Red Zone payment creates risk for Crown

Today’s announcement the Government will pay uninsured former Residential Red Zone owners 100 per cent of their 2007/08 rateable value could create considerable risk for the Crown, National’s spokesperson for EQC Stuart Smith says.

“At the moment New Zealand has substantial cover for disaster insurance, with most building owners paying for disaster cover meaning should there be another event like the Canterbury Earthquakes, we are in a good position to respond and if necessary rebuild.

“For example at the time of the Canterbury Earthquakes, 99 per cent of Red Zone home owners were insured against a disaster, having taken out individual insurance policies.

“However today’s announcement that the Crown will pick up the entire cost for those who hadn’t taken out their own insurance could set a concerning precedent.

“This is fundamentally unfair to those property owners who did pay for their disaster insurance.

“Should people take this as a signal they don’t need disaster insurance, the Crown could end up taking on considerable fiscal risk in the future.

“The previous National Government announced the uninsured properties in the Residential Red Zone would be paid 80 per cent of their pre-earthquake (2007/08) rateable value.

“We considered a range of factors, including fairness, financial responsibility, protecting the value of insurance and the homeowner’s wellbeing.

“Each of those homeowners had already been paid 100 per cent of the pre-earthquake value of their land.

“There is now a risk property owners will choose not to pay for disaster insurance and instead wait for the Crown to bail them out.”

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