Brownlee GerryHon GERRY BROWNLEE (National—Ilam): I want to begin by completely rejecting the comment from the previous speaker Duncan Webb that the Earthquake Commission (EQC) dramatically let Christchurch down. The reality is that they were confronted with over 470000 individual claims. Many of those were contents and I think it's a good move that the private insurers will now pick up that particular task. But alongside the many remaining claims that were land claims there were also 167000 building claims as well. Now 167000 buildings—houses—is a huge amount.While I reject what he said about that I was pleased that he mentioned in a positive fashion the EQC claims managers many of whom had their own homes damaged their own families' homes damaged and were themselves dealing with the ongoing trauma of over 13000 earthquakes over that four-year period. They did a great job in my opinion. And yes you will get people who are unhappy and of that large number 2600 I think is the number now who are still unresolved. The reality is that a large number of that 2600 are second- and third-time claims and often the property has changed hands. I'd invite the Finance and Expenditure Committee to get a full breakdown on exactly where that stands from EQC.Christchurch was an event that I hope is never repeated anywhere in New Zealand. One of the reasons that EQC decided not to just go out writing cheques for people based on the claims information provided to them but rather to engage in the actual physical repair of properties under $100000 damage was to ensure that the overall house stock of Christchurch was not left unattended for decades to come but rather was repaired to as high a possible a standard. The mere fact that people are able to come back to EQC and say I'm not happy with the work that was done on my house." and that they are still able to do that is I think testament to that being the right decision that was made.With regard to the time that it's taken to get to this point in the legislation it's sort of a little bit worrying that after four years of what has been quite a torturous consideration as various aspects of the response in Christchurch and then Kaikōura came to light we still seem to need to have some inquiry into what's happened. It's almost like the Government has a default position that is "inquire into everything."I think the select committee are going to enjoy their work on this.Hon Ruth Dyson: Better than shutting your eyes and saying it's all fine.Hon GERRY BROWNLEE: Well the member over there says I'm shutting my eyes to some people's suffering. That is absolutely not the case. I've just said before that EQC remains there for people to place claims in front of whether it's the first time the second time or the third time. I don't think that had EQC simply written the cheque and closed the claims—as they could have done under legislation—we would have had the results we've got now. There would have been other problems—huge problems—particularly where you had all the cowboy builders come to town with huge rates charged against people who were trying to get their houses fixed and then under-quality jobs done in many cases. As it stands I think we've done extremely well and EQC have done extremely well.The previous speaker raised the issue of not wanting to see the cost of EQC cause people to under-insure. This is one of the areas that I personally lose a little bit of sleep over because I think as we've gone through this exercise and the private insurers have said that they now want to only cover specified amounts the temptation is there right now for people to under-insure and at some point in a disaster that could become quite a problem for the Government. So it's something that we do need to keep our eyes open for. In Christchurch we discovered that over 99 percent of people had insured—a quite extraordinarily high number; an extraordinarily high number in an international sense; and particularly a high number in a country that is known to have earthquakes as a particular risk.While the Minister gave a very interesting rundown—a correct rundown on the history of EQC—it's true to say that the changes in 1994 came about because the private insurers said "We're not keen on covering earthquake damage any longer." So the structure was put in place with EQC taking the first $100000. It effectively meant that every household in New Zealand could pay a premium to EQC and EQC could buy reinsurance on the international market at a much more efficient rate than any of the individual insurers might have been able to do. It did though mean that the Government from that day carried quite a high liability as over those 20-odd years—just under that actually; 17 years—before the earthquakes in Christchurch there was a national disaster fund built up which is known as the retention that EQC is liable for in each time.That raises the question about the two-year period and I was pleased to see Dr Webb mention that as being something that might need to have a little bit of a look at. EQC goes into the market annually to buy what is known as "reinsurance". It effectively means that they pay some of the levy they collect to higher-level insurers who at various trigger points up the cost-scale on any disaster will cover the balance. That keeps premiums low. What we would not want to see though is the long period before a line could be ruled under the cost of any event meaning that they were no longer interested or could not meet the requirements of their investors when it comes to that.In the end how insurance works is that private individuals put up private capital which is at risk in any given period of a contract. If there's no disaster they do well; if there's a disaster they don't do well. It's to the betterment and you would say surety of all New Zealand homeowners that we don't set a claim period for some who might not see damage during a period of time at the cost of everybody else who pays insurance. It's a very fine balance but I think one that would be well worth putting a little bit of extra time into. The other issue that's interesting in here is that this interim measure does continue the land cover on the same basis as has always been there. Treasury were at one point advising that we should only look at the building platform. The problem with that is that the Act covers other natural disasters and you could have circumstances where people lose land and not their building platform and therefore would have absolutely no cover. So I think the decision to stick with that is the right one. There will be many other things that the select committee will—I think I don't want to use the word "learn" because that sounds too patronising and I don't mean it that way at all but they will learn about the operation of the bill and about the operation of the EQC commercial side. I think it would be useful if the select committee were to ask for perhaps some outside independent body to give them advice on how that reinsurance market works because there's no doubt about it that when you have a disaster cash is king. People can be in dreadful circumstances but if there isn't the funding available to help them out of those circumstances then the misery just is prolonged. It's not easy to talk about this because you know I'm critically aware of some of the difficulties that people faced. I would not like to see us though in response to what have been seen as some small failings make some changes to the Act that might make some people happier but create a potential degree of cost and potential misery for many others.We are happy to support this bill. We look forward to the select committee process and indeed we look forward to any improvements that might be made to the scheme but we will not want to support measures that are claimed as improvements that will actually reduce the effectiveness of the scheme."