Changes to the earthquake-prone buildings policy announced today do not adequately address the concerns of business and local communities, says BusinessNZ.

Chief Executive Phil O’Reilly says an extension of time in which building owners must upgrade or demolish their buildings from 15 to 20 years does not significantly improve the policy.

“The problem lies with central government imposing a regulatory requirement when market-based solutions are a more reasonable approach.

“Insurance companies are already re-pricing risk. Riskier, more earthquake-prone buildings are attracting higher premiums and this will automatically lead to building owners strengthening their buildings accordingly, or demolishing them. Putting a regulatory requirement on top of this situation – where building owners have 20 years to upgrade or demolish – will be difficult for some local councils and smaller communities with older, heritage or low-yield buildings. A number of buildings could effectively become worthless unless they can be upgraded within the 20-year timeframe.

“The policy is a form of ‘regulatory taking’ but contains no provision for compensation for affected building owners.

“This one-size-fits-all requirement doesn’t take account of local conditions. Local authorities should be able to deal with earthquake risk according to their local risk profile so that rational trade-offs can be made by communities most likely to be affected by earthquake-prone buildings.”