FENZ levy increase scaled back amid funding review

FENZ levy increase scaled back amid funding review | Insurance Business New Zealand

Insurance News

FENZ levy increase scaled back amid funding review

The amount of the planned increase has been reduced for the coming years

Insurance News

By
Steven Byerley

A planned increase in the firefighting levy, collected through insurance premiums, has been reduced for the coming years. The levy, which rose by 12.8% in July, was set for an additional 5.2% hike by 2029, but the New Zealand government has revised that down to 2.2%.

The government also lowered a proposed flat charge on vehicle insurance from $40, as initially requested by Fire and Emergency New Zealand (FENZ), to $25, according to a report by the NZ Herald. Currently, the levy sits at $9.53.

Internal Affairs Minister Brooke van Velden said these adjustments ensure that FENZ will still receive sufficient funding for its essential operations without overburdening New Zealanders. “It is important that Kiwis are not paying more than necessary to ensure FENZ is resourced to maintain high standards of frontline services,” she said in a statement.

Van Velden also tasked FENZ with finding $60 million in savings by 2029 to strengthen its financial reserves, the Herald reported. FENZ, which relies on levies for 97% of its funding, has faced criticism from the insurance industry, which argues that the service should instead be funded by the Crown.

Earlier this year, FENZ defended its initial 12.8% increase, describing it as “urgent and cannot wait,” citing rising operational costs and immediate funding shortfalls. The agency reported that it faces significant expenses for upgrading fire stations, addressing seismic and asbestos issues, and maintaining an ageing fleet of fire trucks, many of which are prone to breakdowns.

FENZ forecasts that its operating costs will rise to $748 million next year, alongside nearly $90 million in capital costs. In comparison, its operating costs were $423 million in 2016. Additionally, the agency must repay a $75 million loan from the Crown.

While the 12.8% levy hike has provided some financial relief, the minister requested evidence from FENZ to justify the need for the subsequent 5.2% increase. Van Velden had previously declined requests from RNZ to release briefings related to the levy hikes.