by Miriam Bell
The new levies are to fund New Zealand’s fire and emergency services, which are in the midst of being merged into one organisation - Fire and Emergency New Zealand (FENZ).
They will come into effect on July 1 this year, although they are set to be changed again next year.
People with house and contents insurance will now have to pay about $36 more each year, with the levy increasing by around $0.70 per week.
The total levy on house and contents insurance will increase to $127.20 per year.
At the moment, residential property insurance holders pay around $91.20 per year.
Internal Affairs Minister Peter Dunne said the new levy rates will ensure that FENZ has the necessary funding to deliver essential fire and emergency services to both rural and urban communities.
“Some commercial and public entities will face larger increases, though the new legislation will allow for certain measures to address affordability and fairness concerns that were raised during the consultation process.”
He added that rural fire services will no longer be funded by local government from rates and the government expects those savings to be returned to ratepayers.
To date, the new levies have attracted considerable criticism from the likes of the Property Council and the Insurance Council.
The Property Council is not happy with the proposed new levies because while there is a cap for residential property owners, there isn’t one for commercial property owners.
They estimate that nearly 60% of the total levy will come from non-residential property owners and 37% from residential property owners.
Property Council director of policy and advocacy Alex Voutratzis said the levy changes will add substantial financial impost to the insurance that commercial property owners already pay.
“This, in turn, reduces returns from commercial investments as more profits from investments are needed to fund these levy increases.
“These proposed increases are another example of a funding burden unfairly falling on the shoulders of the apparently deep-pocketed property sector.”
For the Insurance Council’s CEO, Tim Grafton, a major issue with the new regime is how to apply the levy to different types of property owners.
This is particularly in situations where there might be a mixed residential and commercial building or different types of businesses in a commercial building.
He said other issues include exemptions and proposals to smooth the passage of payment for the biggest payers which could impact on to others.
The government is consulting on the details of the new regime until April 19. The Fire Services Transition discussion paper is here.
Read more:
New fire regs costly, more complex for investors
Fire levies unfair for investors
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