Knight falls on sword – what now for EQC?

Megan Woods’ pursuit of progress on outstanding Earthquake Commission claims related to the Canterbury quakes now has a high-profile casualty. But was it necessary? David Williams reports.

Just over a year ago, Sir Maarten Wevers and Megan Woods clashed at Parliament.

Woods, then an opposition Labour MP, was part of the Parliament’s Finance and Expenditure Committee reviewing the Earthquake Commission’s (EQC) performance.

Following the 2016 Kaikoura earthquakes, EQC’s coffers were bare and its claims liabilities were put at $2.3 billion. A new arrangement meant private insurers would handle claims on behalf of EQC. A restructure meant 380 staff had left two months earlier. A day before the parliamentary hearing, the board announced Sid Miller, from ACC, would take over as chief executive after the departure of long-time boss Ian Simpson.

In short, there were big, meaty issues in front of the committee.

Woods was the first member to ask questions of EQC board chairman Wevers and the commission’s management. She focused on an embarrassing IT security breach.

“Can you please go through and tell us exactly what was the consequence of that Ransomware attack?” she asked Wevers. “What data was released and breached? And what personal details were possibly leaked as a result of that breach?”

Wevers said he didn’t have details but was happy to provide a written response. Acting CEO Bryan Dunne said as far as he was aware no personal details were released in the Ransomware attack – and that a written response would be forthcoming.

“That would be great,” Woods said. “I do require that.”

She then asked about privacy incidents, saying: “At a time where the commission’s constantly telling us that the number of claims is scaling down, it seems odd that you’re having a record number of privacy issues.”

Given those testy exchanges, the post-election relationship between Woods, the EQC minister, and Wevers, the board chair, was always going to be interesting.

Wevers, head of the EQC board for five-and-a-half years, is a high-powered bureaucrat, having been ambassador to Japan, high commissioner to Papua New Guinea, and the chief executive of the Department of Prime Minister and Cabinet (DPMC) from 2004 until 2012.

Woods portrayed herself publicly during the election campaign as a woman of action, who wanted to bang on tables and get things done.

A showdown loomed – and it didn’t take long to play out publicly.

Knight falls

Woods called a press conference yesterday to explain why Wevers, the knight, fell on his sword.

(EQC’s deputy chair Mary-Jane Daly is the interim chair until a permanent appointment is made.)

Woods says she met Wevers for 20 minutes on Wednesday, during which she “spelt out my ministerial intentions to appoint an independent ministerial adviser into EQC to directly advise me on the settlement of the remaining 2600 Canterbury claims”.

(Most are “re-repairs”, in which home owners are challenging the quality of work already done.)

Woods says Wevers “had some questions and he took some time to go away and consider it”. She followed up with a letter on Thursday, after which he phoned to say he would resign – a resignation she accepted.

Asked why Wevers left, Woods says: “It was after the conversations that we had around my intention to appoint an independent ministerial adviser into EQC, reporting directly to me.”

Was she happy with his performance? “What I’m happy with now is that we have a plan, going forward.”

The appointment of an independent adviser may seem logical. But given the structure of a Crown entity, and the way it normally reports to ministers, such an appointment is effectively a vote of no-confidence in the current regime.

That’s how Wevers took it. In a strongly worded statement, he says he resigned after receiving a letter “expressing her displeasure with the performance of the commission”. He notes that, seven years after the Februrary 2011 quakes, there were 2600 outstanding claims – or less than 0.6 percent of the more than 470,000 claims lodged.

Wevers: “It is clear that the minister has no confidence in the board and staff of the commission. As chair, I take responsibility for that, and have stepped aside so that the minister can appoint someone whom she assesses will be able to do a better job.”

His statement admitted mistakes had been made and customers “have not always been supported as they should have been, when they should have been, and it has taken a long time to reach the final stages of our response”.

“We apologise to each and every claimant to whom we have not delivered as we should have.”

“I’m not content to come in and keep doing the same thing and expect a different outcome. If changes need to be made then I’m prepared to make them.” – Megan Woods

EQC has worked hard, Woods says, but change is needed to speed up the processing of the claims.

The minister spoke to EQC staff before the press conference, to tell them she’s confident they can settle those claims – a statement that jars with Wevers’ view of the minister’s lack of confidence.

Woods: “I have confidence that I can work with the senior management team to put in place the changes that are required for us to settle out these remaining claims in Canterbury.”

To have that many outstanding claims, seven years after the quakes, was not good enough, she says.

Newsroom asked her what is good enough – how quickly does she want them resolved?

Woods doesn’t have a timeframe, saying she wants resolution to be “fair and swift”. She’ll work with her adviser – a senior public servant to be appointed next week – on timelines and details such as whether EQC has enough staff. The adviser will be accompanied by Treasury officials, who will audit EQC’s liabilities.

She wants “clarity around what is possible, changes we can make and how quickly we can get this done for people”.

Taking Woods at her word, then, she’s clear that change is needed but vague on details, including whether the outstanding claims can be more quickly settled. Yet she’s happy to effectively force out a senior bureaucrat through a harsh letter.

(Wevers told RNZ’s Checkpoint programme that Woods’ letter was “couched in terms that greatly surprised me”. The letter made clear she was not happy with where EQC was at. “She said we were not delivering change she needed fast enough. She thought that the commission was unable to respond quickly and effectively to the challenges without external assistance.”)

If a minister’s job is to be tough and demanding then Woods has nailed it. Last year, she oversaw the tearing up of a contract for Christchurch’s metro sports facility. Now this.

Newsroom asked who was next in the firing line. Woods says: “I’m not content to come in and keep doing the same thing and expect a different outcome. If changes need to be made then I’m prepared to make them.”

But the threat of a guillotine over your head isn’t always the best motivation. For progress to be made, the minister needs the trust of senior managers and staff who, ultimately, are charged with making progress. After all, it’s on the pace of progress – not the resignation of board chairs – that Woods will be judged as a minister.

EQC staff are already working under difficult conditions – “It’s a challenge every day,” an EQC staffer says – so there’s a risk that Woods’ pressure will turn the atmosphere toxic. “There’s a lot of movement,” the EQC staffer says. “There’s going to be more.”