Email Parliament Your EARTHQUAKE Story - Deadline 15th November 2016

When the petition for a Royal Commission into defective repairs was launched the problem was recognised as significant.  We knew that EQC’s response was often 'late, inadequate and frequently defective but we had no idea how widespread it was.

On 16 November Duncan Webb will present to the Finance and Expenditure Select Committee in Wellington pressing for a Royal Commission.  He will be followed by EQC.

EQC accepts that in addition to the 5720 defective repairs that it has to revisit it has “discovered” an additional 2200 further shoddy jobs that it will have to remediate.  In fact it is not well publicised but EQC has been required to revisit over 10,000 properties as a result of the flood of enquiries it is getting from homeowners.  Details on defective repairs undertaken by private insurers are not public, but we know that there are very significant problems there as well.

I ran a workshop recently to help people with insurance issues and 70% of the issues related to defective repairs.

Frustratingly EQC is putting the onus of determining the nature and extent of defects on the homeowner by asking them to provide information about what is wrong to EQC. This can only make the problem worse. Homeowners are not equipped to see what has gone wrong with repairs (or equally as importantly see what damage and associated remedial work has been overlooked).  What is needed is a pro-active approach where EQC identifies those properties which are likely to have repair shortcomings (such as those where foundation work has been done including those with rubble foundations) and actually go and determine that all damage has been properly remediated.

The presentation to the Select Committee will press the need for a Royal Commission of Inquiry into the widespread problem of defective repairs. The problem is complex and the Minister should not dismiss an inquiry as unnecessary or blame the issue on “cowboy builders”.  The problems include the cost pressures put on builders by EQC through Fletchers and the failure of effective project management. Many builders will attest to the fact that they were required to do work against their best judgement that EQC (or the insurer) insisted met the Building Code.   The fact is that EQC’s own inquiries show that around a third of foundation repairs did not meet the Building Code.

 EQC Internal Stakeholder Survey September 2014

EQC Internal Stakeholder Survey September 2014

One reason is that EQC used poorly qualified people to assess the damage and scope the repairs meaning in many cases damage was missed or the proposed repairs were doomed to be inadequate. Fletchers (EQR) also have a lot to answer for here.  As project manager it was its job to make sure that the builders were competent and the remediation was properly undertaken before the job was signed off.  This did not happen.  Respected builder Alistair Miles has said that EQR “opened up the doors to anyone including painters acting like builders” That is not good enough.

Further difficulties arose given the state that the Christchurch City Council consenting department was in in 2013 – so much so that the accreditation to grant consents was removed due to quality concerns and an enormous backlog of consents.  It appears that this problem led to the Council buckling to pressure to grant exemptions from the consenting process. This meant that one of the few independent checks on compliance with the building code was removed.

Now EQC is starting to look like a private insurer and wanting home owners to cash settle their outstanding claims.  Homeowners need to be very cautious if this is the case – and certainly if EQC is seeking to settle on a full and final basis.  Unlike insurers EQC’s obligation comes from statute not from an insurance contract and EQC cannot strike a deal with a homeowner which reduces its liability under the EQC Act.

The fact is that the growing number of defective repairs in Christchurch shows that the EQC/Insurance repair programme in Christchurch suffered from significant problems.  Most fundamentally repair decisions were skewed in favour of cost savings. Because homeowners trusted EQC, insurers and builders to complete competent repairs there was no pressure to ensure that repairs were of a high quality and complied with the Building Code.  Project managers and builders were paid by EQC and the insurers.  Those parties were driven to keep costs down whether to run a Crown surplus or to ensure shareholder profits. These pressures flowed through to a cost saving mentality on the part of the builders and contractors.  Because of the exemption framework the check of Council consent and inspection was circumvented almost all of the time.

The result is that many houses will not be as strong and durable as they should be, they won’t last as long and they will be worth less in the long run.

This problem is not getting smaller. As time passes more defective repairs will come to light.  It is not enough to wait for homeowners to raise problems – many defects will be latent and come to light only after a number of years.  A Royal Commission is needed to give impetus to a proactive approach  which identifies the defective repairs and addresses them, as well as ensuring that when the next disaster strikes it is not followed by a defective remedial response.

 

If you would like the Select Committee to know your story email it to the Committee at finance.expenditure@parliament.govt.nz by 15 November 2016 and put “Petition 2014/58 of Duncan Alexander Webb and 3053 others” in the subject line. 

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You may have a big problem. Read more from EQCfix.


Cam Preston