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Proactive release, firearms papers

Hon Stuart Nash
Minister of Police

2 August 2019

A number of papers related to Cabinet decisions for the firearms buyback and amnesty have been proactively released. They can be found on the Police website, here: https://www.police.govt.nz/about-us/publication/proactive-release-papers-relating-development-buy-back-scheme
Community collection events began on 13 July. As at Thursday 1 August, 6831 firearms had been handed in. Just over 4,200 people had been processed for $12,537,611 in compensation. Sixteen collection events are planned for today and the weekend.

Background:

On 20 June 2019 the Minister of Police and the Minister of Finance announced a compensation scheme for firearms parts and magazines prohibited by the Arms (Prohibited Firearms, Parts and Magazines) Amendment Act 2019.

The Government set aside $208 million for payments and administration of the scheme. It noted that if necessary, it will top up that figure. The objective is to remove the most dangerous weapons from circulation to improve public safety.
The papers released today include advice to Ministers on options for the compensation scheme and show the process that Ministers followed to reach final decisions. Most decisions were made by a group of six ministers, authorised with Powers to Act by an earlier Cabinet decision.

There are 17 papers. The first dates from 20 March. It includes the first estimate of the cost of the buy-back, which it placed in the range $55 to $170 million. However it noted significant uncertainty around the number and condition of firearms in the community, in particular rifles and shotguns.

A Police briefing dated 27 May outlines ten possible pricing options provided by KPMG. The ten options reflected variations on three models: a value determined through a single fixed price; a value based on make and model; or a value based on the condition of the firearm.

Police recommended compensation based on the condition of the firearm, with three ‘price points’. KPMG proposed the price points at 95%, 70% and 25%.
Ministers agreed to the base price list developed by KPMG. It reflected the fair market value prior to the law change. Ministers made no changes to the base prices developed by KPMG nor the condition-adjusted prices calculated by Police.
KPMG used two statistical formulas to estimate the likely financial implications. They are based on differing assumptions of what proportion of firearms are of lower value and what proportion are higher value.

A weighted average valuation.

Police and Treasury considered the weighted average valuation to be the most appropriate indicator of costs. This approach reflected research that indicated there are more low-value firearms than high-value firearms in the community.

KPMG estimated the cost of the buyback could range from $75-$233 million using this approach. The briefing noted compensation for prohibited parts and for dealers would add to these costs, which could take the estimated cost of the buyback to somewhere between $109 and $341 million. However it noted that considerable uncertainty remained about overall costings.
A 75th percentile valuation.
A 75th percentile valuation applies a formula where there is a lack of information about the value of firearms held in the community. Without data on the volumes of different priced firearms, this valuation assumes that all firearms would be priced at 75% of the range of prices i.e. at the higher end of prices. It assumes the average value of firearms handed in is $4331. The 75th percentile valuation produced an estimate of somewhere between $170 and $526 million.

Police have subsequently added further firearms to the original KPMG list. Police may continue to add firearms to the list as additional makes and models of firearms are drawn to their attention. KPMG will advise Police on prices for these items, using the same methodology as the first price list, including consultation with industry experts.

The final KPMG report was provided to Police on 7 June. It includes estimates of the volume of certain types of firearms in the community.

The total number of all weapons, both lawful and prohibited, is estimated to be approximately 1.2-1.5 million. Police records show approximately 14,300 military style semi-automatics are registered against licence-holders. These are now all prohibited weapons.

The KPMG report estimated a further breakdown of categories of firearms.
• It estimated there might be 760,000 rifles in the community. It estimated the vast majority (80-95%) would not be prohibited.
• It estimated there might be 380,000 shotguns in the community. It estimated the vast majority (98-99%) would not be prohibited.
The papers released today are as follows:

Cabinet papers and related documents
• Cabinet paper: Arms (Prohibited Firearms, Magazines, and Parts) Amendment Regulations 2019
• Cabinet Minute CAB-19-MIN-0299
• Regulatory Impact Assessment - Implementation of Arms Amnesty - Compensation for individuals and Dealers and Prohibition of certain types of ammunition

Advice to Ministers and related documents
• Firearms buy-back cost estimation (20/03/19)
• Settings for the proposed buy-back scheme (02/04/19)
• Providing for the buy-back scheme in the Arms (Prohibited Firearms, Magazines and Parts) Bill (03/04/19)
• Proposed provisions for the Arms (Prohibited Firearms, Magazines, and Parts) Amendment Bill (07/04/19)
• Buy-back information on decisions, timeframes and operational processes (09/04/19)
• Amnesty and buy-back implementation (26/04/19)
• Buy-back and amnesty implementation update (09/05/19)
• Provisional advice on compensation for dealers (15/05/2019)
• Draft timelines for the buy-back regulations and Bill 2 (22/05/2019)
• Regulatory settings for the buy-back scheme (27/05/2019)
• KPMG Report: Firearms Buy-Back Pricing (7/06/2019)
• Buy-back commencement & firearms announcements (06/06/2019)
• Points for discussion with the Minister of Finance (10/06/2019)
• Providing modification of prohibited firearms as an option (11/06/2019)




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