Earthquake Commission levies are to treble to help rebuild the commission's Natural Disaster Fund which was wiped out by the Canterbury earthquakes, Finance Minister Bill English announced this morning.
The increase was revealed as Crown Financial statements released today showed the Government's finances took a $9.1 billion hit from the quakes in the year to June.
Mr English said the EQC levy, which homeowners pay as part of their home and contents insurance premiums would rise from 5c per $100 of insurance cover to 15c per $100. However the levy is capped and the practical effect will be to lift the annual levy for most homeowners from $69 a year to $207 a year.
Mr English said the levy increase, which takes effect from February 1 next year, was "the fairest way" to ensure EQC could meet its long term costs and most homeowners' insurance bills would rise by about $2.65 a week as a result.
"The levy increase is a responsible step into ensure EQC can meet its long term costs and continue to provide disaster cover around the rest of New Zealand in a sustainable way", Mr English said.
A portion of the EQC's increased levy income, which goes from about $86 million to about $260 million a year will go towards meeting the commission's running costs which have for some time been subsidised by the investment income, but most will go towards rebuilding the Natural Disaster Fund (NDF).
However the road back to financial strength will be a long one for the commission with Mr English estimating that even with the levy increase it will be 30 years before the Natural Disaster Fund will be rebuilt to its pre quake level of $6 billion.
He said the increase would reduce EQC's cash shortfall to meet quake claims which must be funded by the taxpayer from $1.2 billion to $490 million.
Mr English also said he expected to take terms of reference for a review of EQC to Cabinet "in coming months".
The Crown accounts this morning showed gross expenses associated with the quake during the year including the EQC and AMI guarantees and purchases of Red Zone properties were $13.6 billion.
However that was offset by income - mostly insurance proceeds - of $4.5 billion giving a net impact of $9.1 billion.
Treasury said those numbers did not represent the likely final cost to the Crown as a number of decisions regarding the costs - such as the status of properties in the Orange Zone and the Crown's share of repairs to local infrastructure - had yet to be made.
Of the $5.5 billion the Government set aside in the Budget this year for the Canterbury Earthquake Recovery Fund, only $1.6 billion had been spent during the June year against expectations of $2.8 billion.
This was primarily down to delays in assessing and measuring damage and the variance was likely to be reversed in the next financial year as those assessments were made, Treasury said.