Christchurch earthquake: rebuild poses policy dilemmas

The rebuilding of Christchurch after the magnitude 6.3 earthquake on Tuesday poses many questions for policymakers and lessons from disasters elsewhere are mixed.

It took the Japanese city of Kobe 10 years to recover from a magnitude 6.8 earthquake in 1995 and its economy never fully recovered, says David Edgington, an associate professor at the department of geography at the University of British Columbia, and author of Reconstructing Kobe: The Geography of Crisis and Opportunity.

Kobe was the fourth biggest port in the world but within two years the shipping had gone elsewhere because it took time to fix the port.

The Japanese government worked with business leaders to build new industries and revive tourism. They chose to focus on developing a biotechnology industry with mixed success.

The recovery from the Christchurch earthquake will have to be a national project, he says.

With early estimates of costs of between $10-16 billion, Prime Minister John Key has not ruled out an Australian-style disaster levy. But BNZ economists say they expect the cost to be largely funded from the public disaster fund and private insurers.

"There might also need to be further direct funds from the government, although nothing to necessitate tapping the economy through taxes or levies, as we understand it," Mr Key said.

The private sector stands ready and its leaders met with government this week. Businesses were quick this week to provide food, water and other goods to Christchurch.

"We have services on hand to help should you or your family need them," Nick Miller, managing director of Fulton Hogan told staff this week. "Please use them. This is not a time to be macho."

The Christchurch-based civil contracting company, which employs 5000 people in Australasia, said it was already working with government at all levels planning for the next phase.

"The job ahead is massive, and so will be the expectations on us to return our city to its original splendour. With your support and that of the entire Fulton Hogan team, backed by our 78 years' experience, we will play a leading role in this work," Mr Miller said.

The reconstruction of Christchurch comes at a time when the government wants to reduce its size and has just taken advice on how to restructure the welfare system.

Business leader Roderick Deane told a retreat of the Business Roundtable on February 17, just days before the earthquake, that New Zealand government outlays were 45% of gross domestic product compared with 35% in Australia.

One in five children are in benefit-dependent families and in the past decade invalids benefits rose by 70% when the population rose by 12%.

Dr Deane said New Zealand had failed to address policy changes, particularly in social welfare, health and education and the private sector has been crowded out.