Gerry Brownlee speaks out on EQC: “I just think people aren’t seeing the wood for the trees here. And in this case the wood - Megan - is making a whole lot of mischief"

Gerry Brownlee

More than seven years on from the Canterbury earthquakes, and an increasing number of botched Earthquake Commission (EQC) repairs appear to be coming out of the woodwork.

In June 2016 the then Minister Responsible for the EQC, Gerry Brownlee, estimated the overall cost of remedial repairs would be $60 million to $70 million.

During the day on Thursday EQC confirmed it had spent $160 million on remedial repairs.

Then early in the evening the Minister Responsible for the EQC, Megan Woods, said the figure actually sat at $170 million, with the EQC spending another $100 million on re-settling homes that had been cash settled for initial repairs.

This $270 million makes up around 3% of the $9 billion the EQC has spent on quake claims to date.

The Minister Responsible for the EQC, Megan Woods, accuses National of “wilfully ignoring the scale of the problem” when it was in government.  

"One of the things that does frustrate me was that some of these repairs have got worse because they weren't dealt with quickly. Obviously time can make things that are broken a bit more broken," Woods told Radio New Zealand on Wednesday.

Speaking to interest.co.nz, Brownlee says the amount spent on re-repairs is small relative to the total amount spent on repairs.

He stresses he doesn’t want to diminish the issues faced by some in Canterbury, but says the majority of the work carried out on the 67,746 homes repaired by the EQC has been successful.

“You’ve got to be very careful that you don’t start disparaging the reputation of the outfit based on a small number,” he says.

“What fascinates me is that people say, ‘It’s terrible for people. The expense is climbing.’ The reality is that because the expense is climbing, it is indicating that people are getting their problems sorted. And what’s the problem with that?”

Brownlee says the leaky building experience showed that “builders can come in, do a job, de-register a company, go off into the ether and there’s no back-up”.

“At least with this system, there was always going to be back up, and that remains the case right now.”

Brownlee stands by Fletcher Building - the company that won the tender to manage the EQC’s repair programme.

“I think they’ve done a good job.

“I just think people aren’t seeing the wood for the trees here. And in this case the wood - Megan - is making a whole lot of mischief, frankly for herself. If she destroys public confidence in an organisation like this, it will put insurance prices up.”

Woods has appointed an independent ministerial adviser to help the EQC settle its remaining 2,600 claims (all re-repairs) quickly. 

Brownlee emphasises the good relationship the EQC has with its reinsurers and warns: “You can destroy that very quickly.”

Neither Woods nor Brownlee can estimate how much more the remediated repairs will cost.

The EQC’s Natural Disaster Fund only has $424 million in it. EQC says most of this is in the form of on-call and short-term bank deposits, with the remainder in the form of “investments”.

Under Section 16 of the EQC Act, the Crown is obliged to help the EQC meet its financial liabilities in the event of the Fund being exhausted.

The EQC says: “The final amount that would be provided to EQC, and when Section 16 will be triggered, has yet to be determined.

“Key factors that will determine when Section 16 is triggered include settling claims for both the Canterbury and Kaikoura earthquakes and other events around New Zealand.”

In the event of another disaster, the Fund is also covered by reinsurance. However the excess on the $4.8 billion of cover available is $1.75 billion.

In November 2017, the EQC levy people with private insurance pay into the Fund, was hiked by 33% in an attempt to replenish it.

The former government expected it to hit the $1.75 billion mark within 10 years.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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32 Comments

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14

About the only thing correct in this column is the assertion that builders can come and go etc etc. And boy have they done just that time over time. One wonders why? One high court case revealed an instance of a building firm having formed about 40 different companies . But wait, apparently in this instance with Fletchers, there is back up? How so when Fletchers were contracted carte blanche to do as they like, sign off their own shonkynon-compliant repairs, with no liability for such work whatsoever. Who constructed & signed that contract Mr Brownlee?

All this of course means absolutely nothing to those home owners and families having to exist in houses which are compromised to the point of being both uninsurable and unsaleable. Needless to say Mr Brownlee will not be included in that number and nor, one imagines, will be any of his colleagues. How on earth can it be disregarded that thousands of claimants are suffering like this after OVER SEVEN YEARS.

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17

Gerry Brownlee has the credibility and integrity of an Australian cricketer.
Things with EQC and Fletchers were going wrong early on, but those who tried to point out the issues to the Minister were derided as "carpers and moaners".
Not a very grown-up response to what has turned out to be a huge problem, with many millions of dollars wasted on incompetent and inadequate repairs, plus the stress and misery caused to thousands of families.
Cooking up the now discredited "MBIE Guidelines" may have seemed like a clever way to save money and placate the insurers, but that just put another layer onto Gerry's disaster pudding.
He has no shame, as the elderly and vulnerable were especially subject to the inadequate assessments and repair strategies, and many were bullied into accepting the unacceptable.
His continued defense of the indefensible is like an Aussie cricketer saying, " it was only a small piece of sandpaper".

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12

For once and for all, get the truth out there! A Royal Commission as promised by the incoming government. Why delay?!

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13

Can we also as part of this find out exactly how many properties Gerry has managed to amass in Christchurch during this time? I.e. during the period in which his disclosure listing changed from listing specific houses to listing an unspecified plural "houses in Ilam" (or whichever suburb it was).

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23

Did anything happen in that 2008-2017 period that isn't riddled with corruption and incompetence?

Obviously you think you know a lot. If you are so sure of yourself why don’t you post the accusation(s), name(s), date(s) etc and we can forward it to the person/people accused and let them respond to them. You won’t be protected by any privilege but you shouldn’t need it if you are correct. Time to put or shut up my feathered foe.

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17

Maybe that's the very reason Gerry won't do interviews with John Campbell any more....? Campbell's the kind of journalist who'd break a dodgy politicians ass live on national radio with damming personal information about their financial behaviour! Lunch done, what's for dinner mum? More to come out about the wilful neglect of National's years of almost criminal disregard for the lives of fellow New Zealanders.

Brownlee will retire, like the rest of them.

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11

"but says the majority of the work carried out on the 67,746 homes repaired by the EQC has been successful" - oh ok Mr Gerry Brownlee, problem is you are not a reliable source of information. Period.

Exactly. There is a cost to taxpayers of $270 mill, and still counting, arising out of gross mismanagement on the watch of the previous government. Not long ago Mr Brownlee palmed this off as in the vicinity of $60 mill. That in itself is bad enough but why was it necessary in the first place. To try and justify any part of these recalls with comparison to that of building a new house is pure baloney. Completely different set of circumstances. Minister of misinformation and disinformation I say!

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10

As someone pointed out here the other day - the 11.7 billion dollar hole is real alright! But it origins are due to National's campaign of fudging the figures and actually deceptive conduct as managers of taxpayers money. Perception is everything. And it stinks.

Those dastardly Nats telling porkies on the campaign trail and thus leaving poor innocent Robbo with no option but to fudge the numbers and make stuff up. Just not fair, eh.

There needs to be an enquiry, Clare Curran as minister of open government would be ideal for the job.

What is all this drivel "bash National day - for whingers from the COL"

The story has been updated further to Megan Woods confirming the cost of remedial repairs sits at $170m, not $160m, as interest.co.nz was told by the EQC on Thursday. 

Adding in the $100m spent re-settling homes that had been cash settled for initial repairs, this brings the total spent on remedial work up to $270m.

No doubt Gerry Brownlee thinks that it's money that's been effectively spent. Yet there are an awful lot of people upset with him in Christchurch.

Have you passed that information on to Mr Brownlee? He seemed very unsure what all the different figures meant when interviewed on RNZ this morning.

No I haven't. I don't want to put words in Brownlee's mouth, but I assume (having spoken to him for 20 min) his response would be the same if we were talking about $160m or $270m - that in his view it's a small portion of the $9b EQC has spent on repairs in total (1.78% vs 3%). 

And if the money spent in total had been spent properly then it wouldn't have been anywhere near as high as 9 billion either. And this is only the first estimate on the re repairs, the final figure is going to be much higher.

Typical Broken Window Fallacy, with Gerry almost claiming this extra repair cost is now boosting the economy.

Maybe for the re repairers, but it could have also been used on other more productive things if it hadn't needed to be spent in the first place.

Someone has done a bodgy job fixing earthquake damaged buildings and the taxpayer has no comeback, give me a break. Someone is responsible for this mess and they need to be held to account.

Isn't that the point. No way I defend Nat govt or EQC conduct but shonky corrupt people all the way down the line also there, including surveyors and builders, all pigs to the trough and probably planning on picking up more work on the repairs. Makes one wonder if the rationale behind the company veil has had its day.

Easy to sit back with the benefit of hindsight and take pot shots so how about being a clever chap and tell us how you would have set the EQC response up in a way that would have delivered acceptable response times and a lower refix ratio.

Proviso: you need to factor in all of the circumstances including the unprecedented level of complexity, fiscal conditions facing the country, ongoing seismicity, unique liquefaction circumstances, assessment resource limitations, EQC liability limitations under the act, accountability to reinsurers etc.

This is politics, they had a job to do and failed, a lot of people I talk to believe there was corruption involved. In politics, sometimes you get to go down with the ship.

I'm yet to find anyone who can mount a convincing case for the accusation that the Government and insurance industry 'failed' in CHCH, based on rational fact based analysis and comparing this event with responses elsewhere in the world. My business interests were/are involved in the response (not in any capacity on EQC repairs) and I've personally had in depth, on the ground, involvement.

There have been some chronic failures of execution (Pharos's personal story is one of many where incompetence and cynical use of the legal system unnecessarily put people through hell). I've seen the same crap elsewhere in more straightforward disasters. These shortcomings are painful ,and in an ideal world mostly avoidable, but in proportion to the massive scale and unprecedented complexity of CHCH, I think inevitable - whichever government was in power at the time.

Also system of eqc doing "under cap" stuff slowing down analysis and splitting responsibility - should have bee in role of a reinsurer only and therefore only arguing with insuer re liability not putting victims in position of dealing with multiple parties.

I'm not disagreeing with you, I'm just saying that it's politics, you had a job to do and if most of the country thinks you screwed up, you get to wear the hat.

Yep sure, that's the democratic system..... long may she reign !

The media is largely these days emotive and superficial in their 'coverage' of CHCH ( this site being one of the few that digs deeper and why I bother on Int.co trying to inject an alternate view to the EQ discussion), which is not helping the critically important world view of how NZ inc handles reinsurer funded disaster recoveries.

Interesting to see Woods having a crack at Brownlee after being generally pretty circumspect in her comments up till now. She's raised expectations hugely but now she has done so and at the same time discovered the time bombs of undiscovered damage in CHCH, is seeking a scapegoat. And they don't come much bigger ! As you say ... that's politics.

Interesting that the good Professor Webb is staying in the background. Having swapped his suavely dashing lawyer persona and high profile commentator status for a proletarian haircut and checked workers jacket, he is these days largely invisible on EQ matters. But no doubt very much in the bustling Megans ear.

Factor in also the cost of enlisting retired expat English school teachers to assess the damage to houses, having been told not to check any one's foundations. LOL. Brownlee oversaw a cynical con job to send as many New Zealander's to the wall as possible. That's money. But he should be able to be up front.

Or Kaikoura cray fisher men...

The lefty brigade on this forum might as well blame National for engineering the earthquake !

Everyone knows that earthquakes are the most destructive force of nature, and 2 major earthquakes in the same city was always going to cost a fortune to sort out .......... I doubt anyone could put a number on the final cost

I also wonder if a Labour Government could have done anything differently ?

Well, they are now. Best wishes to Chch.

It would seem, if only judged on the forum today, that any credibility or proper function EQC had is now shot to pieces. Just disband EQC and let the insured do their own thing under there own responsibility with which ever insurer on the open market. Now that might mean governments can no longer siphon off accumulated levies
which, at about the time of Abbotsford, I recall Muldoon accused Nordmeyer of starting that practice. It correct EQC was never intended, and has never previously been geared, to run a repair program, and it shows.

I'm the last person to side with Jumbo Gerry .... but Megan Wood should shut the heck up , and get on with the job ...

... because , had Winston Peters picked the Gnats ... big Gerry would still be in charge , and still be grappling with the re-build ...

He did not deliberately leave an UXB for you , Megan ... get over yourself .... you're in the government now , stop sniping , and start working !

Gerry didn't deliberately hide the costs for now so that EQC didn't need recapitalisation, so that National could claim a surplus?