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Our recovery has strong foundations

Hon Gerry Brownlee
Minister for Canterbury Earthquake Recovery

Embargoed till midday
15 February 2013 Speech


Our recovery has strong foundations

Thank you all for being here today, inside the CBD cordon.

Rather than being known as the Red Zone – which denoted dangerous buildings and subsequent demolition – this will now be known by the CERA team as the Rebuild Zone, because frankly, that’s what’s going on.

I want to talk to you today about what’s happening in the city and what will happen over the coming years. First I’ll spend a little time reminding you why we’ve done some of the things we’ve done.

2012 was a very challenging year in Christchurch. Just as we had the 2011 Christmas holidays on our mind a shallow 5.8 magnitude aftershock hit the city on 23 December.

In addition to the physical impact of that shake there was a strong psychological impact. After over 10,000 aftershocks and 51 quakes above magnitude five, people were understandably asking if this swarm of quakes would ever end, and some wondered if they could take much more.

We’ve now gone through a full year without an aftershock of that magnitude. The scientists tell us we will have on-going seismic activity for some years to come, but to give some context to the event as it stands; GNS forecasts the probability of a 5.5 to 5.9 shake in the coming month at just 3 per cent.

But as you know, New Zealand is a country built on fault lines. All we can do is learn from the lessons the Canterbury earthquakes have delivered. The tremendous loss of so many older buildings has left us in no doubt about the requirements of future buildings in Christchurch.

And those older buildings that remain must be strengthened and able to cope with future events. In the residential sector we’ve found that building standards worked well. Domestic dwellings did not collapse – they did however sink, stretch and break.

An important lesson from the earthquakes is that a structure is only as good as the platform it is built on. The land and foundations are key factors in determining the survival of that structure.

Insurance for residential land is unavailable in other parts of the world. The Earthquake Commission is a unique institution that has positioned New Zealand well to recover from a disaster of this magnitude. One key aspect has been their investment in the science and their focus on land as a platform for building.

EQC has coordinated a major geotechnical investigation of the land under the Canterbury region. This systematic and scientific approach has given us perhaps the most sophisticated knowledge of the subsurface of any urban region in the world.

This will be of benefit to Canterbury for decades to come. In June 2011, the Government assessed the information amassed to that point about the impact of the earthquakes on the land in Canterbury. We decided that in the long term, rebuilding on poor quality land would mean we would be doomed to repeat the mistakes of the past.

The designation of residential red zones was based on the information collated through the EQC investigation. The Crown made a voluntary offer to purchase properties in the most severely damaged suburbs at the pre quake rating valuation. The net cost of that endeavour to taxpayers will be over $1 billion.

Homeowners in the red zone have embraced the chance to move on and relocate or rebuild with confidence on safe land. Of the 7207 property owners who have received a Crown offer, over 6500 have signed a sale and purchase agreement, and some, such as those on the Port Hills, have only been in receipt of that offer for a short time. Over 5000 property owners have had their offer expire. The acceptance rate has been 99.8 per cent – a remarkable achievement.

Zoning the land will give long term confidence in greater Christchurch’s building stock. I’m proud that we worked through the challenges that confronted us in a systematic manner. I was regularly asked to hurry decisions. What is clear in retrospect is that good decisions that took a few weeks longer for investigating all options and the long term viability of them are better placed to last the test of time.

As further assessment of residential red zones has been done, engineers see a clear difference between the land zoned unsuitable for residential occupation, and the land zoned appropriate for habitation. This means we can rebuild with confidence in the condition of all land not zoned red.

This includes the 14 per cent of residential land in Christchurch classified as Technical Category 3, or TC3. TC3 is a performance standard which will ensure that in the event of a major quake the house will perform as well as a house on land less susceptible to seismic damage.

This requires stronger foundations, and I’m looking forward this afternoon to attending the pouring of concrete on a new foundation designed especially for TC3 land.

There has been understandable frustration from TC3 residents as insurers worked to understand how the land designation might affect their exposure to this and future events. But that is subsiding as everyone learns more. Confidence is growing in TC3 as builders deliver solutions.

Land values haven’t suffered; and sales of land and houses are regular. TC3 was just another of many curveballs thrown at us since these events began, but I’m confident we’ve made the right decisions for the enduring value of people’s homes.

The elimination of the residential red zones, the loss of building stock below building code performance standards and the now required adherence to high standards, means such a quake would not have anywhere near the level of damage to property and financial loss, and of course death.

New Zealanders’ extremely high levels of insurance have provided the vital capital to rebuild. We can now demonstrate that our rebuild will significantly de-risk greater Christchurch for future insurance contracts. That will ultimately help keep insurance affordable and ensure sufficient cover is available to progress the recovery.

The CBD Blueprint was unveiled on 30 July 2012 and has given direction to construction of the new central city. Certainty about the future shape and geography of the city makes it easier for investors to put their capital at risk by building on a particular site. The Christchurch Central Development Unit was formed to create a consistent and coherent plan to redevelop the central city.

It was also charged with leading the core government sector developments, and attracting the private sector investment alongside it. The first task was delivery of the blueprint within 100 days. The decision to design a comprehensive blueprint was based on a number of factors. There was recognition that a city with over 70 per cent of buildings demolished should be rebuilt as a city of the 21st Century – not a replica of the past. It has to be a city that is attractive to live, work and play in.

We now have a bold vision for our city centre, one that is not constrained by the grid layout drafted in London in the 1840s. Instead, thousands of local ideas were collated and interpreted by the CCDU designers. And that design was created in this city, by people who live in this city.

The new Christchurch is founded on the best of today’s urban design principles. It will be a pedestrian friendly city. The Frame links with the Avon River Precinct to provide transport corridors for cyclists and pedestrians. It affirms and enhances the leafy, green, garden city Christchurch has been known as.

The public transport system is integrated into the design of central Christchurch. A new bus interchange will make transport into the city easy. The new motorway system will lead to productivity gains for Canterbury business, but also require less fuel to get products to market.

The cold, draughty masonry buildings that populated much of central Christchurch were hard to heat and uneconomic to occupy. Modern building codes integrate environmentally friendly practice into new buildings. Not only is it better for the environment, it has an economic benefit through lower operating cost.

Any suggestion that sustainability has been overlooked is not only ill informed it’s also ridiculous. Many people have remarked that before the earthquakes the city was struggling to attract people, and that was reflected in a decline of retail and hospitality in its centre.

When formulating the blueprint we knew both local and central government would need new buildings. We knew where those buildings went would impact on the decisions of investors. For example, hoteliers were anxious to know where a convention centre would be placed.

The location of the courts and police station would impact on the legal fraternity. These core civic assets are the anchors around which a city develops. To give effect to the plan, we have an extensive purchasing plan in progress to accumulate the necessary land holdings.

This plan has restored the supply and demand balance in the commercial property market. While the price of land has fallen following the earthquakes, it has not collapsed, as could be expected in most post disaster scenarios. This is a reflection of the confidence the city can be successfully rebuilt and realistic returns generated.

There will be always arguments about the market price of land, but it’s worth noting that the Crown’s approach to Christchurch is more generous than the approach taken following the Napier earthquake. The date set for assessing compensation for Napier landowners was 4 February 1931 – the day after the earthquake.

We have underpinned the market value of land and are taking out the excess supply. This allows development to be concentrated, creating a tight core to build out from, rather than encouraging an inconsistent patchwork of development. This is one of the reasons the CBD plan has generated considerable confidence in the future of Christchurch.

Large numbers of expressions of interest have been received for the convention centre precinct and other anchor projects in the CBD, with a mixture of domestic and international participants competing to be at the centre of a revived tourism industry in Canterbury. We know from expressions of interest that high quality new hotels will greatly enhance our capacity for tourism and business travel.

Visitors to Christchurch will be attracted by new cultural and entertainment attractions. The plan envisages a high quality performing arts and entertainment complex across Victoria Square from the convention centre. New sporting facilities will make Christchurch a destination for large sporting events.

These projects are important elements of making Canterbury a great place to live. This is why the Avon River Precinct is a key anchor project. I want to take an opportunity now to say a few words about a very special project which will also occur just across the river behind me, and to acknowledge the presence in the audience of Andy Symons, Retail Director of the BNZ.

I’m pleased to announce today that BNZ has come on board as principal sponsor of The Amazing Place. This will be one of the best, if not the best, children’s playground anywhere – and we know it will have what children want, because they’ll be designing it. Children have endured a great deal in this city over the past two years, and not only do they deserve recognition for that, it’s important that they feel real ownership of their new city.

Information packs have gone out to all schools across greater Christchurch, and winners of the Amazing Place competitions will be announced in the third term. So again, thank you to the BNZ for supporting this project and for taking a long term stake in the city. By creating a corridor of green space for people to interact and enjoy in the urban environment, the river will become a vibrant community element of the city, just as the Yarra is in Melbourne, and as Wellington’s waterfront is on a daily basis.

Outside the anchor projects, private sector investment is thriving. Prior to the earthquakes, Cashel Mall had replaced most of its high end fashion with discount goods stores and small retailers. Today we have major investors competing to build their visions in that space.

As you know, the earthquakes smashed apart the core horizontal infrastructure of roads, waste water, storm water and drinking water. Typically that infrastructure takes decades to develop as a city grows and expands. We have the challenge of building out that infrastructure while maintaining service to 180,000 households.

That work will continue for five years and will leave a legacy of the best designed and mapped infrastructure in the country. Pipes and sewers are laid with modern technology. Work that had been completed between the September 2010 and February 2011 earthquakes was largely undamaged by the major shake.

Above those pipes, lie the roads that carry people about their daily business. Wearing my other hard hat as Transport Minister, I can point to the recently completed stage one of the Christchurch Southern Motorway. People regularly report to me that their journeys that once took 40 minutes now take just 15.

Freight is flowing more freely into the Port of Lyttelton, and while the port has suffered major damage and repair work will take some time, Lyttelton itself will benefit from a major reclamation built from the rubble from the CBD.

In regard to the CBD that’s really a summary of the why – why we have approached things as we have. But I know you’re all very interested in the when. As has been the case with every major work programme launched in Canterbury since September 2010, there is a process of identifying the means to tackle an issue, gathering resources, beginning work, and building the work programme to full capacity.

All the while everyone is anxious for things to “get going.” That was the case with the Fletcher EQR managed home repair programme, and the winter heat programme in 2011. And it was the case with the SCIRT programme of replacing and repairing horizontal infrastructure. It was also the case with residential land zoning, which required the aggregation and painstaking assessment of huge amounts of geotechnical data, not to mention fiscal and social assessments of the impact of possible scenarios.

That doesn’t stop lots of people asking “why isn’t it going faster?” The frustrating answer, especially when it comes to building programmes, is everything takes time to ramp up. Despite the early angst, the winter heat programme installed over 15,000 devices into damaged homes in a little over six months, and the number of devices installed is now over 18,000. It also carried out over 50,000 emergency home repairs.

The Fletcher EQR managed repair programme now has thousands of contractors regularly billing over $50 million a month and has permanently repaired over 31,000 homes. And SCIRT, which has completed over $90 million of work and has around $300 million worth underway, is now invoicing $1.5 million a day.

I point all this out because there have already been impatient queries about when the CBD will be rebuilt. This is entirely understandable. Even working as we are to streamline processes around tendering, design and other elements of getting major building projects off the ground, there are many, many ducks to get in a row.

But, a bit like the process of coiling a spring – building up tension before rapidly releasing energy – we’re making very good progress in delivering on the CBD blueprint we launched in July. I’ll now take you through some indicative timelines on a few of the anchor projects.

In the East Frame and the Avon River Precinct detailed design work has commenced at the same time as the Crown is acquiring the property for each project. By August this year we should have land acquisition completed on these two projects, and by then early construction, especially on the Avon River Precinct, will be well underway.

In fact, early construction on the Avon River Precinct will begin in April and both projects are planned for completion by mid-to-late next year. The Convention Centre Precinct is very important for the city, not the least because settling on the site has already given the direction hotel and hospitality investors were so keen to get.

Last year CCDU called for expressions of interest in building the Convention Centre Precinct, and this month parties who responded will be advised of the outcome. Whatever the chosen outcome for procuring this huge project all land will be in Crown ownership within six months of today and site clearance will have commenced.

A month later, in September, the Crown will own all the land necessary for building the Metro Sports Facility, with finalised design and early construction planned to begin soon afterward. By August this year the Crown will own all the land necessary for the Bus Interchange and construction is planned to begin in early 2014.

The Health Precinct in the South Frame is also making good progress, with a request for proposal for master plan services now closed and a master plan contract due to commence next month. By May the master plan will be completed and this will determine the development options available. Detailed design will begin by around August and construction should begin early next year.

These are just some of the areas where the Crown is driving the purchasing of land and the procurement of services to develop these important projects as quickly as possible – the coiling of the spring if you like. In the meantime I want to say I’m extremely impressed and heartened by the response of the private sector, especially in response to the Retail Precinct.

Only seven months after we launched the Christchurch Central Recovery Plan we have outline development plans lodged covering the entire precinct. Land owners and developers have spent a lot of time and money developing their plans, for which we are very grateful, and the team at CCDU is in the process of considering next steps in proceeding at haste.

I also want to make it very clear today – and many of you here will be acutely aware of this, though others from further afield I suspect are not – there is already massive private and public sector investment in rebuilding Christchurch. In September 2012 there was $341 million of residential building work underway in Canterbury – a 34 per cent increase on work that was underway in September 2010 – and that statistic is almost six months old.

Total building work underway in Canterbury in September last year was worth $603 million, up 46 per cent on the value of work underway in September 2010. And there’s just so much more to come, with over $3.9 billion worth of building consents in Canterbury issued between September 2010 and December 2012.

In just the three months leading up to Christmas almost 170,000 cubic metres of ready-mixed concrete was produced in Canterbury – that’s 68 Olympic sized swimming pools of the stuff. This is an 82 per cent increase on the three months to December 2010.

Not surprisingly we’ve seen a 32 per cent increase in the number of employees in the construction sector in Canterbury between February 2010 and February 2012, from 15,520 to 20,420. And it’s not just the building sector where people are finding jobs – the most recent Household Labour Force Survey revealed 16,000 new jobs in Christchurch over the past year.

Conclusion

Our recovery is based on strong and sound foundations. We have taken decisions to reflect future risk and position greater Christchurch to be a strong and sustainable economy. This will create jobs and the prosperity to enjoy quality public services.

In September, I laid out a challenge: that in five years’ time the event that defines the lives of this generation of Cantabrians is not so much the earthquakes, but being part of creating a magnificent new Christchurch. I believe we have laid the foundations to create the best small city in the world.

My parting message to you today is that while the scale of development in the Canterbury region is unprecedented, and while we’d all like things done yesterday, we have an exciting but realistic vision of what Christchurch will become, and orderly well considered processes to make it happen.

We have a very bright future ahead of us. As the global economy recovers Canterbury will be well positioned for high productivity and export driven economic growth. The most important part of that future will be the people who live here. And what great people we have.

As I’ve said at numerous public gatherings over the past two and a half years, the strongest legacy for me in how Christchurch has responded to the quakes is the way everyone, from all walks of life, is now going about their daily lives slightly differently, just happy to be here, and working, and improving our city.

People go to work via different routes, to jobs in different places, very often doing business differently to the way they were before September 2010 or February 2011. And for the most part, despite numerous personal challenges, Christchurch’s residents have embraced and even relished the challenge.

Thank you for what you’re doing to make Christchurch great again; and thank you for being here today.


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