Fire and Emergency New Zealand (Levy) Amendment Bill

Members, we come now to the Fire and Emergency New Zealand (Levy) Amendment Bill. We come first to clause 1. The question is that clause 1 be agreed to.

Point of order. I seek leave for all provisions to be taken as one question.

CHAIRPERSON (Greg O’Connor): Is there any objection to that? There is no objection. The question is that clauses 1 to 15 stand part.

Thank you, Mr Chair. Just some brief notes in relation to this particular stage of the bill, before we go into answering questions.

Fire and Emergency New Zealand provides critical services for our community. The Fire and Emergency New Zealand (Levy) Amendment Bill will ensure we have a fit for purpose funding model to enable Fire and Emergency to deliver this role in the future.

Fire and Emergency receives 97 percent of its funding from a levy on insurance contracts. The Fire and Emergency New Zealand Act 2017 outlines the framework for a new levy system that will provide a secure and predictable source of funding that can adopt to changing needs and priorities over time. It will also be as fair as possible and ensure that all those who benefit from the potential to use fire and emergency services contribute to its funding. The Act sets out the types of insurance contracts that must pay the levy and specifies the value of property to be used as the basis for calculating this levy. This bill makes important changes to these features to ensure the levy is simple to implement, to minimise disruption and compliance costs, while remaining aligned to the levy principles in section 80 of the Act.

The bill means only property insured against physical loss or damage from fire will be levied, instead of property insured against any physical loss or damage. Additionally, the levy will be calculated using the sum insured, an insurance contract rather than the term amount insured. These two changes will clarify which insurance arrangements are meant to pay the levy, avoiding potentially complex calculations and stopping some property being charged twice. These changes are more closely aligned with insurance practice and terminology and increase the likelihood that the system will be consistently applied.

The bill also amends the starting date of the new levy system to 1 July 2026. This is needed as COVID-19 delayed how quickly the Government could progress a review of Fire and Emergency’s funding model and develop this legislation. Additionally, this change provides enough time for regulations to be set and for the insurance sector to update their systems to calculate and collect the new levy once the regulations have been finalised.

Finally, the bill makes a minor drafting change to ensure third-party motor vehicle insurers pay the levy. This was the original intent of the Act.

Hey, just to acknowledge, first, the Minister, I think, in her role as Minister of Internal Affairs—the first time in the chair—to acknowledge that. Look, a simple but a technical question—

💬 Hon Michael Woodhouse: She’s an old hand now.

Oh, well, I won’t go easy then—no, only kidding. It’s around motor vehicles and some submitters have raised the question “What is a motor vehicle?” There’s some concern that this current drafting might capture the likes of e-scooters, e-bikes, ride-on lawnmowers, and so forth, and I know that some submitters to the Governance and Administration Committee—particularly within the insurance realm—were asking “What is a motor vehicle?”, and/or “Has the Minister or her officials considered making it very clearly defined?” Because, don’t get me wrong, I pretty much know what a motor vehicle is—cars and trucks—but, at the moment, there is a concern that this could actually go wider and be including the likes of e-bikes, scooters, ride-on lawnmowers, and so forth, which we don’t think, on this side of the House, is what wants to be captured.

Thank you to the member for his question. I acknowledge some of the submitters had concerns around the broadening application of this particular bill. I’m advised, at the time when officials responded to the Governance and Administration Committee in relation to those submissions, there is a definition within the Act; however, they did not believe, on balance, that there was enough of a problem to change the definition. I should probably also point out that a very important part of this is the insurance contract itself, so insurers will have their own definition of what a motor vehicle insurance is—so what insurance is for motor vehicle purposes. So, on balance, there was no need to change the definition, and we believe we’ve struck the right balance.

I thank the Minister for that. I suppose the question is, ultimately, whether she will consider looking into this further; I know there’s a wider review. I think one of the concerns that comes out of the insurance industry, in particular, is the dis-alignment—that’s probably bad English—between their rules, understandings, and definitions, and what we use in legislation, and the sort of raison d’être of this amendment is to try and align things a little bit more to what the insurers understand things, so it’s smoother, simpler. Is she open to considering defining further, so that, actually, what is levied does align more clearly with the definitions, if you will, of the insurance industry?

Thank you to the member for his question. At this time, on balance—given the submissions, given the Governance and Administration Committee review, and given the advice I’ve received from officials—no, but however, obviously, always in future I’m open to looking at—if there are further calls, and once the legislation is put through, once the regulations are put through, if there is a need to amend in the future, I will of course be open at that time.

Thank you, Mr Chair, and I join with other colleagues around the Chamber in congratulating the new Minister of Internal Affairs on her first time as the Minister in the chair.

I was wondering if the Minister could give us some reflections in light of the intensive weather events that happened at the beginning of the year. This legislation came to the House and we’re passing it, and so on and so forth, but between then and now we’ve had some pretty intensive weather events, and with the narrowing down of the levy to just fire damage within the context of flooding in particular, and I was just wondering, in terms of alleviating any concerns or anxiety around that, if the Minister had some reflections.

Thank you to the member for his question, and I always want to acknowledge the people that have been affected by the recent extreme weather events. Having been on the ground in both Napier, Auckland, and throughout some of the other affected areas, I have seen firsthand the impact of it and also the longer recovery that it is to come.

In relation to the member’s question—and I’m going to narrow it, to keep it within the scope of this particular bill—the purpose of this bill is to be able to provide a much more consistent approach in relation to the levying of insurance contracts to ensure that Fire and Emergency New Zealand has the sufficient revenue it needs. Obviously, that is something that, with extreme weather events, any Minister, no matter what portfolio they are in, needs to be cognisant of. However, for this particular bill, because it is a levy for insurance contracts, there has been no particular attention taken to those extreme weather events. But I think, in general, we have to make sure there are sufficient funds there for Fire and Emergency New Zealand to do the job that they need to do to respond to the extreme weather events.

Clauses 1 to 15 agreed to.

Bill to be reported without amendment.

House resumed.

Madam Speaker, the committee has considered the Fire and Emergency New Zealand (Levy) Amendment Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

The Fire and Emergency New Zealand (Levy) Amendment Bill is set down for third reading immediately.

Third Reading