All homeowners - not just those with insurance - will be required to pay EQC levies through their rates payments if Labour wins the November 26 election.
The levy would be proportionate based on the rateable values of properties.
Leader Phil Goff announced the party's policy to replenish the Earthquake Commission's coffers today, saying Labour would follow National's lead to treble EQC levies were set to treble under National from a current maximum of NZ$69 a year to NZ$207 a year.
However, Labour's policy document was short on details as to whether that cap would remain, as Labour would make levies proportionate to property values.
Labour would also raise the cover provided by EQC above NZ$100,000 after consultation with EQC and the insurance industry following the election, Goff said.
'Universal'
Making the levy universal for homeowners via the rates system would make the system fairer, Goff said in a statement.
“It extends the coverage and will be calculated in the same way as rates, on the value of a family’s home, which takes into account a person’s ability to pay," he said.
“Everyone who owns a home will now be insured -- eliminating the ‘moral hazard’ of covering uninsured homeowners, which penalises people who pay for private insurance cover. This system is also simpler, keeping compliance to a minimum by incorporating the levy in quarterly rates collections."
Labour earthquake spokesman Clayton Cosgrove said the EQC NZ$100,000 liability cap had to be raised to reflect the steep increase in house values and building costs since 1993, when the cap was set.
“It’s obvious from the destruction we’ve witnessed that the cap has to be brought up to date. NZ$100,000 does not go far enough," Cosgrove said.
“We will work with the insurance industry and EQC to set a new level, and to negotiate the effect of that change on the premiums private insurance can charge," he said.
“It means the Government will be taking on added risk. But right now there’s no alternative as the insurance market is not functioning properly and a lot of people cannot get private cover.”
(Updates with comments from Goff, Cosgrove)
33 Comments
"It extends the coverage and will be calculated in the same way as rates, on the value of a family’s home, which takes into account a person’s ability to pay,"....no it doesn't Goofy....use your nut...
Try thinking before you make statements...rates do not take into account a person's ability to pay...they are based on the value slapped on the land they live on and for many it is land they moved onto 40 years ago. Now they are old, infirm and wanting to finish out their lives in the gardens they developed. Yes they can claim a rate rebate but it is sod all. Then along you come with a dumb statement and a promise to make them pay heaps more while selling your idea as a "fairer system"....humbug
"...bring back TV licence scheme..."
I would vote for this if it means we could finally see some decent content. No more "reality TV". No more "dancing with celebrities nobody has ever heard of" shows. No more "find yet another flash-in-the-pan-and-here-today-gone-tomorrow singing sensation" shows. No more house auction and renovation shows. No more lowest common denominator drek.
Imagine if someone began airing documentaries again. And not the god-awful yank shite, with breathless narration for 6 year olds and brain damage victims, and soaringly overwrought music, along with embarrassingly cringeworthy "dramatised reenactments"; No, the BBC documentaries. Horizon. The good ones, like we used to get in the Good Old Days.
Nah, what am I thinking...
Adding the Fire Service Levy to rates makes a lot more sense. Not sure if a fire brigade has ever inquired as to whether a building was insured ( ie levy paid ) before putting out a blaze but they should do.
Dunno about collecting the EQ levy through rates. It can get a bit confusing with mixed use properties where dwelling units are entitled to EQC cover but the commercial bits are not. Also not sure how any top up cover required would be figured out unless EQC is going to go to full replacement ( which I really dont think they will want to do any time soon.)
What an absurd thing to say! I wouldn't want to live in a country where the fire service let your house burn down and children die because you hadn't renewed your policy on time. I shouldn't be surprised, knowing that some even think private prisons are a sensible idea.
I'm worried that National are becoming more ideological, and less pragmatic in their fiscal policy. The model of insurance does not actually cope with significant natural disasters, and the EQC exists because this risk of market failure has been long-since identified. Yet they ignore the paradox of thrift and continue with economic policy that wouldn't pass a 100-level exam.
Irony. You should look it up . Left wingers normally have a very good grasp of it , which is why they vote the way they do..
Interesting that the earlr Fire Brigades in the UK were paid for by insurers and when you piad your premium you got a brass plaque to put on your house which indicated which brigade was responsible for putting out the fire. These are now very collectible.
I do think that having insureds pay the firemen is a bit absurd though.
That's the trouble with Labour...always the details stink. The voters with any ability to sort fact from fiction are heading to the blue camp whether they like JK or not. Those with memories of Clark and the 9 wasted years are right behind them.
It will be for National to control the drift to smugness and crass idiocy within their own camp if they want to still own the Beehive post 014.
On first glance this seems to me to be a very good idea.
If they also raise the cap and the fire service levy were included - it becomes viable for many lower value property owners to opt out of private sector homeowner insurance altogether.
Given it is likely that private sector insurance in NZ will skyrocket over the next few years - I suspect alot of homeowners could decide to self-insure anyway (which could make for a real housing shortage problem in the event of another major flood/EQ disaster).
Charging via rates makes homeowner insurance compulsory but given our disaster profile, it's probably a good idea.
Another benefit is that it provides EQC cover for those who are unable to obtain insurance cover.
My own situation is that an insurance claim is being declined and policies cancelled. While the loss of insurance cover is one issue, the resultant loss of EQC cover is another.
I would support any move to separate EQC Levies from insurance.
I would welcome a means of obtaining EQC cover without the need to insure.
Let me see. I know, I'll play you a stupid game too. What TAX is Labour talking about today, AND that it promises to SPEND wisely on New Zealanders behalf? Is that all their election campaign is about, taxing rich pricks? Some economic plan for the country that is. Although no doubt it will make all you lefties glow with pleasure!
Firstly - collection via Local Authority rating. LA's have historically resisted being a collector for other governmental bodies (eg the Fire service Levy mentioned by other commentators) as it is just seen as an extra tax and they do not want to deal with those things when they have enough trouble keeping the base council rates down each year as it is.
When you look at land damage mentioned by Labour why would it cost a lot more to repair land in Remuera than Kaitaia so why should valuable land attract a [much] higher levy? Which it will if levy is on total capital value ie rateable value which I think is what they mean? "Proportionate to the value of the property".
The EQC cap - no one who knows how the original cap was calculated, it was more than just construction costs it was size as well, would disagree that it must be raised.
It is instructive that during the period 1994 to 2010 when the governments of the day allegedly resisted any increase in the EQC cap that Labour were in charge for a decent chunk of that period.
Temporary accomodation - this will be tricky to price when the proposed EQC cover will not kick in until other insurance exhaused. 'Other insurance' will not necessarily be identical with every insurer. Private insurance provisions should meet all accomodation losses quite adequately in 99 years out of 100. Why add another EQ tax onto the levy for the 'top-up'?
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