Earthquake Commission Amendment Bill

Members, when the House last discussed this bill, Alastair Scott had the call, and he has nine minutes and 40 seconds remaining to speak, should he so wish.

I do so wish. I do so wish—I was expecting to be speaking after the dinner break, obviously, but it seems that we’ve missed a couple of speakers. But it’s a pleasure to be here. I’ve got nine minutes and 40 seconds to go, which obviously meant that I had 20 seconds in the last contribution, which was on the last day of the year. At that point, I had the pleasure of wishing everyone a very merry Christmas, and I trust that they had a happy New Year. So it’s great to have been the one of the last of the last year and be one of the first of the new year.

So welcome, Mr Assistant Speaker. I welcome all the members back to the House. It’s good to be back. It’s good to be opposing, generally, this amendment bill. Of course, as we’ve already heard from a number of speakers, it’s a bill—the Earthquake Commission Amendment Bill—which we will, as you know, be supporting.

However, there are a couple of points I would like to make regarding the bill. There are four parts to the bill. There should have been more—there should have been a lot more. There should have been a number of points which were submitted on and made by submitters to the Finance and Expenditure Committee that were not picked up by the Government. This is disappointing. It’s an opportunity the Government had to get this bill in first-class order, really. Unfortunately, it’s a bit of a band-aid. The work is good, but, as I say, we have to wait for another review of the Government to come forward before we get into the meat of what should be done and needs to be done with the Earthquake Commission (EQC). Another bill will, no doubt—the Minister’s already said—come before the House to fill in more of the gaps that are existing right here, right now.

But there are four good parts to the bill, and if I could just quickly go through them, first of all, of course, the Earthquake Commission does an excellent job. It’s essentially an insurance company, a little bit like the fantastic agency that is the ACC. The Earthquake Commission is not unique, but is extremely embedded in part of the New Zealand culture, because if we didn’t have the Earthquake Commission, we would end up in a situation where premiums for insurance in places like Wellington, the Wairarapa, Christchurch, and Kaikōura would be much more expensive than they are today—much more expensive—because we have a situation where the Earthquake Commission now insures houses and property, but not contents and personal property, if you like, across the board. So we’ve got Aucklanders paying or subsidising or insuring those who live in earthquake-prone areas, and that, of course, enables those people in Wellington, Wairarapa, and Christchurch to have private insurance for amounts above the cap but at a reasonable rate, because without it, the risk is that people wouldn’t bother insuring. It would be too expensive to insure a house in Wellington, for example.

So that is one of the main purposes of the Earthquake Commission: to assist and, essentially, spread the load of an earthquake that might occur in Christchurch across the country. The cost is spread across the country. So that is why it’s a good thing.

The first point that was made in this bill is that the cap has been increased, from $100,000 to $150,000, plus GST. That keeps up with inflation, but only just. However, it has moved from $100,000 to $150,000, so my first point is it could have been adjusted annually or every three years by inflation—so keep adjusting to keep in touch with inflation. Otherwise, without that adjustment, that $150,000 will be eroded over time by inflation and may be less meaningful to those who own a home.

The other good part about the cap, if you like—or the amount that’s insured—is that cover for personal contents is excluded. It’s been taken away. So the effect of that is, essentially, you’re raising the cap to a greater extent vis-à-vis the property, because that is what we are focused on and that is what we’re concerned about. We’re concerned about the housing of those people who live in the dwelling as being tantamount. The personal belongings of the individual—the personal crockery or furniture or whatever that might be damaged in an earthquake—is not superfluous, but it’s not the core being or the core statement or the core meaning or purpose of the EQC. The real purpose is to make sure people are housed. So the cover for personal contents has been removed from the Act with this bill, and that is a good thing. The onus is on the individual to put more attention for themselves in the private sector for the purposes of insuring their personal property, and that is a good thing.

The third point that is brought up in the bill is the extension of time that a member—

ASSISTANT SPEAKER (Adrian Rurawhe): Sorry to interrupt the member—

Again?

ASSISTANT SPEAKER (Adrian Rurawhe): —but it’s come time for me to leave the Chair for the dinner break.

Sitting suspended from 6 p.m. to 7.30 p.m.

💬 DEPUTY SPEAKER: Kia ora tātou, everyone, and welcome to 2019.

💬 Hon Ruth Dyson: Happy New Year to you, too.

💬 DEPUTY SPEAKER: Thank you. We are on the third reading of the Earthquake Commission Amendment Bill. When we broke for dinner, Alastair Scott had the floor, and he has three minutes and 52 seconds remaining to speak.

Thank you, Madam Deputy Speaker. Third time lucky, Madam Deputy Speaker, and you’re the third presiding officer I have spoken to in this contribution—

💬 Hon Member: The best!

💬 DEPUTY SPEAKER: Undoubtedly, the best!

—once, late last year, for about half a minute; earlier, before the dinner break, today; and now—where was I? Where was I? Let me start from the beginning. We are in support of the bill, as the House knows. There have been four substantial points made in the bill. I’d covered off a couple of them before the dinner break, so I’d like to just go to the final two.

I’ve found it interesting that the Government supported the idea that the personal property aspect—well, personal property is excluded from the Earthquake Commission cover. It’s outside the cap. It’s now up to the individual to personally insure their own contents. The EQC now, with this bill, covers only the dwellings, if you like, which is good. I think that’s a good point. It focuses the purpose of the EQC on that, and doesn’t distract it with the huge complexity involved in personal insurance.

So I was quite pleased to see the Government admit, essentially, that the private sector is better than the Government sector at doing this particular role. I think it’s a point worth making that the private sector is more effective and more efficient—and at least the Government is admitting it—in this personal space. So that’s a good thing. So that’s a good thing, and I challenge the Government to look at other areas that the private sector can do better than the Government sector. I know that we, on this side, could list dozens of opportunities that the private sector might be able to take off the State sector, but that’s for another day. So that’s the first point.

The second point was the increase in the cap to $150,000 from $100,000—very good. As I say, it excludes the personal contents, which essentially means that the cap has been raised more than it otherwise would have been, so that’s good. The bad thing is that that’s not adjusted every year, or even every three years or five years, for inflation, and that’s the suggestion at the select committee. It should be indexed to inflation, at least, so that we don’t have a situation where the $150,000, essentially, gets eroded away over time by inflation. So indexing would’ve been great to see.

Of course, there’s a whole lot of other things that the Minister did allude to—I’ll give her credit for that—that do need to be considered and will come before the House at some other point, once the review’s been done and the committee or the review or the consultation—

💬 Stuart Smith: Working group.

—or the working group has finally completed their work. Unfortunately, the Minister did have an opportunity to bring more of those ideas into this bill, but has chosen not to. But at least she’s suggesting that there is more work to be done, and I commend her for that and I look forward to that work being presented to the House. But at this stage, there’s those four points that we’ve covered off from this side of the House, and with that, I commend the bill to the House.

Thank you, Madam Deputy Speaker. I’d like to acknowledge the member Alastair Scott, who just resumed his speech—thank you for the third instalment of that speech. It started in 2018, carried on into 2019, and we even had a dinner break intermission as well. So I’m sure the good people of the Wairarapa will acknowledge your tenacity and determination of getting through that contribution.

I’m delighted to speak at the third reading of this bill. We’re dealing with issues around insurance of residential properties caused by certain natural disasters. Of course, what comes immediately to mind, even though it’s not a natural disaster, is the fires and the emergencies that are taking place right now in the Nelson and Tasman districts. As the member for Te Tai Tonga, I wanted to take the opportunity in this, my first call, to just acknowledge all of the work that is happening on the front line there, and not only with all of the firefighters but also the whole communities that have rallied around and are continuing with their efforts. I wish them every success in putting those fires out.

Albeit not covering fires caused by natural disasters, this bill indeed covers natural disasters and the damage to residential properties. It’s been 25 years since the enactment of this legislation and these are the first substantial amendments which are taking place. I want to acknowledge the Minister responsible for the Earthquake Commission, the Hon Megan Woods, for her leadership in this matter. No one wants to even contemplate things like natural disasters, earthquakes, tsunamis, volcanic eruptions, floodings, and the like, but they are possibilities that we have to prepare for. That’s what this bill is about. It’s about ensuring that the Earthquake Commission (EQC) has greater preparedness and is able to efficiently and effectively respond to these events, and also respond around the claims management, which is a big part of its job. I want to acknowledge the Minister.

I know the member from the Wairarapa was lamenting that the bill didn’t quite go as far as he wanted it to in certain areas, but I do want to thank him and his fellow members of the Opposition for their support for this bill. These are very helpful, logical, and sensible changes and improvements that we’re making to this legislation, which can be implemented now. Who knows what future natural disaster events may happen, but certainly by having these changes in place it will enhance the effectiveness of the Earthquake Commission.

We mustn’t forget Dame Silvia Cartwright, the former Governor-General and an eminent jurist and judge of our courts. She is leading an independent public inquiry into EQC around its handling of the Christchurch earthquakes. I know that the Minister is going to be awaiting her report. We certainly could expect, I would imagine, some helpful improvements, additional improvements, that can be made to this piece of legislation. But for now there are four immediate amendments which we are making in this bill. Mr Smith—no, sorry, our member for the Wairarapa. First day back, and I’ve forgotten your name!

💬 Hon Member: Alastair Scott.

Alastair Scott—Mr Scott from Wairarapa. There are four helpful, significant amendments that we’re making. The first, which has been traversed, increasing the amount per claim. It’s been 25 years and it’s been stuck at $100,000, plus GST. So that rate has been increased to $150,000. That’s certainly overdue in terms of the recognition of the increase of costs.

Also, the removal of contents and personal property cover from EQC, which will now be picked up by private insurers—I think that’s eminently sensible. We’re dealing with residential property, real estate, significant home damage, and that’s really where the focus for EQC needs to lie, as opposed to dealing with a whole multitude of personal property claims. So it’s good that further clarity has been made in that area.

Also, there is a longer lodgment period. There have been many people, particularly with the Canterbury earthquakes, and—who knows? It may emerge through the Kaikōura earthquakes. They are two of the most significant seismic events to happen in this country, and the largest events which EQC has had to deal with. There are situations where having to lodge a claim within three months is not—some people are unable to do that, for various reasons. Having a degree of flexibility and discretion whereby EQC can—indeed, I think we’re stretching it to up to two years now. Provided certain criteria are met to the satisfaction of EQC, then those claims will be accepted. So that’s another welcome addition. Of course, lastly, there are some various changes around the ability for EQC to share private information.

So all of these amendments are very welcome. They are the first of a series of amendments that will be made to this very important piece of legislation, but it’s important that we enact them now. I once again want to acknowledge the Hon Dr Megan Woods for her work in this area and the Earthquake Commission. Likewise, all of the members of this House who are supporting this bill and have done work through the various stages which has led us to this point. With that, I want to commend this bill to the House. Kia ora tātou.

Bill read a third time.