Kaikōura one year on after 7.8 magnitude earthquake: success and stagnation

Monday, 13 November 2017

A year after the magnitude-7.8 November 14 earthquake struck, the seaside town of Kaikōura remains largely isolated. Much needed business has arrived in the form of road workers but the new economy has added its own pressures. 

In Kaikōura, population 2080, there are two men who live less than a kilometre apart. Both were hit hard by the earthquake that struck one year ago. Gary Melville's home on Mt Fyffe Rd shook violently. One exterior wall collapsed and half the house is now unliveable. He and wife Gay can still use their kitchen, lounge and one of their fireplaces, but sleeping is now done in the sleepout, showering is done outside and laundry is done in town. The couple are in dispute with their insurer about whether or not their house is repairable.

'It's been an absolute bastard,' Gary Melville says, 'The longest year I can remember.'

Around the corner, Tony Guthrie was hit, specifically by a chest of drawers in his bedroom, which came crashing down on top of him soon after the shaking started at 12.02am on November 14, 2016, knocking him out. When he came to, he crawled out a window to escape his house. He was airlifted to Christchurch Hospital with a suspected head injury.

**READ MORE:

* Kaikōura: How a tourist town survived without its tourists

* The Road: State Highway 1, one year on

* November 14 earthquake epicentre: Waiau's slow road to recovery**

It turned out the injury wasn't too bad. A nurse arranged a free flight back to Kaikōura for him that day, and seven months later he had sold his broken house and bought another one. One he'd always had his eye on.

'My mood of the place is it's just fantastic,' he says, 'Everybody's getting in behind the workers. It's all positivity. It's no negativity. It's going to be a better place.'

One year on from the devastating magnitude-7.8 earthquake, there is no neat summary of the Kaikōura's progress. Melville and Guthrie are living proof. The town has suffered like no other in New Zealand, despite our long seismic history. Cut off by land for days after the earthquake, still only accessible via a substandard loop road with either limited access to State Highway 1 [south], or none at all [north], along with the usual menagerie of broken homes, businesses, roads, pipes and public amenities. For any town, it's a tough break. For a tourist town that thrives on the movement of goods and people, it is catastrophic.

'That's been the biggest challenge, the isolation,' Mayor Winston Gray says.

'I think a lot of it was not so much that people were isolated. They are here and may not normally travel away a lot, but the fact you couldn't go out, that becomes a mental thing.'

There is optimism in the town, he says, but stress levels are high.

'It's not easy to make things happen. You can't just click your fingers and things get here.'

That, of course, includes people. With a handful of exceptions, Kaikōura businesses have weathered double-digit percentage losses on their trade since the earthquake. The total visitor spend in the town in the year to September was $63 million. In the 12 months before that it was $125m.

'Some [businesses] are doing OK, some are doing fine [and] some are having a really tough winter,' Gray says.

'It's all to do with State Highway 1. It's been a godsend that the NCTIR [North Canterbury Transport Infrastructure Recovery] group are based around here.'

NCTIR is the alliance of contractors and government agencies leading the SH1 repairs. The highway to the south of Kaikōura has been partially open since December. The north side is due to open next month, though work will be far from completed then. More than 300 road workers live in a temporary village in Kaikōura and others are scattered around holiday homes, motels and backpackers in the town. Every day, the main street maintains a steady flow of orange hi-vis and and white, four-wheel-drive utes. Local businesses provide lunches and at night there is a roaring, if inconsistent, dinner trade as workers make their way around Kaikōura's selection of restaurants.

It is a blessing and a curse. The influx of labour coupled with the effect of damaged and destroyed buildings has left Kaikōura desperately short of housing. A district council report to the Ministry of Business, Innovation and Employment noted the timing of repair work may depend on housing availability and several potential sites for temporary accommodation. In one instalment of the council's R you OK Kaikōura survey, nearly a third of respondents said they would need somewhere else to live while their homes were repaired or rebuilt.

'If we take this as a snapshot of the district, 30 per cent of residents will need temporary accommodation. That is around 666 houses. This does not include anyone needing accommodation from outside the district . . .  A sharp increase in rents is making the available accommodation unrealistic.'

'I don't think we have a homeless problem,' Gray says, 'It's just tight. It's difficult to pick up a house and transport a village into Kaikōura, the way the roads currently are.'

Local nurse Sue Posa has two of her sons and their families staying with her. Ten people across three bedrooms and a sleepout.

'We manage,' she says, 'It's not forever. You can put up with anything if it's not forever.'

One of her sons, Dave Posa, came home with his family from Perth to work on the rebuild. They can't find anywhere to live. They heard of one three-bedroom place that became available recently – for $800 a week.

'You've got to look in the bright side,' he says.

'As a local, it's good that [the road workers] here fixing the place up but they've just eaten up all the rentals.'

Sharon Rayner, who runs the Bean Me Up coffee cart in town, suspects she was on the receiving end of this. The landlord recently told her and her two flatmates they needed the property back for family to move in.

'We know full well it's just to do it up, collect some insurance dollars and re-let it out,' she says, 'There's heaps of stories like that.'

This gives rise to an ugly cycle. Not only are the road repairs hoovering up all the accommodation in town, they're also paying several dollars an hour more than the going rate for a hospitality or retail job. A report to the council's earthquake recovery committee included a survey of business owners that showed concern about staffing issues had nearly tripled since the earthquake. Twenty-nine per cent of respondents said they had lost workers to the roads.

'You can't get anyone local because you can't compete with the going rate anymore so you try and bring people in but you can't do that because there's no accommodation,' Four Square supermarket owner Steph Thomson says.

'We have heard of businesses buying properties so that their staff can live in them, but even that has an impact because the people who were living in them now have nowhere to go.'

The Four Square lost half of its staff to roadworks jobs and its stock room to the earthquake, Thomson says. As the summer high-season nears, both of those things will become more of a problem. Trade is still down. It bottomed out at about 60 per cent of usual but has since recovered about half the deficit. 'Things are going to become quite challenging for us,' Thomson says.

She is one member of the UpLift Hub project, working on bringing a Christchurch-style container mall to Kaikōura. Progress has been slow, mostly for money reasons. The group briefed the council on the idea in April.

'[They said] fantastic idea, but they don't have any funding,' Thomson says.

'So then it was all about approaching government direct to see what funding we could get and for whatever reason we can't get it.'

Some of the money is coming from the Lions, some from local businesspeople. Paper Plus owner Mark Fissenden, another project member, fronted the money to buy three containers from Christchurch developer Richard Peebles. He didn't have the means to bankroll the whole thing.

'It's been quite difficult really. I'm not that pleased about the whole thing.

'It's ironic we can go and spend [billions of dollars] on a road but we can't even chuck $50,000 at getting some businesses up and running.'

The three containers will sit on the site of the old Adelphi Hotel – a casualty of the earthquake – placed around the edge with a public space in the middle. Paper Plus will fill one container. Its original building, which also housed Kaikōura Pharmacy, was yellow-stickered and Fissenden and his building co-owner, pharmacist David McKee, have relocated to less salubrious accommodation just down the main street.

'I had 300 square metres, now I've got 50,' he says.

'It's difficult to trade out of there. Book sales and toy sales have gone through the floor. You get three big guys in here in orange vests and the kids run a mile.'

Fissenden plans to split his business in two, shift the books and toys to the container site and leave Lotto and postal services where they are, until he and McKee can get their insurance claim resolved on their building. He doesn't go into details, except to offer: 'I find it difficult to understand why one engineer can say this and one engineer can say that.'

McKee does go into details, the summary of which their insurer's engineering assessment and their own engineer's assessment of the damage to the building do not match up. The insurer's initial settlement offer was a fraction of what it should have been, he says. A third engineering opinion has been sought, which takes time, which McKee doesn't have a lot of. For now, he is trading out of the old Global Culture T-shirt store, which upped sticks soon after the earthquake, but plans to return.

'I have to be out in 12 months,' McKee says, 'We need to either fix our building or replace it in 12 months because . . . if I'm not here and I can't go back into our pharmacy building because the insurers have been so slow, seriously where do I put the pharmacy?'

On the bright side, trade isn't too bad. Road workers have replaced much of the lost tourist dollar – a surprisingly large source of revenue for a quotidian business like a chemist. Seasickness pills were a favourite.

'[Pharmacies] in other towns of this size . . . and no tourism scrape by,' McKee says, 'We don't scrape by because of the tourists.'

The November 2016 earthquake was something of a test case for the insurance industry for two reasons. First, soon after the event, the Earthquake Commission (EQC) and insurers signed an agreement that the latter would act as EQC's agents, receiving, assessing and settling home and contents claims, even those under the commission's $100,000 cap. The idea being it was better for customers and simpler for insurers to have a single shop front.

'It's gone a lot, lot better than the Canterbury experience,' Insurance Council chief executive Tim Grafton says, 'Our view is it's the model for the future.'

About three-quarters of claims are expected to be settled by the end of the year, which means all but the trickiest cases should be sewn up in 2018. That is light years quicker than Christchurch, but the earthquake hit in one of the most sparsely-populated areas of New Zealand, so the insurance event is much smaller. About $2 billion compared to $36b in Christchurch. In fact, there were more claims lodged in Christchurch this time, and almost more in Wellington, than Kaikōura, Hurunui or Marlborough. It is unlikely insurance will be the thorny legacy of this disaster as it was Christchurch in 2011.

Second, the 2016 earthquake was New Zealand's first major sum-insured disaster. After Christchurch, insurers abandoned costly, open-ended full replacement house policies in favour of coverage up to a capped dollar amount. Insurers' obligations end with the transfer of part or all of the insured sum into the customer's bank account. A much simpler process but one that put the onus on customers to ensure they were sufficiently covered and then manage their own repairs or rebuilds. If they were underinsured and looking at a total loss, they had a problem.

'I think there was certainly experience in some areas where people had chosen sums insured kind of based loosely on what the average prices for houses in the area,' Grafton says.

'Compared to New Zealand-wide standards you've got housing in some of the rural areas that is very low cost in terms of market value but in terms of rebuild cost quite possibly significantly more.

'Some people are caught in that respect . . . The actual number of properties that fall into that category will be small number but nevertheless a big problem for people who did underinsure themselves.'

It sounds promising, but it isn't the full story. Half of all survey respondents in a social report submitted to the council's earthquake recovery committee in September identified wellbeing issues, many of them citing the desire for advice around settlements and self-managed repairs. In the same survey, 30 per cent of respondents said they were having complications or delays with their insurance processes.

The messy reality of an earthquake recovery is that you can have a Tony Guthrie on the one hand and a David McKee on the other. You can have tourist businesses like Whale Watch and Encounter Kaikōura – the engine of the town's tourism industry – with decimated customer bases and a fleet of boats hobbled by a raised seafloor benefit from an upgraded marina when the dredged harbour reopens on Tuesday, exactly a year after the earthquake. You can have Sharon Rayner, the coffee cart owner who had to move out of her rented flat in a town with no spare accommodation, owning one of the few local businesses to prosper in the recovery.

In Gary and Gay Melville's backyard, next to the sleepout, is a chook run. They hatch birds themselves. When the earthquake hit, an incubator in the house holding several fertile eggs was thrown across the room, smashing its contents. The Melvilles, fearing a tsunami, bolted.

'When we came back a few hours later we were in there looking at all the devastation and trying to half clean it up,' Gary Melville says, 'You could hear this cheep, cheep, cheep. Little buggers had been smashed out of their shell and some of them survived.

'They're good chooks, too. Just started laying.'