HBRC addresses recovery costs

HBRC Councillors received this week a detailed accounting of costs that council incurred in the immediate and ongoing response to Cyclone Gabrielle.

As at 19 May 2023, HBRC has incurred over $47.5 million in costs associated with the CDEM response, HBRC’s own response and the subsequent recovery work. According to Government  Civil Defence guidelines:

“Eligible welfare (response) costs will be 100 per cent funded by the Government. E.g., caring for directly affected people (accommodating, transporting, feeding, and clothing people as a result of an emergency).

“Eligible other response costs will be 60 per cent funded by the Government (above the local authority’s threshold) and 40 per cent funded by the local authority. E.g., precautions or preventive actions to reduce immediate danger to human life, where those precautions or actions were begun during the response period or immediately before the emergency.

“Eligible recovery costs will be 60 per cent funded by the Government (above the local authority’s threshold) and 40 per cent funded by the local authority. E.g., Essential infrastructure recovery repairs.”

Negotiations are well underway sorting out who will actually pay for what.

HBRC Councillors and staff both noted that many spending decisions were made under extreme pressure as the disaster unfolded in real-time. Understandably, protecting lives, property and lifeline assets was the priority, not generating purchase orders or worrying about the ultimate bill-payer while standing in floodwaters. 

Undoubtedly there are lessons in crisis decision-making to be learned; however, there’s really no point in obsessing over ‘heat of the moment’ decisions made by those on the frontline about providing generators or helicopter service. The Agenda paper gives examples of these kinds of decisions. HBRC estimates over 40,000 staff hours have been devoted to cyclone response, with another 10,000 hours from CDEM staff.

Apart from the eventual cost recovery from Government, HBRC also carries $358 million in insurance cover, repayments from which will also need to be negotiated. So far, HBRC has identified claims exceeding $20 million for equipment and infrastructure, and has received progress payments of $4.25 million.

When all this negotiating under existing civil defence reimbursement guidelines and insurance is over, ratepayers will still face a substantial tab, some of which might ultimately be paid by dedicated recovery funds yet to be awarded by Government. HBRC and other HB councils have filed their ‘bids’ with the HB Regional Recovery Agency, the official conduit to the Government for Cyclone Gabrielle recovery funding.

In the meantime, HBRC has borrowed $35 million to pay its recovery bills.