Keeping Gerry informed – bridging the information gap.

In today’s Press Minster Brownlee is quoted as saying the rental housing crisis is: “not a problem that has been brought to my attention” (article is here).

It is bad for good government if Ministers are not kept fully informed of important events. Clearly Ministers rely upon those around them, and those people may also not be fully aware of what is going on.

Rather than being critical of this state of affairs it is preferable that we do our best to bridge the information gap.

To that end, it would seem a very good idea if helpful information were provided to the Minister’s office by all who want to help out. There are a couple of places to start with.

The first is CERA, which would also help protect Roger Sutton from not being aware of important issues. At this stage no direct email address comes to mind so try the general one: info@cera.govt.nz The folk who deal with the e-mails are very helpful and track the information coming in.

Minister Brownlee has a number of private secretaries, and I have the contact details for one: Scott McHardy. Try sending helpful information via this e-mail address scott.mchardy@parliament.govt.nz
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The problems that plague us: Japan and Christchurch

The following is a quote about Japan from Annelise Riles, a professor of Law in Far East Legal Studies and a professor of Anthropology at Cornell University. 

“Sadly, the recovery is plagued by a number of serious political problems.”

“They include an unwillingness of the mainstream press to fully investigate or to place news in analytical context; an unwillingness of elites in position of authority, whether in the private sector or the government, to put aside politics as usual and address the needs of the many victims; and a lingering unwillingness on the part of many citizens to openly challenge the government even though many people privately voice their total distrust of government claims and cynicism about its motivations.”

Professor Riles is currently helping to organize a two-day conference to begin March 11 to bring business and political leaders from Japan together to examine the lessons from the earthquake and tsunami.
More info here.

Apportionment – is EQC now your insurance company?

Most are familiar with the High Court declaratory judgement instructing EQC that the total cost of claims must be apportioned over the number of claims lodged. As it happens, the Court’s decision has a serious unintended consequence for some claimants.

Where a house is a “rebuild” or requires major repairs, and no single claim breaches the cap, the claim cannot be passed to the private insurer. As a consequence EQC becomes responsible for the rebuild or repairs.

The following, which focuses on rebuilds, is specifically about those in the Red Zone but the underlying EQC as insurer issue also affects many in the Green zones.

Where a house is in a residential Red Zone the owners are given two choices: Option 1 or Option 2.

  • Option 1 is to take the rateable value for both the land and house.
  • Option 2 involves taking the rateable value of the land and settling with your private insurance company for the building(s). Those whose house is written off are entitled, by their policy, to have a new house built. 

The problem arising from the High Court Judgement involves Option 2. The steps in the scenario are:

  • EQC assess a house.
  • It is agreed to be damaged beyond economic repair – a rebuild.
  • Apportionment is applied correctly.
  • Even though the house is a rebuild no single event exceeds the cap.
  • Because the cap has not been exceeded the “file” will not be passed to the private sector insurer.

This scenario is likely to arise often with houses at the lower end of the value scale (rebuild value < $250,000 +/-). Through the judgement EQC is the only insurer in a position to cover the policy on the house.

Consequences 
The consequences for the homeowner are unclear, but potentially financially damaging.

Had the claim been passed to the private insurer then a rebuild would have been available as part of Option 2. It is not stated whether EQC will stand in the place of the private insurer for Option 2. As EQC is the insurer in other regards, it seems very clear that they pick up all the private insurer policy obligations.

The absence of publicity about this from EQC or Gerry Brownlee suggests there is no desire to have EQC face these costs, perhaps in the hope those in this situation will be diverted into taking Option 1. As the cost of a rebuild will be significantly higher than rateable value, taking Option 1 will mean a financial loss to homeowners and a gain to EQC.

Legal stuff
The Crown Offer policy and documents were drawn up before the apportionment matter went before the High Court in Wellington. The Declaratory Judgement makes no decision (or comment) on how apportionment is to be carried out, nor on the effect it is to have on insurance policies. Consequently the Judgement cannot be used to deprive anyone of the rights they had prior to it being issued (the Judgement was purely about who paid for what, with policy entitlements not up for consideration).

As mentioned above the Crown Offer, and the policy behind it, was developed and promulgated prior to the declaratory judgement. The environment that gave rise to it has changed substantially, and in an unanticipated way, while the content remains the same.

How it is worded and operates need to be revisited to ensure that it continues to accurately reflect the legal situation, and does not deprive or deceive claimants of and about their legal rights. In particular it needs to state that EQC is an insurer in its own right under Option 2, for those who wish to consider that choice and are under-cap.

Bottom Line
Clarification is needed that any legal right to a rebuild is not removed by the apportionment judgement or process, and that EQC will stand as insurer under Option 2. Those who are undercap through apportionment, and have been sent offers, should be sent amended offers. If such clarification is problematic then the matter needs to go to the High Court for another declaratory judgement.

An Official Information Act (OIA) request has been sent to CERA about this. Don’t hold your breath while waiting for the response. CERA don’t seem greatly influenced by the Ombudsmen’s requirements for the prompt handling of OIA requests.
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Mayor Bob Parker – a clown

Earthquake Recovery Minister Gerry Brownlee is reported by the Press today as describing mayor Bob Parker as a clown. The Press article is here.

The diagnosis was made in the context of responding to mayoral comments made last week. According to Bob, Treasury are looking to the council to raise rates, or sell assets, to recover earthquake costs. The offending part of the mayor’s comments reported in the Press on the 1st of February (here) was that

Under the Canterbury Earthquake Recovery Authority Act, the Government could force the city to raise rates to cover costs, or sell off assets, he said.
“CERA has the ability to say this is how you have to meet your costs, and can make us take measures such as raising rates or selling assets.”
Mr Parker would not reveal the source of the comments.

As Gerry knew, and Bob obviously did not, the CERA legislation prohibits the Earthquake Recovery Minister from directing councils to set rates. Sadly this little episode has the potential to increase the pressure to have unrepresentative local government implemented in Christchurch.
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Nicky Wagner – newsletter

Nicky Wagner has issued her first newsletter as electorate MP for Christchurch Central. You can read a copy of it here.

As electorate MP Nicky is the person to contact when you have queries, suggestions or concerns, and especially problems with government agencies (EQC, ACC etc.).
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