Christchurch quake cost rises $10b to $40b
The Christchurch rebuild just got $10 billion more expensive, of which the government expects to provide $2 billion, Prime Minister John Key has told the National Party's South Island regional conference.
But that will not stop the government forecasting to achieving its political totem of a return to fiscal surplus in the year to June 2015 in the annual Budget, to be published on May 16.
The revised Treasury estimate adds 33 percent to the previous official cost for earthquake rebuild of $30 billion, published in the half-year fiscal update in December.
"This estimate includes capital costs incurred by entities, such as commercial entities, as well as the Crown," says Mr Key, indicating additional costs for insurance companies, including global reinsurers who stand behind locally issued policies.
"The Budget will also show that the estimated net fiscal cost of the earthquakes to the Crown will rise from around $13 billion at the half-year fiscal update last December to around $15 billion.
"This is the largest and most complex, single economic project in New Zealand's history. The scale of the rebuild is unprecedented," he says.
"That always meant that it would be difficult to get an exact handle on the total estimated cost straight away. Despite this, the Budget will still show the government is on track to a surplus in 2014-15."
More precise information about actual costs across a range of areas, including housing, social investment, infrastructure and commercial development, had taken time to accumulate.
"These estimates will continue to be updated from time to time, but they do not change the government's commitment to Christchurch and Canterbury," Mr Key says. The region was struck by three devastating quakes in 2010 and 2011, destroying swathes of Christchurch.
"We will do what it takes to rebuild our second largest city, and that commitment will be unwavering."
The increase implies a potential 25 percent uplift in the expected impact of the rebuild on economic activity, with a ramp-up in activity in Christchurch now starting to show through in economic statistics and forecasts. At the same time, economists are warning the rebuild could take a whole generation to complete.