Auditor gives mixed report on EQC for Christchurch rebuild

Tuesday 5th November 2013

The Earthquake Commission gets a mixed report from Auditor General for managing home repairs after the Canterbury quakes, with a pass mark for managing the programme and controlling costs, and a fail for how it has dealt with homeowners.

By June this year, the state-owned disaster insurance provider had repaired more than 40,000 homes, or just over half of those it is responsible for, at a cost of about $1.5 billion. The cost includes $154 million for home-heating and emergency repairs and $180 million on project management.

The 2010 and 2011 earthquakes damaged about 180,000 homes in Canterbury. EQC is required to pay the first $100,000 and has responsibility for about 160,000 damaged homes all up. It expects to make cash settlements on about half of the claims and manage repairs for the rest.

"EQC's performance to date has been mixed," Controller and Auditor-General Lyn Provost says in her overview of the audit. "It has performed well in managing repair costs and setting the home-repair programme up quickly, but has not performed as well in dealing with homeowners."

"Although efficiency is clearly important, this report is a timely reminder for EQC and others that being in the public service means serving the needs of people," she said.

The report finds fault with some aspects of the EQC's work.

It was late in ensuring timely repairs for the homes of vulnerable people. Homeowners "experienced inconsistency in information and processes, and long periods without specific information from EQC about their claim, leading to a lack of certainty while waiting for repairs," Provost says.

The EQC could also have been quicker putting systems in place to control quality of repairs. About 20 percent of homeowners with repairs just completed in 2013, were dissatisfied either with the quality of repairs or the time taken.

"For homeowners, waiting to have a home repaired is trying and stressful," Provost said. "If the surveyed level of dissatisfaction with repairs in the programme in 2013 applied to the whole programme, then the owners of more than 14,000 repaired houses would be dissatisfied or very dissatisfied with the repairs."

The EQC got better marks for ensuring homeowners didn't have to compete directly with each other for materials or tradespeople, ensuring safe work practices and for the 80 percent of home owners (with repairs completed in 2013) that were very satisfied with the outcome.

Provost said repair costs to date had been "reasonable" but the EQC would have to work hard to ensure that continued, such as "managing essential controls and systems, staying ahead of the private insurance and central city repair and rebuild work, and completing the home-repair programme by the December 2014 deadline."

She said project management costs, amounting to about 12 percent of the cost of repairs to date, were "at the higher end of what we consider to be reasonable in the circumstances."

Provost recommends the EQC prioritise actions that will give homeowners more certainty and improve the consistency of its practices," while continuing to monitor project management costs and the quality of repairs.

The EQC's task had been complicated by continued earthquakes and the need to apportion damage correctly, and the effects of land rezoning in Christchurch.

BusinessDesk.co.nz

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