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Saturday, March 5, 2011

Ten proposals to stay on road to recovery

Ten proposals to stay on road to recovery

By Fran O'Sullivan
5:30 AM Wednesday Mar 2, 2011
Seeing John Key, Phil Goff and Bob Parker observing two minutes' silence together as they commemorated the earthquake victims was poignant.

All three have been strongly affected by the earthquake.

Goff was in Christchurch when the quake occurred. Parker is tirelessly leading the fight for the survival of his beloved city. Key is doing a great job leading the national effort.

Why stop there?

During the past few days plenty of ideas and plans have been floated to try to ensure the country's second biggest city is rebuilt.

Here are 10 proposals doing the rounds.

1. Set up a leadership commission to drive the Christchurch recovery at national level.

This could be the ideal forum to ensure the country's political leaders combine with Christchurch's prime civic, business and community leaders to ensure the drive to rebuild the city keeps going.
This is not presently a problem, but as the year drags on other events will take precedence: the Rugby World Cup and the general election.

It will be difficult for Christchurch to keep its voice at the top table - particularly if the city faces a long wait for the aftershocks to settle down before the rebuild starts.

2. Beef up the Earthquake Recovery Commission.

Key says the Government may set up a fully fledged authority to help direct the Christchurch recovery effort.

After the September 4 earthquake the Government appointed a seven-member commission. Its membership included the mayors of Christchurch, Selwyn and Waimakariri districts as well as Environment Canterbury Commissioner Dame Margaret Bazley.

But its part-time leader Murray Sherwin - who says the February 22 quake is a "game-changer" - thinks it's time to look at a different approach.

A full-time authority led by a full-time chief executive with strong logistical skills would not only give much-needed focus to the recovery effort, but also take some of the pressure off Cabinet Minister Gerry Brownlee (whose sole responsibility is now as Minister Responsible for the Earthquake Recovery) who wouldn't be human if he was not by now feeling the strain as one of a number of local MPs whose own homes have been damaged by the quakes.

3. Announce terms of reference for the Christchurch inquiry.

It's very important that we do find out whether the country's building standards are up to scratch when it comes to dealing with earthquakes in areas which are subject to major liquefaction and lateral spread. Key is right to want to find out why some of the more modern buildings in Christchurch failed.

The inquiry must also address why the city council does not insist that owners of potentially quake susceptible buildings do not face mandatory requirements to strengthen them to 67 per cent of load requirements in the current building code (the 67 per cent is merely an aspirational target).

4. Earthquake levy - why the heck not?

It is extraordinary how hyperbolic some are over the notion that we might pay an earthquake levy.

Look across the ditch. All Aussies earning over A$50,000 ($67,500) have been hit with a 12-month levy to help pay an estimated A$5.6 billion bill to rebuild Queensland after the disastrous floods.

Key is concerned that applying a similar levy here will dampen consumer spending and take the edge off the economic recovery. This depends on the level of the levy and to what threshold it would be applied. In Australia there are two rates.

Crucially, income from A$50,000 to A$100,000 attracts a 0.5 per cent levy. Those earning above A$100,000 pay an additional levy of 1 per cent on income over that threshold.

Setting a high threshold - say $100,000 for an earthquake levy here - ought not to affect economic growth.

After all, the Government says one of the reasons why its tax-cutting package has not sparked consumption-led growth is that many high-income earners are using their tax-cuts to retire personal debt.

In any event, it is difficult to see how the Government could equitably trim big expenditure items if it does not also look at raising new revenue from those who can afford it.

5. Replenish the EQC's funds.

This is a given. The levy that all insured householders pay as part of their general household insurance payment will be either doubled or trebled. But the key issue now is whether the EQC's coverage also needs to be extended.

Right now it's set at the $100,000 plus GST level. But with commercial insurers already taking a tough approach after the first quake to just what constitutes "replacement" values - or the standard to which damaged residential housing should be restored - it's time to consider broader coverage.

6. Reprioritising the national infrastructure spend.

Infrastructure Minister Bill English says this will happen. But it's apparent from the feedback I received to my last column (both public and private) that many Aucklanders feel it would be wrong to institute a "go slow" on infrastructure plans in the country's commercial capital. It's clear English wants to prioritise a considerable degree of the national spend to fund the restoration of Christchurch's infrastructure and help ensure the viability of New Zealand's second largest city.

But others caution that Auckland should take precedence as, more than ever, its own economic success will be necessary to offset the loss of activity in the South.

Responding to my suggestion that Len Brown should sell assets like Auckland's airport shares to fund rail projects, a reader suggested it was better to reinstate the plan to fund overdue infrastructure projects with Auckland's own regional fuel tax.

7. Christchurch Recovery Bonds.

The Government's international appeal will bring in more funds to restore Christchurch. But readers suggest why not launch recovery bonds "aimed at Kiwis who have emigrated who are feeling slightly unnerved by not being 'home' to help", or domestic savers looking for a new investment option.

One added: "The government should seriously consider introducing what was equivalent to war bonds in World War II. There is a need to raise 'big' money within New Zealand quickly, and not add to our already substantial overseas loan portfolio."9

8. Recovery lotteries.

The Ministry of Internal Affairs has given special permission so that 50c on every dollar spent on Lotto, Lotto Strike and Lotto Powerball this week will go to the recovery fund. Why not a string of such lotteries?

9. Review all big expenditure items.

English is doing just that to free up more money for Christchurch. It's now apparent that he's not adverse to reviewing major items such as interest-free student loans, KiwiSaver incentives and the extent of Working for Families.

10. Incentivise Christchurch business.

Declare that the new Christchurch CBD (whenever it is built) will be a special national "enterprise" zone with special (very low) company tax rates to attract businesses to invest there to create export-oriented high-tech businesses or servicing centres for other major businesses.

It's a given that little can realistically get under way until the ground has stabilised. But it is important to the city and its businesses that it retains its special flavour in this area.

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