Budget 2016: $303m to merge and modernise New Zealand’s fire services

Internal Affairs Minister Peter Dunne today announced funding of $303 million over five years to combine urban and rural fire services into one organisation from mid-2017.   

“The name of the new organisation – Fire and Emergency New Zealand – reflects the wide range of services that our firefighters provide for their communities, including callouts to road accidents and natural disasters,” Mr Dunne said.

“Merging the New Zealand Fire Service, the National Rural Fire Authority, and the fire functions of 40-plus Rural Fire Authorities is a significant and complex change,” said Mr Dunne.

$112 million of capital funding will be spent on moving to the new organisation over four years, beginning in 2016/17.  The remaining  $191 million of operating funding over four years from 2017/18 will be spent on new measures to address funding gaps in rural fire services, set up local committees to ensure community needs are well understood by the single fire organisation, and better support for New Zealand’s 12,000 fire volunteers.

“This funding package shows our commitment to building a 21st century fire service that supports its career and volunteer workforce, that supports rural and urban communities, and that keeps strong links to civil defence and other emergency services.”

The fire levy (paid on insurance for contents, property and motor vehicles) will become the main source of funding for the new organisation, replacing a variety of funding sources for rural fire services.

From July 2018 the fire levy will be broadened to include insurance on material damage, not just fire damage, to better reflect the range of services Fire and Emergency New Zealand will provide. The fire levy on motor vehicle insurance will be extended to include third party insurance.

The $303 million package over the next five years will be funded through:

•    A $112 million capital injection for transition to the new organisation over four years from 2016/17, which will be repaid over the next 10 years.

•    A proposed increase in the fire levy of approximately $151 million over four years from 2017/18.

•    $40 million of Crown funding over four years from 2017/18 towards the cost of public good non-fire activities, such as responding to medical emergencies, floods or other natural emergencies.

“The new funding arrangements will be much fairer and will ensure that both large and small property owners and most motorists will pay their fair share towards the cost of fire and emergency services,” said the Minister.

The Minister said there would be public consultation every three years on the level of the fire levy, making the funding of fire services more transparent.

The changes to the levy mean there may be small increases from the 2017/18 year, but more work has to be done. This will include an operational and performance review of the New Zealand Fire Service Commission that will start this year, as well as a comprehensive analysis of the costs of rural fire services, to inform the transition to the new organisation and its likely costs.

“We will have for the first time a picture of the cost of providing fire and emergency services,” Mr Dunne said. “This will allow Fire and Emergency New Zealand to strategically deploy services where they are needed to protect our communities.” We will have a stronger performing organisation that can show it is efficient and effective,” the Minister said.  

People transitioning to the new organisation would retain existing entitlements.

Mr Dunne said legislation will be introduced into the House within the next three months, and will provide for issues such as how assets will be transferred from the current fire services to the new entity, and an updated offences and penalties regime.

Background information at www.dia.govt.nz/Fire-Services-Transition