Funding the options
Estimated costs of the governance and support options
How much funding is needed depends on which governance and support option is chosen.
The New Zealand Fire Service Commission’s (the Commission) current income is $355 million
in the 2013/14 financial year. The cost of rural fire is unknown, although estimates from a
2009 study place it at $38 million per annum.1 The review has used this estimate.
For each of the options to be implemented successfully, the extra funding would either
come from a reprioritisation of existing baselines or new funding provided to the
Commission, or a mixture of these approaches. Over time, the new structures under Options
2 or 3 may result in increased efficiency, and the options may cost less. In addition, the
review is considering how the monitoring of the Commission may contribute to increased
efficiency.
The estimated costs of the governance and support options are set out in the diagram
below. The estimated costs exclude GST.
Figure 1: Estimated cost of governance and support options
The estimated costs are based on assumptions
All of the options would require an increased investment in training, particularly so that
Rural Fire Forces that are authorised by the Commission can safely and accurately provide
the non-fire services. This is not to provide training for all Rural Fire Forces for the full range
of activities that NZFS brigades do, but to ensure that the Rural Fire Forces receive the same
training when doing the same job, for example motor vehicle extraction.
The costs for Option 1: enhanced status quo are based on the assumption that it would be
largely delivered from within existing baselines. The extra $3.3 to $4 million per annum
consists of a limited increase in human resources support, extra staff and equipment
maintenance required for the rural sector.
1 The Economic Cost of Wildfires, Business and Economic Research Limited (BERL) economics report to the Fire
Service Commission (2009).
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Option 2: coordinated service delivery requires an estimated extra $26.8 to $45.6 million per
annum and Option 3: one national service requires an estimated $30.5 to $46.1 million per
annum. Options 2 and 3 have the same cost assumptions. The assumptions are that both
options would require:

a substantial increase in equipment for rural fire. This funding would ensure that
the equipment that rural firefighters use are fit for purpose, are well maintained
and have an acceptable replacement cycle. The funding increase is not to ensure
that the rural fire services have the same equipment as the NZFS;

more human resources support, for both NZFS and the rural sector;

financial incentives for both volunteers and their employers;

greater information and communications technology (ICT) investment because, for
example, 3000 rural volunteers would need to access the same ICT systems as NZFS
under these options; and

finance, risk and performance and other corporate services would have a higher
demand on their services.
None of the cost estimates above take into account the cost of implementing the
Commission’s Vision 2020 and the improvements that implementing the vision would
require. Furthermore, the costs do not include the possibility under option 3 that the one
national fire service would have to pay the costs that are currently provided by local sources
of rural fire funding. It is therefore possible that these costs are underestimated.
The transition costs for Options 2 and 3 are based on the assumption that new national
systems would need to be developed as a one-off cost and supported on an ongoing basis. It
also assumes that a change implementation team would need to be hired and national
marketing and rebranding undertaken as one-off costs.
How would this be funded?
There are decisions to be made within each of the funding options and these would affect
how much different groups would pay the Commission. The Fire Service Review Background
paper: funding has more information about how much different groups would pay.
Once an option is chosen, more detailed financial modelling would also take place to better
estimate the costs to different groups and how much extra funding may be generated. The
modelling would take into account the current levy take of $355 million. Depending on
decisions about how the governance and support options would be funded, the modelling
may also take into account the estimated funding and transition costs required for the
chosen option.
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