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Thursday
Nov032011

Labours EQC Proposal

I said that I would not get involved in the election, but Labour's 'out of left field' EQC proposal announced yesterday that future levies be met through rates, gives rise to an interesting cross-subsidisation scenario. This should concern councils, particularly the minority like ours  that persist with land value based rates.

If the EQC levy is to be paid from land based rates, what is the relationship to the value of the house that may be damaged or destroyed by any quake. Phil Goff stated that the current $100,000 EQC limit will be reviewed upwards, presumably by a substantial amount. Will this apply to non-residential rate-payers who currently do not pay the levy? This could have far-reaching ramifications. 

The proposal as it stands sounds a logical way to deal with the problem of peole who choose not insure, and therefore avoid the levy, but it does not appear to have been thought through. It could provide an ideal excuse for quake-shocked insurers to exit the residential market, and leave the EQC to become the insurer of first and last resort, with councils acting as its reluctant collection agents. 

Sometimes you wonder if pollies dream up these ideas on the drive to the airport.

 

 

 

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