O'Connor DamienFIRE AND EMERGENCY NEW ZEALAND (LEVY) AMENDMENT BILLFirst ReadingHon DAMIEN O'CONNOR (Minister of Agriculture) on behalf of the Minister of Internal Affairs: I present a legislative statement on the Fire and Emergency New Zealand (Levy) Amendment Bill to the House.ASSISTANT SPEAKER (Hon Jacqui Dean): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon DAMIEN O'CONNOR: I move That the Fire and Emergency New Zealand (Levy) Amendment Bill be now read a first time. I nominate the Governance and Administration Committee to consider the bill and at the appropriate time I intend to move a motion that the select committee report back on the bill to the House by 16 February 2023.Fire and Emergency and our career and voluntary firefighters are a critical part of our communities. They respond to a broad range of incidents to keep us our whānau and other loved ones safe. This includes fires motor vehicle accidents medical emergencies and forming a key part of our emergency management response during natural disasters among many other things. When these events do occur Fire and Emergency are there to help protect people and prevent damage to property land and the environment. They also play a key role in helping us to reduce the chance of devastating fires in our homes businesses and other private and public property in the first place.The Fire and Emergency New Zealand Act 2017 saw the amalgamation of more than 14000 people from 40 separate organisations into Fire and Emergency New Zealand (FENZ). This included the New Zealand Fire Service the National Rural Fire Authority 12 enlarged rural fire districts and 26 rural fire authorities into one organisation. The legislative framework has mostly been fit for purpose since then.However based on feedback from the sector this Government established a review of the funding model in 2019 to make sure the collection of funding through insurance levies had fair and reasonable settings. This bill establishes the findings of that review and makes important changes to the functions of the levy framework.FENZ is funded by a 97 percent levy collection so it's important that the levy system works well in order for FENZ to deliver critical functions. The levy framework in Part 3 of the FENZ Act sets out the types of insurance contracts that must pay the levy who is responsible for paying the levy and the value of the property to be used as the basis for calculating the levy. In other words it's a methodology for the levy. The framework does not specify how much money Fire and Emergency will have in the short term; this is done through a separate regulation-making process under the FENZ Act. This means that when we consider the levy framework we must focus on whether it provides a fit for purpose funding system for the long term rather than any immediate funding matters of today. It is also worth noting that the levy framework in the FENZ Act is yet to begin. While most of the FENZ Act came into force in 2017 after the Act had completed its journey through the House the levy framework in Part 3 has had a delayed starting date. This has given us an opportunity to make certain that the levy framework will work as intended and ensure that it can be well implemented in practice.During the 2019 review of the funding model alternative approaches were considered such as a property-based model that calculates the levy based on property data such as value size or use. We decided to stick with and improve the existing insurance-based model over this alternative. This reflects the fact that the insurance-based model remains fundamentally fit for purpose and the least costly to implement for stakeholders.However I would like to acknowledge that there were some concerns among stakeholders about the insurance-based model in the FENZ Act under this approach. That's why we have this bill here today before us. The Government has heard these concerns and is taking action to address them. I'd like to acknowledge the insurance sector and thank them for the critical role they play in the Fire and Emergency levy under an insurance-based model. This bill is about enabling the simplest system making it easier to implement without creating unnecessary cost and complexity. To achieve this the bill makes four changes to improve the levy framework in the FENZ Act. Firstly only property insured against physical loss or damage from fire will be levied instead of property insured against any physical loss or damage. Secondly the levy will be calculated using the sum insured in an insurance contract rather than a term amount insured. These two changes will clarify which insurance arrangements are meant to pay the levy avoiding potentially complex calculations and stopping some properties being charged twice. The approach in the bill is clearer and it more closely aligns with existing practice and terminology in the insurance sector. It also increases the likelihood that the system will be consistently applied.Thirdly the bill clarifies a small technical matter to make sure that motor vehicles insured against third-party risk pay a flat rate of levy just like motor vehicles with comprehensive insurance will. This was the original intent of the FENZ Act and will mean that all insured motor vehicles pay the levy.Fourthly the bill amends the starting date of the new levy system to 1 July 2026 or an earlier date set by Order in Council. This is an unfortunate but necessary side effect of the disruption that COVID-19 has caused to us all. There are several things that must be completed before the new levy system can be complete.This bill must pass through the House and the Government needs to set regulations outlining exempt property and what the levy rate will be. It is also critical that the insurance sector has enough time to update their systems to calculate and collect the new levy once the regulations have been finalised. The existing commencement date was set before COVID-19 came to our shores and it is just not feasible any more.The effect of these combined changes is to provide a levy framework that is clear to interpret and simple to apply in practice. This makes the levy framework more predictable and stable for Fire and Emergency and levy payers—two key principles of the funding system. It also ensures that the work of insurance companies and insurance brokers for the levy is much simpler. This will significantly reduce the implementation and ongoing administrative costs they face. This in turn ensures that these costs are not passed on to New Zealanders taking out insurance.Before I conclude I'd like to extend my thanks to the Insurance Council of New Zealand the Insurance Brokers Association of New Zealand the Property Council New Zealand and to Fire and Emergency New Zealand who all provided feedback on the exposure draft—your constructive and thoughtful feedback has helped to improve the legislation and ensure it is workable for everyone. Your patience and input is greatly appreciated. I pass that on on behalf of the Minister herself and I commend this bill to the House.ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to.