BUDGET 2012: Govt flags $2b in quake spending

The government expects to spend more than $2 billion on earthquake recovery next year, including rising red zone payouts.

However, that comes after earthquake recovery spending - which does not include money from the Earthquake Commission - drops from $1.6b in 2011 to an estimated $860 million this year.

Today's budget reveals new quake recovery spending of $128m to help devastated Christchurch recover from a series of quakes, including the February 2011 shake that killed 185 people.

The spending officially comes from the $5.5b earthquake recovery fund established in the last budget, but like other new spending announced in today's "zero" budget, the extra money will come from savings in other areas or new revenue.

Budget figures show the government expects to spend about $859m on the quake recovery this year, half of the $1.59b spent in the previous year.

That will turn around in the coming financial year, figures show, to a budgeted figure of more than $2.17b. About $800m is earmarked for infrastructure spending and $71m for land zoning, while $1.14b is "yet to be allocated".

Almost $150m of the $5.5b quake fund is allocated for the government bailout of Canterbury-based insurer AMI.

Today's budget revealed a $114.9m boost to the Canterbury Earthquake Recovery Authority's coffers, to oversee quake-battered Christchurch's reconstruction.

That includes $94.7m over two years for maintenance and security of houses in the residential red zone - houses on land deemed too damaged to repair which will be bought by the government and knocked down.

The new Christchurch Central Development Unit, tasked with hatching a blueprint for the broken city's CBD within 100 days and managing the rebuild, will get $29.9m over four years.

Rising red zone payouts

Canterbury Earthquake Recovery Minister Gerry Brownlee says $600m has already been paid out to red zone property owners.

"Many more settlements will occur over the next year and we expect the dollar figure to at least double."

Mr Brownlee says nearly $60m has been spend on demolition in Christchurch CBD in the past year and $35m has been recovered.

"Recovery of costs will continue," he says.

Today's budget also flagged another $13m to be spent on social policy initiatives led by non-government organisations and $800,000 for re-surveying.

In his budget speech, Finance Minister Bill English said repairs in Christchurch will cost more than $20b.

"So it is without doubt the largest - and most complex - economic project in New Zealand's history."

He says the government is determined that residents can rebuild and move into their new and repaired homes as soon as possible.

"Finalising the remaining residential land zoning decisions and the settlement of outstanding insurance claims is therefore a priority."

Work on about three-quarters of the 1000 buildings to be partially or fully demolished in the CBD has been finished, and 13,000 repair jobs are underway.

Mr English says about 6600 sections are expected to be available in the next two years.