1. PESETA SAM LOTU-IIGA (National—Maungakiekie) Link to this
to the Minister of Finance
What are some of the issues the Government will consider to meet the expected fiscal cost of the Christchurch earthquake?
Hon BILL ENGLISH (Minister of Finance) Link to this
Based on an early assessment of the combined cost of the two earthquakes, the cost to the Government could be about $10 billion over the next few years. This will almost certainly involve a combination of the Government taking on a bit more debt in the short term. There is not much choice about that. We are incurring significant costs as we speak. Also, there is the issue of how much of our existing spending can be redirected towards Christchurch, and a likely increase in Earthquake Commission levies, I expect, alongside an increase in other insurance premiums. The Government will not allow an increase in debt to become permanent. We remain committed to a long-term goal of reducing our debt and vulnerability to foreign lenders.
Peseta Sam Lotu-Iiga Link to this
What are some of the likely costs the Government will face as a result of the earthquake?
Some of the direct costs will be at least $3 billion for residential property claims from the Earthquake Commission before reinsurance cover applies; significant contributions to local infrastructure—roads, water, stormwater, sewerage, and stopbanks—and potentially large costs around land remediation, depending on policy decisions there; and, of course, temporary assistance to families, individuals, and businesses from the various support packages that the Government is making available in Christchurch.
Peseta Sam Lotu-Iiga Link to this
What are some of the fiscal policy options the Government might consider in response to the earthquake?
Sound fiscal policy is a good idea under any circumstances, regardless of whether there are extra costs for the earthquake. The Government, as signalled by the Prime Minister earlier in the year, was looking to make progress towards surpluses more quickly. It is certainly not now possible to get there more quickly than we expected, but any changes that the Government makes will ensure that we stick to principles we have employed so far: protecting the vulnerable, maintaining front-line public services, and maintaining our policies for a long-term improvement in economic growth.
Rahui KateneWhat assurance can he give the House that low-income families receiving Working for Families or families where income support is the primary source of income will not be targeted for savings to meet the fiscal costs of the earthquake?
I can give the member the assurance that low-income families and families for whom income support is the principal source of income will not be expected to make contributions.
Peseta Sam Lotu-Iiga Link to this
What will the earthquake mean for the Government’s wider economic programme to build a faster-growing economy and higher incomes?
Although the earthquake is a very significant and tragic event, it merely underlines the importance of the Government getting on with its longer-term programme to build a faster-growing economy. It is essential that we get our finances in order to accommodate the costs of the earthquake but also that we continue with long-term investment in infrastructure, raising educational standards, providing a more productive and effective Public Service, and continuing with tax reform, because these things will give us a stronger economy, which will help us to recover from the earthquake.