Labour's plan for a universal Earthquake Commission levy individually set at a rate proportionate to the value of the home covered would see owners of more expensive homes pay more for the same cover, Earthquake Recovery Minister Gerry Brownlee says.
Labour leader Phil Goff today announced his party would make EQC levies compulsory for all home owners with payments made through local authority rates.
Announcing the policy at quake torn Seabreeze Crescent, in Christhchurch suburb Bexley, Mr Goff said while the EQC's $6 billion Natural Disaster Fund had largely met the challenge of meeting claims from the Christchurch quakes it was depleted, "and it is clear the system needs modernising."
Labour would ensure widespread EQC coverage by collecting levies through the local authority rates system rather than via an additional fee on private home and contents insurance as is currently the case.
Levies, which National has already said it would treble, leaving most home-owners paying $207 a year would be made proportionate based on the rateable value of homes.
"Everyone who owns a home will now be insured - eliminating the ``moral hazard" of covering uninsured homeowners, which penalises people who pay for private insurance cover."
Mr Goff also said a Labour Government would also increase the $100,000 cap on EQC cover after consulting with the commission and the insurance industry.
But Mr Brownlee said Labour's proposal "smacks of policy on the hoof"' and was poorly thought out.
"Why would anyone be comfortable with the idea you would be paying for the same EQC cover based on the value of your home?"
Under Labour's proposal the owner of a $1 million house on a small section in Auckland would pay more for the same amount of cover as the owner of a house on a large section worth far less in another part of the country, he said.
Labour's plan would "erode the structure" of the EQC which Mr Brownlee believed had generally served Christchurch homeowners well.
Meanwhile, Labour's earthquake recovery spokesman Clayton Cosgrove said the $100,000 cap on EQC payments above which private insurers paid out for damage to homes had to be raised to reflect the steep increases in house values and building costs since it was set in 1993.
Mr Cosgrove said raising the cap meant the government would bear more risk, "But right now there's no alternative as the insurance market is not functioning properly and a lot of people cannot get private cover".
Labour has already said that if it won the election it would act as an "insurer of last resort" to ensure Christchurch homeowners could proceed with rebuilding or repairing their homes. It would also acquire 1500 sections and sell them to displaced Red Zone residents at cost to rein in high prices.
Mr Goff will this evening face off against Prime Minister John Key over their parties' respective earthquake policies this in a public debate at Christ College.