Martin TraceyFIRE AND EMERGENCY NEW ZEALAND (LEVY) AMENDMENT BILLFirst ReadingHon TRACEY MARTIN (Minister of Internal Affairs): 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. At the appropriate time I intend to move that the bill be reported to the House by 1 April 2019.This is not a very large bill to be perfectly frank but it does a couple of things that are very very important. So if you don't mind I will every now and then just check my notes to make sure that I don't say that it does something that it doesn't do or forget to say something that it actually does do just for clarity.For more than 150 years the fire service organisations have played a critical role in the safety and protection of our New Zealand communities but the role of the organisations has changed and it has grown. Fire services have become our first defence to the effects of climate change—responding to flooding land slips and bigger and more intensive wildfires. They increasingly attend non-fire emergencies such as motor vehicle accidents medical incidents hazardous substance emergencies and natural disasters. A modern fire and emergency service is also central to the resilience of our communities not only leading the response in times of emergency but through community recovery as well.Fire and Emergency New Zealand (FENZ) came into existence on 1 July 2017 to better meet New Zealand's changing emergency needs. To create a unified organisation has been no mean feat. Forty organisations have come together bringing with them a total workforce of 14000 people. Of these people 11000 are volunteers who give their time for free to serve their local communities. Despite the challenges of unification—it is a large job—Fire and Emergency New Zealand has continued to seamlessly deliver services in communities around New Zealand. They have attended 82567 incidents in their first year.The main purpose of the Fire and Emergency New Zealand (Levy) Amendment Bill is to amend the commencement date for the new levy regime that funds those activities. It is essential that this change be made prior to 1 July 2019 as this is when the new regime would have come into force. I therefore recommend that the time-critical amendments in this bill progress through the House as quickly as possible.FENZ is funded by a levy on property insurance. This is implemented by insurance companies and insurance brokers. At the moment the levy regime that existed before the fire services were unified last year is still in place with a transitional levy rate to fund FENZ's initial few years and some of the costs of the reforms. Under the Fire and Emergency New Zealand Act a new levy system is set to take place on 1 July 2019 as I previously mentioned. It also makes some changes to the way that the levy is calculated and this is part of the concern and the reason why we need also to take a delay as the current levy system does not reflect the scope of services that Fire and Emergency New Zealand carries out.To implement the new levy regime insurance companies and insurance brokers will need time to change their systems and their business processes. Since the passage of the FENZ Act officials at the Department of Internal Affairs have worked closely with insurance companies and insurance brokers on planning for the implementation of the new levy. This work has revealed that a number of changes to the new levy regime will be required for it to work properly. The time needed to complete this work and to ensure that the new levy regime operates properly means that the current date of 1 July 2019 is not achievable for the commencement of the new levy. It has also highlighted some serious concerns about the unintended consequences of the levy calculation.If I can just mention for example a very large national property portfolio insured at say $4.5 billion against fire and $25 billion against material damage will have their levy rise from $4.7 million per year to $18.5 million per year under the current levy calculation. A large national portfolio of older building stock insured with the indemnity value of $1 billion and replacement value of $3.8 billion would see their current levy rise from $1 million to $2.81 million. This is a problem and this is the problem that I inherited when I came and sat in this seat and this is the problem—why I brought this bill to the House now.The levy calculation was always going to be complicated. This is not a comment or a criticism of anybody in particular; this is merely an explanation about why we need the time. To dramatise that this would be the increase for large property owners in New Zealand and these would be our supermarkets many of our churches and so on and so forth. This is too large an increase for any major business or our churches and so on to be able to manage in the time frame that we have been given. We need more time.The Department of Internal Affairs and Fire and Emergency New Zealand need more time to work with these businesses and these organisations to make sure that we get what is a fair levy across all of the people of New Zealand who will need Fire and Emergency New Zealand services because that is what this is supposed to be about. This is about making sure that Fire and Emergency New Zealand has the amount of money it needs to provide what is the expectation of New Zealanders for the service that they will provide. So the extra time will also provide more information about what FENZ's costs are before setting the levy rate to fund it.The Government therefore intends to move the commencement date back by one year to 1 July 2020. The bill achieves this by setting a backstop for transition to the new levy regime at 1 July 2021. The backstop date of 1 July 2021 will ensure that if it later becomes apparent that the commencement of the new levy regime by 2020 is not achievable we can change that date by Order in Council. This will save the need to come back to the House.The bill will also make a number of other changes. It will exempt the collections of public museums public art galleries and whare taonga from the levy from 1 July 2019. Cabinet approved this exemption in 2017 which was intended to be made through levy regulations in July 2017. As these levy regulations are tied to the commencement of the new levy without an amendment delaying that regime by a year it would also mean delaying this exemption for those collections. We are therefore bringing the exemption forward as we could see no reason to continue charging the levy on collections insurance.The bill also makes amendments to clarify that the FENZ levy rate may be set for a period other than three years and that the surpluses or deficits of levy income in a previous levy period must be taken into account when setting the levy. I would like to emphasise it is essential that this bill pass prior to 1 July 2019. If that date is not achieved there is a material risk to FENZ revenue that FENZ revenue will be disrupted. This was a date that was set in by the prior Parliament and again it is not a criticism of anybody at that time; this is merely a recognition that the work that needed to be done was more complicated than recognised by the Parliament at that time.FENZ needs revenue certainty so that it can continue to deliver its fire and emergency functions uninterrupted. This is important for the safety of our communities across New Zealand. Providing certainty about the rest of the levy regime will require some legislative amendments. The Government is currently working through the drafting of these amendments and intends to introduce a second FENZ Act amendment bill in the new year. The amendments in that bill will be technical and will finalise the detail of the new levy regime. We have to get these right.I move that the Fire and Emergency New Zealand (Levy) Amendment Bill be reported to the House by 1 April 2019. I commend the bill to the House.