Homeowners and landlords could see hundreds of dollars added to their rates bills under Labour proposals for a sweeping overhaul of the disaster insurance regime.
The policy unveiled by Labour's Earthquake Commission (EQC) spokesman Clayton Cosgrove would see EQC levies gathered by taking them off insurance premiums and adding them to rates bills so all residential properties are covered.
The levy is currently $207 a year for most homes but Mr Cosgrove said Labour would also lift the maximum payout by EQC from its current $100,000 cap.
He acknowledged that the resulting increase in EQC's total liability would mean the levy would probably have to rise but that insurance premiums would not necessarily fall to reflect the fact they would not include the EQC levy.
"I've never seen an insurance premium go down."
Local Government NZ president Laurence Yule was unimpressed both with the proposal and the fact Labour hadn't consulted his organisation about it.
"What we're concerned about is we're under a lot of public pressure to justify rates. You add another cost in there and it will actually be brand local government that gets tarnished with it rather than EQC.
"Simply tacking something on to a rate because it's a convenient form of collecting the money is not something we're comfortable with."
But Insurance Council chief Tim Grafton said his organisation supported the idea. "To be consistent we would also expect Labour to also support shifting the Fire Service levy off insurance premiums as well."
He said there was "a high likelihood" that EQC levies would rise if the $100,000 cap on payouts was increased.
Mr Cosgrove said Labour would also establish an independent Insurance Commissioner, whose first job would be to review how EQC and the insurance companies handled the fallout from the Canterbury earthquakes.
Mr Grafton said Mr Cosgrove's comments around that plan contained "the pointed inference that the insurers had failed to live up to reasonable expectations of New Zealanders, which we would reject".
"If there is an independent commissioner reviewing insurers we would welcome the opportunity to shine a light on the challenges insurers have met and the very considerable efforts that go unrecognised in terms of trying to address one of the world's most complicated insurance claims issues."
Earthquake Recovery Minister Gerry Brownlee said Labour's policies were unnecessary as equivalent work was already under way.
"The Government is already well down the path of reviewing the Earthquake Commission Act ... the terms of reference of the review have been publicly available for some time and include the caps, excesses and levy collection mechanism.
"The Government has been quite open about the need to look at increasing the $100,000 EQC cap, as this limit was set in the early 1990s and has not kept up with inflation," Mr Brownlee said.
"A pattern is certainly emerging of Labour being caught napping rather than coming up with new policy. This highlights their lack of understanding of Earthquake Recovery issues and absence of new ideas for Christchurch."
Labour will announce further earthquake recover policy today.
The EQC levy
• $207 a year, collected as part of insurance premiums.
•It covers the first $100,000 of damage to homes caused by earthquakes, landslips, volcanic eruptions and hydrothermal activity or a tsunami.
• Thousands of Christchurch homes did not have EQC cover because they were not insured.
• Labour says shifting EQC levies from insurance premiums to rates bills would ensure universal coverage.