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Rubble is seen on cars in central Christchurch - Source: Reuters
When I was in Christchurch covering the earthquake I spent a lot
of time driving and cycling across the city from Civil Defence
headquarters to the homes of my family and friends in Cashmere and
New Brighton.
It was during these trips, often long and tricky due to silt,
broken roads and traffic, that it fully dawned on me what a lasting
and deep impact this disaster will have on the local and national
economy.
Don't get me wrong... the massive devastation and horrendous loss
of life from the quake in the centre of Christchurch shocked and
saddened me like the rest of New Zealand.
I saw the cruel carnage of the PGC and CTV buildings first hand and
stood gobsmacked and dazed like other media under the broken down
Cathedral - a cathedral my grandfather helped fix up back in
the 1930s.
However, it was the quake's impact in the suburbs that really
rammed things home to me.
Unlike after the September quake when I went to Christchurch, you
did not have to look far in my family's community to find
damage.
There were the five red (basically condemned) stickered houses
around my sister's place in Bowenvale; the fallen down fish and
chip on Cashmere Road and the smashed up mechanics in Beckenham;
the flattened pub out at Brighton and the gaping holes in the road
outside my mum and dad's place. It was everywhere and you knew it
would all have to be cleaned up and fixed up.
Then there were things like the sparkling car yards on Moorhouse
Avenue, near my hotel, and car yards that I imagine will be
struggling to sell new cars in the coming months, as nervous
consumers put away their wallets.
Or my mate's new cafe in the red zone of the CBD, stymied and shut
down by the cordon, just when it was hitting its straps. His
endeavour and enterprise cruelly ripped out from with under him and
put on hold.
These are only little anecdotes from my extended Christchurch
community and on their own don't sound like much, but they all
amount to lost dreams, lost jobs, and a loss of confidence.
And when you think of the dozens and dozens of similar communities
that have suffered the same fate across Christchurch it is hard not
to think that the downstream impacts of this quake could end up
being truly enormous.
In fact, already some business groups are starting to question
Treasury's $15 billion rebuild figure suggesting it could end up
being double that.
We just don't know.
It is because of this uncertainty and lack of confidence that
Reserve Bank Governor Alan Bollard was absolutely right in cutting
the official cash rate by 50 points yesterday.
I have little time for those who argue that we have an inflation
threat and should wait.
I know it is tough on those with bank deposits, but this is a
national emergency like we have never seen, we have no choice
here.
Confidence in Christchurch has been shattered and with the New
Zealand economy already on the brink of recession it was in my view
too risky not to cut.
Lower interest rates will help businesses stay a float, help people
keep their jobs and hopefully put more money into the economy as
people are encouraged to spend.
Sure inflation - not to mention oil prices - might be a problem in
a year's time when the rebuild starts proper.
But we can deal with that by putting rates back up a little quicker
than normal. By next year the economy should be strong enough to
take it.
Who knows - maybe the money going into the farming sector right now
from high commodity prices will have finally started flowing
through to the cities by then?
And let's not forget Bollard did put rates up twice last
year.
He has credibility.
So when he says he will put rates back up to keep inflation in
check if need be, he can and should be believed.
Comment on Corin Dann's article below.
Read more Corin Dann commentary here.
