Victoria University’s $101m earthquake payout finally settled

Wednesday, 6 December 2023

Damage to Te Herenga Waka ‒ Victoria University of Wellington from the 2016 Kaikōura earthquake was mostly minor but “widespread” and impacted all campuses. (File photo)

Te Herenga Waka ‒ Victoria University of Wellington has received the last of a $101 million insurance payout in relation to the 2016 Kaikōura earthquake.

A financial report presented to the university council this week showed a surplus of $17m for the year to date, to October, compared with a forecast deficit of $3.5m by that time.

This was attributed mainly due to “one-off proceeds” received in relation to the settlement of the Kaikōura insurance claim and final payment of $40.8m, and its financial sustainability programme.

The university has announced the loss of 228.6 full-time equivalent jobs, including 75 staff who took up voluntary redundancies and 65 were were made redundant, and six programmes.

Vice-chancellor Nic Smith said damage from the quake was mostly minor but “widespread” and affected all campuses.

In 2017, the university closed its Boulcott Hall while seismic strengthening works were carried out by the building’s landlord, following the 2016 Kaikōura earthquake. (File photo)

As an example, a few months after the earthquake, the university closed its Boulcott Hall while seismic strengthening works were carried out by the building’s landlord. The Kelburn library lift shafts were also replaced after being extensively damaged.

It has taken the university more than five years to settle the property insurance claim, which totalled $101m. While it had received a number of progress payments over recent years, the final $41m was only “recently received“.

Had the claim not been settled, the next step would have been legal proceedings.

“We have worked very closely with our insurers over that time but did not know how and when it would be resolved,” Smith told The Post.

The total payout was also considered to be a “one off”. He said “asset sales and one-off capital injections” did not further the university’s financial sustainability goals beyond helping to reduce debt servicing costs.

Te Herenga Waka ‒ Victoria University of Wellington vice-chancellor Professor Nic Smith. (File photo)

The university’s underlying deficit was projected to be about $29m at the end of this year, slightly less than the $33m earlier projected, excluding the earthquake payout and philanthropic funding.

“Both of these latter sums of money are ringfenced for particular purposes and do not solve the ongoing financial sustainability challenges we are facing,” Smith said.

While the money will be spent on fixing damage incurred during the earthquake over the next few years, it had helped pay down some debt and reduce its debt servicing costs, he said.

“The savings resulting from this have helped us retain some jobs and programmes as part of our financial sustainability change programme.”

Additionally, he said enrolment numbers were “encouraging”, with domestic, international and accommodation numbers “looking strong”.

As at November 22, the university had over 10,500 domestic applicants, including 4887 school leaver applicants, and 5390 international new applicants.

Demand for student accommodation was also high, with occupancy between 91.88% to 93.7% in the university’s catered halls and 85.7% in independent living accommodation.