Clause 7(1)(b) of the canterbury Earthquake Commission Act 2012

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nunz

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#181034 29-Sep-2015 23:05

Really off topic here.

My parents in law got a letter from EQC yesterday warning them they are going to receive a bill from EQC for the the excess on their repair work. Details were sketchy. Visiting an elderly friend today I got to eyeball one of those letters.

EQC are sending out letters to Chch residents billing them for excess on their repairs. The payment date of the bills are November 2015.

The charge rate is as follows:
For those whose repairs were 20 000 or less $200.
For those over 20 000 it's 1% of the repair.

Again, no warning of this has been received until now - payment due in six weeks.

$200 isn't much, but it's not $200. $200 is what the least affected will be charged. Here are some of the implications:

The poorest members of our city live in the East of Chch. This was also the hardest hit. Property values in the poorest area of town are $270 000. Most of the red zone is in the poorest areas. This means those who lost houses and had a payout by EQC of (the minimum to rebuild a house) of 270k will be faced with a $2700 bill. That's the minimum if we use the lowest priced areas as a marker.

$2700 is a not insignificant amount for the more affluent, for the lower decile areas that is a killer. For many in those areas life has been really difficult. Many lost jobs when factorys closed, they have had their houses destroyed or badly damaged, many of them have lived and still live with really really crappy roads, pot holes, delays, detours and goodness knows what else. The East side has also seen it's schools closed, systems downgraded and communities completely destroyed or disrupted.

The story for them doesn't end there - rates have increased, services dropped and assets sold. Rent costs are through the roof, expenses have risen. Rates will continue to rise, we are being told to expect rate hikes in the region of 7% per year for several years to get Chch back and working. Again that's the poor or lowest incomes who will feel that the most.

There is another irony in all this - having had their houses fixed / replaced the poorer areas have had their valuations increased. Thus more rates. And now the Govt wants to kick em again with this bill.

I'm about to conclude with three points.
1 - I am very very aware that the East isn't the only part of Chch. I can only imagine the stress those living in places like Fendalton will feel when they get a $4000 or $10 000 or whatever amount bill for their higher priced houses. and the fact that the 7% or similar rates rises come on top of already massively increased rates from done up / rebuilt houses. The reason I've started with my concentration on the poor is they are the most vulnerable in our society - and also will be the ones who bear the majority of the brunt of this payback scheme the Govt has concocted. Why? By share dint of numbers - The majority of this payback will be from the East side of Chch.
2 - This bill is a back casting of cost, concocted 2 years after the earthquake and sprung on us now. We have been retrofitted for payback , something we never agreed to, after the fact. We are being forced to honour a commitment to a contract that had a clause added after it was signed. Under contractual law this would be illegal - and the only reason the Govt can get away with this is because - well they are the Govt and can do what they want.
3 - Some pundits may claim it is only fair for Chch to pay its fair share of the rebuild cost but what they forget is we have. Just like every other person in NZ, every time I pay my insurance I pay an EQC levy. That levy is there to ensure when the brown stuff hits the fan there is a backstop recovery. EQC has sat pretty on its cash stash for years, and now having perpetrated farce after incompetence after farce, and jacking repair costs through the roof with their bumbling, we are being told to pay up all over again. Any other insurer, retro fitting an excess would be told to rack off. But - hey, they are the Govt, what can you do?

We have paid our share, like every other NZ'er, and unfortunately for us we shot snake eyes. Now we get to pay again - after paying insurance excesses, losing jobs, losing businesses, losing homes, losing schools, watching our kids suffer through stress and anxiety, , paying back debt and watching insurance companies slither out of obligations. Just as we get start to stand up again, another kick in the guts. But hey, they are the Govt. what can you do?

I'll end with a warning - having done this to us in Chch, who's next? Wellingtonians / Upper South Islanders, maybe it's you next? Pike River, maybe it's you? how about Unungahua, Murchason, Napier? I'm sure they could retro fit you guys with a bill. The Hutt Valley floods recently - they must have been expensive. Then there is the flooding up north. So John? who are you planning to retro fit with a bill next.

But hey, it's okay, they are the Govt. what can you do - it's nothing personal - just business. And they will let us pay it off over time if we cant scrape up the dosh in the next six weeks. Do we have to pay interest too? I'm sure that's only fair as well. But hey, what can you do - it's just Govt - business as usual.

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#1396987 29-Sep-2015 23:22

When was the work done, relative to when it was billed for and when they want payment? If the work was done 3 years ago and they have only just started sending out letters now, when peoples may have moved or died, it does sound very odd. I thought the excess was only payable on the main insurance policy with the insurance company you use otherwise aren't you paying two excesses.

nunz

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#1396988 29-Sep-2015 23:31

mattwnz: When was the work done, relative to when it was billed for and when they want payment? If the work was done 3 years ago and they have only just started sending out letters now, when peoples may have moved or died, it does sound very odd. I thought the excess was only payable on the main insurance policy with the insurance company you use otherwise aren't you paying two excesses.

Yes - we are paying two excesses.

The earthquakes were in 2010 / 2011. The bill was passed 2012. This is not insurance excess - this is an EQC excess that didn't exist until the govt retro fitted it as a sub clause in the Canterbury Earthquake legislation.

My parents in law had the work done in 2013. My friend last year. Both received bills at the same time. EQC have started to send them out just recently.

Many people still haven't even had work started 5 years after the event. Insurers have not even agreed to how to assess the damage on many houses and still haven't priced up the jobs.

Many people are still fighting to get decent repairs done. As an example, the wall paper was peeling off the walls of our house when we moved back in 4-6 weeks after work started. Glass through the carpet, paint splatter on furniture, kids toys and possessions brought from rooms not needing repairs and sat in with painted over alls and stained permanently, floors out of line, etc etc etc The value of the property we are in has probably decreased with the work done and we endured an extra 4 weeks of re-work as the workers were bought back several times until the landlord gave up in disgust.

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#1397127 30-Sep-2015 10:09

I thought there was always an excess on EQC claims.

A couple of things don't seem very reasonable about how these excesses are levied.
One is that unless there was an accurate scoping of damage after each earthquake event where a claim was lodged, they're just guessing apportionment of costs. EQC attempted to split/apportion our claim(s) in an attempt to keep the claim "under cap" as we'd lodged a claim for the June 2011 quake. Presented with a scope of works prepared a few weeks before that claim was lodged and challenged to identify any additional damage, they had to back down. If I didn't have that, they would have split the total claim down the middle to turn it into two under caps claims which would have nearly doubled the EQC excess payable. EQC were advising people to lodge claims after each significant aftershock event regardless of whether they thought there was damage or not. Fortunately we were able to withdraw the claim for the June quake, and the over-cap claim was passed on to our insurer.

The other thing is that EQC/Fletcher EQR still play secret squirrel with costs. They're levying the excess based on 1% of Fletcher EQR total repair cost, but still not providing a cost breakdown of how that cost was made up. They could be dreaming up a figure out of thin air, although that's not likely perhaps. What is a potential problem to them is that most homeowners will have an original scope of works listing damage, and although that's not going to itemise costs (costs withheld even if requested due to a supposed reason of "prejudicing future negotiation") it will identify proposed repair methodology. Of course it's no secret now that in an alarming number of cases, work was not carried out to an acceptable standard. If they submit a detailed invoice - showing actual cost for aspects of repair, which can then be compared with the original scope of works, then "anomalies" where they cut back on repair methods to save $$$ will stand out. Of course if they did the job on the cheap, then the excess will also be lower - but there's no comfort in that!

I don't believe it's reasonable for EQC to not disclose cost details when that cost is used to calculate excess payable. I also do not believe that the exclusion to the Official Information Act which they have been using (prejudicing future negotiation) is valid - the work which has been paid for is a "done deal", there's nothing there to prejudice future negotiations, but I suspect there could be a lot of information disclosed which would not reflect well on how EQC / Fletcher EQR conducted themselves.

Our personal experience with EQC was appalling - and I will never get over it - despite eventually getting them to admit serious fault, back down, and formally apologise. I look forward to an independent inquiry - though it will be a long time coming.
However for now, as far as the EQC excess goes, I don't believe there's any alternative but to pay it. If that's a problem, then you need to talk to them sooner rather than later.

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#1397142 30-Sep-2015 10:32

We got a letter for 2 excesses in July this year, due 4th of October (and paid last week). What irked me is that despite only getting one repair job done for minor cosmetic damage (in Dec 2012) our repair was split into 'two' claims each worth, according to EQC, just over $20,000 (somehow they had managed to decide what damage each event did despite not doing a scope between the 2 events). We were never told there was an excess, I even remember asking the assessor at the time of the repairs who told me not to worry about 'that'. When we made our contents claim to EQC we were told straight away there was an excess and that it would be taken from our payout.

It is a load of crock but as OP says, not much that can be done about it.

encompassit

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#1397263 30-Sep-2015 11:55

As an east side resident who was displaced after being red zoned

The excess you state was always there - I know I had to pay that excess on all claims - each event - 9/2010, 2/2011, 6/2011, 7/2011, I had damage in every single event and as a result paid multiple excesses. I am fine with that - insurance is about risk management and reducing the impact of loss - which it certainly did. Remember EQC only cover the first $100k + GST per event for the house. Insurance companies kick in after that, which again I had to pay the excess for their insurance cover.

As to the East being low social economic area - I disagree - it was social policies over 60 years ago that low social economic housing be spread through out all suburbs - through out NZ. Every (older) suburb has a low social economic housing area - The east side has pockets in Wainoni/Aranui and Shirley - the rest (majority) is middle class - I know I lived in the east side all my life up to being red zoned. North side - Papanui/Harewood/Redwood areas also have pockets of low social economic housing of equal size and population as does the south side with pockets around Sydenham and Beckenham as does the west side. There are many pockets throughout Chch.

The east side was by far one of the most damaged areas and the repairs are of course ongoing - however there were other pockets of areas equally badly damaged and they are still undergoing repairs as well - throughout Chch there are extensive repairs going on - however - there are only x number of manpower - machines - materials and other resources available at any one time - the repairs will take many years still to do - Kobe Japan - took over 10 years to complete all the repairs after their earthquake.

Rates increases - Chch is one of the cheapest rates within NZ - they have a policy to keep rates low and instead have a 30 year plan that rests on borrowing money that is termed 'inter generational debt' - this debt will never be paid off - the plan clearly shows that the debt will be serviced by expected population increases over time - this debt we are passing down to our children and our grandchildren. That is far more worrying than what we are dealing with at the moment. CCC is not alone in this model - most territorial authorities have this model. In fact the entire western world has this policy of going into debt and simply servicing the debt. It is one of the main causes to the world's economic woes at the moment and will likely take a generation or two before being sorted.

I know live outside of Chch and my rates are double of what I would pay if I lived in Chch - so Chch rates are still cheap regardless of the increases, instead of paying $3.80 a day in Chch I am paying $7.60 a day.

Those people who lost their jobs as a result of the earthquakes - there are now many times more jobs than there were before the earthquakes - like it or not - the earthquakes have create a micro economic boom for Chch and has brought in considerable monies that flow through our local economy. The only other part of NZ that is booming is Akld and that is because of expected population increases. The rest of NZ is in a recession - in fact without the Canterbury rebuild and the Akld property boom NZ would be in a far worse state than it is. Our diary industry is definitely in bad shape with a number of farmers facing total economic disaster.

Look at Greece - look at Spain - look at Ireland - look at a number of other countries whose debt is so high they are teetering on economic collapse. The USA is printing money like it is confetti The Chinese who have benefited from the 'I want' culture in the western world - themselves started releasing reserves to keep their country working a number of years ago because of the economic slowdown in the West. These reserves went into infrastructure - however - they are now slowing down.

No country has the assets behind them to cover their debt - our (world) currencies' value use to be based on gold in our reserves - something tangible- however - we now place it on 'trust', the trust that they can cover the value of the currency - something intangible.

Sorry I do feel for those who have little and the impact of the earthquakes has caused - however - I am more worried about the global correction that must come.

nunz

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#1397334 30-Sep-2015 13:17

encompassit: As an east side resident who was displaced after being red zoned

The excess you state was always there - I know I had to pay that excess on all claims - each event - 9/2010, 2/2011, 6/2011, 7/2011, I had damage in every single event and as a result paid multiple excesses. I am fine with that - insurance is about risk management and reducing the impact of loss - which it certainly did. Remember EQC only cover the first $100k + GST per event for the house. Insurance companies kick in after that, which again I had to pay the excess for their insurance cover.

If you look at the original post, the excesses being charged by EQC are from retro fitted legislation - 2012, two years after the event. This excess being levied is not a standard EQC levy, it is a special levy imposed on the people of Canterbury - and on them alone. special legislation to get this done - after the fact.

Also as the poster(s) previous to you pointed out the costs have been escalated by the process, it is a totally closed book, enormous amounts of money have been wasted with incompetence and certain companies have made out like bandits.

A fair process would have given choice over a repairer, openness about work being done and funnily enough could have been done less expensively.

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nunz

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#1397337 30-Sep-2015 13:19

kingjj:
It is a load of crock but as OP says, not much that can be done about it.

I was being sarcastic :) I believe something could be done about it and should be done about it - first of all publicise this - I don't know of anyone I've talked to who things this is a fair process, including those not affected by these levies.

nunz

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#1397355 30-Sep-2015 13:36

encompassit: As an east side resident who was displaced after being red zoned

The excess you state was always there - I know I had to pay that excess on all claims - each event - 9/2010, 2/2011, 6/2011, 7/2011, I had damage in every single event and as a result paid multiple excesses. I am fine with that - insurance is about risk management and reducing the impact of loss - which it certainly did. Remember EQC only cover the first $100k + GST per event for the house. Insurance companies kick in after that, which again I had to pay the excess for their insurance cover.

As to the East being low social economic area - I disagree - it was social policies over 60 years ago that low social economic housing be spread through out all suburbs - through out NZ. Every (older) suburb has a low social economic housing area - The east side has pockets in Wainoni/Aranui and Shirley - the rest (majority) is middle class - I know I lived in the east side all my life up to being red zoned. North side - Papanui/Harewood/Redwood areas also have pockets of low social economic housing of equal size and population as does the south side with pockets around Sydenham and Beckenham as does the west side. There are many pockets throughout Chch.

The east side was by far one of the most damaged areas and the repairs are of course ongoing - however there were other pockets of areas equally badly damaged and they are still undergoing repairs as well - throughout Chch there are extensive repairs going on - however - there are only x number of manpower - machines - materials and other resources available at any one time - the repairs will take many years still to do - Kobe Japan - took over 10 years to complete all the repairs after their earthquake.

Rates increases - Chch is one of the cheapest rates within NZ - they have a policy to keep rates low and instead have a 30 year plan that rests on borrowing money that is termed 'inter generational debt' - this debt will never be paid off - the plan clearly shows that the debt will be serviced by expected population increases over time - this debt we are passing down to our children and our grandchildren. That is far more worrying than what we are dealing with at the moment. CCC is not alone in this model - most territorial authorities have this model. In fact the entire western world has this policy of going into debt and simply servicing the debt. It is one of the main causes to the world's economic woes at the moment and will likely take a generation or two before being sorted.

I know live outside of Chch and my rates are double of what I would pay if I lived in Chch - so Chch rates are still cheap regardless of the increases, instead of paying $3.80 a day in Chch I am paying $7.60 a day.

Those people who lost their jobs as a result of the earthquakes - there are now many times more jobs than there were before the earthquakes - like it or not - the earthquakes have create a micro economic boom for Chch and has brought in considerable monies that flow through our local economy. The only other part of NZ that is booming is Akld and that is because of expected population increases. The rest of NZ is in a recession - in fact without the Canterbury rebuild and the Akld property boom NZ would be in a far worse state than it is. Our diary industry is definitely in bad shape with a number of farmers facing total economic disaster.

Look at Greece - look at Spain - look at Ireland - look at a number of other countries whose debt is so high they are teetering on economic collapse. The USA is printing money like it is confetti The Chinese who have benefited from the 'I want' culture in the western world - themselves started releasing reserves to keep their country working a number of years ago because of the economic slowdown in the West. These reserves went into infrastructure - however - they are now slowing down.

No country has the assets behind them to cover their debt - our (world) currencies' value use to be based on gold in our reserves - something tangible- however - we now place it on 'trust', the trust that they can cover the value of the currency - something intangible.

Sorry I do feel for those who have little and the impact of the earthquakes has caused - however - I am more worried about the global correction that must come.

You make some good points - however,
1 - While there are pockets of poverty / lower social economic areas in all suburbs in Chch, the reality is that East side suburbs such as Bromley, Aranuui, Wainoni, Waltham, Woolston, Phillipstown and Linwood were more known for their poverty than their wealth. They were / are poor, lower priced areas. Shirley has some areas of affluence and middle class housing, similarly Woolston, and Linwood but still large pockets of poverty. Linwood has been through some gentrification over the last 20 years with younger people seeing it as a way into the housing market.
Compare that to the other areas you mention like Papanui (heading upwards from where it was 20 years ago), harewood (highly affluent), Redwood (middle clas to affluent nad growning more affluent). They are seen as working class or mid upper class areas. While Fendalton, Merivale had some major damage, along with the inner city (Sydenham / Beckenham) the majority of the red zone centres on poorer suburbs. Just like Otara in Auckland is never going to be mistaken for Ponsonby, similarly no one is going to mistake Aranui, Bexley, Bromley, Waltham for gentrified areas (or at least weren't going to previously.

2 - Yes work was generated, 12-24 months after the fact - but for the first two years most of the work went to a select few. As the rebuild got underway more jobs appeared but for a quite while, without open factorys (again with a lot in the inner city, eastern / southern suburbs) many jobs were lost. Add to that the cost of finding new housing (rents rocketing), shortages etc and the East got really hard hit. close their schools and community centres and the support structures crumbled. Now hit them with a large bill. People just getting back on their feet are going to be stuffed back in the brown stuff again (and I don't mean liquefaction either). also work wise, moany women in th eEastside had facotry jobs - how many of them do you see employed in rebuild work?

Statistically - Between 2006 and 2013 Total workers dropped from 9600 to 7476 - A staggering 2200 less workers (Census NZ Data - Employment by major anzsco).
Siginifcantly there were large drops in labourers, sales staff , machinery operators and other semi unskilled work - traditionally the area of employment for poorer areas. significantly the trend for Waimakiriri, Selwyn Huruni and Greater Chch is the same. It wasn't a shuffling of worker locations in Canterbury.
At the same time populations increased across those areas from 438k to 448k - much of it migrant, incoming labour.

3 - One of the reasons for the Chch rates being lower was Chch council is the third highest revenue generating council in NZ (something the Govt is trying to strip off us) so subsidised rates via that income. As a group entity it is number 1 in NZ.

4 - You say you have doubled your rates. Unless you moved from chch to the chatham islands (most expensive rates in NZ), that is not possible - unless you aren't comparing apples with apples. Under your new rates regime, has your house increased in value? Has your land increased in value? If you lived Eastside, there is a high probability that your house / land values are higher now - assuming you moved into a more affluent neighbourhood from a poorer area. THe difference between Chch and most south Island locations is less than $200 per $1700 per annum. That's 11% deviation in the majority of the south island. Moving north there is more deviation but Wellington, Auckland, Far north and BOP skew those figures substantialy.

LesB

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#1397372 30-Sep-2015 14:35

This only applies to those who were not cash settled. Also the details seem to be wrong. EQC only funds up to the first $115,000. From another article on the subject -- "The invoice amount will be for 1% of the building work value and as a result the maximum excess payable will be $1,150.00 including GST. EQC have confirmed that 90% of the invoices that will be issued will be below $600.00."
Cheers
LesB

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#1397411 30-Sep-2015 15:49

Well, presumably they actually have to do the work before they can issue this payment demand so I'm ok :-)

Cheers - N

Please note all comments are from my own brain and don't necessarily represent the position or opinions of my employer, previous employers, colleagues, friends or pets.

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#1397518 30-Sep-2015 19:05

Bit that amused me was asking money for a house I dont own any more, nor the people I sold it to either.

Would have been nicer to bill when the repairs had been done rather than years later.

Like others I'm just going to pay it as it is a small excess compared to the excess on my standard house and contents.

A

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nunz

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#1397963 1-Oct-2015 13:25

LesB: This only applies to those who were not cash settled. Also the details seem to be wrong. EQC only funds up to the first $115,000. From another article on the subject -- "The invoice amount will be for 1% of the building work value and as a result the maximum excess payable will be $1,150.00 including GST. EQC have confirmed that 90% of the invoices that will be issued will be below $600.00."
Cheers
LesB

Thanks for letting us know that - facts have not been presented to my P.I.L. so they are worried sick around what type of bill they will get.

nunz

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#1397968 1-Oct-2015 13:35

Talkiet: Well, presumably they actually have to do the work before they can issue this payment demand so I'm ok :-)

Cheers - N

One heck of a situation to be in 5 years down the track.

Friends of ours have over 12 cracks in the foundation and a brick wall their waif of a daughter can lean on and it moves . EQC wants to put plaster patch on foundations - despite independent expert reports saying foundation is stuffed.

The whole process has been flawed:
1 - EQC / fletchers quote. Other / independent quotes not accepted.
2 - Originally wouldn't do cash settlements and now they will but if they cash settle and have miss quoted that's tough bikkies.
3 - Getting in expert advice to refute bad EQC quotes is out of the owners pocket.
4 - They back fill legislation and charge people but you cant see the scope of work done, prices or costs, but they can charge you for what they did - no accountability.

The IRD tax law states:

Tax invoice for supplies worth more than $1,000

For supplies worth more than $1,000 (including GST), the tax invoice must clearly show:

the words "tax invoice" in a prominent place
the name (or trade name) and GST number of the supplier
the name and address of the recipient of the supply
the date the invoice was issued
a description of the goods and/or services supplied
the quantity or volume of the goods and/or services supplied.
Examples: litres of petrol, hours of labour, kilos of potatoes etc.

The EQC invoices are illegal as they are for services or goods worth more than $1000 but the govt will let them slide on this legislation as it is "commercially sensitive" even after the job is done.
And they say NZ is a corruption free country.

nunz

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#1397969 1-Oct-2015 13:36

afe66: Bit that amused me was asking money for a house I dont own any more, nor the people I sold it to either.

Would have been nicer to bill when the repairs had been done rather than years later.

Like others I'm just going to pay it as it is a small excess compared to the excess on my standard house and contents.

A

I know someone who just received a bill for their dead mothers house (she died two years ago). seems they are now liable. Inter-generational debt :)