We're in a fix, say repairers
Christchurch Earthquake 2011
Contractors forced to cover hundreds of thousands of dollars in upfront costs for opt-out earthquake repairs are under unfair financial pressure because of Earthquake Commission (EQC) payment changes, building firms say.
Property owners opting out of the Fletcher repair scheme were tasked with managing their own bills after changes made by the EQC in August.
EQC previously paid contractors directly.
Russell Poole, co-owner of the Fix It building repair franchise, said repairers could now be waiting up to 35 working days for payment, or seven weeks, which was double the previous average.
His company had sent the EQC 150 invoices since January and the average time frame for payment was 21 calendar days.
It demonstrated the EQC's "clear ability" to pay within standard insurance industry terms of 15 working days, he said.
"It means the businesses have to fund that cashflow for up three or four weeks longer than they otherwise would have had to have done," Poole said.
Invoices that would previously have been paid but would now not arrive until at least October 20 had "significantly reduced" the cashflow in his business.
Poole could not reveal how much his company had outstanding but said it was in the "hundreds of thousands".
"Going by the old system, we would have had a fair whack of that money already."
There was now more likelihood a contractor would seek payment in advance but Poole said he would not.
"We just don't think it's right. In all honesty, we'd rather shut up shop than do that.
"There's no reason the homeowner should be penalised for not allowing Fletcher to do their repair."
He had written to Earthquake Recovery Minister Gerry Brownlee twice and to the Commerce Commission twice, alleging anti-competitive behaviour and price-fixing.
Pushing homeowners back into the Fletcher scheme was the "only probable outcome" of the policy change, he said.
Nick James, of Christchurch firm Rebuild Me, said the EQC's payment terms were "changing just about every day".
"The new changes are not helpful. They're not paying by the 20th, which they said they were going to," he said.
James had been told payments were delayed because invoices did not comply, despite being on forms from the EQC's website.
"It is unfair. Give us an even playing field and we can get these repairs done, which is all we want to be doing."
Rebuild Me would not charge homeowners but the system was "putting a lot of strain on" financially, James said.
"We've been told [EQC's] focus is with Fletcher but shouldn't their focus be on fixing the houses in Christchurch? Isn't that what the organisation is there to do?
"Why should it matter who the job goes through?" he said.
EQC customer services general manager Bruce Emson said the commission's relationship was with the customer only.
"It's not EQC's job to protect contractors from normal business risks and it's up to contractors to ensure their customers do not get behind in payments," he said.
- © Fairfax NZ News
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