Press release: Seismic policy lives saved estimate a fabrication

 “The claim by Nick Smith,Minister of Building and Housing, in a recently released Cabinet paper, that 335 lives will be saved by the new seismic strengthening policies over the next 100 years, grossly overstates the true position,” Ian Harrison Chair of  EBSS says.

MBIE’s  analysis of the life safety benefits, which is based on sound scientific evidence, shows that just 24 lives can be expected to be saved.

The Minister’s Office has said that “officials have thoroughly checked the cost-benefit analysis that has been released to date and can find no reference to the figure of 24 as an alternative to the figure of 335 contained in the Cabinet paper. The estimate of 335 was derived from modelling by an independent consultant based on population adjusted historical earthquake fatalities across New Zealand, over the next 100 years.”

“On page 37 of the MBIE cost benefit paper ‘Indicative CBA analysis for earthquake prone building review’ it clearly states that the average lives lost per year with no strengthening was estimated to be 0.96, and 0.72 with strengthening to 34% NBS. Over 100 years the difference comes to 24 lives saved,” Mr. Harrison responded.

EBSS has attempted to replicate the Minister’s lives saved estimate but could only do so by making bizzare assumptions, such as assuming that all of New Zealand is as seismically risky as Wellington, or that all present buildings were built before 1930.

“Cabinet has made critical decisions on the basis of the lives saved estimate, but it appears that it was misled” said Mr. Harrison.

In May EBSS asked MBIE, under the OIA, for the documents that would explain how the Minister’s number was calculated. The request was initially refused because it would be a  “contempt of the House of Representatives”, and after three months no relevant documentation was provided.

“MBIE and the Minister need to come clean and provide the independent consultant’s analysis.”  Mr. Harrison said.


Supplementary information

What is EBSS

EBSS is a society established to:

  • Improve the quality of the debate on seismic strengthening policies
  • Lobby central and local governments to implement evidence based seismic strengthening policies
  • Provide information to building owners who are adversely affected by the implementation of the current seismic strengthening policies
  • Provide assistance to building owners who may have received poor advice from engineers on seismic strengthening matters.

The MBIE cost benefit analysis

As part of the review of seismic strengthening policies in 2012, MBIE engaged Martin Jenkins and GNS Science to build a model to generate cost benefit analyses of various seismic policy settings. A description of the model and its results is in the Martin Jenkins report. ‘Indicative CBA analysis for earthquake prone building review’ September 2012. The report can be accessed on the MBIE and Martin Jenkins websites.

This model has been used to produce a cost benefit analysis of the new seimic policy proposals announced by the Minister in May 2015. The analysis, that was presented in the MBIE Regulatory Impact Statement (RIS) showed that the present value of the strengthening was $27 million. This figure captures the present value of lives saved (at $3.65 million per life), injuries reduced and other benefits. The full detail of the present value calculation has not been released, but it is consistent with the analysis on page 37 that shows that strengthening to 33%NBS  reduced the average annual lives lost from 0.96 per year to 0.72.  On average 0.24 lives per year would be saved by the policy and over 100 years, 24 lives.

The model was also run on the assumption that all of New Zealand had the same seismic risk as Wellington.  This had the effect of increasing expected deaths to 8.02, and the life safety benefits would have increased commensurately. The point of this exercise was to demonstrate that even using the extreme and plainly wrong assumption about seismic risk, the costs of strengthening still far outweighed the benefits.