Internal Affairs Minister Peter Dunne has confirmed a 40 per cent increase in the Fire Service levies applied to insurance policies.
From July 2017, the existing Fire Service will be replaced by Fire and Emergency New Zealand, which will deliver fire and emergency services across the country. The organisation will bring together volunteer and paid, urban and rural fire-fighters, to deliver a comprehensive national emergency service.
To fund that, more money will need to be levied from insurance-holders.
New rates to apply from July will mean New Zealanders with house and contents insurance will have a levy increase.
The total levy on house and contents insurance will increase to $127.20 per year. (From $91.20)
The total levy on car insurance will now be $8.45 per year. (From $6.08)
“The new levy rates will ensure that Fire and Emergency New Zealand has the necessary funding to deliver essential fire and emergency services to both rural and urban communities,” Dunne said.
“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.
“Local government will also no longer fund the costs of rural fire services, approximately $30 million nationally, from local rates.
“The Government expects local government to return these savings to ratepayers as a consequence.”
The levy change has been unpopular with the insurance industry, which has argued the service should be funded from general taxation. It has argued the Fire Service does more now than simply putting out fires.
Tim Grafton, chief executive of the Insurance Council, said the Government had not taken heed of submissions to its consultation document.
“If you are a low-income consumer then a 40 per cent increase in tax will not be immaterial, I would imagine,” he said.
Domestic policies will have their tax applied at a rate of 10.6c per $100 insured, to a maximum amount of $100,000 in house insurance and $20,000 for contents cover.
That means the maximum levy payable per house is $106 and $21.20 for personal property
But commercial property owners will pay that same rate on all of their insurance cover, with no cap.