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Labour leader David Cunliffe, in making announcements in Christchurch this morning, also put insurance companies on notice, saying if the industry did not work with the new system in good faith, he would resort to "alternative regulatory means" -- but he did not expand on what that might be.
Announcing the first tranche of the party's Canterbury policy, Mr Cunliffe said the recovery had been "far too slow and far too messy".
"Forty months after the February 2011 Christchurch earthquake, there are still more than 10,000 insurance claims that have not been settled."
As of May, 9755 'over-cap' insurance claims were still pending settlement. There are a further 1508 claims where people are undecided on their offers, and 1368 claimants who are yet to receive an offer. EQC has a further 6273 claims yet to be resolved.
This backlog was preventing families from moving on and clogging up the courts, Mr Cunliffe said.
The Earthquake Court would be a special division of the Christchurch District Court, and deal with insurance claims of up to $1 million.
"Building on the experience of the current 'Earthquake List', it will streamline the process and cut through a back-log of cases," Mr Cunliffe said.
"To reduce the burden on families all costs, including lawyers' costs and witness fees, will be paid for by the Crown."
If the case is successful, the Crown would recoup a proportion of costs from insurance companies and EQC.
If the insurance industry obstructed the new process, he would consider "alternative regulatory means" to ensure compliance.
Mr Cunliffe also announced a commitment to urgent work on flood-vulnerable homes affected by the earthquakes.
EQC and Christchurch City Council are seeking a High Court declaration on whether EQC should pay for flood mitigation and prevention work.
"We will amend the law as needed to make it clear that EQC must pay for earthquake damage in the form of land subsidence or other geological changes," Mr Cunliffe said.
"We believe the government, through EQC, must pay its share to help those families and communities who, because of the earthquakes, are now having to deal with land that has sunk and the subsequent flooding of their properties."
Labour would send army engineers to help with the work, he said.
The cost of protecting the 500 most flood-prone homes has been put at $20 million, which would be split between the Government and local authorities.
Discussions with the Christchurch City Council would determine how the bill would be split.
Labour would also provide temporary housing for those whose homes are being worked on.
"People in Canterbury should not be shivering through a fourth winter waiting to have broken homes fixed or to receive settlements that would allow them to move on with their lives."