As we approach the fifth anniversary of the Canterbury Earthquake Sequence, Mr Adrian Cowie’s analysis of the situation with City housing stock, as published on Stuff makes for chilling reading and at this point it behoves us to examine the actual state of progress in the City and the outlook. http://www.stuff.co.nz/business/71112274/Damage-specialist-warns-of-catastrophe-for-homeowners
Reviewing Mr Cowie’s comments, Stuff remarked:
Registered surveyor Adrian Cowie, who has been assessing homes since the September 2010 quake, said the recent Government investigation into unconsented repairs only revealed a small fraction of inadequate work.
MBIE had looked at minimum building standards for its investigation rather than check repairs against the EQC Act and private insurers’ policies, which were of a much higher standard.
“If they’d used insurers’ standards they would have found 100 per cent failure,” he said.
Christchurch City is not just the much vaunted (but elusive) CBD rebuild. It is principally the suburbs and the houses belonging to the 400,000 or so residents, without whom, there would be no city and Mr Cowie’s expose’ serves to give voice to a suspicion which has been growing for several years that the ‘repairs’ carried out by both EQC and corporate insurers are failing on a seismic scale. It is clear that the problem of failing repairs and inadequate repair standards is shaping up to be massive and the elephant in this room is obviously the MBIE ‘guidelines’, alluded to by Mr Cowie. Now some five years later, we need to ask ‘why did it happen’, ‘who were the major players’ and ‘how are we going to fix it’?
There are two main reasons that produced the current additional misery for Christchurch homeowners.
- As a deeply indebted little nation borrowing monthly on international markets, New Zealand really did not need a major urban earthquake. Having had its reserves plundered for ‘other purposes’, EQC was not fiscally as strong as it should have been in 2010 and Government, faced with many thousands of claims, sought to minimise the costs facing EQC. Schedule 9 (1)(a) of the EQC Act 1993 makes reference to the fact that EQC is only required to reinstate houses “in a reasonably sufficient manner…” and seeing this as an opportunity, despite the fact that NZ has a well-functioning Building Act and Code, the Government decided to define ‘reasonably sufficient’ for EQC by commissioning the Ministry of Building, Innovation and Employment (MBIE) to produce ‘guidelines’. These guidelines set standards for repair which were clearly lower than those of the Building Act 1991 and were designed to avoid the cost of honestly replacing every cracked foundation slab and to generally cheapen ‘repairs’. (Otherwise why have ‘guidelines’?).
This was not a clever decision and led to two mutually conflicting standards coming into effect as it was clear that the ‘guidelines’ could not apply to private insurance contracts. The preamble to the first iteration of the guidelines even alluded to this fact. Apart from the poor and inadequate repairs that ensued – the extent of which is just coming to light – the scheme resulted in many properties which should have been assessed as ‘over cap’ remaining out of the ambit of the private insurers and victim to sub-standard repair.
- The second reason for the current escalating situation is that by seeking to dodge its EQC liabilities, National set a fine example for the corporate buccaneers and opportunists who run our almost-unregulated insurance industry. Not surprisingly, they took the gamble that they could also ‘get away’ with use of the ‘guidelines’ to scope repairs to a lower cost and not the ‘policy standard’. They did it knowingly and instructed their loss-adjusters and engineers and in some cases, even their lawyers, to enforce the MBIE guidelines as the standard to use.
All this was too hard for the local authorities to contemplate, so they simply looked the other way. (That’s called ‘unconsented repairs’). The Labour party seems to have been too busy imploding at the time to take any notice of what was happening in our second largest city and for five years has been a disinterested onlooker.
Now that the failures and the legal challenges are mounting, and the deficiencies and shortcomings are obvious to all, insurers, (well, IAG at least) have begun to admit that the MBIE guidelines are not the policy standard. Clearly this will lead to a considerable come-back on previously settled claims when homeowners realise the extent to which they have been the victims of fraud. Many glued-together slabs will become total rebuilds at enormous additional cost to the insurers. It’s coming.
Who were the players?
The architects of the MBIE Guidelines were clearly seated in the Ministry of Building, Innovation and Employment, which places the Lead Minister firmly in the picture. But who asked him to do it? How was it decided? I suspect that without a big OIA Request and a view of Cabinet papers, it will be hard to determine – but we can assume that Gerry Brownlee and John Key might have been complicit. The Minister for Housing (2010) must be in there as well somewhere? It’s likely that they all knew what they were doing and the results are a far cry from their advertised promo below.
Each of us can bear witness to the dodgy engineers and professionals, who supported and were allowed to flourish in this climate of profit-taking and deception, but my view is that as Minister responsible for Earthquake Recovery, Brownlee must take the primary responsibility for accepting adoption of a standard that has cost and will cost the city, years of remediation of sub-standard repairs and outright loss for many people. I see his position as that of a veritable traitor in his own city who preferred cost-saving over preserving or restoring the asset value of his constituents and fellow citizens. His cheap attempt to pin the MBIE debacle on tradespeople and contractors who did not design the repairs and did only what Fletcher instructed them to do, (and on which Fletchers ‘signed off’), gives a fair measure of the man. http://www.stuff.co.nz/business/71071043/gerry-brownlee-targets-cowboy-builders-after-eqc-foundation-review
Brownlee needs to resign. Now.
We have watched his unpleasant, dictatorial style for five years and enough is enough. This Minister has totally lost any credibility.
As for the others, the disaster we are witnessing has been led from the top. John Key’s Government had the choice to rebuild our second city properly and fairly and to insist on high standards from the outset. Instead, National, myopic on its focus on the CBD, chose sleight of hand and apparent cost-savings for the taxpayers’ property. I say ‘apparent’ because it is now clear that there will be no cost savings as it is obvious that repairs to MBIE guidelines are not ‘reasonably sufficient’ and both EQC and the corporate insurers will face huge additional costs now that the failure of the MBIE policy is clear. I don’t care about the corporate insurers – they will reap the rewards of their own deception, and hopefully the Courts will assist, but the New Zealand Taxpayer has had enough of government dishonesty via EQC and Southern Response. Now we will have to pay a second time to fix what could have been sorted from the outset.
How do we fix it?
There are many contractual relationships involved in the current unfolding situation(s). Some were designed from the outset to avoid liability and rats are already attempting to leave sinking ships. http://www.stuff.co.nz/business/71124031/no-responsibility-on-fletcher-eqr-for-shoddy-quake-repairs-contract-suggests
Whether or not they will succeed remains to be seen. One thing is certain – unless the people have the sense to combine their efforts to confront Government accountability and corporate greed, EQC and the insurers will pick-off the ‘little people’ one by one, using pseudo-legal claptrap and misrepresentation. But fear-not, there are many more contractual remedies available than you may be aware of – even if you have signed one of their ‘project management agreements’. It certainly does not stop there and it is likely that a legal saviour will emerge if the people have the sense to support that avenue.
Now that this huge shortcoming has come to light, it remains to be seen whether or not the National Government will accept responsibility and try to equitably sort out the growing mess. Even more interesting will be whether or not those on the Labour, Greens and NZ First parliamentary benches will enforce an equitable remedy for the many defrauded homeowners.
That a Government agency could have visited this disaster on the nation’s second largest city, is beyond comprehension. We need accountability and we need remedy and we need them NOW.