Researching the recovery: The Department of Building and Housing s research role in the response to the Christchurch earthquakes

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6

th

Australasian Housing Researchers’ Conference

8-10

th

February 2012

The University of Adelaide, Adelaide, South Australia

Researching the recovery: The Department of Building and

Housing’s research role in the response to the Christchurch

earthquakes

Author 1:

Ms Anne Duncan,

Manager, Sector Trends and Performance

Department of Building and Housing, Wellington, New Zealand

Author 2:

Ms Annette Cooper,

Senior Research Analyst, Sector Trends and Performance Department of Building and Housing, Wellington, New Zealand

Contact:

Ms Anne Duncan

Department of Building and Housing Anne.Duncan@dbh.govt.nz

Abstract

This paper outlines the research and evaluation response of the Department of Building and Housing following the earthquakes in Canterbury, New Zealand. The earthquakes and aftershocks have caused significant damage to Christchurch which is New Zealand’s third largest city. Post-earthquake, the Department of Building and Housing, like all government agencies, was working hard to offer any and all assistance to the people of Christchurch in rebuilding their city. In the short term, the Department was focussed on modelling for temporary accommodation, modelling labour demand for rebuild work, and closely

monitoring a series of key indicators which relate to the building and construction sector. The Department has also fast-tracked roll out of programmes from the Building Act Review (BAR) including new consent processing for restricted building work. The streamlining of consent process around rebuilding is designed to assist people to move quickly from temporary accommodation to their own homes, either owner or rented. The future research

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activity of the Department will be continuing to understand and inform government on policy options/considerations relating to the longer-term issues surrounding the rebuilding,

including monitoring economic and construction factors such as procurement and labour in Christchurch. The tragic events in Canterbury and their aftermath continue to present new opportunities and challenges for New Zealand housing researchers.

Key words: natural disaster, modelling, New Zealand

Introduction

In September 2010 and February 2011 two devastating earthquakes struck the Canterbury region in the South Island of New Zealand. Collectively these earthquakes caused significant destruction and distress on a national level. Following the second earthquake a state of emergency remained in place until the 30th of April 2011. Identifying the true extent of the damage is a longer term process. This presentation outlines the evaluation and research response of the Department of Building and Housing (the Department) to these events. The paper begins by providing a more detailed context, before outlining the research and

evaluation activities in place to respond, finishing with a reflective discussion of these actions.

Background

At 4.35am on September 4, 2010 a magnitude 7.1 earthquake centred near Christchurch struck the entire Canterbury region. While the damage was significant, the country was collectively relieved that no lives were lost. However, at 12:51pm on February 22, 2011 a 6.3 magnitude aftershock occurred causing widespread injury and the tragic loss of 185 lives.

The extent of the infrastructural damage was not immediately clear and on the 19th of July

2011, over 5100 homes were declared unable to be occupied in central Christchurch. This area became known as ‘the red zone’. It was noted that:

“In the residential red zone, area-wide land damage is so extensive there is an increased likelihood of further damage due to liquefaction and lateral spreading from the ongoing series of aftershocks. Homeowners in the residential red zone face lengthy disruption that could go on for years. Such wide scale land repair would take a considerable period of time and result in ongoing social dislocation, which would have major impacts on schooling, transport and employment for whole

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communities. The Government has moved to ensure residents in these zones have the option to get on with their lives as quickly as possible. (Federated Farmers, 2011)

Further announcements were to follow the identification of the original red zone. On April 11, 2011 the Earthquake Commission (EQC) estimated that 12,000 homes in total were deemed to have serious structural damage (ONE News, 2011). Furthermore, 417 homes in the suburb of Brooklands were declared to be uninhabitable on November 17, 2011 (CERA,

2011). By the 4th of December 2011, the EQC had received 408,050 damage claims from

both earthquakes, and 328,901 of those claims remained unresolved (Earthquake Commission, 2011).

The response of the Department

Immediately following the emergency, the Department commenced planning a coordinated response. The immediate response was focused on the urgent need for temporary

accommodation, particularly for those whose homes were uninhabitable, whether due to damage to the property or because of the extensive liquefaction that happened as a result of the earthquake and the continuing aftershocks.

While the immediate need was for short term accommodation, this need was also likely to continue longer term as repairs and rebuilding began. Much of the temporary

accommodation, some of which the Department had put in place as an immediate response to emergency housing need, would not be suitable for a family to live in for six months or longer. In addition, it was clear that those in aged and specialist care facilities required special consideration. A total of 205 Housing New Zealand (HNZC) homes were damaged beyond repair. The damage to HNZC properties represented a considerable loss of housing provided to those people unable to engage in the private market and those with special housing needs due to disability or other long term condition. Another factor contributing to housing need is the predicted demand for dwellings to accommodate large numbers of construction workers needed to assist with the rebuild of Christchurch.

As well as considering the immediate response to housing need, the Department also

prioritised its other portfolio, building and construction. The Department is responsible for the national Building Code, which sets standards for all building in New Zealand. In the interest of public safety, repairs and rebuilding work in the aftermath of the earthquake needed to be completed according to the latest standards set in the Building Code. The Department

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therefore has a key role to play in this. It also has implications for building consent authorities (local councils) and construction firms.

The immediate evaluation and research response was a key part of the broader response of the Department to the earthquakes and continuing aftershocks. In the immediate term evaluation and research work was driven by two priorities:

the need for information in the area of housing, particularly temporary in the very short term, and

the need to understand and forecast labour markets impacts from repair and rebuilding work.

In order to achieve these goals three streams of work where set up. 1. Monitoring and reporting of key earthquake indicators. 2. Labour demand modelling.

3. Piloting of risk-based consenting.

The following sections provide further detail on the work undertaken by the research and evaluation team (the team), which aided broader decision making in the Department following the earthquake and subsequent aftershocks.

Monitoring and reporting of key indicators

The Department has implemented a monitoring regime that provides a comprehensive understanding of what is happening in Christchurch on a day to day basis, allowing early indications of trends that may be of concern. There are three major reports that the Department is producing.

Earthquake Indicators Reports for our Chief Executive and Senior Leadership Team.

Drivers of Temporary Accommodation Demand (TADD) for the Earthquake Recovery team in the Department.

A hybrid of the two reports for our Minister for Canterbury Earthquake Recovery.

Earthquake Indicator Reports

In the period immediately following the earthquakes, access to sufficient data was a challenge. The offices of Statistics New Zealand (SNZ) were out of commission due to building and infrastructure damage, and subsequently did not become fully functional for

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several months. Therefore, regular statistical releases from SNZ that the Department relies on for monitoring, such as building consents, building work put-in-place and migration statistics were unavailable or delayed. However, there was new data available for use from new earthquake related services such as the Canterbury Earthquake Temporary

Accommodation Service (CETAS). Nevertheless, the cancellation of the 2011 Census had a longer term and more serious impact on research and data availability. This therefore had significant, long term impacts in relation to unavailability of core data that not only the Department but all government agencies use as their basis for a multitude of research, modelling and forecasting activities.

The first questions considered by the team immediately after the earthquakes concerned what could be usefully monitored to provide insights into what was happening on the ground. In the short term this required finding out what could be measured and what information was available to use as proxy measures. The Earthquake Indicators Report was initiated to ensure the Chief Executive and Senior Leadership Team had the most up to date

information available, and could in the first instance make the best decisions for temporary accommodation. Later, the information would change to reflect the rebuilding decisions that would be required in the medium and longer term.

The reports started using any information that was available which included a series of basic emergency infrastructure information such as port-a-loos, sewerage, power and emergency accommodation requests. As time has passed, the reports have moved into monitoring information that is more relevant to the current state, such as building consents (volume and value), market rents, house sales and demolitions. The content of the reports reflects what relevant information is available on repair and rebuilding work, and to longer term housing issues. Critical issues for the Department are also highlighted on a monthly basis. For instance, from market rent data the team can assess how the market is coping with demand for housing, and if pressure is starting to build in some suburbs. The reports also include a variety of measures outside building statistics, such as wastewater, power supply, migration and school enrolments. This data can give an indication of population movement and areas of Christchurch which are still missing vital services. These are important factors in driving demand for housing and the rebuilding work.

Finding ways of making complex information simple to comprehend and access is an ongoing challenge for researchers. The Earthquake Indicator Report is therefore structured as a dashboard-style report utilising graphics tools available in Excel 2010. Dashboards have limited space for commentary, so each month decisions need to be made on what the

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most important information is. In addition, mapping technology is also utilised to present data visually. This has assisted considerably when displaying information about changes in weekly rents on a suburb by suburb basis. This pragmatic approach to the Earthquake Indicator Reports has helped to inspire more focused prioritising of work in the team. Importantly, this has resulted in a more reflective approach to research and evaluation activities. This is an example of good research practice and will inform and support our research and analysis activities across our Department in the future, ensuring we more effectively deliver information that will support good decision-making.

Drivers of Temporary Accommodation Demand (TADD)

Monitoring temporary accommodation demand is a critical activity for the Department to aid decision making about supply of temporary units or villages built on public land during the rebuilding. By using data that is updated frequently, it is possible to estimate how demand is changing as it happens. This information is used to help plan and update the Department’s temporary accommodation strategy.

The four key determinants that have been identified as drivers of temporary accommodation demand (further described in Appendix One) are:

stratified average weekly market rent in Christchurch changes in number of tenancies for Christchurch rental housing listings for Christchurch

number of EQC claims closed.

The indicators which give a picture for the medium and longer term demand are:

number of red zone properties departures from Canterbury

cost of a typical mortgage in Christchurch.

By monitoring all of these indicators, a picture of the current trends and future demand for temporary accommodation is able to be anticipated. For instance, if the weekly rental prices started to rise, and people were unable to cope in the private rental market, the government could consider providing more accommodation. This would help relieve the short-term pressure and ensure the market doesn’t fail.

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Information from the Earthquake Indicators and TADD reports is also provided by the Department for a monthly report to the Minister for Earthquake Recovery. This is a cross-agency report containing information from a number of other government agencies including the Ministry of Economic Development, the Ministry of Social Development, Treasury and Department of Labour. This report provides the Minister with the most relevant information for Christchurch across all the relevant government portfolios.

Labour Demand Modelling

In order to be useful in a natural disaster, research must move beyond simply monitoring trends. In this instance it was critical to develop an understanding of what will be required in the future to repair and rebuild Christchurch. Forecasts are often inaccurate, however, modelling and forecasting is necessary to provide essential parameters and scope where there is none. This is not only valuable but necessary to planners and decision-makers.

One key area of challenge following the earthquakes was to find a way to understand what the labour requirements for the repair and rebuild work in Christchurch would be and to gauge the national response to the new and unexpected demand. Playing a key role in the development of sector capability in building and construction, this forecasting is therefore important to the Department. For instance, knowing where likely skill and supply shortages will occur is important for long term workforce planning. Key issues for the sector were identified in December 2010, such as the uncertainty around the number of builders, plumbers and electricians required, strategies to recruit new people into the sector and ensuring these people have the skills needed for the rebuild. It was unclear whether the labour market had the ability to respond to increased demand for skilled workers.

A model was produced to provide preliminary estimates in January 2011. However the second earthquake struck in February 2011 meaning that the model required significant revision. The first step of the resulting modelling approach was to understand the scope, scale and types of damage for repair and rebuild work. From there estimates were made of what the labour requirements might be. Occupational categories such as carpenters,

concreters, bricklayers, roofers, electricians, plumbers, drain-layers, and painters were used to estimate not only the total labour requirements, but identify need in relation to each occupational class.

Initially data was sourced from the Earthquake Commission (EQC), who were receiving claims and doing damage assessments. EQC provided the overall scale and scope of the damage by broad value, which gave a high level indication of the overall likely cost and

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number of repairs and rebuilds that would be required. The focus was on residential work as the damaged commercial properties were mostly in the CBD and almost impossible to assess in the early stages of the recovery. While questions remain over the future rebuild of these properties, the team has collaborated with the Canterbury Earthquake Recovery Authority (CERA) and Fletchers to add in estimates for commercial work.

For residential work, there were two categories of assessments: repairs and complete rebuilds. Residential properties that were not structurally damaged would need to be

repaired. HNZC provided breakdown analyses of individual properties according to the type of damage i.e. repairs to roof, broken chimney, damaged walls, etc. Specific, individual property damage assessments were analysed by quantity surveyors, who estimated the labour by type required for each of those particular set of repairs on the houses. The information was then extrapolated across all damaged houses. Methodological challenges were encountered in this process. For example, the HNZC properties the team had detailed information about were not typical of Christchurch homes as they tended to reflect the lower end of the market in terms of house value.

Many houses were irreparable and for this an estimated labour requirement for a new-build was supplied by quantity surveyors (Rawlinsons, 2010). The methodological challenges here related to the probable value of the rebuilt house, and an average floor size as an indicative, generalised formula was used and applied across the board. In association with CERA and the Department of Labour, labour demand estimates have been produced that are now accepted across government. This provided a large scale overview of the likely demand and a picture of where to focus attention for developing and supporting sector capability.

As with the Earthquake Indicator Report, the model is being updated as new data becomes available and as events unfold in Christchurch. During the writing of this paper, new areas of land were yet to be zoned green or red and the final outcome will have a major impact on the overall rebuild numbers. A CERA survey in the red zone found that 1728 households in the red zone were still occupied in November 2011, with 44% of occupants unsure what their next move would be. This high level of uncertainty about the future adds a further level of complexity in estimating the scale of the rebuild in Christchurch.

Modelling is an important tool for a number of reasons. It is an effective way to develop an understanding of the likely scope and scale of change and it enables the Department to be forward looking. However, there are a number of risks to modelling. The major risk is

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ensuring that modelling is located in reality and passes the common sense test. Thus it is important to approach modelling with a critical eye and to ensure it is grounded in reality

Pilot of Risk-based Consenting

Every piece of repair and rebuild work needs to go through the process of getting a building consent. This is to ensure quality standards are maintained. There were and will continue to be a huge influx of consent applications being received by building consent authorities in Christchurch and the Canterbury region. The cost of a huge compliance burden to those doing the repair and rebuilding work could potentially delay the recovery.

Prior to the earthquake, the Department made a commitment as part of a review of the Building Act to, where possible, streamline building and construction in New Zealand. Part of this involves moving to what is called risk-based consenting. This means that, for low risk work, the consenting and building inspection processes are streamlined. This also means that consent authorities will be able to focus on high and medium risk construction activity (refer Appendix Three for more detail). The sheer volume of rebuilding work to be done in Christchurch has prompted the Department to fast track key elements of this work, and start a pilot of risk-based consenting in Christchurch. This gives us the opportunity to test out how, and how well, risk-based consenting will work.

The expectation is that the pilot is going to provide a wide range of information. It is expected to demonstrate the feasibility of the risk-based consenting approach, its acceptability to different parties, and show whether it can be successfully implemented without any negative impact on building quality. It will also inform the development of the regulations for

nationwide roll-out. Questions will be asked about what can be learnt about the actual process of risk-based consenting that will make a nationwide programme easier and faster, and what kinds of training do we need for industry, BCAs and consumers.

Information from evaluation of the pilots will also help identify new data sources for ongoing monitoring. The quality of data on consent volume, timelines, building inspections, consent approvals and building quality from BCAs will be assessed. A cost-benefit analysis of risk-based consenting will also be performed. The result of fast-tracking this pilot is that it should get construction moving quicker in Christchurch.

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What the people of Canterbury have been through is not something anyone would ever wish to see happen again in New Zealand. But like all other countries on the ring of fire, there is a risk it will. The lessons the team have learned from the research and evaluation activity have been important ones. The conclusion of this paper deals with the three key lessons the team has learnt in the wake of a tragic natural disaster, which would be applicable to others in similar situations.

Thinking objectively despite the disaster

In a disaster evidence and information need to be provided as soon as possible which is an extremely difficult thing to do. The information you are most likely to need which in the Christchurch case was related to emergency housing, is the most difficult to find.

Despite the shock and trauma of what has happened and as the realisation of the scale of the destruction begins to set in, researchers need to be gathering and analysing data so they can provide information to decision-makers. How many people need to be housed and where? What short term housing is available? Where is it? Any example from Christchurch was the immediate set up of CETAS for emergency housing. The data the team needed was not being collected so what would have been really useful was if someone from the team had been more closely engaged with the new services. This would have ensured the information being collected could have been used to begin planning temporary accommodation options.

The lesson here is that when you have the least amount of time and space to think about gathering data, it is probably the time you most need to be doing it. In addition, the time you are least likely to be looking ahead into the next twelve months is also probably the time you most need to be doing it.

Readiness to Respond to new challenges

The team were called upon to do new types of work that we weren’t experienced with for example the labour demand modelling. There was little information, only a small amount of experience, and very little time in which to provide our decision-makers with advice.

The lesson here is that as researchers you need to be agile. Approaches, methods, data sources, may or may not work in the way you need them to, so you need to try something new. Innovation is a necessity not an option because the space and the data might not be there. At some points it felt as though all the team had were assumptions, as time went by and data became available the quality of the modelling improved.

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Start out by doing the best you can with what you have, and move on towards more assurance and confidence as and when you can. In the first months the assumptions were beyond what we would consider in the normal acceptable range. As time passed we revised and re-worked our models and moved into more collaborative working relationships with

other agencies and leveraged on their knowledge and expertise, as they leveraged on ours

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Collaborate and Cooperate

In the face of a natural disaster researchers must operate as they have never co-operated before because, literally, people’s welfare depends on it. There was no room for territorial stances, for demarcations, or for patch protection over data or skills. Working together became compulsory because we needed to deliver the best possible information within the shortest timeframe. This was a big learning curve for all the government

departments involved in the earthquake, who can sometimes be guilty of working in splendid isolation.

Conclusions

In the long term, the Department will continue to monitor trends and activity in the housing, building and construction sphere. The research work done by the team has supported good decision-making in the Department. It has also contributed, along with research from other agencies, to enable the best possible response to be made for the people of Christchurch.

In the future, the team will also be looking to coordinate evidence we can circulate for other cities and countries that may be faced with responding to natural disasters. We hope that what we have learnt through this experience can be helpful to others and we would be happy to share.

There are some big questions, however, that still remain.

Who will choose to stay in Christchurch and what will the scale of the rebuilding be?

If they leave, where will they go and what will the impact be on Christchurch, our country and our economy?

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References

CERA. 2011. Further 758 Christchurch properties rezoned [Online]. Available:

http://cera.govt.nz/news/2011/further-758-christchurch-properties-rezoned-17-november-2011.

EARTHQUAKE COMMISSION. 2011. Caterbury Earthquake: Statistics [Online]. Available:

http://canterbury.eqc.govt.nz/news/progress/statistics.

FEDERATED FARMERS. 2011. Red Zone Fact Sheet [Online]. Available:

http://www.fmg.co.nz/canterbury-earthquake/red-zone-fact-sheet

ONE NEWS. 2011. 12,000 Christchurch homes severely damaged [Online]. Available:

http://tvnz.co.nz/national-news/12-000-christchurch-homes-severely-damaged-4110396.

RAWLINSONS 2010. Rawlinsons New Zealand Construction Handbook, Auckland,

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Appendix One: Description of Temporary Accommodation Demand Drivers

Short term:

1. Stratified average weekly market rent in Christchurch. We monitor this because any increase in private market rental rates will make public temporary accommodation more attractive in comparison because it is cheaper, and will increase demand for it. 2. Changes in number of tenancies for Christchurch. We monitor this because any

increase in the number of tenanted properties indicates increased rental demand in the private sector, and this will drive increased need for temporary accommodation. 3. Rental housing listings for Christchurch. More listings indicate an increase in the

availability of private rental housing. This means there are more opportunities for renters to find suitable private sector accommodation. Likewise, decreasing numbers of listings could indicate a reducing supply in the private market and more demand for temporary accommodation.

4. Number of EQC claims closed. The majority of repairs for current homeowners and renters are paid for by EQC following lodgement of a claim and an assessment. A large number of claims being closed in any month means that EQC has given the approval and money to get repairs done. This will increase the demand for temporary accommodation as occupiers often need temporary accommodation while the repair work is being carried out.

Medium and longer term:

1. Number of red zone properties. An increase in the number of red zone properties will produce a long term reduction in overall housing supply because those houses are removed from the market. Removal of properties is likely to produce an increase in rental housing demand because the available pool is smaller. We expect some former home owners will elect to become long term renters, and others will become short term renters as they look for a new home. Either way, they need housing. 2. Departures from Canterbury. The Inland Revenue Department (IRD) records

international departures. A decrease in population from the area means there will be a general decrease in housing demand. Some of that will be for rental properties. This is likely to mean a decrease in demand for temporary accommodation. Of course, we also need to understand inflow, as this balances out the picture and gives us a net effect. Inflow is harder to measure.

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3. Cost of a typical mortgage in Christchurch. An increase in the typical cost of

mortgage will reduce the number of people for which homeownership is an option. A typical mortgage is assumed (for this calculation) to be the quarterly median sale price, 25 year term, 15% deposit, weekly payments and a typical interest rate (calculated with RBNZ data). Temporary or permanently reducing homeownership could affect demand for temporary accommodation.

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Appendix Two: Labour Demand Model Assumptions

That we could extrapolate information relating to a small set of homes (80) to a large number and wide range of homes.

Assuming damage of over $100,000 equated to a rebuild. EQC data was accurate and up to date.

Commercial information was accurate and up to date.

The time for rebuild and repair start was assumed to be 1 February 2012 in the first model, then July 2012 in the second version.

The overall time-span for repair and rebuild was modelling over 4, 5 and 6 years. Views continue to change as to the time it will take, with estimates of up to 10 years now being used.

We estimated the maximum number of FTEs by occupational class required in any month over any year as our annual requirement.

We modelled on average house sizes of 145 sq/m (medium) and 202 sq/m (large). An annual FTE is taken to be 2,150 hours of work.

We estimated that 70% of potential rebuilds will actually be rebuilt in Christchurch. This was based on Hurricane Katrina research by Sapere.

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Appendix Three: Risk-based Consenting defined

Risk-based consenting is a streamlined building consent process for some low risk work. The amount of plan checking and inspection is aligned to the risk and complexity of the work and the skills and capability of people doing the work. This means that more work will be exempt from consent requirements, as set out in Schedule 1 of the Building Act

In plain English, low value, low risk building work won’t need to go through a lengthy council consenting process. An example would be a standalone garage which is a non-residential structure, has no drainage, and may be prefabricated. This is a very low risk building project.

Simple houses which are low risk can be consented and built more quickly and cheaply. This does involve a licensed building practitioner taking greater responsibility for the quality of their work and reduces the number of council inspections that are required.

For Christchurch that means some rebuilding won’t need to be held up by consent authorities, so they can concentrate on the complex work.

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References

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