Politicians face Christchurch challenge

They don't mince words in the owner's manual. "The recovery of the greater Christchurch area after the devastating earthquakes of 2010 and 2011 is the biggest challenge faced by New Zealand in living memory."

The Canterbury quake recovery strategy describes a daunting task for the next government. "Recovering from natural disasters on this scale has never been tackled before and is uncharted territory for the affected communities, the councils, business and government."

There are fiscal headaches for central government. There are questions about new building standards and their cost. And there is the shape of a reformed Earthquake Commission (EQC) to be decided, alongside other insurance issues. All of this will be carried out against the backdrop of white-hot pressure over communication, community engagement and leadership.

Already, the practical struggles have led to political squabbles.

There has been fury over red-zone home owners not being compensated for home improvements made after 2007, the "valuation day" on which purchase offers are based. And in the early days after the February 22 quake, there were placards and protesters at the gates of Civil Defence HQ in central Christchurch.

The Fairfax Media-Research International poll out today suggests an ongoing rump of discontent.

Some 31.2 per cent strongly agree that the speed of decision making affecting individuals and home-owners has been far too slow. And 44.8 per cent agree or strongly agree that the speed of decision-making affecting businesses has been far too slow.

Labour has long been preaching the need for community buy-in, to soften the blow of inevitable bad news. Its local MPs have kept up a daily earthquake bulletin – up to its 137th edition – and rallied street corner meetings and caravan clinics.

Canterbury University researcher Kris Vavasour has canvassed hundreds of residents about communication after the quakes. A "big issue" for people was conflicting and confusing information, specifically from leaders like Earthquake Recovery Minister Gerry Brownlee or Christchurch Mayor Bob Parker, Mr Vavasour says.

In the surveys, Mr Parker was either admired or hated, being described as both a "show pony" and an "amazing speaker".

"The only politician to receive nothing but positive comments was opposition MP Brendon Burns, who was praised for his efforts in setting up meetings with residents and other initiatives," Mr Vavasour says.

A rump of anxiety and anger over issues in the immediate aftermath rumbles on in a new set of practical issues "still very much to the forefront of some people's daily existence," Mr Vavasour says.

"For many, the focus is now on issues such as land zoning – either waiting for it, fighting it or working with it – and insurance."

Canterbury Earthquake Recovery Authority chief executive Roger Sutton describes the ongoing land evaluation work as the greatest current challenge.

About 3500 houses in the hill suburbs are at risk of rock fall, cliff collapse or landslides, zoned white. A further 1600 on the flat and zoned orange are affected by liquefaction and are also in limbo.

"Everybody wants things done quicker and it's just very hard to get a lot of things done fast," Mr Sutton says.

"There are still well over 100 geo-tech engineers out in the field every day in Christchurch doing fieldwork to feed into these land decisions. New Zealand actually only has so many geo-tech engineers to call upon to do this work."

NOTWITHSTANDING the home improvement compensation issue, the Government's package for red-zone home-owners has been broadly endorsed. In earlier Fairfax polling 40 per cent nationwide said the red zone was good and 21 per cent poor. In Canterbury, 44.1 per cent said it was good.

The package, budgeted so far at $653 million, is being paid for out of the $5.5b Canterbury Earthquake Recovery Fund, set up in this year's Budget.

The call on the fund has so far been modest. Only $1.59b out of $2.81b budgeted for this year has gone on items like welfare support and infrastructure rebuilding.

But Treasury remains unsure about how much the overall bill will grow. Last week's pre-election economic and fiscal update (Prefu) increased the overall cost from the $15b estimated in May to $20b. There was even talk of a further blow out to $30b.

"There are still a number of significant decisions to be made regarding the nature of the reconstruction and rebuild," Treasury said in its latest financial statements.

"These decisions will likely have fiscal costs associated with them and they include the need to make decisions on the future of the recently announced orange and white zones."

Reserve Bank Governor Alan Bollard has also warned of further cost blowouts caused by over-judicious building standards.

"Disaster preparedness is necessary and desirable, but not costless," he said last month.

The royal commission of inquiry into the Canterbury earthquakes has already floated a list of regulatory changes and three new categories for residential foundation design have been set up for the region.

When the commission winds up next April, the Government will have more big and possibly costly calls to make. Commission hearings on national design standards and codes of practice are still to come.

The next government will also start work on a review of EQC. The number and cost of claims has grown with each aftershock and its National Disaster Relief Fund (NDF) is now certain to be exhausted. In fact, the fund is expected to come up more than $1b short on claims – a cost that will be sheeted back directly to the government as EQC's guarantor.

TO HELP its recovery, the EQC levy has been trebled, boosting annual revenue from $86m to $260m. But the soon-to-be-depleted NDF was a much greater source of revenue, drawing $377m from its investments in 2009/10 alone.

Besides increased claims, business costs have also skyrocketed, with staff numbers going from 22 before September 4, 2010, to more than 1000 in February. The wage bill for September last year to June this year was $138m.

The levy hike is an "interim step," with next year's review set to go all the way back to the very basics of the organisation.

"The starting point is do you want to have an EQC and has it worked well. I think the answer overwhelmingly to that is yes, we do want one and yes, it has worked well," Mr Brownlee says.

"The question becomes then, do EQC cover the first $100,000, the second $100,000 ... There is a question to be asked and answered about how do we cover the next few years. Do we perhaps put in place some financial instruments that might mitigate the Government having a huge call on it?"

- Fairfax NZ