David Farrar: Is it third time unlucky?

Dust from silt on Gloucester Street in Christchurch. Photo / Geoff Sloan

The two large after-shocks on Monday 13 June 2011 may have done less structural damage than their two larger predecessors, but could end up being the catalyst for political damage.

The primary (but not most damaging) quake hit on Saturday 4 September 2010. The killer after-shock on 22 February 2011 became known as the second Canterbury earthquake, and Monday's after-shocks were strong enough to be referred to as the third earthquake. Indeed EQC is treating them as a separate event for insurance purposes.

This third quake poses a number of problems for the Government. The first is fiscal - one estimate had the additional damage in the realm of $5b. The Government has rejected that figure as way too high. We should hope so, because there is a limit to how many disasters the country can pay for. In a small country of four million people, the existing bill of $15b+ is punishing enough, without billions more being added to it.

A further major risk is insurance, or lack of it. Jarrod Booker reported yesterday "Insurers are warning that big overseas backers will reconsider covering events such as earthquakes in New Zealand after the devastation in Christchurch".

If the global insurance market walks away from New Zealand, then the Government will be forced to step in as our national insurer - well beyond what EQC currently does. At this stage the Government's long feared credit rating downgrade turns from a case of will it happen to how bad will it be.

But the fiscal and insurance risks are not the greatest danger to the Government. This third earthquake has acted as a catalyst for residents to demand certainty over their future, and the feeling is that the Government has days, not weeks or months, to announce its plans - otherwise they face angry and despairing protests dominating the TV news bulletins.

Nature abhors a vacuum, and in the absence of official information on what areas are to be abandoned, rumours and speculation are everywhere.

To some degree it is quite obvious which suburbs will be deemed unbuildable. Residents won't need a degree in engineering to look at the liquefaction and come to conclusions. That is partly why they are so frustrated at the lack of a decision by the Government - because to them the decisions are obvious.

So why is the Government taking so long to announce what some people might call the obvious? I think there are four things they want to be able to do before they make any announcements. They are:

1 - Have specific information down to the individual house level on whether their house must be demolished, may be demolished or is not affected. One can't just refer generally to suburbs - you need to be able to give certainity about individual houses.

2 - Be able to communicate the decision directly to affected residents. A resident should not find out by watching the 6 pm news, what is happening to their house.

3 - Arguably most importantly, the Government I presume wants to be able to say what "the solution" is - where new suburbs will be built, whether houses will be moved or demolished etc. Just telling home owners their suburb is condemned without being able to tell them what will happen next would be somewhat cruel.

4 - Ensure that everyone agrees on the above. The Government can not decide this unilaterally. The insurance companies and their reinsurers all have to be convinced that a particular suburb or area is unsafe to rebuild, before they will pay out for a brand new house, rather than fixing the current home.

So it is no surprise that the Government is wanting to take the time to get it right, and be able to do the above. But there is a wonderful quote by François-Marie Arouet, better known as Voltaire. He is credited as saying in 1772 "The perfect is the enemy of the good".

Voltaire was warning that if you keep delaying to get a perfect solution, you may end up not achieving anything at all. That sometimes it is better to go forward with what you have, rather than "improving" it further.

The Government no doubt has a checklist of things it wants to have settled, before it makes an announcement. I think they need to add an additional item to their checklist, and stick it up the top. The extra item should be "Can make an announcement by the end of next week".

* A disclosure statement on David Farrar's political views.