The Insurance Council of New Zealand (ICNZ) has again criticised plans to pay for a new national emergency service through insurance levies.

Internal Affairs Minister Peter Dunne has released a discussion paper seeking public feedback on the calculation of surcharges on insurance contracts and a transitional “levy relief” for Fire and Emergency New Zealand (FENZ).

“The very fact the Government has to consult to understand how you should apply the tax on insurance shows just how complicated and costly it is to administer, and demonstrates why it would be far better to fund FENZ from direct taxation,” ICNZ CEO Tim Grafton told local media. “This just highlights the complexity of the whole situation.”

The discussion paper says the levy base will be broadened from fire insurance contracts to those insuring properties against physical loss or damage, to reflect FENZ’s bigger statutory mandate and wider scope of services.

Levies will be calculated on the amount insured in an insurance policy, rather than the property’s indemnity value.

“Everyone benefits from the fire services’ response to earthquakes, floods and storms and hazardous substances emergencies, but currently only those with fire insurance pay for this activity,” the paper says.

“The shift away from applying the levy to indemnity value will improve the clarity of the calculation.”

The closing date for submissions is April 19. FENZ begins operations on July 1.