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Monday, December 6, 2010

Earthquake Rates Relief - CCC double dipping? Part 4

Earlier I mentioned that the Council had stated the end result of the rates relief policy was that residents who had to leave their houses would have the additional rating costs included in the emergency accommodation provided by insurance companies. As there were no specifics about this, and our insurance policy seemed to exclude ordinary expenses, I asked the council about the basis for the statement.

A few days ago an e-mail arrived from the CCC explaining the basis of the statement that residents would not pay twice for rates:
" ...has passed your request for further information on to me for response.  The information that you refer to, in paragraph 32 of the report to Council on earthquake related rates relief dated 17 November, was based on discussions between Council staff and claims managers for three of the largest insurers in the Christchurch market - IAG (owner of State and NZI), Vero and Lumley.  The information provided by insurance company representatives was verified with the Chief Executive of the Insurance Council."
In essence this means that emergency accommodation provided by those insurers will include a component for rates, which will not be deducted as an ordinary expense along with electricity, phone etc. If you are with Lumley, NZI, State or Vero it looks like you can have an expectation that you won't pay your rates twice. The rest of us will need to look at this with our insurance companies.

Again, this is fine on the surface but there are significant underlying problems.
  • Where an insurance company pays the rates then the double dipping is shared across two parties. This reduces the burden on homeowners but the issue remains.
  • Once a policy holder is no longer eligible for emergency assistance from their insurance company they pick up the cost again. For some, especially many of those in Zone C areas, this may continue for two or more years.
Ultimately the Council is still double dipping no matter who pays the additional rates. Hopefully a joint approach by local MPs can influence the government to underwrite the relatively small amount the council would lose (c. $6m over three years) and relieve the pressure on all concerned.


NOTE:

The power to levy rates is granted to councils via the Local Government (Rating) Act 2002. This power allows council's to be flexible in how rates are set (section 3 (a)), and gives them power to remit some or all of the rates payable if considered appropriate (section 85). The discretion is wide and the choice of the amount remitted lies with the council. The bottom line is there appears to be no legal requirement for the Council to levy rates on earthquake affected properties.

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