Quake costs blowout

Written By: - Date published: 1:27 pm, August 30th, 2011 - 51 comments
Categories: disaster, labour - Tags: ,

Big news today as the estimate of the EQC liability for the Christchurch quakes more than doubles:

Finance Minister Bill English this morning announced the Earthquake Commission has increased its estimated Canterbury earthquake liability by $4 billion to $7.1 billion. …

Most of the extra costs would be met through the Natural Disaster Fund, which held about $6 billion before the first earthquake in September, Mr English said.

Government will have to cover some of the increase, contributing to our worst ever budget blowout of $18 Billion (same link).

Reading this my first thought is – thank goodness for the EQC! I know it isn’t getting everything right, and there’s a lot of anger in Christchurch right now. But how would we manage at all without the EQC? We should all be grateful for the foresight of the first Labour government who set it up in 1947. For all its faults this (as a right winger would have it) “socialist big-government bureaucratic dinosaur” is the mainstay of our ability to recover. Ask yourself, in a world without the EQC, how would the “free market” have coped with Christchurch?…

51 comments on “Quake costs blowout”

  1. On reading that 18,000 more homes have damage over $100,000 than expected I could not help but think, how stuffed housing is in NZ. It is time for the government to seriously look at affordable housing for everyone. If you have a Canterbury home which is uninhabitable or unsafe/unhealthy, if you struggle to pay the rent, life is difficult. Housing is a big election issue, so is poverty and the deficit for me.

  2. James N 2

    We know how the “free market” is coping with Christchurch. Insurance companies running for cover and every shabby bolthole they can find to avoid their obligations, especially when it comes to providing the mandated insurance for new buildings or new property purchases. The sand in the machinery is being thrown by the “free market”. Perhaps we need a state-owned insurance company to get things moving again…

    • Andy-Roo 2.1

      I agree.

      The EQC assessed our place last week, and we are “over cap”.

      This means that we have to wait for our insurance company to complete their own assessment and schedule of work. This will not happen this year.

      Once done they will then try and “TINA” us into signing off on a contract that limits their liability to items specified on the schedule, and an agreetment as to their maximum liability, despite us holding a “full replacement policy”. In other words they will put pressure on us to allow them to contract out of some of their existing liabilities.

      If we sign, they win.

      If we don’t sign, they still win -as we are then in a legal process, which they can delay and delay and delay. With every day saving them dollars and increasing the chance that we will just fold and go away.

      • Lanthanide 2.1.1

        The courts should fast-track a test case and slap a fine on the insurance company for breach of contract.

  3. thejackal 3

    National’s Financial Fantasy Land

    The National party made a press release today concerning an increase to the estimated liability for the Canterbury earthquakes. Despite the huge increase of around $3.3 billion, Bill English is down playing any negative impact to the government’s growing debt crisis, saying that they still expect to return to surplus by 2014/15 and will keep net debt below 30% of GDP. It’s really just more National party bullshit!

    • Treetop 3.1

      I’m sick of the government finding ways to spend money on their screwed up ideas e.g. control card (food card). Only 25 million.

      I’m sick of the government’s unrealistic budget forecasts.

      I’m sick of the government being in denial when it comes to children living in misery.

      Someone needs to TEACH the government how to budget and show them where they can save money which does not impact on the most vulnerable.

      Bull shit walks and action talks.

  4. mik e 4

    Having a large debt at a time when worlds economies are in dire straights is dumb even Berlusconi & Sarkosy know better, borrowing Bill just borrows and hopes! dumb and dumber. Like selling of assets that are that are performing extremely well better than a lot of private sector businesses
    Mighty river power 50% increase in profits
    Cost of Govt borrowing 6%
    The Bean brain bean counters are trying to spin these high performing assets of us tax payers.
    Insider traders and Con men

  5. tc 5

    This just makes the $6bill p.a. hole they punched through the crown revenue take with their ‘fiscally neutral’ tax cuts for the already well off look all the more reckless than it was at the time.

    And this is on top of the worst budget in living memory (that $10Bill hole) with no detail on cuts and growth forecasts out of a fairys arse combined with a predicted asset sale based on valuation they’re obviously happy to flog them off for.

    The NACT don’t give an F about the wellbeing of the economy, they’ve got some hollowmen backers and mates to pay off via asset sales. No surprise that Fay’s apparently paying $1m p.a. to PR firms to reposition his gob under the great nat asset sale tap.

  6. Afewknowthetruth 6

    ‘ how would the “free market” have coped with Christchurch?…’

    The way the free market coped with New Orleans: get a few touristy sectors looking reasonably tidy and leave the rest to rot.

  7. Tom Gould 7

    I see Gerry’s mate Duncan earned his money tonight, telling everyone watching that any party making spending promises can now forget it. He forgot to say that Goff cannot win, but I guess that was taken care of by mini-me in a later story based on a deliberate misunderstanding of attempted humour by Mallard. Inventing stories is never a good look.

  8. MrSmith 8

    This has to be a disaster for the Nact’s , and I believe they are still only giving us 2/3 of the cost maybe only 1/2.
     
    Now they National need to be asked time and time again ‘How are you planing to pay for this?’ Asset sales is what the public now believe and whatever magic potion or spin they come up with over the next few months the people are going to have asset sales in the back of there minds, thats the Nact’s plan after all, but only 49% Mum&Dad, well the price just went up by almost 50 % and that needs to be heard loud and clear, the message should be 49+50= 99 and there are plenty of National supporters that were willing to swallow 49% but now these voters will be handwringing.

    • Blue 8.1

      It’s always been obvious that once voted in for a second term, Key and English would find an excuse to sell more than they said they would.

      ‘Government retaining majority ownership’ is the line for the election, to lure the voters into giving them the reins again.

      Then it’s just a matter of finding the right excuse. Christchurch earthquake costs just became number one on the list.

      If you listen carefully, you can almost hear it now: “Well, that was then, and things have changed now, and if we don’t sell all the assets Christchurch will collapse, and so will the economy. Plus we got a really good deal on them, you know.”

      Just think about what would have happened if we hadn’t given all those tax cuts to the top income earners or bailed out South Canterbury Finance…

  9. TEA 9

    Gees … not to bad a one off of only $1,000.00 for every New Zealander, or $40 at 4% per annum.
    77 cents per week.

    • Colonial Viper 9.1

      Too bad NATs have ideologically ruled out an additional earthquake levy on those earning $48K or more a year.

      Sell off the country to foreigners OK but NO MORE TAXES on the top 30% lol

      • rosy 9.1.1

        So we’ve got some of the in the U.S, France, Italy and now super wealthy Germany who get the problem of low tax on the asset-rich. Even in NZ we have Gareth Morgan’s Big Kahuna articulating the same problem. But no – we have a government that would rather go into debt, sell assets and allow private companies to make windfall profits on people’s misery than tax the ‘wealth creators’.

      • queenstfarmer 9.1.2

        There already is an earthquake levy – it’s called the EQC levy. It’s been around for yonks and is levied upon property insurance, and is therefore paid by the (presumably) wealthy landlords and other property owners. That levy is set to rise significantly.

        However, if there is any talk of a broader levy upon the people of Canterbury, then it should instead be levied on all New Zealanders (no problem with the Greens approach of >$48k).

        • Colonial Viper 9.1.2.1

          I agree with you, however a general levy on above average earners would prevent the need for any asset sales to fund Christchurch.

      • mik e 9.1.3

        80% of New Zealanders when asked in a survey late in feb after the big quake said they wouldn’t mind paying a few more cents in the dollar to sort out CHCH borrowing bill and Key said no!

  10. Tom Gould 10

    The mid-programme ‘One News Update’ says ‘the cost of rebuilding Christchurch has ballooned to $8 billion, that’s $1,000 for every New Zealander.’ No it’s not, you lazy, incompetent, ignorant, idiots. And this passes for ‘news’?

  11. tc 11

    Yes Tom there’s no more penguins to show so it’s back to makin shit up

  12. vto 12

    Well my 2 c says two tings…

    1. I don’t believe those figures. They are so very very easily massaged. Has English shown anybody how that figure is made up? In considerable detail?

    2. I thought the EQC was fully funded and as such draining the lot of it still does not leave the government out of pocket.

    Somebody’s leg is being pulled and it is probably mine.

  13. bigbruv 13

    Those partial asset sales ain’t sounding so bad now aye guys…

    There are other areas the Nat’s should start looking at now to save some money, they could start by slashing benefits and doing away with the DPB.

  14. Brendon O'Connor 14

    I just dont understand how we seem to understand insurance more than the EQC or even Insurance companies.

    Isn’t insurance about spreading the risk evenly or as evenly as possible? If you dont want to spread the risk you dont get insurance.

    Oh, I get, only until they have a big payout and then it is every corporate for themselves.

    I love this brave new world where it is evey one for themselves and wee honour and respect greed and allow it to foster. Wow, I bet my kids are going to be proud of the society we are giving them. Makes me beam with pride.

  15. Jum 15

    Re Insurance – it rather interested me that Chris Ryan, chief executive of the insurance council of NZ, said in the Herald yesterday that, “So many Christchurch companies found that they had the wrong insurance cover for their needs.”

    Excuse me? Don’t these businesses rely on the insurance advisers to tell them which is the right insurance cover?! Don’t they?????

    • rosy 15.1

      They do. And the insurance companies even advertise these nominally independent advisers on their sites e.g. Tower http://www.tower.co.nz/insurance/health/info/adviser I don’t see any disclaimer about the quality of advice either.

    • queenstfarmer 15.2

      Don’t these businesses rely on the insurance advisers

      Probably, but sadly most of them I wouldn’t call “advisers” any more than I would call a used-car salesman an “automobile adviser”. From my experience, most of them are just pushing products they only partly understand, closing the sale and picking up the commission as quickly as possible, thanks for coming.

      I suspect it’s like financial advisers – there are a small number of genuine, good advisers, but the majority are just commissioned salespeople aggresively pushing whatever gets them the biggest / quickest commission.

  16. Robert B 16

    You can’t be serious.

    You seem to assume that because there is an EQC the money just magically appears.

    The alternative to EQC is everyone keeps more of their own money and in the event of a major earthquake, the Govt raises the funds. We all end up paying for it, but sans the massive bureaucratic cost of administering an agency that will only be called on once every 20 years.

    The problem with EQC is it needs to be resourced for a major event that hardly ever happens. That brings massive operational expense which is wasted 99.999% of the time. It’s massively inefficient and is, frankly, a terrible model.

    Take the political blinkers off and look at the logic of the situation.

    • Colonial Viper 16.1

      Idiot.

      Who gives a shit if the life jacket on your boat does nothing 99.99% of the time.

      That;s like your fire extinguisher sitting around doing fuck all on 99.99% of the days.

      What are you going to do? Decide its more efficient for everyone on the street to share one fire extinguisher?

      Or everyone on the boat to share one life jacket?

      Its not the probability of an event which matters, its the consequences of the event.

      • Robert B 16.1.1

        You give a shit about your lifejacket if it’s costing you millions of dollars and there’s an alternative guaranteed method of plucking you out of the water if something happens.

        Your assimilies are not assimilar.

        And your last line is said like a clown with no understanding of life. If that were the case we’d ban cars, probably buildings too.

        Dumb.

        • Colonial Viper 16.1.1.1

          No, you are dumb.

          You have no basis to say that there is an alternative, cheaper, and more secure way of doing the job of the EQC.

          You are talking ouht of a pie hole which should really stay shut. A pie hole which is moaning that the EQC is useless “99.999%” of the time after we have had four or more serious earthquakes in the last 365 days.

          Get your math straight moron.

          And your last line is said like a clown with no understanding of life. If that were the case we’d ban cars, probably buildings too.

          Meh its you who have no understanding of life.

          350 fatalities + 10,000 serious injuries a year from vehicle accidents. Shit has been banned for 1% of that damage.

          Consequences matter not probabilities. When a one in one thousand year earthquake hits your town you don’t give a fuck about the probability, you give a fuck about the consequences.

          People with your mindset always moan “oh no one could have foreseen something this bad could’ve happened” (you hear this around the financial markets a lot lately)

          Wrong, just blind people like you.

    • queenstfarmer 16.2

      Um, no. That’s pretty much how insurance works, and EQC is simply an insurance model (a state owned one, but nothing wrong with that). It’s actually the reinsurers who pick up a good chunk of the costs that otherwise would fall on the Govt. I suspect the running costs of EQC over recent decades are minimal compared to the reinsurance cover now being called on (actually being maxed out).

      • Robert B 16.2.1

        It’s different than all other insurance companies though, in that it needs to have a building full of people twiddling their thumbs and costing millions and millions of dollars every year, just in case there’s a quake.

        Most of the time there’s not.

        Doing it in another way would remove that cost. It’s simply maths 101 really.

        $Ms of dollars – $Ms of dollars =… um,… could you help me out here?

        Plus in the meantime people get to keep their own money. That’d be nice, really.

        • rosy 16.2.1.1

          EQC covers floods as well, doesn’t it? and other natural disasters? And these occur reasonably frequently, I would have thought. There seems to be a major event every year so are they really twiddling their thumbs until an earthquake comes along? I think not.

          • Robert B 16.2.1.1.1

            The odd landslides here and there but not much really.

            The problem was it was put together for a different time. These days all insurance companies are reinsured overseas for major events so theres not the same level of problems serving a huge claim series as previously. That wasn’t the case before.

            All in all, it’s an outdated, inefficient and unnecessary organisation costing New Zealanders massive amounts of money every year. Time to look at other options I say.

            • Colonial Viper 16.2.1.1.1.1

              Can’t believe you just ignored that when the going gets tough, the private insurance companies fuck off.

              You are a paid lobbyist for the private insurance companies. Easy to see through you buddy boy.

              Today the Crown has to provide the insurance for South Island towns because private insurance are cowards and their foreign shareholders can;t stomach the risk.

              What a traitor, backing private corporates who won’t even insure churches any more.

              Calling the EQC unnecessary after the devastation of Christchurch. And the private sector insurers have fucked off. LOL.

            • rosy 16.2.1.1.1.2

              “The odd landslides here and there but not much really.”
              And only the odd flood? According to the MfE a major flood occurs every 8 months.

              Whaddaya reckon the insurance bills would be if the flood risk of NZ houses had to be taken into account? I’ve no idea what the sums are, but it’s a pretty wet country, with almost all cities built near the coast and/or on flood plains.

              But before talking about whether EQC is an outdated concept it might be a good idea to understand the costs of replacing it, I think a better argument would be whether all New Zealanders should have automatic cover for natural hazards through EQC, not just those with household insurance.

            • lprent 16.2.1.1.1.3

              This is the EQC now dealing with the aftermath of a large urban earthquake with 1200 staff or so.

              This is the EQC in 2009 with 21 staff looking at what happens in the event of a large urban earthquake.

              You are just a ill-informed fool too lazy to spend a couple of minutes to use search engine or to exert any effort thinking.

    • Colonial Viper 16.3

      The problem with EQC is it needs to be resourced for a major event that hardly ever happens. That brings massive operational expense which is wasted 99.999% of the time. It’s massively inefficient and is, frankly, a terrible model.

      Do your math right, moron.

      In the last 365 days you have had major events on about 4 of them. Thats a greater than 1% up time. And lots of work and effort since ***every day*** since Sept 4.

      Which brings me back to the point. Its not the sunny days you save up for.

      Only a moron like you would say the EQC is a waste of time after the year we have had. Fraking idiot.What is wrong with morons like you.

      • Robert B 16.3.1

        “moron” “moron like you” “fraking idiot” “morons like you”.

        Nice ad hominem, f*ckface.

        I know you lefties don’t like freedom of speech or debating stuff, but perhaps you could grow a brain and actually discuss the points?

        If you did you’d realise the stupidity of your post. Gee, it only took 54 years for them to actually be needed. Was that really the best use of those crowds of staff standing around twiddling thumbs for 54 years?

        And let’s face it, they haven’t exactly performed to an exemplarary standards in Christchurch. Just talk to anyone down there and see.

        So perhaps next time engage brain before mouth and think it through logically (rather than ideologically).

        • Colonial Viper 16.3.1.1

          Meh

          You’re the kind of loser who can’t do math (99.999% not used when we have had at least 4 major earthquakes in the last 365 days haha loser), blames the EQC for Brownlee’s shit leadership, ignores how shit the private insurance companies have been (yet would love them to do more of the work like a paid lobbyist).

          I know you lefties don’t like freedom of speech or debating stuff, but perhaps you could grow a brain and actually discuss the points?

          You’re a joke.

          At least 4 major earthquakes in the last year and you say that the EQC has nothing to do “99.999%” of the time.

          Bet you think that an airbag is useless because it too does nothing 99.999% of the time.

          LOLZ to you

        • lprent 16.3.1.2

          Robert: See my reply. the short version is that you are a stupid lazy fool who doesn’t bother to do minimal research before hysterically inflicting your uninformed notions on the rest of us. If you expect to be treated as anything apart from the arrogant fool you seem to aspire to be, then do some work and learn something about your topic

          • Rob 16.3.1.2.1

            Please carry on , this might actually put CV over the edge. You can almost feel the arteries blocking as he types.

            • lprent 16.3.1.2.1.1

              Please don’t joke about that. I am a bit sensitive about it 😈

              • Rob

                Yes indeed, just read your link, very sobering and one we all should read. Maybe my frivolous comment does have an element of reality, this is just blog and if you do get that wound up about it ,maybe you just need to step outside , stand on some grass and take some time out.

  17. Brendon O'Connor 17

    It seems a bit like the quality of the advice of Building engineers.

    At least one engineer got it severely wrong after the Sept quake on the assumption that the same engineer OK’s both the CTV and the Pyne Gould buildings. Or two engineers if it wasn’t the same one. So, he or they made a mistake. A bit like the insurance advisers. Except how many other times did they get it wrong and is there any oversight of their mistakes? Must not be any checking of their work as the CTV and other deaths may not have occurred had they got it right.

    Correct me if I am wrong, but aren’t the CCC building standards only require buildings stay upright during an earthquake so inhabitants can survive and then the buildings get knocked down?
    How come the engineers who mistakenly said the CTV and Pyne Gould buildings are not being q2uaestuioned over their other building assessments? What buildings are Christchurch people in that are also ticking time bombs?

    So many questions – not that the MSM is asking them. As long as Happy Feet is alive and kicking then the serious questions will never get asked.

  18. waynewhoever 18

    Yes we should all be grateful for the foresight of the first Labour government who set up the EQC in 1947. Yes very grateful indeed!

    It is A pity that present Labour Party has not got the astuteness or the prudence of the first Labour government.

    The Labour Party as it is now cannot be said to be the friend of the New Zealand people.Labours moments of partial glory are buried deep in its past.

    Unfortunately it is now a good rule of thumb to suspect the worst of the Labour party – and usually in time your suspicions will be validated!

    What the heck has ever happened to the Labour Party since the beginning until now! At present its an absolute disaster!

    • Colonial Viper 18.1

      Tory Troll

      The true disaster is John Key, Bill English and Gerry Brownlee, the true party of neoliberals intent on selling off NZ to the Chinese.

      National is the natural ally of racist parties like ACT.

      NATs = Once were farmers. Now cheap car salesman looking to make a quick buck at the expense of all New Zealanders.

  19. MikeG 19

    has someone hacked Fran O’S column in the Herald?
    “Immediately impose a special tax aimed at higher income earners to start replenishing the Natural Disaster Fund which has been exhausted by the impact of the Christchurch quakes.” Is thius really coming from the right-wing cheer-leader?!

  20. MrSmith 20

    From this piece http://www.economist.com/node/7852904

    “Not surprisingly, insuring property in Florida is not very profitable. According to the Insurance Information Institute, the cumulative underwriting loss on Florida homeowners’ insurance in 1992-2004 was $8.6 billion. As a result, insurers are going bust or pulling out. Ten collapsed after Hurricane Andrew in 1992; three companies owned by Poe Financial Group, Florida’s second-biggest home insurers, went into liquidation this summer. Allstate decided last year not to renew 12.5% of its 758,000 policies in Florida.”
    “But Floridians need not fear being left without insurance in a hurricane. The state provides cover, through the Citizens Property Insurance Corporation. Some 900,000 Floridians now get their home insurance from Citizens, which taps the taxpayer to cover its deficits. In May, Jeb Bush, the state’s governor, signed a bill for a $715m subsidy to help the company cover last year’s $1.6 billion hole. According to Robert Hartwig, chief economist of the Insurance Information Institute, bailing out Citizens requires “grandmothers living in trailer parks on fixed incomes in [inland] Gainesville to subsidise million-dollar homes in Marco Island”.

    So the state is left to clean up after the insurance companies go under.

  21. Campbell Larsen 21

    Totally predictable –
    We are being deceived by the government – the actual cost of what it would have cost to restore Christchurch to it’s former self (or mostly) will likely now never be known. One thing is sure the bill that we are now looking at is grossly inflated and in in effect a transfer of wealth from the public purse to the private sector – mainly construction companies and CBD land owners.

    The extensive demolition being carried out is more about creating a economic deficit that can be used as a rationale for ‘austerity measures’ and artificially inflating economic activity.
    The introduction of CERA means that we can never be sure that we are getting value for money, or that decisions reflect the supposed state of the economy. New aquatic centre, new train set, new stadium, nothing is impossible, nothing it seems except rational decisions which could limit the extent of the cost of these events to the taxpayer

    CERA is just like Jabba and his mates – she will gobble up as much money as the public are stupid enough to put within reach.
    When someone like Fran O’Sullivan gets behind a levy to fund further works it’s not because she has come to her senses – the time for a levy was when it could be used to negate the need for austerity/ asset sales. Since both austerity and assett sales are both sill firmly on the cards a levy would be just throwing good money after bad.
    We are being robbed. The time has come for an independent audit of all expenditure and the increasing dubious decisions in the aftermath of the quake – if we don’t do something now we will never see the end of these quake costs.

  22. For those clowns who think that private insurance will cover things like floods and other hazards – go visit Brisbane. In much of Australia where flooding is an issue it is impossible to get flood cover. Lots of Aussies would love to have their State governments have a similar system – in much of brisbane the premiums would have to be pretty steep – about 1- 5% of replacement annually – given the return period of floods in much of the Murray and Queensland.

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