Fire levies unfair for investors

Unfair funding burden will be imposed on commercial property owners by the Fire Services Commission’s new funding proposals, the Property Council says in a call to arms.

Friday, November 11th 2016, 1:00PM

by Miriam Bell

Commercial and residential property owners with insurance for fire damage will have to start paying significantly more in fire service levies under new Fire Service Commission funding proposals.

The new funding proposals stem from the revamp of the country’s fire services.

New Zealand’s fire services – which includes the New Zealand Fire Service, the National Rural Fire Authority, and 38 other rural fire authorities – are being merged into one organisation.

The new organisation, which will be known as Fire and Emergency New Zealand (FENZ), is set to come into being from July 1 next year.

Under the proposals, the fire service levy on insurance for both commercial and residential property owners will increase from 7.6c per $100 to 10.6c per $100.

For residential property owners, there is a cap of $100,000 for buildings and $20,000 for contents, but there is no cap for commercial property owners.

The Property Council is not happy with the levy proposals and is encouraging its members to make their voices heard.

They view the proposals as unreasonable and inequitable, particularly because they will now fund services, like rural fire services, not commonly used by most property owners.

Early estimates by the Property Council indicate that levy increases will be in the range of 40% for all property owners.

However, they also 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 and residential property owners and investors already pay.

Levy increases of the size proposed will add tens of thousands of additional costs for investors, he said.

“This, in turn, reduces returns from their 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.”

The issue is particularly acute for commercial property owners who often already spend significant amounts on fire and emergency systems within their buildings.

Voutratzis said the Property Council supports a modern, efficient and effective fire service that provides a rapid response to accidents and crises.

But there must be equity in how the fire service is funded and an acknowledgement that funding must be tied to the users of these services, he said.

“In our submission to the Fire Services Commission, we are calling for a review on the proportion of funding from levies that property owners will pay for fire services.

“There must be fairness and proportionality of levy increases to match the fire services that New Zealanders use.”

The consultation period on the proposed levy increases is now underway and public submissions can be made until November 30.

The Property Council is submitting on behalf of its members, but submissions can also be made online here.

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