Chch rebuild cost $8.5b

Last updated 12:45 12/04/2011

 

Christchurch will soak up $8.5 billion in Government spending as the city rebuilds after two major earthquakes, Finance Minister Bill English revealed today.

English gave the updated spending figure in a speech to the Wellington Employers’ Chamber of Commerce this afternoon.

The new figure included $3b on local government infrastructure, roads, insurance excesses on schools and hospitals, temporary housing and land remediation agreed after the September quake, demolition costs in the CBD, ACC costs and the business support package.

There was a further $2.5b set aside to cover the expected costs of decisions yet to be taken. The biggest cost among that figure was likely to be for the remediation of land damage from the February quake.

The $3b for local government cost was for pay-outs by the Earthquake Commission (EQC) meeting residential property damage claims.

Of the total, $5.5b would be fully covered in the Budget on May 19.

''It sounds a lot, but New Zealand's annual GDP is around $200 billion a year; the Government spends around $70 billion a year; and it has assets of over $220 billion,'' English said.

''Meeting the Government's share of the immediate earthquake costs will require a quite substantial front loading of Crown debt in the next year or two. That's because we need to get the rebuild underway quickly and therefore we need the money immediately.''

English insisted the short-term shocks would not affect the overall aim of getting the Government accounts back in to surplus as soon as possible.

''The earthquakes do not fundamentally change our economic situation or the Government's programme,'' he said.

"They simply make the task of returning to surplus a little more difficult."

Treasury had earlier projected a hit of up to $5b to revenue from the earthquakes. However, figures out today showed the amount lost would be ``a bit less than'' $3b, English said.