Earthquake Commission Amendment Bill

I move, That the Earthquake Commission Amendment Bill be now read a third time.

The changes in this bill will improve the Earthquake Commission’s efficiency and ability to respond to future events. This is a bill that has four straightforward changes that can be made now, ahead of a more comprehensive review of the current Earthquake Commission Act. The support for these changes comes from across the House, and it’s a good indicator of how logical they are. I thank the members from the Finance and Expenditure Committee for their work on this bill and for the improvements made as a result of submissions that were received.

The changes we’re seeking to make with this bill are the first substantial changes to be introduced since the current Act was introduced in the early 1990s. The inquiry into the Earthquake Commission (EQC), which will commence shortly, is a step towards a fuller review of the Act. Learning from the experiences of the people of Canterbury and Kaikōura will identify further areas for improvement. I expect to bring further, more substantive changes to the Earthquake Commission Act following that review.

The four changes in this bill include increasing the amount the EQC can pay per claim from $100,000 to $150,000, plus GST. The cap on claims has not been increased since 1994, and this change acknowledges the increase in building costs since then. Secondly, the bill removes contents and personal property cover from EQC. This will now be picked up via people’s private insurance policies. Following a significant earthquake like the Canterbury sequence, EQC needs to focus resources on restoring people’s homes rather than being diverted on to contents and personal property claims. These two changes will come into effect as people’s insurance policies are renewed from 1 July 2019. Any new property insurance policies entered into from 1 July 2019 will also reflect these new clauses.

In my role as the Minister responsible for the Earthquake Commission, from time to time I come across a situation that reminds me why changes to this bill are important. About the time of the second reading of this bill, I received a letter from a man who found that his reclusive aunt’s Christchurch home was earthquake damaged. She had not let anyone into her home for a number of years. The family did not know the extent of the damage to the house. With a three-month deadline for lodging a claim, the elderly woman and her family could not receive EQC help to repair the home. It’s situations like this that demonstrate the need for a longer claims lodgment period. The bill includes that change. It enables EQC to accept claim notifications for up to two years after a natural disaster, rather than the current three-month time limit. EQC will need to be satisfied that the failure to make a claim within three months has not materially prejudiced their ability to assess the claim.

Further to this, the bill provides for regulations to be made either to extend the two-year deadline or for EQC to consider accepting claims in exceptional circumstances more than two years after the damage-causing event. The changes in the bill also improve EQC’s ability to share information. I want to thank the Office of the Privacy Commissioner for their submission, which greatly improved these clauses in the bill. Specifically, the changes in the bill mean EQC may release information that it holds to prevent or lessen a threat to public health or public safety or to the life or health of any individual. EQC may also release information for the administration of the EQC Act or the performance of its functions. Information that will facilitate natural disaster preparedness, response, or recovery, including the settlement of insurance claims by insurance companies, can also be released by EQC. EQC may also make property-related information available publicly. The bill requires EQC to have appropriate protections in place to maintain the confidentiality of personal information. These second two changes will come into effect on 1 July 2019.

The changes I have outlined are straightforward to make. They are also logical ones that can be put in place now in preparation for a future event, should it occur, and will increase the efficiency of EQC’s claims management. I’d like to take a brief moment to comment on why I did not support Supplementary Order Paper 156, which would have allowed claims to be lodged directly with private insurers, making them agents of the Crown for that claim. Firstly, we don’t need it to be in law for this to happen. The memorandum of understanding (MOU) that was put in place after the Kaikōura sequence of events was put in place before this law change. We could do the same thing again quickly if it is the best model for the event, following that event. Any new MOU would also build on the strong relationships that have further developed between EQC and the small number of private insurers in New Zealand. I have not yet received the review of the Kaikōura MOU, and I want to receive Dame Silvia Cartwright’s report following the inquiry into the Earthquake Commission before we undertake a substantive review of the EQC Act.

We need to make sure we aren’t putting in place a model that may have unintended consequences, while ensuring we make any improvements to the model that are identified in the review. So I commend this bill to the House. Thank you, Madam Assistant Speaker.

Thank you, Madam Assistant Speaker. Well, it is a pleasure to speak on the Earthquake Commission Amendment Bill in its third reading, and we will be supporting it, as we have all the way through this process—however, with some reservations. The two years, I think—that was extending the time period to make a claim out to two years—was something that we did initially oppose. We’ve agreed to it reluctantly but with qualifications, and I think that it is incumbent upon the Minister responsible for the Earthquake Commission now to ensure that it’s quite clearly communicated to people that while they have an opportunity to wait up to two years to identify earthquake damage or other damage and make a claim with the Earthquake Commission (EQC), that is really putting themselves at risk, because there is the material prejudice clause in there, and I think it’s very risky when you’re getting up to a period like two years to actually meet that test and get a successful claim.

It should also be pointed out to people that they most likely won’t have cover for their house if they haven’t been living in it for more than 60 days. Most insurance companies have a clause that you must live in or visit your house continuously, or if you’re away from it for more than 60 days, you’re actually required to inform the insurance company, or your insurance can, in fact, be null and void, or you can have a material increase in the excess—quite significant; $10,000 in one case. So that might be quite significant for damage. You would think that the damage that wasn’t obvious would be at the lower end of damages rather than at the higher end. So that’s the two years. So I understand what would drive the Minister to want to do that, but I think there needs to be quite a bit of caution there.

Sharing information and tidying that up in the law and making it very clear that EQC can share information around natural disasters to help with preparedness and share it with other agencies is absolutely needed. As the Minister said, this is the first opportunity, really, to do that. There was a lot learnt from the Christchurch event, and lifting the cap from $100,000 to $150,000 and also removing the contents cover—there was quite a bit of work done on that by the officials, in fact, in a normal earthquake event that is likely to actually lower EQC’s exposure by a small amount. So it wasn’t a significant or material amount. But I don’t know why and I don’t understand why that couldn’t have just been adjusted by Consumers Price Index rather than having to wait for legislation to change, because inevitably legislation will come in well after the inflation has occurred and it’s inevitable that they’ll be behind and therefore the cap will be out of whack with where it should be.

But the Minister alluded to my Supplementary Order Paper (SOP) 156 at the end, and I will cover that, and I think that she also said that one of the aims of this bill was to promote efficiency. Well, that’s exactly what the memorandum of understanding (MOU) did. It was very clear right through the select committee process that all of the evidence supported having the MOU or the ability for an insurance claim to be made, and that that would be deemed as an EQC claim, and to take the middleman out, effectively, which is EQC, and that the insurance companies, who were the main submitters, and legal practices as well—that that needed to be in the legislation rather than an MOU. We know it worked really well, and I look forward very much to when the other piece of legislation that the Minister alluded to comes in and it has what is effectively my SOP in there—that the Minister will look for a really decent bottle of chardonnay that she can give me and thank me very much for all the work that I did on that. And if she doesn’t like to bring me chardonnay, a very good pinot noir would be good. It wouldn’t be political to give a brand but I could give a price band. A good Marlborough wine or a good Waipara would be quite adequate for my tastes.

But I think that it is important that we actually think about these things while we’ve got the opportunity, and to wait for another inquiry I think is really abdicating your responsibility, and I really don’t believe that that’s the right thing to do. I think that the more substantive changes—we’ve had enough time, we’ve had enough inquiry, and I think it is, really, just trying to deliver on an election promise. We had, actually, the chairman, Sir Michael Cullen, and Sid Miller, the chief executive of EQC, in front of the Governance and Administration Committee last week, and I was quite alarmed, because I really believe the MOU and the SOP—the opposition to those, particularly from EQC, is about patch protection. I think that they’re out there to try and grow their influence. We were told, under questioning from myself about the risk-based insurance pricing models and the impact on the market, that EQC are looking at, with Treasury, becoming the insurer of last resort in New Zealand. I was quite shocked to hear that and I’m quite concerned about it, so I’m flagging that now, that we are certainly keeping a very close eye on that because that is a serious development. So, with some caveats, I commend the bill to the House.

Well, to the member for Kaikōura: shame on you. Shame on you for being half-hearted in your support of this bill. Shame on you—

ASSISTANT SPEAKER (Poto Williams): Order!

—for naysaying—

ASSISTANT SPEAKER (Poto Williams): Order! Order! Dr Webb, please. Not me.

Shame on the member—shame on the member for being half-hearted in his support of the bill. Absolutely. Think about it. And shame on the member for not reading it clearly. For a start, read the amendment. The current position is, under this bill, that three months is the required time limit in which someone must make a claim. Shame on the member for not even understanding how reinsurance works. Nobody wants to put in a late claim.

As for your Supplementary Order Paper (SOP) 156, Mr Smith, you don’t seem to understand how insurance works, because if we think about it carefully, then we don’t even need the SOP. The memorandum of understanding that was put in was a very useful memorandum of understanding, but we can’t require insurers to agree to an arrangement. So the suggestion that we need to put into legislation a requirement that Earthquake Commission (EQC) agree with insurers is meaningless, and not only meaningless, it’s mischievous. It’s a recipe for disaster.

This bill, however, is a good step forward that should have been taken some time ago, because the work underpinning it was done years and years ago. But what we have is some very useful progression so that we can get in place some efficiencies in the system whilst the inquiry is being undertaken. Let’s not pretend that the system’s working perfectly. That’s well acknowledged, but we don’t want to be hasty in a redesign of the entire system. These are improvements that can be made very easily, and improvements that everyone recognises. The increasing of the cap to $150,000 is an obvious and reasonable improvement of the system, so that that first level of cover will cover most of the damage that occurs in a major event. We can be a little dismissive, but getting rid of the contents cover is a very significant improvement because the administrative burden associated with administering $20,000 worth of contents cover is extremely high, and the idea of having to have an EQC step for $20,000, which often was for curtains and carpet, before you could move on to your insurer and get the wider contents cover—well, it’s well we do away with it. In fact, that simply slowed down contents claims and, I must say, from personal experience, was a huge frustration for homeowners.

In terms of the extension of claim time, can I say that this is probably the point which I consider to be the most significant improvement, because a number of people that I have dealt with over time did not put their EQC claims in within the required period, and it is an absolutely legislative hard deadline. If you’re outside of the statutory deadline, then there is no give whatsoever. Many people had very good reasons for not putting that in. They might have been an absentee, they might have been overwhelmed, or they might have been suffering from illnesses of all kinds. It was entirely unfair that they were not entitled to make an EQC claim simply because they hadn’t done it within the rigid statutory three-month period.

What we have now is an ability for the Minister to push that out not only to two years but, in special circumstances, beyond that. Whilst in the Finance and Expenditure Committee, which I sat on, there was all kinds of discussion about what it might mean for reinsurance, the fact is that it means nearly nothing, because we know the vast majority of people put their claims in on time, for a very good reason. They want to be paid. They want to get their claims settled. So, in fact, that very small percentage—1 percent or less—who don’t get their claims in on time do it through oversight, through omission, through hardship, and through all kinds of other reasons. That has no impact on the cost of getting reinsurance, because everyone wants to be paid on time. The idea that someone would maliciously not put their claim in is fatuous. It’s a ridiculous proposition and there’s no motive for it whatsoever.

The other important innovation here, and it’s one which is far more structural and less, kind of, immediate for any affected homeowner, is the information-sharing provisions. Now, these are contentious in that we are gathering information about individuals and individual claims, but, in fact, the purpose of this is for the preparedness and the management and handling of claims. That personal information is not going to be identifiable. So what we really need to know, what EQC needs to know, is wider risk questions—questions about where the vulnerabilities are, questions about what the damage to properties is—so that the claims can be managed much more effectively and the forward-looking risks can be managed much more effectively. In fact, what that will lead to is a more effective claims system and more effective risk management, and those preventative steps and educative steps that EQC can take are much better managed in the long run.

As the Minister noted, the Privacy Commissioner had very good advice for the select committee on that, and, having sat on that select committee, I’m very comfortable indeed with the fact that that information-gathering exercise will be effective and that the bill, as a whole, will vastly improve the EQC system. So this is a great improvement. We’re looking to further improvements once the commission is concluded, and I commend this bill to the House.

Well, I often think that in life there are lawyers and there are others, there are environmentalist and there are others, and, luckily, every time I think of it, I’m in the “others”. Sorry, Madam Assistant Speaker, I want to take a brief call on the—well, it might not be so brief, actually—the Earthquake Commission Amendment Bill. But before I do, I really want to wish everyone—because it will be my last opportunity to speak in the House this year—a very merry Christmas, some a merrier Christmas than others, but I’ll reserve the right to tell them in due course who they are.

💬 Simeon Brown: What do I get, Ian?

Ha, ha! I’m not sure about you, Simeon.

We’re not here to argue about what’s in this bill, because we support what’s in this bill. I think it is a timely, I guess, review of the activities of the Earthquake Commission (EQC). Frankly, if we didn’t have an Earthquake Commission in New Zealand, we may well not have insurance for earthquakes, particularly in some parts of New Zealand; so it’s a critical part of what we do in New Zealand. In fact, I suppose, when we think about it, it’s probably been a critical part of what we do in New Zealand since 1931 at least. It certainly is now, and the events of recent years—particularly with Christchurch and Kaikōura and the events in Wellington—have pointed to the huge requirement for this commission to operate and to operate in an efficient manner.

The changes that have been proposed in this bill, particularly increasing the cap and, as the last member spoke about at length, the ability of people when required to make claims up to two years after the event is, I think, a very positive change. It also removes the EQC insurance cover for contents, which is certainly a necessary change to the bill—well, I don’t know whether it’s necessary or not, but it’s easy enough. You’ll always be able to get insurance, within reason, for contents cover in the private sector, and that’s how it should be. So this commission really shores up an issue in New Zealand which is hugely important for us, and that is the fact that earthquakes do a lot of damage to our ability to attract insurance. If we think about Australia, in Australia, fires are really their earthquakes, and the same thing happens there. In fact, in many parts of Australia, you can’t get cover for fire insurance; so an EQC-type arrangement shores that up.

I want to talk about a couple of things—one the Minister responsible for the Earthquake Commission mentioned actually, and that was the measure that Stuart Smith introduced around insurance companies handling, effectively, the first contact claims and, in fact, handling the whole of the claims process. The Minister mentioned the fact that that can be tacked on to any natural disaster. And I accept that; it can be. But we then heard Duncan Webb go on to say that we can’t force insurers to accept those types of arrangements. Well, we certainly can if it’s a law, because the law is the law. So if we put it into law, there would be no problem ensuring that the insurers accept those requirements. And so I didn’t think there was necessarily a sensible argument to that. In fact, if we put it in law, we could enforce that and we could ensure that that happens.

But I think that, initially, the changes that have been made to this legislation and to the Earthquake Commission’s activities are sensible. I do think, though, that there’s a significantly large amount of work required to further changes to this legislation in the future, because as we review what happened, particularly in the two Christchurch earthquakes and probably Kaikōura and Wellington, I think we’ll come up with a different solution in due course to the challenge we’ve got. I think it does need to be connected to the private insurers because, at the end of the day, they make the market in New Zealand. They’re hugely important to where we get to, and I think that we need to accommodate them in the way we write this legislation. I don’t think for a minute that it’s the Government’s business to be providing any kind of business activity where that is adequately covered by the private sector.

Now, you could argue that in some cases, and certainly in the earthquake situation, it may not be adequately covered by the private sector, in which case I think there’s very good reason for Government to intervene. So, as I said earlier, we support all the changes that are made in the course of this. There are some improvements that could be made in the future, and as the reviews come to hand I hope that the Minister will go on and make those changes.

I just also want to very briefly mention the background to this legislation, in that three Ministers, at least, had an impact on this: Gerry Brownlee, who dealt with the initial Christchurch earthquakes; certainly Nicky Wagner has had an input; and the current Minister, Megan Woods. I think that, when you’re dealing with this kind of thing or with this type of legislation that is specific in a lot of cases to the personal effect it has on people, that’s pretty significant. So Parliament, across the board, needs to make changes that enable people to live better lives in times of natural disaster, and that’s really what this is about.

I think I’ve mentioned in the House previously that I’ve had experience myself of EQC claims going right back to 1931—they weren’t EQC claims in those days, but I certainly have buildings that were damaged in 1931 and have been re-damaged since. So it’s quite interesting, and I understand the challenges that those people would have. It didn’t perhaps affect me in the same manner because it’s not recent damage, but I think it’s hugely important. I commend the bill to the House, and I’m sure that there will be some reviews coming to us in the future that will change it again. Thank you.

It is a pleasure to rise on behalf of New Zealand First and confirm our support for this Earthquake Commission Amendment Bill. Of course, we’re debating here or confirming these four common-sense changes which represent the low-hanging fruit of our experiences, and our hard-won experiences, in the series of quakes that have afflicted us as a nation over the last eight years. I commend the Minister, and New Zealand First commends the Minister, in bringing these, as I say, low-hanging fruit or more obvious changes forward, pending the more comprehensive review by Dame Silvia Cartwright.

Of course, there is the lifting of the cap to $150,000 from $100,000, as it was set in 1994, and of course we know that real estate and building prices have lifted considerably in that time. But I think there was some debate on where that cap should be set. I think some had advocated for a higher cap, but I think $150,000 is a fair level. I think we’ve got to be careful here with moral hazard. It is up to individuals to insure their own property, and we can’t have the State just being the default provider. The same goes in terms of the removal of contents from the process. That just merely clutters up what is—and we know there were hundreds of thousands of claims within the Christchurch and the Kaikōura sequences of quakes. So taking out the contents and personal belongings provisions does unclutter that process. It is a common-sense provision, and, once again, it’s a moral hazard. It shouldn’t be up to the State to be insuring your telly or your vases or nanna’s antique cups. That’s up to you, and I think that’s fair enough.

To extend the claim time—we’ve had a bit of debate about that tonight as well. I think three months seems to me to be an extraordinarily short period of time. These are absolutely traumatic events, and it does not make sense to have an arbitrary three-month period. People will get their claims in as soon as they can, but it does stretch that out for two years in the most extreme events, and it does take some pressure off those people in traumatic circumstances.

The information-sharing provisions—we do note that it was amended under advice from the Privacy Commissioner, the select committee doing its work as it does well in this Parliament, and we support that as New Zealand First. It does streamline the response and improve the efficiency of the Earthquake Commission.

I would just like to touch on Stuart Smith’s Supplementary Order Paper (SOP). New Zealand First actually supported that SOP in principle. We thought it had merit. It had worked under the memorandum of understanding (MOU) during the Kaikōura sequence, and we did seek some assurances from the Minister that that would be considered properly within the scope of the Cartwright review. We have had that assurance, but we do share the Minister’s view that it does not make sense to make ad hoc provisions on something that is a bit more complicated and that may have unintended consequences. We know that—the Kaikōura example is that we can bring this MOU in, should it be required, in lieu of the Cartwright report coming back and recommending that going into the fuller review of the legislation.

So in closing, I’d like to commend the Minister for bringing these common-sense provisions forward. I commend the Finance and Expenditure Committee. They obviously did quite a bit of work in panel beating this bill out, particularly around those privacy provisions. The officials, as always—and I would just like to thank also, by just reiterating the words that have been spoken tonight, as this will probably be my last contribution of the year: to you, Madam Assistant Speaker, a very merry Christmas, and to all members of the House, and in fact, the precinct too, in this weird ecosystem that we live in. I wish you all a very merry Christmas and a happy New Year, and look forward to working with you all again next year. So with that, New Zealand First has pleasure in commending this to the House. Thank you.

Madam Assistant Speaker, thank you for the opportunity to take a call on the Earthquake Commission Amendment Bill. I’m grateful that I’ve had the opportunity to follow what I thought was a very considered and excellent contribution from the New Zealand First member Mark Patterson—one of his better contributions that I’ve heard in this House. I thought it was very good.

Can I also take this opportunity, Madam Assistant Speaker, of acknowledging you and the role you’ve played throughout the year. This will probably also be the only opportunity I get to speak between now and the adjournment debate, but I think you have done an exceptional job as a presiding officer of this House. And to all members from all sides of the House, a merry Christmas to you all.

Now to the Earthquake Commission Amendment Bill. My first point would be that I think it’s a missed opportunity. I think there was a substantial amount of research and inquiries done in response to two major earthquakes—or three major earthquakes in Christchurch and one major event in Kaikōura—that actually gave the opportunity for the new Minister coming into this portfolio to do something that was significant, and I think the opportunity has been missed, for a reason that I’m not sure of. I could be unkind to say it’s incompetence. I could be unkind to say the Minister simply hasn’t had time to consider the issues.

But to put a bill before the House which does, effectively, four relatively minor things is a missed opportunity. And I know the Minister’s working on further reform and further legislation. I hope that that will come through with a little more guts and gusto to actually set ourselves up for, inevitably, another major disaster which will sadly occur in this country.

So the four changes include lifting the cap from $100,000 to $150,000. It sounds like a big increase, but when you consider the second aspect of the bill, which is to remove the fact that, currently, the Earthquake Commission (EQC) covers contents up to $20,000—when you take that out of the $150,000, the adjustment actually is probably inflation since it was set in 1994. I fully support legislation taking contents out of the cover of EQC. I think that was the point that was made well by Mark Patterson, that it’s the complete responsibility of the individual owner to insure their contents in the event of an earthquake. EQC was set up for major coverage of things like the dwellings etc., not for contents. So I support that part.

The fourth amendment this legislation does is around EQC’s authority to share information—no problem at all with that.

The one I certainly am very nervous about is the second major change. It’s extending the time of notification from three months to two years. And I know that Dr Duncan Webb gave us an incredible example during the select committee process that I still find, frankly, incredulous. But he gave the example of a house that had been in the Christchurch earthquake that had suffered no known visual damage above the ground at all. No contents had fallen off the shelves. There were no cracks in the GIB board. But sometime afterwards, they went to lift their carpet to replace the carpet and they found a massive fracture in the concrete foundation floor.

Now, I suppose it could happen, but I just find it very, very strange that a massive fracture could occur in a concrete foundation with absolutely no sign of any damage at all above that ground level. But Duncan Webb assured us that he’d had a constituent case like that, and that’s why he was strongly supportive of extending the time from three months to two years.

I can accept some extension of time—I think to take it from three months to 12 months. But I just think by taking it to two years, the longer that is open, the more possibility there is for questionable or fraudulent claims, and if there are questionable and fraudulent claims, then there is a possibility that that has to be covered, ultimately, and that means levy increases, and levy increases, frankly, mean that the cost of the levies increases for those that are honest. That’s how insurance works.

The last point I want to make a comment on is the superb Supplementary Order Paper (SOP) 156, moved by Stuart Smith, which has been rejected by the Government. But the interesting thing was the comment we just had from Mark Patterson, the New Zealand First member, when he said New Zealand First were actually supportive of the SOP. Well, if they’d been prepared to support the SOP with courage and conviction, it would actually have passed in the House during the committee stage.

Be that as it may, I speak from some experience. I had buildings—a home, in fact, that was affected by the Christchurch earthquake. I had a farm dwelling on a property out of Kaikōura—out of Cheviot, actually—that was affected by the earthquake in Kaikōura. From my own experience—and I say this without criticism of EQC—they fell woefully inadequate in being able to assess the damage.

In the first earthquake, they arrived at my place and said, “Minor damage—it’ll be below cap.” The second earthquake, they said, effectively, the same. The third event in Christchurch, they acknowledged it would be above cap, but, at that stage, they underestimated the total cost of the repair, which ended up being over $400,000. If it hadn’t been because of the good faith of my own private insurer being prepared to negotiate with EQC, it could’ve ended up in a very messy battle between the two.

Stuart Smith’s SOP would solve that problem, and, in the case of the Kaikōura earthquake, the Government then agreed that instead of using EQC you use immediately your private insurer. That is the most efficient way to do it. That’s what happened to the dwelling that I’m talking about in my Cheviot property. FMG Insurance came in as, effectively, the first responders. They worked in assessing the damage. They then were prepared, with agreement from EQC, to bill, in those cases, the first $100,000 to EQC. The claim was settled very quickly.

Now, I know that the Minister says, well, of course, you don’t need a legislation change to do it, and she’s working on this idea because she thinks it has merit. I go back to the very first point I made: it seems to me that this legislation is being rushed through. It achieves four things which are, yep, satisfactory—four things which, of course, National supports. But, if we had a Minister who was prepared to grab the challenge of the portfolio, this is an opportunity where we could have seen a substantial review to EQC legislation. We could have set things up that would position EQC in far better shape to serve the needs of New Zealanders who may be very unfortunately affected by a major event such as an earthquake in the future.

Having said that, despite it not being enough change and not being substantial enough, National does support the legislation. I take this opportunity of commending the legislation to the House.

Tēnā koe e Te Māngai o Te Whare. I’m very pleased to take a short call for the Green Party in support of the Earthquake Commission Amendment Bill.

Now, the National Party is once again contradicting itself. Stuart Smith put out a press statement in March of this year saying, “I’m pleased that the Government has picked up most of the recommendations particularly raising the cap from $100,000 to $150,000.” in terms of the Minister’s announcement that she was going to be making changes to the Act. Now we have the Rt Hon David Carter criticising the Minister responsible for the Earthquake Commission for rushing things through, seeming to ignore the fact that there is a major review going on, chaired by Dame Silvia Cartwright, in terms of doing the things that can be done now, and then waiting for the recommendations that come from that review before implementing more comprehensive reform. So I congratulate the Minister for bringing these changes to the House, which are really good fixes, and yet waiting for more comprehensive recommendations before doing the bigger work around more fundamental changes.

I would note that these changes actually pick up issues that were identified by the ombudsman and that were identified by the Canterbury Earthquakes Royal Commission. The whole issue of the cap of $100,000 plus GST was a major issue in terms of claims. It makes really good sense to increase that to $150,000. Similarly, having the Earthquake Commission (EQC) focus on the repair and recovery of homes rather than focusing on contents makes sense, moving the responsibility for dealing with contents claims to private insurers. Similarly, extending the notification period for claims from three months to two years, and the Finance and Expenditure Committee made a change there to allow it to be further extended by regulation under certain conditions, because in those initial three months after the earthquakes—as anybody in Christchurch, Hurunui, or Kaikōura understands—the focus is very much on just dealing with the trauma of having homes completely destroyed in some cases, severely damaged in others, and getting to grips with quite changed circumstances. Three months is too short, so that two-year period makes a lot of sense.

I then, again, commend the work that the Finance and Expenditure Committee did in response to the submissions of the Privacy Commissioner around the provisions about sharing information to expedite the finalisation of claims and settling those.

But Stuarts Smith’s amendment—again, the Minister has quite clearly said in earlier stages, “Wait for the review recommendations and then look at that in the whole, rather than just doing an ad hoc change here.” As the Kaikōura and Hurunui quakes showed, there can be cooperation between EQC and private insurers through a memorandum of understanding arrangement without necessarily needing the law to change to do that.

So these are four really sensible changes to help improve implementation of the EQC legislation and to help speed the settlement of claims. I commend the bill to the House, and I wish you, Madam Assistant Speaker, a very merry Christmas, having already wished other members of the House that.

Thank you, Madam Assistant Speaker. It’s great to have the opportunity to talk on this Earthquake Commission Amendment Bill. I haven’t actually had an opportunity to talk on it, even though I was a member of the Finance and Expenditure Committee, so it’s a great pleasure to be doing that tonight. I just thought I’d particularly wish you, Madam Assistant Speaker, merry Christmas for, just as my other colleagues have noted, the great job that you’ve done this year and your role acting as an independent arbiter of these fine debates in this great institution.

Of course, to the members of the Finance and Expenditure Committee, it’s been a pleasure working with you this year, ably chaired by Mr Wood over there. But, also, I think as a committee across the House, it has been an effective and hard-working committee this year, and I think we’ve achieved quite a significant amount, particularly with some of the tax bills, and, more recently, we’ve just debated the Reserve Bank bill only a matter of a couple of hours ago.

But, of course, this is about this bill, which is the Earthquake Commission Amendment Bill. First thing: we’ve made progress with this bill. We’ve made some progress, but, unfortunately, I don’t think we’ve made the progress that we should have made with this very, very important issue. I’m reminded of the time after the Kaikōura earthquake when I spent three days with that hard-working local MP Stuart Smith, driving round the back blocks of Kaikōura visiting farmers and other people who lived in quite remote areas, many of who, immediately after the earthquake, had suffered from a lack of communication—mobile services. Very few people had been visited by anyone—emergency services.

In fact, the only people we really encountered over the three-day period, where we drove into many, many places, was the local insurance firm, who was driving up to make sure that their clients were fine and that they were happy and, if they had issues, that they were lodging their claims. They were doing that as they were driving around, and it was a fabulous piece of service to the rural community, but it also highlighted the issues of providing insurance and actually actively putting in place mechanisms following a major tragedy, like our earthquake that Kaikōura and Christchurch obviously encountered.

That actually meant that those claims could be expedited and completed quickly, because that is the purpose of any insurance and, of course, the role of the Earthquake Commission, which is to provide that framework, that backstop to major events. Of course, it’s funded by the Government, and unfortunately we’ve seen wholesale loss of funding over the series of those three very significant earthquake events, to the point now that the Earthquake Commission funding has now been largely dissipated, and, as a result, we’re in the process of rebuilding that fund. But, of course, that is the purpose of the fund. The purpose of the Earthquake Commission fund is to actually act in times of difficulty and to pay out, and I think that probably strikes at the first issue.

Whilst the bill picks up four of the minor issues—and to some extent this is a National Party bill, and we originally proposed nine issues to be dealt with in the Earthquake Commission (EQC). Unfortunately, the Government only did a half-hearted job and we’ve only picked up four of those issues. I think one of the outstanding issues—and I haven’t heard anyone speak about it tonight, but the first one was around the issue of apportionment. This bill ignores this issue, which is one of the most fraught issues in the Canterbury experience: namely, whether EQC cover reinstates after each seismic event, and what constitutes an event for the purposes of that reinstatement. That definition is really, really important.

Apportionment is the process by which EQC determines who is liable for claims under the Earthquake Commission Act. Without that clarity, what you have is the issue of, if there is an event, who picks up the liability. It may be that EQC has to pick up the liability, it may be that a private insurer has to pick up the liability, it could be the reinsurance component, or there may be other arrangements in place. These costs have to be split up correctly, because unless you do so, you cannot settle the claim.

I spent some time early this year with a very specialised seismic engineer, Mr Brown, who had been deeply involved in working with insurance claims in Christchurch around the issue of when you had this series of seismic events, at what point did the liability to the EQC or to the private insurer—and in some cases, the building owner or the property owner had changed their private insurer. So, in fact, what we ended up with was a whole cascade of events, and the question was: who picked up that apportionment? I can tell you that that person, a very skilful man—Mr Brown, and his team—did very extensive modelling, and what they basically had to do was backfill, by looking at the seismic events, the size of those seismic events, and then work out from an engineering perspective to what extent each of those events had affected the building and at which point in any of those seismic events the building had been damaged, and therefore create a new claim. I’m saying that that apportionment has not been dealt with at all in this bill.

The other thing is around the issue of reinstatement. Of course, we had a very important submission from the Insurance Council of New Zealand, who said that EQC cover should only fully reinstate at the completion of the repairs during the period of insurance, as this would significantly reduce EQC’s exposure, preserve the principle of indemnity, encourage repairs to be undertaken in a timely manner, and remove incentives to under-insure for catastrophic events.

Now, again, this is an important aspect, and this bill, unfortunately, falls silent on this issue. I think that it is disappointing that we have a Minister from Christchurch who should have taken the opportunity to deal with these hard issues. It’s fine doing the soft issues and to give the perception that you’re moving forward—and they are improvements, I will acknowledge that—but I think they really should have done more to deal with that issue in itself, the reinstatement.

Now, the other thing I just want to talk to is the very good Supplementary Order Paper (SOP) 156 in the name of Stuart Smith. I think this is where the travesty falls. That SOP, which the good member from Kaikōura put up, basically said “Let’s learn from the example of Christchurch”, where we had all of these multiple claims going on, and the history of EQC having to gear up through having to recruit all these people. In many cases, those people had to be recruited from outside the insurance industry, and therefore had to be trained in what they had to do in terms of, first, assessing claims, and then ultimately going through the process of settling those claims. So we had to gear up, from the start, very quickly and immediately following a catastrophic event.

That model proved to be less successful than the Kaikōura one, where we saw the very good practice undertaken by our Government, I should say, where a memorandum of understanding was entered into between the EQC and private insurers. That meant that when an event happened—and with Kaikōura, what happened is that those people who had significant property damage could immediately lodge a claim with private insurers, because that meant they had access to people who understood the insurance industry, understood the terms, could handle—and had the processes and IT platforms to be able to handle—the level of those inquiries and, as a result, by filing that claim with a private insurer, that claim was therefore activated against EQC. I think it’s absolutely a travesty that this has not been picked up. I am aware that Dr Woods talked about speeding up processes, but, unfortunately, missed this very important component. But, none the less, we will be supporting it, but we’ve got a lot more work to do on this issue.

It’s a pleasure to follow the member Andrew Bayly, and I want to acknowledge and thank him for his support of this legislation and his considered contribution to this debate. I want to particularly commend the Minister, the Hon Dr Megan Woods. She’s taken ownership of the Earthquake Commission (EQC) portfolio, and finally people in Christchurch know that they have a Minister who is on their side, who’s listening, and who’s taking note of the issues that have been raised with the Minister and is moving to address them. The instigation of the inquiry under Dame Silvia Cartwright is going to reveal, probably, things that we don’t want to have revealed, actually. But, as long as we can do it in the same way as we have tonight—across the House, join together and say, “These are problems that need to be solved.” The four problems here—the level of the cap, the contents and personal property cover from EQC, the period for claim lodgment time, and the regime around sharing information—are all issues that need to be progressed.

There are others—as Andrew Bayly and other speakers have rightly pointed out—that need to be considered, but let’s try and get it right this time, not just push ahead and not give it proper consideration. We need to do it once and do it right. I think this is an excellent piece of work, and I commend its progress to the House.

Thank you very much, Madam Assistant Speaker. I’m delighted to support this bill, the Earthquake Commission Amendment Bill. It seems appropriate that, coming up to Christmas, sweetness and light is across the House and we can all wish people a very merry Christmas and a happy New Year.

I think it’s really important that we do support this bill, because having a bill that is fit for purpose, particularly in terms of a country like New Zealand that is so prone to earthquakes—I mean, we weren’t called “the Shaky Isles” for nothing. I think it’s also particularly important that there is sweetness and light across the House.

I’d like to take up Ian McKelvie in his discussion on cross-party agreement, in terms of this type of legislation, this type of legislation that tends to go over a length of time—and he was talking about the Earthquake Commission going back to 1931—but also the type of legislation that comes into play in times of a disaster. It’s something that everybody needs to agree with, because that’s what we’re here for: to support the people of New Zealand.

Now, of course, this bill implements work that was begun by the National Party back in 2012. A review was done between 2012 and 2015, basically, to update the 1993 Act. I see that it’s been mentioned as 1993 and 1994. I’m not quite sure what’s correct, but I’m sticking to 1993. Basically, it was to update that Act in light of the Canterbury earthquake experience. Unfortunately, this bill does only cover part of that review. There were nine parts of this review, and only four parts of it come into this bill. These four parts are important, and they are in need of change, but we definitely need another bill to pick up the other parts of the review and also any other work that’s in progress at the moment.

I was pretty surprised to hear Dr Duncan Webb talking about how this should be done urgently. I agree that it’s important that we get this legislation done, but, if he feels that it should be done urgently, you would have thought that we would have done more than less than half of the review.

The first thing, in terms of the points that we are covering, is the removing of the $20,000 limit for contents. I think that’s pretty important. If you think about in the face of a disaster, the legislation and the Earthquake Commission should be looking at the big picture. In terms of a disaster, the big picture is people’s homes. There’s absolutely no doubt that insurance companies are perfectly capable of looking after contents. So let’s get rid of that distraction, and let’s focus on the big issue.

The second issue is about raising the cap limit. It was $100,000 plus GST. That’s been in place since the Act was originally done in 1993, so to lift it to $150,000 makes a lot of sense too. I was interested to hear the Rt Hon David Carter talking about the fact that it is actually more than a 50 percent uplift because, of course, the $20,000 for the contents comes out of it. So it goes from $100,000 to $150,000, but the $20,000 is taken out of it.

The next thing about the proactive sharing of information is a lot of the issues that we had during the Canterbury earthquakes were to do with where the information came from, and sharing that makes a lot of sense. Greater transparency and greater discussions are important. However, I do think we need to be careful about how we share that information. I’m sure that we will do that sensibly and well.

The fourth thing, and this is the issue that has been debated—it was debated, I know, at the select committee process but is also still in discussion—is about the length of time. It can go from three months to up to two years with regulation. But one of the issues that was particularly important in Canterbury was the number of seismic events. How you manage those seismic events over a length of time is pretty important.

This bill is important. I’m glad that it’s got to this stage. Unfortunately, it’s only half of the review, but I’m sure that the Minister will bring a new bill in future, and we’ll be interested to see that. Thank you, Madam Assistant Speaker.

I’ve been advised in the past that when you face a big problem, such as eating an elephant, the way to do it is to take one bite at a time. I think with this piece of legislation we have a Minister who is determined to ensure that we have a fit for purpose Earthquake Commission (EQC), who is taking just that approach. This piece of legislation makes some sensible and timely changes to EQC to ensure that it is adapted to the needs of our country in 2018.

I have to say, as the Chair of the Finance and Expenditure Committee, I was very pleased with the way that the committee worked on this piece of legislation, considered the submissions that came in, and made some very sensible changes to it.

This is a very good piece of legislation. We know the Minister is working hard on the next stage, which is the inquiry. We look forward to what comes out of that. But in the meantime I wish to commend this piece of legislation to the House for the benefit of the people of Canterbury and New Zealand. Thank you, Madam Assistant Speaker.

Thank you, Madam Assistant Speaker, for the opportunity to speak on this bill. This will be the last contribution I make in this year. I wish all members on both sides of the House a very merry Christmas. It must be something in the air. It’s great to feel it. It’s a shame that we—

I apologise to the member. This debate is interrupted and is set down for resumption next sitting day. Can I wish those who serve in this House and in this precinct a very restful summer break and a very merry Christmas to you all. Pō mārie.

Debate interrupted.

The House adjourned at 10 p.m.