8. Hon CLAYTON COSGROVE (Labour—Waimakariri) Link to this
to the Minister for Canterbury Earthquake Recovery
How many of the 5,100 properties in the red zone have been deemed to be uneconomic to repair by the insurer and how many of those, approximately, had unimproved land valuations of less than $150,000?
Hon MAURICE WILLIAMSON (Associate Minister for Canterbury Earthquake Recovery) Link to this
Those numbers and assessments are still being finalised. The full extent of the damage to houses beyond the Earthquake Commission cap of $100,000 plus GST is confidential to the homeowner and their individual insurer, and is for insurers to assess. For that reason, the Government is offering to purchase properties in the most damaged areas at capital value to enable homeowners to move on quickly, rather than wait years for their claims to be resolved. This offer to purchase properties at their 2007 rating valuation is a fair and balanced one, which the New Zealand Institute of Valuers agrees with. The land rating valuations for all these properties in Christchurch are available on the Christchurch City Council website.
Hon Clayton Cosgrove Link to this
Given that answer, what advice enabled him to claim, in answer to oral question No. 9 last Wednesday regarding preserving the equity of earthquake victims, that the Government believes that “in the vast bulk of cases” the financial offer will achieve that, when he says he does not have those figures?
Hon MAURICE WILLIAMSON Link to this
There is a very big difference between “the vast bulk of” and having the absolute detail. I still believe, and the Government still believes, that the offer we have made is fair and balanced. The vast bulk of properties that we know of at this point show that, in fact, the 2007 rating valuation is a fair and balanced offer.
Hon Clayton Cosgrove Link to this
How is it fair and reasonable to base the land-only offer on a value that has no relationship to market value, given that it is what remains when the improvements are subtracted from the capital value of the property?
Hon MAURICE WILLIAMSON Link to this
I am sorry, but the member does not seem to get the answer every time I reply. The Government has worked its way carefully through this. We think the most open figure that everyone knows about, a figure that everyone has a copy of and knows what it is, is their 2007 rating valuation. There is lots of evidence to show that since that date, property prices were going down in terms of the transactions and sales. One thing I think the member is missing is that the offer the Government has made is voluntary. People do not have to take the offer.
Hon Ruth DysonHow is it fair, balanced, and reasonable that his red zone package will leave many elderly people—not outliers, as he intimated last week—with a significant shortfall between the rateable value of their property and the purchase price of anything comparable, and will leave that couple unable to borrow money?
Hon MAURICE WILLIAMSON Link to this
One of the factors I think members need to take into account is what the interest rates on mortgages would be. If we go back to 2007, I can tell the member that the mortgage interest rate at that time was 10.1 percent. Right now banks are offering a 4-year fixed mortgage at 6.45 percent, but in Canterbury I am told that at least one bank is offering one at about 3.6 percent. If those people take that rate on a $200,000 mortgage, they will be substantially better off than they would have been when holding a mortgage back in 2007.
I raise a point of order, Mr Speaker. My question asked specifically about a couple who were in the situation where they had a significant shortfall between their red zone rateable value and a comparable purchase price, and who were unable to borrow money. For the Minister to then recall what the 2007 interest rates were and what this year’s interest rates are is irrelevant. The question was not addressed.
Mr SPEAKERWell, I listened very carefully, and for a start I was somewhat of the member’s view. But it seemed to me that the Minister was pointing out that he cannot assess whether a person can or cannot borrow money. He was pointing out that today, compared with 2007 when the valuations were based, it is cheaper for people to borrow money, and therefore people on limited incomes may be able to borrow money. Certainly, I accept that that was not the answer the member would have expected, but I have to be careful not to prevent Ministers from answering a question in the way that they see fit. The member has a further supplementary question in which to dig into that issue. I am reluctant, sometimes, to ask a Minister to give a particular answer on a member’s first attempt to get an answer out of that Minister. I accept, though, that the member has some grounds for being aggrieved, but there is a further supplementary question there, obviously.
I just reiterate the point that my question was specifically about people who were unable to borrow money, but I will take your advice and go on to my second supplementary question if you did not hear that part of my question.
I did actually hear that part of the question, but when it is alleged in a question that people are unable to borrow money, who says so? The Minister was interpreting it, I think, in that way—who says a person cannot borrow money? Banks may determine that someone who could not borrow money at 10 percent can borrow it at 6 percent. I cannot insist that a Minister answer in a particular way on that kind of assertion in a question.
How is it fair, balanced, and reasonable for many people in a brand new home with minor earthquake damage who live in the red zone—and so are required to move, not repair it—and who are not outliers, as he said in answers to questions last week, to be told by their insurance companies that they will be paid only the price of repairing their homes, not of replacing them? How is that fair, balanced, and reasonable?
Hon MAURICE WILLIAMSON Link to this
There are two answers to that. The first is that that is why the Government has put on the table the offer it has, and the second part of the answer is that that member herself said in the Christchurch Press the day after the Government offered the package that this offer was fair.
Amy AdamsWhat reports has he seen on the public reaction to the Government’s package for affected residents in the greater Christchurch residential red zone?
Hon MAURICE WILLIAMSON Link to this
In addition to the large volume of positive letters and emails received by the Minister for Canterbury Earthquake Recovery and the Canterbury Earthquake Recovery Authority, and by other Government MPs, on 3 News on Monday night the results of a Reid Research Services poll were reported. This poll found that 72 percent of New Zealanders nationally, and 76 percent of people in Christchurch, agreed with the Government’s earthquake package.
Brendon BurnsGiven that the average new section price around Christchurch usually starts at about $150,000, how would having to pay that price preserve equity for constituents of mine whose red zone land is valued below—well below—$150,000?
Hon MAURICE WILLIAMSON Link to this
I repeat again: the key words in the member’s question were “average” and “usually”. Therefore, some land will be more than the average price; some will be less. The compensation package that we are offering to people in the red zone is to pay them what their capital or rateable valuations were at the time of the 2007 rating valuation. I think that everybody believes that is a fair and balanced package.
What does the Minister say to my elderly constituent living on River Road in Richmond, whose large section, as measured by the 2007 rating valuation, is worth half, per square metre, the value of the land of her neighbour; and how would that preserve her equity, as repeatedly pledged?
Hon MAURICE WILLIAMSON Link to this
I would say to that person the same thing that I would say to every one of the other 5,100 property owners: that they should sit down, get some advice, look at the Government’s package in great detail, and, if they think it is a fair and balanced package—which we do—they should accept it and get out of there as quickly as they can.