Editorial: Vigilance needed during rebuild

19:17, Oct 23 2012

After what seems to have been an unconscionably long time, the first real statistics supporting anecdotal reports that the rebuild of Christchurch is at last getting seriously under way is welcome news for the region.

Heavy construction work rebuilding Christchurch's badly damaged infrastructure - sewers, drains, roads and the like - has visibly been under way for some time. Now, as insurance problems are worked out, housing and new commercial projects are stepping up.

According to Christchurch economist Robin Clements, who crunches economic data for The Press's quarterly Mainland Monitor, it has all led to the South Island recording a growth rate to the last quarter of 3.3 per cent, the highest in eight years, largely attributable to rebuilding activity.

According to the National Bank, Canterbury alone grew by 4.4 per cent to the June quarter, the fastest in five years. While hardly representing a boom, the figures are more than healthy and as the rebuild continues are likely to endure for some time. As the Canterbury Employers' Chamber of Commerce chief executive Peter Townsend, with an excusable exuberance, commented, "you can now smell the money".

After all the delays and frustrations of the past 18 months, that enthusiastic response is understandable. It undeniably reflects the opinion of many who have been struggling to sort out the problems that have made the recovery slower than most would have liked. It also, however, carries a hint of another problem that may arise as the money floods into the city and rebuilding gets going in earnest.

For as one expert on disaster recovery has noted, where there are a large number of claims and an influx of money to meet them, people who will want to take advantage of the situation through fraud, bribery and corruption are sure to follow. This has happened not only where one might expect it, in the aftermath of earthquakes and tsunamis that have hit Third World countries in recent years, but also in better run places, such as Japan and the United States in the wake of the Fukushima disaster and Hurricane Katrina.


By one estimate, false claims, for instance, can run as high as 15 per cent. That is bad enough, but more insidious, and possibly more draining on recovery funds, are bid-rigging, backhanders, price fixing and other such cosy arrangements that can also become rife. With the recovery expected to cost about $30 billion, there will certainly be incentive enough for such activity.

Fortunately, there is every sign that regulators are aware of the potential problem. The Serious Fraud Office said several weeks ago that it was already pursuing a potential insurance fraud worth tens of millions and that it would keep an eagle eye out for other fraudulent claims. Last week, the Commerce Commission said it was meeting staff in key positions with EQC, Cera, insurance companies, loss adjusters and the like to warn of the perils of corruption within the tender process for reconstruction jobs.

A possible weakness lies within companies, who are said by experts to be less attuned than they should be to the possibility of corrupt practices by employees. If that is so, they would be wise to lift their game. Christchurch people will not take kindly to those who are found to have carelessly allowed money intended for the rebuild to go instead to line the pockets of fraudsters.

The Press