The Insurance Council of New Zealand (ICNZ) has criticised the Government’s proposal to impose a levy on insurance under its fire service reforms.

A general tax and a levy on property rates – which has been adopted in most Australian states – are better funding options, ICNZ says in a submission on the plan.

“We must first underscore the overwhelming unfairness of levying a private sector product to fund a public good,” it says.

“These two better approaches – general taxation and a levy on property rates – have been adopted overseas for sound reasons.

“To cast them aside from a fundamental review of the fire service was a dereliction of duty.

“In our view the levy provisions should be rejected in favour of funding through general taxation to give… a fairer, more stable, more transparent, more efficient and more equitable source of funding.”

The Fire and Emergency New Zealand Bill was introduced for a first reading in Parliament in July.

Internal Affairs Minister Peter Dunne has called it a “once-in-a-lifetime” chance for fire service reform.

The bill repeals the Fire Service Act 1975 and the Forest and Rural Fires Act 1977.

It states the country’s fire services legislation has not fundamentally changed since the 1940s.

“This bill is intended to enable ‘fit-for-purpose’ 21st-century fire services that are flexible, modern, effective and efficient, and fire services that work well, are funded appropriately and value the paid and volunteer workforce,” the legislation states.

ICNZ says it is “nonsensical” and “inequitable” to impose an insurance levy.

“The rationale for levying insurance to fund the fire services is now well buried in the annals of history,” ICNZ says, adding the plan is inequitable because “property owners who do not insure, or who underinsure, get the benefit of the fire service without having to pay for it or do not contribute a fair and equitable share”.

ICNZ represents 28 general insurers that insure more than $NZ600 billion ($581.2 billion) of property and liabilities.