Fire Service set for major restructure

Fire Service set for major restructure

The 2016 Budget has its first surprise -- consumers will be hit in the pocket with a $161 million bill to fix up the Fire Service.

Internal Affairs Minister Peters Dunne has announced the 'Fire Levy' paid by insurance-holders will be increased from next year to cover the costs of a major restructuring.

The Insurance Council is calling the increase a "sneaky tax".

Fire Service set for major restructure

Chief executive Tim Grafton says the levy is unfair on those who pay insurance, who are effectively subsidising "freeloaders" who don't pay their insurance and still benefit from the Fire Service.

"The losers are people who insure themselves, the winners are those who don't; it's bizarre.”

Mr Grafton says Police are paid out of general taxation, and that should also be the case for the Fire Service.

The Fire Service says the levy collected $350 million this year, paid on insurance against the risk of fire on property, contents and cars.

Fire Service set for major restructure

That levy is set to increase by $161 million over three years from 2017, by broadening it to include insurance on material damage, not just fire damage.

The fire levy on motor vehicle insurance will also be extended to include third party insurance.

The Government will also commit $10 million per year towards "public good non-fire activities" such as responding to medical emergencies and floods.

The restructure will combine Urban and Rural Fire Services into one organisation by mid-2017 under a new handle -- Fire and Emergency New Zealand -- to reflect the changing role of the Fire Service.

Fire Service set for major restructure

The country's 12,000 volunteers and underfunded rural services will get a $191 million boost.

Southern Principal Rural Fire Officer Mike Grant is calling the restructure a "once-in-a-lifetime opportunity".

He was pleased with the plans for regional committees to help drive the organisation and funding to support the rural sector.

Fire Service set for major restructure

Mr Dunne says a levy system is the fairest and simplest way to fund the Fire Service.

The Government will introduce "anti-avoidance provisions", similar to those in the Income Tax Act, into the legislation to prevent people and companies dodging the levy, he says.

But he says people choosing not to take out insurance would always be a problem.

"The Fire Service will continue to provide coverage for those people, you can call them freeloaders if you like, but we're not going to move to a user-pays Fire Service."

He says there will be no job losses as a result of the restructure.