Rebuilding the EQC Fund for the future

Press Release – New Zealand Labour Party

Labour Leader Phil Goff today announced Labour’s plan to rebuild the Natural Disaster Fund and reform the EQC to secure the fund’s ability to respond effectively to future disasters.
Phil
GOFF
Labour Leader

Clayton
COSGROVE
Canterbury Earthquake Recovery Spokesperson

2 November, 2011 MEDIA STATEMENT
Rebuilding the EQC Fund for the future
Labour Leader Phil Goff today announced Labour’s plan to rebuild the Natural Disaster Fund and reform the EQC to secure the fund’s ability to respond effectively to future disasters.

Phil Goff announced the new plan in Christchurch today, accompanied by Christchurch Labour MPs.

“The sheer scale of the devastating Canterbury earthquakes severely tested the EQC. While it largely stood up to the challenge the Natural Disaster Fund is now depleted and it is clear the system needs modernising,” Phil Goff said.

“Labour has taken on board the need for change and will review several aspects of the EQC to ensure it is effective in responding to future disasters.

Labour’s changes to EQC will include:

• Ensuring widespread EQC coverage – making it universal by collecting levies through the local authority rates system.
• Increasing the Cap on EQC Cover from $100,000 in consultation with the EQC and the insurance sector.
• Making the levy proportionate by basing it on rateable values.
• Reviewing the Operations of Earthquake Commission to ensure the lessons of the Canterbury earthquake are used to secure the long-term reliability of the Commission.
• Covering temporary accommodation expenses.

“Making the levy universal for homeowners via the rates system will make the system fairer,” Phil Goff said.

“It extends the coverage and will be calculated in the same way as rates, on the value of a family’s home, which takes into account a person’s ability to pay.

“Everyone who owns a home will now be insured — eliminating the ‘moral hazard’ of covering uninsured homeowners, which penalises people who pay for private insurance cover.

“This system is also simpler, keeping compliance to a minimum by incorporating the levy in quarterly rates collections.

Clayton Cosgrove said the EQC $100,000 liability cap had to be raised to reflect the steep increase in house values and building costs since 1993, when the cap was set.

“It’s obvious from the destruction we’ve witnessed that the cap has to be brought up to date. $100,000 does not go far enough.

“We will work with the insurance industry and EQC to set a new level, and to negotiate the effect of that change on the premiums private insurance can charge.

“It means the Government will be taking on added risk. But right now there’s no alternative as the insurance market is not functioning properly and a lot of people cannot get private cover,” Clayton Cosgrove said.

Phil Goff said Labour’s EQC plan would ensure it was properly structured and resourced to meet the needs of New Zealanders in the future.

“The Canterbury earthquakes have provided a harsh and deadly reminder that we can never know when natural disasters will strike.

“It has also reminded us that we must be prepared for when they do.

“Labour’s plan will modernise the EQC and secure it and the disaster fund for future generations of New Zealanders,” Phil Goff said.

Labour has already announced a package of measures designed to kick-start Canterbury’s recovery. This includes decisions to:

• Acquire 1500 sections and on-sell them at cost to Red Zone residents
• Ring-fence a maximum of $100 million from the Canterbury Earthquake Fund to ensure home improvements to houses in the Red Zone are reimbursed up to a maximum of $50,000
• Resolve the insurance standoff and, as a last resort, be prepared to intervene in the insurance market on a short-term basis to get the market functioning again
• Establish an independent insurance commissioner to protect consumers and resolve disputes
• Immediately release all geotechnical information with a plain English guide
• Take action to fill critical skilled worker shortages, firstly from within Christchurch and New Zealand, and provide training – including converting dole payments to apprenticeship subsidies

ENDS

EQC_policy.pdf

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