A billion dollar estimate on the High Court’s ruling that the Earthquake Commission is liable for thousands more payouts is hopefully a worst-case scenario, Finance Minister Bill English says.
The ruling that EQC could not cap homeowner’s payouts at NZ$100,000 a year if they sustained damage from multiple earthquakes would feed into a review of the EQC model, although the government was not focussed on that review right now.
The news came in the same week as the government announced a NZ$4 billion cost blowout for EQC after new estimates on the cost faced by its NZ$6 billion disaster fund raised the expected cost to NZ$7.1 billion, meaning the government would be required to cover the shortfall.
“I’d like to think that would be a worst case, about a billion, but EQC are sorting through the costs now,” English told media in Parliament on Tuesday morning.
The government would have a better picture of the cost over the next few days.
“I think the important thing is that we get as much certainty about insurance issues in Christchurch as we can, as soon as we can,” English said.
“Either way, it’s just about whether the insurance falls with the private insurers or with the EQC. It doesn’t affect claimants at all,” he said.
The ruling was another example of the EQC legislation being “a bit unsatisfactory” when it was put to the test.
“However, the law is what it is, we have to pay out under the law as it is, and it will feed in to a future review of EQC. We need to have some clearer boundaries and clearer expectations,” English said.
The government had a growing list of issues that needed to be considered regarding a review of EQC, but had not come to any conclusions.
“I think it’s important that we focus right now on just getting people’s claims paid out under the law as it is, and not clouding the picture with speculation about what might happen in the future,” he said.
(Updates with video)
9 Comments
Absolute rubbish.
EQC has no idea of costs, simply because they haven't assessed thousands of properties and most of the assessments they have done bear no resemblance to what actual costs will be.
Here's some examples of ours:
2 storey house of 330m2 or so with full replacement insurance. EQC estimates about $150k damage in January (which was a bit too low). Red stickered in Feb, EQC haven't given any information on it's assessment since then, but the insurer has determined it's a total loss (about $600k replacement). EQC will now have 2 full payments. We have 3 other properties in exactly the same situation.
For lower value properties, for instance I had one assessed and paid out the $115k for Sept as it needed repiled. After Feb it needs rebuilt and the insurer has assessed it as a total loss. The cost of the rebuild will be about $200k. All from EQC now. We have several others in similar circumstances.
I know of another property (very substantial property replacement over $1m) with about $150k damage after Feb about $500k damage after Feb and demolished after June. That will be 3 EQC payments of $345k for that one property.
I would be very surprised if the average overcap payment did not increase from the $115k to $180k or so at a minimum. ie, that the total cost would go from $3.45b to $5.4b. Personally I believe that the extra cost could possibly get to the $3b range, especially when you consider the large number of Fendalton and Hill residences that had successively increasing damage and may now get 3 full payments.
Anyway EQC's $7.1 b just doesn't add up. Now conservatively:
Consider 50,000 houses having an average $10,000 repair
Another 50,000 houses having an average $60,000 repair
Another 30,000 houses having an average $180,000 EQC payment
10,000 sections written off at an average $180,000
20,000 sections needing repair at an average $50,000
120,000 chattel claims at an average $5,000
30,000 chattel claims at an average $25,000 (multiple claims from overcap houses)
Conservatively that's $13.05 billion
Now add in administration and costs, which for the length of time this will take and other costs lets say 1500 people at a total cost (incl cars/offices/expense etc) of $100k each for a period of 3 years - that's $480m alone. So say $500m
Therefore total cost to EQC:
OVER $13.5 BILLION
Now given that I said back in Feb there was likely over 30,000 overcap homes I think my estimates are fairly good (although to be honest I think that the overcaps may increase beyond 30,000 now once jobs actually get priced properly).
He gets less credible by the day. And interesting that John Key's letting BE front all these "it's not that bad" press statements. When it is that bad - JK will roll in with the apologies and the excuses and look like the white knight protectorate of his faithful, if not misguided, underlings.
They both know how bad it is. And they both know they don't have a clue about what to do about it. They are more uncertain about our future than even we are.
Yep its Nat policy I reckon....National will win the election based on JK's image....so leave all the dodgy Qs to BE etc to take the flak and fall on and leave JK sqeaky clean....its a great strategy and its working....especially against Phil Goff who behind the front image seems to be of some substance....but will loose.
Both know how bad, yep, Im sure of it.....they are selling growth like snake oil salesmen, and when the energy minister refuses to comment on Peak Oil, and hence its economic effects ie no more growth EVER, well that just proves it...
Of course Labour and Phil Goff are equally hamstrung.....they promise "stimulation" to get more jobs and the economy going (growing) again....neither can achieve this after peak oil, so both are destitute.
regards
Limits of wind power....globably the best we can do is 1TW. "This limit poses important limitations to the expansion of this energy. Since the present exergy consumption of all energies is ~17 TW, it implies that no more than 6% of today’s primary energy can be obtained from the wind."
So it wont be wind saving us.....
http://www.theoildrum.com/node/8322#more
regards
I want to be the Minister of Finance...!
“I think the important thing is that we get as much certainty about insurance issues in Christchurch as we can, as soon as we can,” English said.
Translation...I'll point out the obvious...maybe they will go away
“Either way, it’s just about whether the insurance falls with the private insurers or with the EQC. It doesn’t affect claimants at all,” he said.
Translation......Oh jees not gone yet..? the obvious not working here..!
“However, the law is what it is, we have to pay out under the law as it is, and it will feed in to a future review of EQC. We need to have some clearer boundaries and clearer expectations,” English said.
Translation....we didn't like it ..we are going to move the goalposts..there you go I flicked you a bone ...bugger off..!
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