Smith StuartSTUART SMITH (National—Kaikōura): Thank you Mr Speaker. It is a pleasure to speak on this Natural Hazards Insurance Bill. As my colleague Gerry Brownlee said yesterday the National Party actually welcomes this bill. I too have had quite a bit to do with the earthquakes and the Earthquake Commission (EQC) over the years and I think the one thing that we can all agree on is that EQC didn't do a stellar job. There were a whole lot of issues that occurred during certainly after the Christchurch earthquake series. There was a lot of change that occurred between then and the Kaikōura earthquake and it worked very well but it was a much smaller event. I'll put it to the House that actually the next time there's a really large one we will end up with similar issues because there will be gaps and these things don't get tested until there is a really big event. Each event has its own characteristics and it causes damage to a community in different ways. This bill is going to go a long way to fix all the gaps that we're aware of but I'm certain that we will be back or the House will be—it might not happen for 50 years or longer who knows but it could happen tomorrow. So getting this done is a really good step forward. We support that.My colleague Gerry Brownlee said there were over 700000 claims from the Christchurch series of earthquakes. It's a massive undertaking. There were certainly some big issues because of the managed rebuild and the way that was managed and there was some bad behaviour by contractors which has come back to bite a lot of homeowners and that's certainly a very serious issue. In fact I'm working on a member's bill that might actually avert some of those issues in the future. But that's another story.This bill goes to set up new definitions around land damage—where the barriers lie. I think that's a really important thing to do. That caused a lot of issues in the Christchurch one and indeed in the Kaikōura earthquake. I do note in clause 42 that the maximum land cover amount for residential land—and it goes down into (1)(b)(ii) the number of dwellings in the residential building multiplied by $50000 plus GST;" and then damage to bridges and culverts in residential buildings the lesser of "(1)(c)(ii) the number of dwellings in the residential building multiplied by $25000 plus GST." I look forward to understanding through the select committee process where these numbers came from how they were calculated and if they are adequate. What really worries me about this and the cap that's gone from $150000 to $300000 under this bill is we're in a cost of living crisis in New Zealand at the moment with rampant inflation. It's only going to get worse. How long are these numbers going to remain valid? Should they be linked to the Consumers Price Index or the building cost inflation at least? I don't know the answers to those but I'm sure that we will hear quite a bit about that during the select committee process. These things all need to be teased out.The bill allows the new Natural Hazards Commission to raise reinsurance against different hazards other than earthquakes and I think that's a really interesting proposition for several reasons. One if we can just—the $300000 rise in the cap is significant. The Christchurch earthquake sequence was—private insurers paid out $21 billion EQC paid out $10 billion. EQC were already the largest single reinsurance buyer in the world for these types of events and now they are going to go up by three times effectively. So that is a massive amount of reinsurance. How will the reinsurance market react to that? I don't know. I suspect it's a big buy. They're going to have to look for a much wider spread of reinsurance than they perhaps have at this stage but most of the reinsurance goes through one centre. So I mean I really look forward to learning more about that during the committee stage because it's a really important issue. And it has been raised when we did these other series of legislation in the last term. That was an issue. And so there must be quite a bit of information about that and I certainly want to hear about that. That is a really important area.Expanding EQC to other natural hazards does raise some questions with me. There is a scheme in the UK called Flood Re which is to deal with flood-prone housing in particular. It's effectively what EQC is doing: socialises the cost of insurance across the whole market. The problem that they have with is that is that it effectively locks people in to areas which are flood-prone when actually the better long-term solution would be in the really worst places to have a managed retreat from those areas. I mean we can think of Westport where we've had several floods there recently. That's a very serious issue and maybe we should be looking at that. I don't want to see EQC expanding their mandate to cause people to be locked into those homes—Dr Duncan Webb: We already cover floods. It hasn't changed.STUART SMITH: —that have already dealt with several floods and will have to deal with that again. I think that's a real issue and I'm surprised it hasn't been raised by the member on the other side because he certainly had a bit to do with it. I thought he'd be all over that. But it is a serious issue and I think that's something we have to consider.There's quite a lot of information-gathering powers here and we just really have to know and understand whether the unfettered access to information that the commission will have—is that really necessary? I don't know. I don't see any justification in the information provided for that amount of information being gathered. And where is it going to be spread out to? I don't know. And who's going to get it? It is as I said unfettered in the bill as it stands. I look forward to debating that. So that's an important one. This is a minor one although it could be quite important. I think it's clause 23 where it defines the events that would be covered by the commission. It doesn't include meteor strikes—a very unlikely event but it is something that can and does happen. Meteor strikes actually are covered by reinsurance and most—not all but some—existing insurance policies do cover meteor strikes. If we are going to have a sort of socialised insurance cost surely that would be one of the things that should be covered.The other important issue about the increase of the cap from $150000 to $300000 is the impact it's going to have on people's insurance bills. Particularly in this place here where we are in Wellington there is going to be a significantly lower cost for people living in high-risk areas. However far more people are going to be affected by having higher insurance costs because they live in lower-risk areas. The reason for this is because the private insurance area which is covering the cost currently from $150000 upward is based on a risk-based pricing model. Therefore the risk is assessed in the premium and from my information those people living in a low-risk area—say in Northland—could be saddled with up to a $200 increase in their premium. So we're socialising that cost across New Zealand. Yes the people in Wellington Central will benefit from that but I would put it to the House that the people in Northland will be disadvantaged. So I'm looking forward to teasing that out in the select committee because—I'm sure the people of Northland won't feel too bad about me saying this but actually they have much lower incomes than people in this part of the world and there are already social difficulties in that part of the world. I have great concern for that being in the National Party. We do care about these matters.It's with that that I do commend the bill to the House with the caveats that I have just laid out before you. Thank you."