E.Q.C. plunder example of New Zealand corruption


When one thinks of the Earthquake Commission (E.Q.C.), s/he might think of a body that has failed Cantabrians and New Zealand at large miserably. New Zealanders might look at the politics of it over the last 8.5 years and wonder why we still have it. But what if I told you at least in the 1990’s institutional ineptness was not the cause of the problems, so much as politicians using it as a lending body for their big projects?

This is a rare moment in time when one might have a shred of sympathy for the E.Q.C., which many New Zealanders viewed, perhaps incorrectly as a rainy day fund for natural disasters. The incorrect perception would stem from the fact that on the day of a major disaster, a substantial chunk of the rebuild fund comes straight from Government coffers, and usually at the expense of other major projects – roading, hospitals, schools, new social welfare initiatives and so forth.

E.Q.C. did not ask to be “plundered” as one commentator put it, but thanks to a decision taken by the fourth Labour Government in 1988 to privatise E.Q.C., it was left to control its own finances, appointments in processes in accordance with the Earthquake Commission Act 1944. In other words it was basically told it could do what it wanted. And during the 1990’s that happened, with the billions of dollars that was meant to be under their control in case of a major earthquake, being used to fund Government budgets for non related stuff.

Perhaps too, the public were a bit lazy in terms of paying attention to E.Q.C.’s problems. Perhaps they did not understand what was going on, or simply adopted that damaging New Zealand attitude “she’ll be right mate”. After all no big earthquakes exceeding magnitude 7.0+ would strike on land at all in the 42 year period between the Inangahua earthquake of 1968 and the Darfield earthquake in 2010. Memories were short, complacency was setting in. Why bother about something that has not happened in my life time, many asked.

On 04 September 2010, the magnitude 7.1 Darfield earthquake and its aftershock sequence put the E.Q.C.’s 22 permanent staff and 2 part time staff to the test. Very quickly – within a couple of days – it was very obvious that the magnitude of the disaster was in excess of anything that they could handle. Over 100,000 individual claims from businesses and private owners alike were in bound. The internal filing system was swamped and staff did not know where to start.

Worse was to follow. E.Q.C. were still struggling with these 100,000 claims and the attendant problems that went with them when Christchurch was slammed by the 22 February 2011 aftershock. Whilst an aftershock technically, it was an event in its own right by virtue of the damage done, lives lost and vastly more complex problems now arising.

Now, having had three major earthquakes costing New Zealand billions of dollars and the very real knowledge that in the future there will be more, one has to wonder whether E.Q.C. can be built back up in time. With faults in north Canterbury having been stretched by the Kaikoura earthquake and the Alpine Fault waiting in the wings with a magnitude 8.0+ earthquake that will cause disruption all over the South Island and much of the lower North Island, the urgency is there.

I am not sure re-nationalizing the E.Q.C. will work, or whether it would have the desired effect in time. A renationalization would require the Government to take back financial and procedural oversight of the organization. In a political sense this carries the obvious risk that a future Government would not then privatize it a second time.

The public might despair of politics, especially when it comes to politicians with their snouts in the public fund trough. However it really would be a good idea given the monsters waiting in the wings to start paying attention to what is happening to E.Q.C. now.

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