Appropriation (2010/11 Supplementary Estimates) Bill

Again, I have just a few questions. As the Minister in the chair, the Minister of Finance, alluded to, we are all acting in good faith with regard to the Canterbury earthquakes and there is no query around the process. I want to take a few seconds to say that it is very good to see the Minister in the chair standing up and taking a call when there are genuine questions. I mentioned this earlier. I was talking to an older, since retired MP about the process in the Chamber. He said he was a little dismayed that Ministers did not take the call during the Committee stage when genuine questions were put up by the Opposition. Old hands like Peter Dunne often stand up, and it was good to see the Minister Bill English, who has been in this House for a long time and obviously respects tradition, stand up and answer some of the questions that the Opposition put his way. I thank the Minister for that.

I have a couple of questions. As I said, I am not passing judgment at all, but I would like to talk about the non-departmental capital expenditure of $3 million for Canterbury earthquake demolition-related property purchases. Where does this come from? In terms of property purchases, what is the process for—I assume it relates to the Canterbury Earthquake Recovery Authority or the Government— purchasing a property? Is this perhaps the process if the property is not insured or cannot ever be built on again? How will these properties be identified? As we well know, a significant portion of the central business district—and, again, we are not even necessarily talking about the central business district here—and residential properties have been demolished and can never be built ever again.

💬 Amy Adams: We’re talking about the central business district.

OK, we are talking about the central business district here, and $3 million is not a lot of money at all. In fact, it barely buys a decent piece of commercial real estate now. So I wonder what that $3 million is about and why it is there. How will the property be identified? Will they be identified by Gerry—

The CHAIRPERSON (H V Ross Robertson): The member referred to an honourable member by his first name.

I apologise. Will the properties be identified by the Hon Gerry Brownlee or by the insurance companies? Again, it is a question of process, but $3 million is not a lot of money at all.

I could be wrong here, but I understand that about 95 percent of buildings in the central business district are covered by insurance anyway. I am assuming—and, again, correct me if I am wrong here—that insurance companies will pay out whether a building is demolished, it is rebuilt, or the land can never be built on again, or whatever the circumstances. I could be wrong. Maybe this $3 million is to just top up insurance costs, or maybe it is to buy buildings that are owned by the Government. Maybe the Government owns a building in Christchurch and this is part of that. Again, I have absolutely no idea, so it would be great if the Minister could clarify that.

In terms of page 929, we are talking about $27 million worth of Canterbury earthquake property demolitions, related costs, and compensation. I think the Minister alluded to this. I do not think anyone really knows what the cost of demolishing a significant part of the Christchurch central business district will be. It would take a very brave person to stand up and say that it will cost X million dollars. It could be $37 million or it may be $17 million. Again, I am just curious to know how this figure was arrived at. The Minister outlined the process for bringing this to the House, which was hugely appreciated. But I know that when one is estimating work, even for a refurbishment of a standard commercial building, one has to bring in a quantity surveyor and one goes through that whole process, let alone assessing the cost of demolishing the central business district of one of New Zealand’s largest cities. So I just wonder whether, for example, Fletcher Challenge came up with this, or a firm of quantity surveyors—maybe Quotable Value, which is online—or experts came to the Minister and said: “Look, Minister, we have absolutely no idea whatsoever. We think it could be $30 million. We don’t know, but we know you have to put a figure in here so it is recognised.”

The classic case is Rolls-Royce, which never valued its brand but put a dollar on the books just to show that it did have a value, because it had absolutely no idea. But a sign of value meant it was worth something. Is this the case where the Minister has said that we need to have something in the estimates because we have no idea how much it will cost, so we put in $27 million? As the Minister said, we all agree. We are not going to quibble about this. Hell, if it ends up being $37 million, that is tough, but I do not think there will be any New Zealand demolition company that will rip off the Government or the taxpayers of Canterbury. So this will be done—I am assuming and I know—in a good, sound commercial way, but I ask whether there was a process around that $27 million. Thank you very much.

I thank the Minister in the chair, the Minister of Finance, for his intervention in a previous question. We are on schedule 1 of the Appropriation (2010/11 Supplementary Estimates) Bill, and we are touching on the amendment that includes the substantive part of Supplementary Order Paper 246, which is the addition of $27 million for non-departmental output expenses for the demolition efforts in Christchurch, and another $3 million for associated demolition-related property purchases. I will not take a long call, but I want to underline a couple of important points. The first is that obviously the whole Committee is unanimous in its support for this provision. It reflects that the whole country is unanimous in its support for the people of Christchurch. We all stand shoulder to shoulder with them, even though we are not living day to day through the aftershocks, the disruption, the lack of water, the lack of sewerage services, and, in some cases, the lack of electricity and heating. Any of us who have families or relatives there or elsewhere understand how terribly disruptive and morale sapping that must be.

On the subject of morale, I think it is fair to say that there has been a perceptible shift in mood since the last major aftershocks. People have, if you like, shifted the questions they are asking from how they will get through the immediacy of this, to what is the longer-term game plan for recovery and rebuilding. There are many streets in the low-lying areas of Avonside, Bexley, and other areas, where those living there are living through terrible, terrible disruption. They are living in broken homes and they are unclear whether they will be able to rebuild, whether their insurance costs will cover it, or whether they will be forced to move—

💬 Amy Adams: This is not the SOP, though.

The Supplementary Order Paper is around demolition costs, and I am talking about demolition.

💬 Amy Adams: No it isn’t. It’s around CBD costs, not Bexley.

Yes, and it includes central business district costs, of course. But as the mood is around the central business district, so the mood is around where people live. It is the need for certainty and the need for a plan, and at the moment people do not have that. They are now turning to the Government and they are asking how long it will be before they will know what the plan is.

I was in Christchurch not long ago and I had a look at the central business district. It is an extraordinary sight, as we all know. The scale of the devastation on a brick-by-brick basis is so much more than is captured on our TV screens. It was even more eerie at night, frankly, when one would expect the central business district to be lit up, but in the centre of Christchurch there is nothing. There is only darkness because there is no power, there are no people, and there is nothing going on. It is just walled off.

It is clear that much of that central business district will have to be demolished. The latest aftershocks only increased the concentration of sites where that will be required. What is not clear is what will be rebuilt, where it will be rebuilt, whether it is actually tenable to build a central business district on the same spot, or whether it will need to be shifted. What design would proof us from future earthquakes? On the upside, what design would give us the world’s best small city to live in? That is the opportunity that is before Christchurch.

We will sense the shift in the mood from getting through the days, weeks, and months of hardship caused by an earthquake, to asking the positive questions about this new place that we will get to. If it is not simply the rebuilding of what we had—and sadly it cannot be—then what is the new place that we will get to? It is for that reason that in my earlier remarks I drew the connection between the rebuilding of Christchurch and the rebuilding of New Zealand more broadly, because all New Zealanders are feeling—

💬 Amy Adams: I raise a point of order, Mr Chairperson. Has this debate now become one of a general discussion about the rebuilding of Canterbury? My understanding was that it was reasonably tightly constrained to the two specific changes on the Supplementary Order Paper that are around demolition costs, and property acquisition costs related to demolition. If it is in fact a wider debate around the rebuilding of Christchurch, then I would be grateful for your advice on that, because it seems to me that the member is straying well off the matters in the Supplementary Order Paper.

The CHAIRPERSON (H V Ross Robertson): The member is correct in saying that it should be around the non-departmental output expenses and capital expenditure, but I have given the member a little bit of latitude, given that there was some confusion at the start of the debate. The member’s time is almost completed.

I think that for the people of Christchurch and Canterbury, although they appreciate that there is important work to be done in the central business district around the direct demolition costs, any discussion of that legitimately touches on the broader concerns and feelings about the need for a clear plan for a rebuilding of the whole city and of the Canterbury economy. The same mood exists around the broader country about the need to rebuild our shattered economy.

The Committee joins together in supporting these amendments because the Committee joins together in supporting the people of Christchurch. I want the people of New Zealand to understand that Labour Opposition members—who are citizens of New Zealand, like National members and members from every other party in this House—care deeply about Christchurch and its people and about New Zealand. That is why we are here and why we support these amendments. Thank you.

I will make just a few comments about schedule 1 of the Appropriation (2010/11 Supplementary Estimates) Bill. I will pick up on one or two of the points that have been made earlier and perhaps explore them a little further. We understand well that the intent of Supplementary Order Paper 246 is to provide supplementary money to the tune of $27 million for property output expenses and demolition and $3 million essentially for demolition-related property purchases. We understand that the reason for the Supplementary Order Paper is that the Budget moratorium period, from 11 April to 19 May, covered the period of Cabinet decision-making that spanned 22 February. I make it clear from the beginning that the Green Party has no difficulty in voting for this Supplementary Order Paper.

Perhaps the Committee could advise, with respect, the Hon David Cunliffe to resist the temptation to speak on behalf of the Committee when he is in full knowledge of the fact that the Green Party opposed the original Canterbury Earthquake Recovery Bill at the time, and that we did so for good reason. I will not rehearse the reasons; we conveyed them at the time. We supported the recovery purpose of the Canterbury Earthquake Recovery Authority but we judged the powers granted under the bill to be excessive for that purpose. That said, it is history and we do not oppose—we never did—an appropriate amount of funding for the rebuilding of Christchurch.

I believe that we are all cooperating across party lines to that end. I for one have held three public forums entitled Vision Christchurch since April through to June with the aim of engaging experts and the public together to embrace a vision of a future eco-city that would reflect 21st century values and technology. There was one forum in central Christchurch at the end of April, one in New Brighton a few weeks ago, and one just 2 days ago in Lyttelton. They have been very well attended, with about 100 to 200 people at each meeting, and there have been superb presentations and animated discussion. Geotechnical consultants, landscape planners, architects, civil engineers, transport specialists, community sociologists, and iwi leaders have attended. I plan to get all that information from those meetings and before very long channel it into the cross-party forum under the chairmanship of the Minister for Canterbury Earthquake Recovery. We are all collectively combining our strengths to rebuild the city in good faith, but I point out that it would be presumptuous to assume on behalf of the whole Committee that we are all in favour of everything that has gone before.

I will make a couple of specific points about schedule 1 and also just touch on an issue that attends it: mainly, that the psychology has changed. I think Mr Cunliffe was correct when he said that after 13 June the psychology in Christchurch has changed—indeed, it has. The psychology has changed from 4 September to 13 June, with all the trauma of 22 February. In the first two meetings I spoke about there was an upbeat mood about rebuilding Christchurch. After 13 June, at the most recent meeting I convened in Lyttelton, there was this new psychology. I would not call it a malaise but a deep trauma on the part of the residents. It has bifurcated the city into those who basically are making a definitive decision to leave—anything up to perhaps one-fifth of the city; we will find out—and those who will remain.

I was apprehensive about that mood as we went into this forum on Sunday, but I found that from those 60 to 80 percent of the residents who are still resolved to remain in Christchurch, the determination to rebuild the city after 13 June came through. Just last Sunday afternoon in this meeting, with about 115 people present, the determination came through loud and clear. It was arguably the most inspiring experience I have had in the whole of the earthquake experience to date. I think we can take consolation from that determination, and a certain amount of confidence that we are actually going to get there.

I will pick up on the figures from where Mr Nash left off and address these questions to the Minister in the chair, the Minister of Finance. I want a bit more specificity. We are talking about $27 million for demolition; I have no query of that. I just query whether $3 million for property purchases will prove to be enough in the fullness of time.

I have been down to the central business district. I come and go from Christchurch. I live there most of the time. I left at 8 o’clock this morning. I went in for a Radio New Zealand interview in downtown Christchurch this morning at 7.15. I have been into the red zone a couple of times. Mr Cunliffe’s description is correct: it is an eerie experience. Most likely now 1,000 buildings will come down. A couple of months ago it was 242, then it was 300, and then it was 900. Over 1,000 buildings will come down. Anything from 50 to 60 percent of the buildings are coming down. There will be $3 million for property purchase.

As I understand it, we are talking about $3 million for just the central business district. With a broad operating assumption of 1,000 buildings coming down, I ask the Minister what percentage of those buildings that $3 million pertains to. Under the Canterbury Earthquake Recovery Authority powers the Minister for Canterbury Earthquake Recovery has the powers of requisition. What percentage of those buildings—if it is possible to answer this question—does that $3 million pertain to, and does it pertain in any way to requisition? Mr Nash talked about purchasing private property if it is being sold, and about insured property.

My question is—and in all three meetings I have found this the most excruciating challenge of all, I think, for the rebuild—about the relationship and the cooperation between the private sector and the public sector. I sat through a business meeting last night in Christchurch of about 30 business people and people interested in heritage. I know the agony that those business owners are going through, and there is a risk of capital flight out of Christchurch sooner rather than later. They are on the verge of moving.

On the other hand, there will also be private owners who will refuse necessarily to act in the public interest. With my three meetings I am trying to generate a public mood where the public interest in a re-envisaged city becomes palpable, and the public interest can be expressed by the Minister for Canterbury Earthquake Recovery and Roger Sutton. Even with the 40 percent or 50 percent of buildings left standing, there may be intransigent private owners.

I think the single biggest challenge to the Government—and it is a challenge to all of us as a society—whether or not there is a cross-party forum, is how we deal with that situation. If we have a vision, and I have seen architects’ PowerPoint presentations with a vision of a new eco-city, some buildings could be in the road. Does the $3 million pertain to requisition? I would not necessarily critique it. I was critical of excessive powers, but I understand the powers exist and they can be used in the public interest. I would be intrigued to hear the answer on that point.

I acknowledge the perceptive and considered approach of the previous speaker, Dr Kennedy Graham, to the earthquake issues. I have listened to his media comments and I have found them to be helpful. When I think of the non-Government parties in relation to Christchurch, I say that the Greens are again marking out a more considered approach to the issues than perhaps some other parties are.

To deal with the member’s question, which was raised initially by Stuart Nash with regard to the dollar amounts, the numbers are basically a guess. We needed to get some cash to enable the Canterbury Earthquake Recovery Authority to get on with the job, but in acknowledgment of the process of getting supply from Parliament, we did not want to exploit that opportunity by trying to appropriate a large amount of money for which we could not provide a strong rationale. The number is a guess at the amount that might be required simply to tide over the operation until the full budget process is completed.

Dr Graham has put his finger on an absolutely central issue in the progress of the rebuild. On the one hand, it is trying to get the right balance between the need to build confidence by getting things going—which is a role that initially has fallen largely to the Government, working alongside the council—and, on the other hand, it is ensuring that taxpayers do not take on all the responsibilities. So it is conceivable that some owners of buildings in the middle of Christchurch with a complex situation may prefer the Government to pay for the demolition of their building, either because they are just not in a psychological state to make decisions or because they cannot get their bank, their insurer, their tenants, and their next-door neighbours all lined up, because it is a bit of a complicated process. There is a risk that owners will simply hand over all those responsibilities to the Government, and that would not be appropriate. They have to take the risks that go with the ownership of property, including what happens when events that they are insured against actually occur.

There is an easy and obvious answer to it, but I think that we will work out, in the pragmatic Kiwi way, through the planning process just what that balance might be. In the end, I think the member is quite right that the purpose of getting on with the demolition that is financed by these appropriations is to build the kind of confidence that will encourage and enable private investors to put in their capital, because ultimately that is what will decide the fate of Christchurch. The vision of the community is a necessary step, the competence of the council is another necessary step, and then someone has to actually put up the capital to build the buildings according to both their objectives and the objectives that are set out by the plan. Will this appropriation be enough? I would be very surprised if it is, but it is certainly enough to tide us over.

The question was put that the amendment set out on Supplementary Order Paper 246 in the name of the Hon Bill English to schedule 1 be agreed to.

Amendment agreed to.

Schedule 1 as amended agreed to.

Bill reported with amendment.

Report adopted.

Third Reading