Update from Gerry Brownlee, Minister for Earthquake Recovery: 11 June 2011

Posted 17 Jun 2011 by GovtCera Popular
Posted in CERA/Govt
This post was added to the Cera website - click here to view this item

Saturday 11 June 2011

As we approach the four-month anniversary since the February 22 earthquake, I'm aware that for some time there has been only one question on the lips of homeowners whose properties suffered the most damage - do I have a future here?

I acknowledge the frustration of those living in badly beaten-up houses or away from their homes in rented accommodation.

My desire is as simple today as it was in the days following the September earthquake: to do everything we can to return those with insurance to a financial position that is as close as possible to that before the events. In other words, as at September 3, 2010.

That desire stands for the February 22 event. It is what we are all working to deliver.

And while the waiting must feel like forever, rushing decisions will ultimately be at the cost of property owners.

I had initially hoped we would be able to give an indication on the state of the land and options for some of the worst-affected suburbs by the end of May. The size, scale and complexity of the issues we are facing means it will take a little more time.

It is also taking time to collate and analyse all the data involved.

This is the largest natural disaster we have ever faced in New Zealand.

The Earthquake Commission (EQC) has now received more than 345,000 claims for all the earthquakes since September 4; one of the highest numbers ever handled by a single insurer in the world. The previous biggest event for the EQC was the Gisborne earthquake in 2007, with 6224 claims.

New Zealand is the only country in the world to insure land. This adds another layer of complexity to the recovery process. It also means it would be inequitable to compare our recovery time frames to other major earthquakes in other parts of the world.

Where the damage delivered by the September 4 earthquake was able to be fixed by relatively modest civil works, the February 22 quake has caused much of the work that was under way to be reconsidered and presents a host of far greater engineering challenges.

A quick glance at the liquefaction maps from the two earthquakes shows the differences in scale between the two events in the starkest of terms. We've suffered over 10 times the land damage and are having to take many more issues into consideration when assessing the solutions.

These challenges are being addressed day and night by probably the largest team of geotechnical engineers and scientists ever to work on a single project in this country.

Over a dozen agencies are working together, including GNS Science, Land Information New Zealand, the University of Canterbury, EQC, private insurers, geotechnical engineers Tonkin & Taylor, the Department of Building and Housing, and the engineering and infrastructure teams of the region's three councils Christchurch City and the Selwyn and Waimakariri district councils.

Their information and mapping, showing upward, downward and sideways land movement, is being shared with the EQC and private insurers to build a comprehensive layer-by-layer picture of what's happened to the land on every damaged section in greater Christchurch.

Initial indications are that some land in the worst-affected suburbs has moved as much as one metre vertically and 3m horizontally.

We'll soon know the state of the land on those sections, the pre-quake value of that land and buildings, and the level of expected EQC and private insurance payments.

This process involves liaising with at least nine insurance companies, which collectively have more than 95 per cent of the private insurance market in New Zealand. These companies are then backed by a number of multinational reinsurers.

This will help us determine the probable cost of fixing the large areas of most-damaged land and assessing whether that exercise is viable.

You might recall the Government determined after the September quake that it would fund additional land remediation to a value of around $140 million across greater Christchurch over and above what the EQC was required to carry out.

We were going to do some perimeter treatment works, including underground stone columns along the riverbanks, to confine the land and help to mitigate lateral spreading in any future earthquakes.

Taking into account the different scale of the two events, you can see how some eye-watering sums of money could easily be spent by attempting to provide the sorts of land-improvement works that were under way following the September earthquake.

Just 47 days after September 4, the EQC was able to unequivocally say it could repair the damaged land on all but 13 properties in Canterbury, and houses could be repaired or rebuilt on the remaining land with confidence.

I can tell you now we won't be able to make such a blanket statement this time. While many will be able to confidently rebuild, it is becoming clear that in some parts of greater Christchurch, it simply isn't feasible to rebuild.

Exactly where those lines are drawn is the subject of ongoing work. It's as important for those who will be told they can stay as those who sadly will have to move elsewhere that the decisions we reach are robust.

We must be able to tell you exactly why a decision was reached so you can have confidence in it.

Viability is not simply about the cost of fixing the land. If every house in a street, damaged or not, needs to be removed for land remediation to take place, how long will this take? Where will people go? Will they want to return? What will this mean for communities, their schooling and employment?

These are questions the Government needs to ask and answer, and are in addition to the strict economics that will inform insurance decisions.

While the scientific work being done to build a picture upon which to make decisions is massive and complex, so too is the work necessary to deliver fair and adequate payouts for the residents of Christchurch who will have to move.

In cases where it is determined people will have to move, we could just leave each individual householder to deal with a number of parties to determine their insurance payouts, with multiple payments arriving at different times and people relocating from areas in an ad hoc fashion.

Homeowners will in most cases have up to five insurance claims: an EQC land claim, an EQC built-property claim, an EQC contents and/or chattels claim, a private insurer claim for their house, and private insurer claims for contents and sundry other chattels such as fences and outbuildings.

If left to run its natural course, the process would be unwieldy, probably result in widespread dispute and take many years. It would also impact on the time it would take the EQC and private insurers to settle serious individual land and home claims in areas where rebuilding can take place.

We've decided the Government needs to help clarify the processes and simplify the choices for people in those hardest-hit areas, where it's likely that decisions will be made affecting reasonably large numbers of people, to help deliver equitable solutions and provide homeowners with choice.

It is our hope those in the hardest-hit areas, where retiring the land is determined as being the only practical option at this time, homeowners will receive a single package that outlines their position and provides information on settlement processes.

We also want to provide comprehensive personal support to guide people through all processes and options once the decision on their land is made.

So finally I return to my ultimate desire in this major process, which is to enable those homeowners with insurance in greater Christchurch to regain as much equity as possible in what for many was their biggest asset before these events.

I firmly believe that time spent waiting for that outcome will be welcomed if a single package can be pulled together. And given the goodwill which has been displayed by all parties to date, I'm confident we can deliver.

Good progress is being made. I know it's tough and patience is wearing thin, but we hope to be able to provide some certainty for homeowners soon.

The Government is committed to getting this right and we will stand alongside you as together we rebuild this beautiful city and region.

Originally published in The Press, Saturday 11 June 2011.


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