Councils stand up for their communities against litigation from overseas insurers

Te Uru Kahika—the partnership of New Zealand’s regional and unitary councils—are calling for central government intervention after Bay of Plenty Regional Council yesterday approved up to $5m of its Regional Fund Reserve could be used to fund legal costs to defend litigation brought against them by profit driven insurers.

Insurers are seeking to recover payouts made to Edgecumbe property owners following the flooding caused by Cyclone Debbie in 2017 by targeting ratepayer-funded flood management infrastructure.

Gisborne District Council Mayor Rehette Stoltz expressed serious concern that the sort of legal action happening in the Bay of Plenty could be brought against other councils providing infrastructure to help communities withstand extreme weather.

“New Zealand’s regional and unitary councils help reduce the risk to people and property from extreme weather events. We do this in lots of ways, including by providing infrastructure that helps to manage floods and other natural hazards from having the worst impacts.

“While infrastructure can reduce risk, due to the changing climate it cannot safeguard against all possible scenarios and the severity of all possible weather events.

“The legal action Bay of Plenty Regional Council is facing raises the question, can councils continue to responsibly provide the flood resilience infrastructure our communities are calling for?

“In tough economic times, it’s not viable for councils to be spending on legal costs. We need improvements to the law to give greater clarity and reduce litigation risk, otherwise it is ultimately our communities that will suffer,” said Mayor Stoltz.

Every year, flood resilience infrastructure reduces the risk to hundreds of thousands of New Zealanders living in flood-prone areas and saves our country billions in losses to properties, food production, and businesses.

Chair of Greater Wellington Daran Ponter said initiatives to maintain and build infrastructure like pump stations, science and research, and nature-based solutions are where council’s effort and spend need to be, not defending legal cases.

“Collectively, regional and unitary councils are calling on central government to intervene to ensure we can continue building infrastructure that meets the challenges of a changing climate.

“Legal defence can cost ratepayers millions of dollars, but potential court awards or settling outside of court can cost many times more. Litigation also diverts internal council resources, such as people’s time, away from other critical work.

“Ratepayer-funded infrastructure exists to support communities, not to subsidise the profits of overseas insurance companies.

“Litigation puts the future of this infrastructure, local democratic councils, and the security of flood-prone areas at risk,” said Chair Ponter.

The litigation in the Bay of Plenty is a matter of national importance as 1 in 7 New Zealanders live in a flood-prone area and new projects to reduce the risk to these communities are delivered by councils every year.

Regional and unitary councils are working together on this issue to ensure money is spent on building and maintaining vital infrastructure, such as the 42 co-invested central and regional government ‘Before the Deluge’ projects receiving Regional Infrastructure Funding, and not defending lawsuits.

Te Uru Kahika urges central government and insurers to work with us to ensure councils can continue to deliver the infrastructure that our people and economy depend on.