Feb 2012- New Zealand at Risk of Becoming a Banana Republic

Christchurch, New Zealand- On the eve of the New Zealand national day, Waitangi Day, dark clouds are gathering in the quaint and peaceful country. Since the February 22, 2011 earthquake a flurry of unusual policies are pushing New Zealand in the direction of Zimbabwe under strongman Mugabe.

Hastily drafted legislation called Canterbury Earthquake Recovery Act 2011 (CerAct) gave sweeping powers to central government, made public servants immune from prosecution, infringed on property rights and interfered in commercial contracts.

While there are legitimate needs for special laws such as expediency, unnecessary provisions are wreaking havoc on people’s lives and are threatening to undo democracy and economic freedom long cherished in New Zealand.

An agency- Canterbury Earthquake Recovery Authority (Cera) was created and discretionary power on all matters quake-related was vested in the government-appointed CEO of this authority along side the appointed Minister of Canterbury Earthquake Recovery.

One of the biggest problems thousands of Canterbury residents are facing is the taking of their freedom to decide what to do with their homes.

In a well-functioning democracy residents are free to repair their homes using their own money or their insurer’s money and get on with their lives. Instead Cera unilaterally dictates the recovery process by introducing a land colour-zoning scheme without consulting affected residents.

Effectively residents are held in limbo and cannot proceed with repairs if Cera did not zone their land “green”.

The reasons for having the need to colour-zone and the criteria for different colours are convoluted and smack full of conflicts.

For example, “white zone” residents are not able to repair pending government decision on their land. There are still many white zoned homes almost a year after the quake. “Red zone” residents got short end of the straw by having their homes condemned, regardless if there was any quake damage and are forced to relocate.

Compensation for these condemned “red zone” homes came in the guise of “voluntary buy out offers” with thinly-veiled threats.

A transaction cannot be voluntary if the buyer has already condemned your home and offered you no feasible alternative.

The buy-out price was a take-it-or-leave-it government valuation which in majority of cases does not represent the fair market value of these homes. Worse yet, the voluntary buy out document itself iterated a lower, compulsory buy-out price should a homeowner refuse the voluntary deal.

To add insult to injury, government officials, including Gerry Brownlee, the Minister of Canterbury Earthquake Recovery threatened to cut off essential services to these homes. It should be noted that essential municipal services (power, water, sewer) are restored and functioning.

The buy-out offer conveniently absolves insurers (including the state-owned EQC) from the contractual obligation of reinstating damaged homes and the difficult task of providing renewal to homeowners’ insurance policies.

The worst part was the tying of home insurance to the “voluntary” buy-out offer. Under-insured homeowners receive partial government valuation, and un-insured homeowners receive nothing.

A prudent policymaker would make a compulsory buy-out of all condemned homes at pre-quake fair market value, since it is the government’s decision to decommission certain suburbs from residential use.

These transpired policies and actions seen thus far are cold, slick, business-like, and are devoid of reason and compassion. This worrying slide down the slippery slope should alarm all who value democracy and economic freedom.