Latest Christchurch earthquakes costly

BEN HEATHER
Last updated 05:00 28/12/2011

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Christchurch earthquake

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Friday's earthquakes could take a multimillion-dollar bite out of local and central government coffers, with scant protection from insurers.

The magnitude-5.8 and 6.0 quakes caused significant new liquefaction in eastern Christchurch on a scale similar to those on June 13, which would cost the Earthquake Commission (EQC) an extra $1.1 billion, the Treasury said.

Before Friday, Canterbury's damage claims were expected to drain the commission's $6b natural disaster fund, leaving a shortfall of $829 million to be covered by the Government.

The cost of covering any new damage from Friday's quakes, which will run into at least the tens of millions of dollars, will have to be met by the Government and ultimately the taxpayer.

EQC spokesman Iain Butler said yesterday that it was too early to determine if the latest quakes would be on the same scale as the two big June 13 shakes.

"The financial impact will depend on the proportion of new damage versus worsened existing damage," he said.

However, many homes hit hard on Friday would be in the red zone, where they were already slated for demolition, and the land would eventually be abandoned, he said.

Some homes might have to be reassessed if they had suffered fresh damage, which could disrupt timetables for repairs, he said.

"The impact on EQC won't be properly understood for weeks."

Insurers said they did not expect to take a large financial hit, with many claims likely to be under $100,000, meaning the cost will fall on the EQC.

Friday's quakes will also hit the Christchurch City Council's bottom line.

Council water and waste manager Mark Christison said the council had been unable to reinsure the city's infrastructure for quake damage past July 1, meaning the the cost of repairing fresh damage would be met by the council.

There did not appear to be any significant additional damage to above-ground infrastructure, such as pumping stations, but if anything was found it would not be covered, he said.

The below-ground infrastructure was less clear-cut, and it could be difficult to determine what damage was new, but insurers would not cover anything obviously new, he said.

"In Bower Ave [in Parklands], we've had a couple of severe breaks where it was OK previously, so we won't be covered for that," Christison said.

The cost to the council would be lessened by some Government funding, although how much was still under discussion.

"A lot of damage this time around is also in the red zone in Parklands, where there was damage already. There might not be a lot of extra cost," he said.

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Nick Bryant, a spokesman for Earthquake Recovery Minister Gerry Brownlee, would not comment on the possible cost of Friday's quakes, but the Government remained committed to underwriting the EQC.

* This story originally quoted EQC spokesman Gordon Irving in error. The spokesman was Iain Butler.

- Canterbury

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