The Government has ordered a review of how Fire and Emergency New Zealand is paid for, opening up one of the oldest and least understood parts of the country’s tax and levy system to fresh scrutiny in an election year.
Internal Affairs Minister Brooke van Velden has asked the Department of Internal Affairs to investigate whether there are better ways to fund the service than the insurance levy that has bankrolled firefighting since the 1970s. About 95 per cent of Fire and Emergency’s income comes from a levy added to most property insurance policies, including cover on homes, contents, vehicles and commercial buildings.
“The Fire Service levy was introduced in 1975 and, despite changes to the core services FENZ delivers, is still the funding model used today,” van Velden said in announcing the review. “Given the widened mandate, there is a valid question about whether this model is fair for levy payers and fit for purpose.”
That widened mandate is at the heart of the problem. When the levy began, it paid for a service that put out fires. The Fire and Emergency New Zealand Act 2017 added a long list of new jobs, from medical call-outs and car crashes to maritime incidents, floods and storm recovery. The result is a service funded almost entirely by fire insurance that now spends much of its time on work that has nothing to do with fire.
The department’s own figures make the mismatch clear. Between 1 July 2025 and 31 March 2026, only 59 per cent of the incidents Fire and Emergency responded to, including false alarms, were fire related. The rest were the medical emergencies, rescues and weather events that have become a growing share of the modern brigade’s work.
A second issue is what officials call free-riding. Because the levy sits on insurance, property owners who go without cover still get a fire engine when they need one, but pay nothing towards it. As insurance gets dearer, that gap matters more.
The review will not touch the levy rates that have already been set. Those rates, which rise by 2.2 per cent and are locked in for three years from 1 July, will stand regardless of what the review finds. Van Velden said the work would not affect them and described the timing as a chance to consider “whether its design and operation remain appropriate” given how significant the levy has become.
The push for a rethink did not come from Wellington alone. Federated Farmers and the Forest Owners Association wrote to van Velden asking for an independent review, and the rural lobby has welcomed the response. “We wrote to Minister Brooke van Velden last week asking for an independent review of FENZ, as farmers are really concerned about rising levy costs and declining rural services,” Federated Farmers vice-president Colin Hurst said. “It’s a very positive first step that the Minister has now asked the Department of Internal Affairs to investigate if there are better ways to fund FENZ than through insurance levies.”
Hurst said the levy had not kept pace with what rural communities were getting in return. “It’s been 50 years since the system of collecting levies on property insurance began, while the responsibilities and workload of our fire and emergency services have changed hugely,” he said. He pointed to “consistent complaints about rundown fire trucks, equipment and stations in rural areas” and a thinning of specialist rural fire expertise, and argued farmers deserved “assurance that farmers and rural businesses aren’t subsidising the urban residential sector”.
Insurers have lined up behind the review too, though they want it to go further than tinkering with rates. Insurance Council of New Zealand chief executive Kris Faafoi said the current model was already pushing some households out of cover altogether, with knock-on effects for everyone left in the pool. “When premiums rise, there is a real risk people reduce their cover or go without it altogether,” he said. “That has broader consequences for individuals, communities and the wider economy.”
The council says the share of uninsured New Zealand households jumped from 7 per cent in 2022 to 17 per cent in 2025, with insurance now among the four biggest financial pressures on households. As more people drop cover, the levy falls on a shrinking group of policyholders, which makes insurance dearer still. Faafoi has floated a “Community Protection Levy” as a broader and more stable way to fund large-scale risk reduction.
For all the agreement that the 50-year-old model is showing its age, the alternatives carry their own trade-offs. Funding Fire and Emergency from general taxation would spread the cost across everyone and remove the free-rider problem, but it would also hand the service’s budget to the politics of the Budget round each year. A flat charge on every property, similar to a rates bill, would capture the uninsured but could hit low-value rural and provincial properties hardest. The department has said it will work through these options with targeted stakeholders before reporting back, weighing fairness against how workable each idea would be.
How essential services are paid for, and who carries the load, is shaping up as a quiet but real theme of this year’s campaign. Voters weighing up where the parties stand on tax, levies and the cost of living can compare their own views against the policies on offer using Newswire’s voting tool ahead of the November election.
What do you think of the way Fire and Emergency is funded, and would you rather pay through insurance, rates or general tax? Have your say in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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