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Diggers work among abandoned cars in Christchurch - Source: ONE News -
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There are renewed calls for an earthquake levy to pay for Christchurch's rebuild as the Government's finances take another hit.
Finance Minister Bill English announced today that the Earthquake Commission (EQC) has revised its estimated Canterbury earthquakes liability from $3.1 billion to $7.1 billion.
The Green Party says that makes the case for a temporary earthquake tax stronger than ever.
"If you're talking about a levy of 1.5% extra on incomes between $48,000 and $70,000 and then 3% extra on incomes over $70,000 ... it would raise about $1 billion a year and that would make a significant difference to paying off the cost of the rebuild," Green Party co-leader Russel Norman said.
Norman said the Government's plans so far are only making New Zealand's debt problems worse.
"Bill English has told us we have a debt problem and I agree with him. But I think he's being fiscally irresponsible."
Labour will not commit to a special earthquake levy but says its new tax plans will help
"That's what the capital gains tax is about. It's about paying down that debt helping the earthquake recovery in Christchurch," Labour leader Phil Goff said.
Figure rises after property assessments
English said the new figure follows the assessment of further properties affected by all of the quakes.
"Over time the scale of the damage to Canterbury has become more clear, as has the Government's share of the expected cost of rebuild," he said.
This includes a re-estimation to $2.2 billion for damage from the February 22 quake and $1.4 billion from the June 13 quake.
Initially it was thought that 12,000 homes would have damage of more than $100,000 but English says that number was now around 30,000.
He said the cost of land damage had risen from a forecast of between $300 and $600 million to $1.8 billion.
English said there is enough in the coffers to cover this rise.
"EQC can meet most of these costs through the natural disaster fund, which held around $6 billion before first quake," he said.
He said the Government also has a guarantee agreement in place, which has been paid by EQC every year for the past 20 years.
"That will be used to meet any shortfall," he said.
English said that although the increase was a "setback for fiscal strategy" it would not affect the Government's surplus forecast.
"The Government remains essentially on track to met a budget forecast of a return to surplus in 2014/15 and we will keep net debt below 30% of GDP."
The new estimate adds an immediate $1.1 billion to the Budget deficit for the financial year to June 30, pushing it close to $18 billion, and to 8.8% of Gross Domestic Product.
English said the rise was not a cause for too much concern as the budget was "running better than expected, with higher than forecast tax revenue and lower than expected Government spending".
But he added that these are still estimates based on partial information and the expected liability is likely to be revised again.
English said there is money in the EQC fund but expected it would go to zero and beyond, triggering the Crown's guarantee.
And any future incidents would have to be covered by the Crown and reinsurance, English said, making the country more vulnerable than it was before the new figures were known.
No threat to claimants
Canterbury Earthquake Recovery Minister Gerry Brownlee has assured Cantabrians that today's announcement will not slow the rebuild of Christchurch and will not mean that claims will not be met.
"EQC contents, building and land claims in Canterbury will continue to progress at pace, as will EQC's full inspection programme - claims will continue to be paid out," Brownlee said.
Since September 4 last year EQC has received more than 388,000 claims for all the earthquakes, one of the highest numbers ever handled by a single insurer in the world.
Brownlee said EQC was paying out about $4 million a day.
The Canterbury and Christchurch earthquakes are likely to rank globally as the fourth most costly for insurers since 1970 after Northridge, California, in 1994, the 9.0 earthquake and tsunami disaster in Japan in March this year, and Kobe, Japan, in 1995.
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announcement.
