Webb Duncan; Williams PotoDr DUNCAN WEBB (Labour—Christchurch Central): Thank you Madam Assistant Speaker. I look forward to working on the Finance and Expenditure Committee with Mr Smith on this bill which is a very good piece of legislation. It has come to this House only now and I must say that is disappointing seeing that the document that initiated the review was the terms of reference of September 2012. In fact when those terms of reference came out legislation was scheduled for 2013. So it's good to see that now we have a Minister Responsible for the Earthquake Commission who is taking some immediate action whilst we can and getting this low-hanging fruit.I don't agree with the former speaker Stuart Smith that we should have an entire review right away—a further inquiry looking into reinsurance issues. We've got to get those wider structural issues absolutely right. There is going to be a review and an inquiry into the Earthquake Commission (EQC). The former speaker asked why that was the case. I will tell you why it's the case. It's the case because EQC let Christchurch down and for six long years claims were not handled well. One of those reasons was that the rules weren't there for the hard-working claims managers to do that and that's what we're going to get right. We should have got it right a lot earlier so we could get on with it. But the last Government didn't get around to it. It had other things on its plate and Christchurch clearly wasn't one of them.I was very proud I must say to have petitioned the former Government to commission an inquiry. They didn't do it but I'm very proud to be part of this Government that is now doing exactly that.We know that EQC is a critical part of our social infrastructure and it's fantastic that we've got an agency which guarantees insurance for homes. It is important and both sides of the House agree on this I think that we want to make sure that continues and that we have rules around EQC which encourage both good Government-guaranteed home cover but also widespread insurance cover across the board. I think that this bill will be a further step in achieving that because we certainly don't want to see any great flight from the homeowner insurance market generally. One of the issues that's occurring is increases in insurance premiums and we know that there is a section of the community—a concerning section—that when insurance premiums go up don't insure. We certainly want to avoid that. We know from the Quake Outcasts case that the Government in fact did step in—as it probably should have; as it appropriately did—and dealt with uninsured properties. We've really got to be cautious that we don't have in a sense this implicit expectation that the Government will assume that risk. It's much better to have a universal cover where the risks are explicit and they can be much more accurately priced. So really we absolutely do need the inquiry that's going to happen.One of the real disappointments for me in the regulatory impact statement was the fact that the Treasury paper looked to avoiding social distress and not just economic loss. One of the things that clearly has happened in Christchurch is not only ongoing financial distress but social distress as well and that was never really addressed in the Treasury paper. But what this does is go some way to saying let's get an organisation which can address these things. One of course is the extension of the cap to $150000. That may indeed go up further and there's certainly an argument—at its inception the idea was that the EQC cover would be sufficient to rebuild a modest home. We've departed miles away from that now and one of the problems we have is essentially a two-layered insurance system. It's cumbersome and as the member for Kaikōura would know there have been some changes there to address that and indeed in this bill we go some distance further. But by increasing that cap it's much more likely that EQC will be the sole manager of insurance claims and that's a good thing.Of course it does increase the exposure of EQC and that means that the costs the EQC levies attributable to that will go up. But as the Minister pointed out in her opening speech that will be offset in some way by the contents claims disappearing. It may well be that in fact those two things will offset each other.In terms of contents cover it's true that the loss of contents is distressing but I think it's fair to say that it's not catastrophic. The damage to your homes is a qualitatively different thing from a loss of contents. Loss of contents was only ever $20000 so we can see that even in terms of that the cover was not as great. I think it's quite appropriate to move away from contents cover to say that if anyone wants contents cover they can go to their private insurer because it's not catastrophic. The other important point is the administrative burden: that the administration of contents claims—and there were many tens of thousands of them—did not give the dividend it ought to have for EQC. So we don't want EQC's time to be taken up administering claims for vases when it should be administering claims for houses. So it is in fact largely insured in any event. Insurers have been consulted. They're not going to abandon the home contents' market. People can still get effective cover for their contents and it's really appropriate that EQC move out of that.Mr Smith in his speech did touch on what I think's probably the knottiest question here and that is the extension of the time limit. It's entirely correct that the time limit the three-month hard time limit is far too short. It's entirely unreasonable to expect all homeowners to make that claim within time. I look forward to working with members from all sides of the House in select committee on examining this because I'm not sure the Minister has got it quite right by simply extending it to two years and leaving it at the discretion of EQC as to whether that is extended to two years or not. There's reference to the Insurance Law Reform Act and the fact there's a similar provision but they're certainly not parallel. So I think this is one area where some tweaking of that reform an entirely appropriate reform will pay dividends both for EQC in terms of administration—because what we've found is that leaving discretion in the hands of claims managers can be difficult. I think a much better idea would be a brightline rule there.The other thing is there that EQC has the discretion to decline a claim for delay where they're seriously prejudiced in the view of EQC. Serious prejudice is of course another judgment call. So I think in this instance that will come under some scrutiny and I'm sure that we'll improve that and the department will cooperate and the Minister will be overjoyed at seeing her excellent bill even better.The fourth area of reform here is in respect of information and it's really important to note this. The royal commission of inquiry into the CTV collapse pointed out that EQC was the recipient of considerable information which affected public safety and that what we really needed was an ability—an explicit ability—for EQC who held considerable information of this nature to disclose it immediately. The Privacy Commissioner has looked at this and is of course quite happy for that information to be disclosed. The Privacy Act has an exception in cases of public safety so EQC now has an explicit ability—or will have an explicit ability—to do that. So it's good to see that as well. It's probably a slightly more complex provision.And of course the other thing is sharing information with insurers. There are some concerns in there that I think again need to be looked at. We don't want information to be shared willy-nilly so to speak—questions for example as to whether potentially fraudulent claims information will be shared. There are good reasons why insurers want to share that information and why they want to know that but at the moment there's no particular entitlement of EQC to share that kind of information. So we need to inquire into that and ask some tough questions around that.Overall this is an absolutely great piece of legislation. Can I just say though that it's the beginning. Once the EQC—ASSISTANT SPEAKER (Poto Williams): I apologise to the member—your time has expired.