insurers. Now, my learned colleague, the Hon Jacqui Dean, she, quite rightly, mentioned that there is one international way that some countries deal with this which is through collecting the levy component inside property rates. That would be a big step for New Zealand but I think it’s something we have to discuss. It would have to be discussed alongside of the resourcing and the mechanism by which one supported, whether it was local government or—how would that work? It’s a discussion we need to have.

Car registration, for example, could include part of a levy rate, rather than having it on the side. Again, something else we need to discuss. General taxation is used in other nations. We need to put everything on the table and have a really, really good look at this in a timely fashion and, again, I would welcome the opportunity to continue to work with my colleague Kanwaljit Singh Bakshi so that there are no surprises. I appreciate that putting this Supplementary Order Paper on the table after this legislation has come out of select committee is not optimum, and I apologise for that. Timing is everything, I suppose, but I do hope from this moment forward to work more collegially with the member so that he knows as much as I know with regard to the pathway we take this, so that Fire and Emergency New Zealand will be sustainably funded on a fair and relevant basis. Kia ora.

Can I, first of all, thank the Minister Tracey Martin for being so candid about what she’s wishing to do. But I would like to provide just a little bit of perspective, and support the Hon Jacqui Dean in her comments that have been made, because a lot of this was looked at previously. One of the reasons why the former Government didn’t go with some options, including the rates-based option, was because at the time—and I had some involvement in this—Local Government New Zealand was adamantly opposed to a rates-based system that would fund what was, effectively, a central government agency to deliver fire and emergency services.

It also went through a process at the time where local authorities were prepared to give up their rural firefighting forces and merge them into the central fire and emergency management service on the basis that it was taken out of rates, and it was all going to be funded by an insurance-based product. So my point today, Minister, is probably to say some of this work has been done and has been thought about. The Government at the time made a decision that they didn’t think they wanted to go down that path, which, in my previous role, I supported. I acknowledge the fairness and equity issues, but if you don’t use an insurance-based product there are really only two ways of forcing payment and that is through general taxation or ratepayer contributions.

So we are prepared, on the side of this House, to support the Supplementary Order Paper. I understand the complexity involved in it but I just have a little bit of caution that if people think they’re going to race off to local government and say we’re going to put a rate—that is a really big call. Certainly, local government, in its process of working out what it does and what central government does, is very resistant to taking on a funding collection role for an entity that it has no governance control over.

So Minister, I think—we’re supporting it, as has been said. You’ve been straight, upfront about the timing issues and I appreciate that. There is enough money to keep the thing going so we’re not in any imminent risk. I would challenge you just to think, though, about the New Zealand Defence Force option. I accept the argument you’re placing—in terms of what they do for their own firefighting capacity and how they help New Zealand—but, once again, one of the big issues that local government finds itself facing is a whole lot of Government agencies do not fund rates—Department of Conservation, a whole lot of other things, do not make a contribution to society. So one of the issues I think the officials need to consider in thinking this next stage through is what is the value of the defence force’s firefighting capability in terms of looking after itself but also helping the community, versus what will be the lost income from a rating-based system and whether that’s the right thing to do.

So I think we’re pretty clear on this side. We do wish to be constructive in the dialogue. I’m just trying to raise some issues from a historical perspective for the Minister’s understanding to say that if you get local government over the line that this is a good thing to do, then it’s on the table, but I wouldn’t take that for granted. Thank you.

Thank you, Mr Chair. I just wanted to pick apart a little bit what a levy regime might look like that included levying Fire Emergency New Zealand levy amounts on, and through, local government. I thank the Minister for indicating that it might well be on the table, but it is spoken, and so, clearly, there is going to be some work done on it.

So can I just go through some of the thoughts that I have, together with my colleague Lawrence Yule, who, of course, has been closely involved in this work in the past and has a pretty good understanding. The questions I would have is what is the cost of collection of a levy amount through a secondary arm of Government in local government? Would that mean that for each territorial local authority (TLA), and maybe regional council or maybe not, we don’t know—let’s just stick, for argument’s sake, with just regional councils because that covers every ratepayer in New Zealand. How then do you differentiate between those ratepayers? Will there be a difference between commercial and residential? OK, well if that’s the case then that is getting a little unsuitable for regional councils so we need to discount those and, perhaps, go back to TLAs—

CHAIRPERSON (Adrian Rurawhe): I’m sorry to interrupt the member, but it has come time for me to leave the chair for the dinner break.

Sitting suspended from 6 p.m. to 7.30 p.m.

The question was put that the amendments set out on Supplementary Order Paper 205 in the name of the Hon Tracey Martin to clauses 4 and 8 be agreed to.

Amendments agreed to.

Clauses 1 to 8 as amended agreed to.

Bill to be reported with amendment presently.