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Earthquake Commission Amendment Bill - Submission to the Finance and Expenditure Committee [2018] NZHRCSub 5 (27 June 2018)

Last Updated: 15 June 2019

Submission to the Finance and

Expenditure Committee on the Earthquake Commission Amendment Bill

31 May 2018

Margaret Macdonald Senior Advisor

1

MargaretM@hrc.co.nz

Submission of the Human Rights Commission on the Earthquake Commission Amendment Bill

To: Finance and Expenditure Select Committee

30 May 2018

Introduction

1. The Human Rights Commission (the Commission) welcomes the opportunity to provide this submission to the Finance and Expenditure Select Committee (the Committee) regarding the Earthquake Commission Amendment Bill (the Bill).

2. The Commission is New Zealand’s National Human Rights Institution and is accredited “A” status by GANHRI and the UNHCHR. The Commission was established in 1977 and is an independent statutory body with mandated responsibilities under New Zealand’s Human Rights Act 1993. The Commission’s purpose is to promote and protect the human rights of all people in Aotearoa New Zealand. It works for a free, fair, safe and just New Zealand, where diversity is valued and human dignity and rights are respected.

3. The Bill amends the Earthquake Commission Act 1993 (the Act) with the intention to update and improve the operation of the Act. The Bill proposes a limited set of changes to the Act to be put in place before the independent inquiry into EQC is complete. The Commission understands the rationale for the proposed reforms is to simplify and accelerate the management of claims for natural disaster damage, particularly following large-scale natural disasters. The Bill draws on the lessons learned from the Canterbury and Kaikōura earthquakes and addresses some of the issues previously identified by the Ombudsman and the Canterbury Earthquakes Royal Commission.

4. The four amendment proposals are to:
   • remove EQC cover for personal property (contents)
   • increase the ECQ building cover cap from $100,000 (plus GST) to $150,000 (plus GST)
   • lengthen EQC claim notification time limits, and
   • clarify EQC’s authority to share and publish claim-related information
5. The Commission is supportive of the intent of the Bill. It commends the commitment to make immediate improvements based on recent events, to be followed by a comprehensive reform of the Act once the independent inquiry is complete.

6. A summary of the Commission’s recommendations is set out at the end of this document.

Human rights and disaster recovery

7. Natural disasters have the potential to adversely affect human rights, such as the right to life, health and property. In addition, human rights and freedoms usually enjoyed by the population may be curtailed through the exercise of emergency powers.¹ These rights have been ratified in international law and they are also implicit in the Treaty of Waitangi.

8. A human rights approach requires compliance with New Zealand’s international human rights law obligations. These legal obligations require that the State respect, protect and fulfil the human rights of people within New Zealand. In addition, in a natural disaster context, the Commission recommends that law, policy and practice is also consistent with the Guiding Principles of the Sendai Framework for Disaster Risk Reduction 2015-30; ² the Pinheiro Principles which relate to the loss of housing and shelter;³ the United Nations Guiding Principles on Business and Human Rights;⁴ as well as the Treaty of Waitangi.

¹ For example, The Canterbury Earthquake Recovery Act 2011 provided the Government with unprecedented powers. However, instead of using the powers specifically legislated for, the Executive made decisions in relation to Canterbury properties and property owners in reliance on the so called “third source of power” rather than following the procedures set out in the legislation. The experience of the people who did not accept the Government offer has highlighted the danger that reliance of such a source of power poses to the rule of law and the rights and freedoms of New Zealanders. These matters are discussed in the Commission’s 2016 report Staying in the Red Zones.

² The Sendai Framework is a 15-year, voluntary, non-binding agreement which recognizes that the State has the primary role to reduce disaster risk but that responsibility should be shared with other stakeholders including local government, the private sector and other stakeholders.

³ The Pinheiro Principles outline the international standard on the right of refugees and displaced persons to return to their original homes and country of residence. They highlight the right to restitution for displaced persons and are grounded in the principle of restorative justice and restitution as a legal remedy. In the Canterbury earthquake recovery context, the Principles are relevant in regard to people displaced as a result of the red-zoning of earthquake damaged land and the use of Section. 124 notices issued under the Building Act (2004).

⁴ The State has an obligation and businesses a responsibility under the international human rights treaties it has signed and under the United Nations Guiding Principles on Business and Human Rights to make it possible for grievances to be addressed early and remediated directly.

9. In addition to these treaties, conventions and guidelines, the New Zealand Government has committed to the implementation of the 2030 Sustainable Development Agenda adopted by the United Nations in 2015. The Goals and targets related to natural disasters offer opportunities to reduce disaster risk and build resilience. They include targets related to ensuring healthy lives, education, sustainable management of water, building resilient infrastructure, resilient cities, climate change and marine and terrestrial ecosystems.⁵

10. As New Zealand’s National Human Rights Institution the Commission’s role in disaster recovery is predominantly to work with government, NGOs and civil society to ensure that respect for human rights is a core factor underpinning recovery efforts. To this end, the Commission has produced two substantial reports monitoring human rights in the Canterbury earthquake recovery; a human rights checklist for disaster recovery; and Guidelines for insurers on the prioritisation of vulnerable customers.⁶ A primary concern for the Commission has been the significant impact of secondary stressors on people’s wellbeing caused by delayed insurance settlements, substandard repairs and inability to access information about their claims from EQC and private insurers, and land zoning decisions.

11. In March 2018, the Committee on Economic, social and Cultural Rights (CESCR) in its Concluding Observations expressed concern about “the slow pace of processing claims arising from the Canterbury earthquakes, including concerning access to adequate housing.” It recommended that the State party:

Strengthen its efforts to swiftly process the outstanding claims arising from the Canterbury earthquakes, including by establishing a well-equipped specialized tribunal, and promote the implementation of the recommendations made by the Human Rights Commission in its monitoring report, “Staying in the red zones”.⁷

12. The recommendations of the CESCR Committee should be considered in the context of the amendments to the Bill, and in the subsequent review of the Act.

⁵ UN Sustainable Development Goals, 17 Goals.

⁶ Staying in the Red Zones: monitoring human rights in the Canterbury Earthquake Recovery [2016]; Human Rights Checklist for disaster preparedness, prevention and recovery responses [2016]; Best Practice Guidelines for the prioritisation of vulnerable customers [2016] Note: The vulnerability Guidelines were included in the Memorandum of Understanding relating to Kaikoura earthquake claims management between EQC and private insurers ; and Monitoring Human Rights in the Canterbury Earthquake recovery [2013] See also The Business of Human Rights [2016].

⁷ United Nations Committee on Economic Social and Cultural Rights Concluding Observations on the fourth periodic report of New Zealand, 40 (e) p. 8., May 2018.

Removal of EQC cover for personal property

13. The Commission endorses the pragmatic proposal to remove EQC cover for personal property, in order to streamline processes for customers and enable greater focus by EQC on its core housing role.

Clarification of EQC’s authority to share information

14. The Commission also supports the proposal to clarify EQC’s authority to share and publish claim-related information. This proposal addresses the Royal Commission of Inquiry’s recommended exception to the Act “for the purpose of preventing or lessening a serious and immanent threat to public health or public safety, or the life for health of any person” ⁸ —a position the Commission endorses. The Commission further notes the Office of the Privacy Commissioner has expressed no concern about disclosures by EQC in order to protect public safety.⁹

15. However, the Commission submits that amendments are made to two of the proposed EQC amendments to better achieve the stated purposes of the Bill.

Increase to the EQC building cover cap

16. The building cover cap system caused a number of problems in the Canterbury earthquake sequence. For a significant number of claims it was unclear whether the losses were the responsibility of EQC or insurers. Initial rapid assessments have since been found to be seriously inadequate. More than seven years after the earthquakes homes initially deemed to be an EQC repair continue to be revised as over cap. For the homeowner, this means after many years of delay, they are effectively at the beginning of the repair/rebuild process again. The application of the cap to separate losses after each of the earthquakes (apportionment) was an additional complicating factor which resulted in delays.

17. Delays in the claims resolution process have been acknowledged by Government as a significant secondary stressor resulting in negative impacts on the mental health and wellbeing of affected people.¹⁰

⁸ Canterbury Earthquakes Royal Commission, Final Report, Volume 4, Earthquake Prone Buildings. Section 4: Individual unreinforced masonry buildings that caused fatalities, (e) p. 161.

⁹ Earthquake Commission Amendment Bill Regulatory Impact Statement, p.17.

¹⁰ Cabinet Social Policy committee, Office of the Minister of Health, Supporting Mental Health Services in Christchurch, (19-20) p. 4. See also 2013-2017 All Right? Research on Cantabrian’s mental health.

18. In the short term, the Commission supports the proposal to increase the monetary building cover cap. The intent of this amendment is to reduce the number of over cap claims, limit the double handling of claims and the potential for EQC/insurer disagreement. The Commission expects this would contribute to an improved customer experience. However, the Commission does not believe the increase from $100,000 (plus GST) to $150,000 (plus GST) is sufficient to meet these objectives. To meet this aim in a manner consistent with the original intention of the cover, the figure should be sufficient to rebuild a modest home and to allow for site works associated with the repair or reinstatement of the dwelling and access to it. The original cap of $100,000 (plus GST) has not changed since the 1993 Act came into force.

19. The Commission notes that the 2015 Discussion Document on proposed changes to the Earthquake Commission Act 1993 prepared by Treasury, proposes an increase of the cap to $200,000 (plus GST). The Commission recommends the cap is increased to this figure and that the cap is reviewed every five years to ensure it is adequately aligned with increases in building costs.

20. When the Act is reviewed the Commission recommends that an alternative structure to a cap is explored and considered.

Lengthen EQC claim notification time limits

The Commission supports the proposal to lengthen claim notification time limits to up to two years after the damage occurs as recommended by the Ombudsman. However, the Commission is concerned that claims are subject “to the limitation that a claim made after three months may be refused if the lateness of the claim materially prejudices EQCs ability to assess the claim”. The reliance on the discretion of case managers to determine whether the claim time is extended to two years is potentially problematic. Previous research findings relating to EQC customer interaction and claims management have identified a number of shortcomings relating to consistency, transparency, and responsiveness.¹¹ Accordingly, the Commission recommends for the purposes of consistency, that further thought is given to the application of a bright-line rule to determine whether the claim time is extended to two years.

¹¹ ECQ Customer Interaction Review, November 2014. pp 6-7.

Summary of the Commission’s recommendations

Recommendation 1

The recommendations of the UN CESCR Committee should be considered in the context of the amendments to the Bill, and in the subsequent review of the Act.

Recommendation 2

The Commission recommends the cap is increased to $200,000 (plus GST) and that the cap is reviewed every five years to ensure it is adequately aligned with increases in building costs.

Recommendation 3

When the Act is reviewed the Commission recommends that an alternative structure to a cap is explored and considered.

Recommendation 4

For the purposes of consistency, the Commission recommends that further thought is given to the application of a bright-line rule to determine whether the claim time is extended to two years.