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Government announces $1b buyout scheme for those affected by cyclones and floods

In brief
  • The Government announces $1b voluntary buyout scheme for uninhabitable homes alongside investment in flood mitigation for thousands of others.
  • The scheme has residential focus, with commercial support pending.
  • Some are criticising the scheme’s lack of detail, but are optimistic. 
  • The Government continues with ethnic-based distinctions; using a separate Māori landowners’ process. 

Uninhabitable homes

The Government has announced a voluntary buyout scheme for around 700 properties across the country that are considered unlivable due to cyclone damage. More than half of these (around 400) are located in Auckland. 

This buyout will be funded by a partnership between the central government and local councils, with an estimated cost of $1b for Category 3 properties (where future risk cannot be easily mitigated). The split has yet to be confirmed.

An additional 10,000 homes will receive investments in flood-mitigation measures to protect against future bad weather events.

This announcement follows months of analysis and consultation with affected property owners by the cyclone task force led by MPs Grant Robertson and Michael Wood.

Government announces $1b buyout scheme for those affected by cyclones and floods - Centrist
Robertson’s announcement has been well received, but people need details to feel certain the Government is going to get it right.

Risk assessment

Local risk assessments in affected regions shaped how these properties were characterised. Local voices were part of this process. The Government acknowledges the complexities involved, particularly in areas with multiple-title ownership.

There are 3 categories for affected areas:

  • Category 1 is properties safe for rebuilding.
  • Category 2 includes areas where community-level interventions, such as raising stopbanks, can mitigate future weather risks.
  • Category 3 denotes properties with an unacceptable risk that cannot be adequately mitigated. 

For category 3 properties, the Government will engage in a funding agreement with local councils to offer the buyouts. A portion of the initial $100 million allocated in the 2023 Budget will be used for flood-protection work in category 2 areas. 

The Government aims to provide certainty for homeowners, while striking a balance between supporting affected communities and passing costs to taxpayers. 

The announcement has been welcomed by homeowners, who have experienced flooding and have been advocating for a bailout scheme, but many are still anxious about the government getting it right. Exact settlement sums are currently unknown. 

Challenges abound

The details of the process, including property valuation criteria and cost-sharing arrangements between government and councils, will be decided in the next few months. The government also plans to address the situation for uninsured properties, and explore the role of drawing on insurance in the buyout process.

Moral hazard is also a consideration. Striking a balance when it comes to compensating for losses without inadvertently signalling the government will backstop future development.

Despite the government’s scheme, the challenges communities face, including the inability to obtain insurance and limited access to other financial assistance are significant. Families across the affected areas still face the dilemma of where to go if they sell their land. 

The focus of the announcement has been on residential properties, but information regarding support for commercial properties is expected to follow.

Ethnic distinctions made

The government has again made distinctions based on ethnicity, offering support and engagement with Māori landowners through a separate process.

MP Kiritapu Allan said that this year’s budget includes $30 million allocated to rebuild homes on Māori land. Some families continue to reside in makeshift and overcrowded accommodations, struggling to find secure and suitable housing options.

The lack of available funds for repairing their homes raises concerns that some may be forced to leave the area, disconnecting them further from their communities. 

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