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Source: ONE News -
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The cost of the Christchurch earthquake has risen again
according to the Government's books opened today.
The numbers show the Government is on track to return to surplus in
three years, but they come with a warning that international events
could blow it off course.
Treasury predicts unemployment falling to 4.7% by 2013, down from 6.5%, a surplus by the following year and 170,000 new jobs over four years.
Economic growth of 2.3% is forecast this year and an average of 3% over the next four years.
Finance Minister Bill English says the recovery has been stronger this year than was expected back at the Budget in May.
"But there are still plenty of head winds which will have the affect of keeping growth moderate," he said.
But moderate could turn to miserable if global markets turn sour.
Under that scenario, demand for New Zealand exports drops and
the economy loses $35 billion over five years. That is nearly
double the estimated cost of the Christchurch earthquakes and
Treasury estimates there's a 20% chance things could be worse than
that.
"Treasury has put a one in five assessment on it - there is
probably a one in 20 or one in 30 chance of a meltdown like 2008,"
English said.
Labour Leader Phil Goff says after the World Cup win, economic reality is hitting home.
"Unfortunately after the euphoria of winning the Rugby World Cup over the weekend, which we'd like still to be celebrating, this brings us crashing down into the reality of New Zealand's position," Goff said.
The Christchurch rebuild is part of that reality.
In May, Treasury estimated the earthquake damage at $15 billion but now they say it's $20 billion because of continuing aftershocks and rebuilding taking longer than expected.
"We now expect investment relating to the earthquake will not start in earnest until the second half of 2012. This represents a delay of six to nine months compared with the Budget Update," Treasury said.
And if factors such rebuilding to higher standards are included Treasury says the bill could blow out to $30 billion.
"I think the $20 billion is pretty realistic, the $30 billion to me looks a bit improbable," English said.
He also believes it's realistic to get the books back into surplus in three years time.
"We'll be sticking to that 2014 surplus barring some kind of meltdown or other catastrophe," he said.
Sticking to that timeframe will mean more cuts to government
spending and more pressure on the public service.
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