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ChristchurchNZ 2018 Budget commentary

Highlights for Christchurch and Canterbury

The Coalition Government has delivered on its promise to make nearly $300 million available to accelerate the Canterbury recovery:

• $298.5 million of capital in 2018/19 for an acceleration fund, plus operating funding of $500,000 in 2017/18 and $1.0 million in 2018/19 for its administration.
• Christchurch City Council will access capital investment through the fund to complete projects beyond the arrangements already fully dealt with in the Cost Sharing Agreement with the Crown – to help speed up important projects in Christchurch.
• Projects which might benefit from the acceleration fund include completion of the stadium and financing new uses for the Residential Red Zone.
• “We are not making Canterbury decisions from Wellington. Local decision-makers will be front and centre because they know what’s best for Christchurch.” – Hon Megan Woods.

ChristchurchNZ Commentary: The additional funding will help continue our city’s positive rebuild momentum. It will provide confidence with respect to core anchor projects. This announcement should also deliver confidence to the private sector that ongoing investment in Canterbury is supported by public sector investment. The value of the anchor project portfolio is greater than the sum of its parts and the completion of the whole portfolio is essential to the city’s recovery. Projects such as these will enhance Christchurch’s visitor offering which in turn will support our visitor economy.


The Government is launching a special insurance tribunal to resolve outstanding Earthquake Commission (EQC) and insurance claims:

• Tribunal will resolve unsettled residential insurance disputes arising from the Canterbury earthquakes of 2010 and 2011.
• It will provide an active, individually case-managed resolution process for claimants and their insurers, as well as mediation services.
• $6.5 million is provided for operating funds and $1.5 million capital to establish the tribunal.

ChristchurchNZ Commentary: This provides additional confidence to the people of Christchurch. This is a positive step towards resolving long-standing legal issues, enabling people to move forward.


The Government is launching a public enquiry into EQC:

• The independent inquiry will have to power to compel evidence, hold public hearings and ensure all the information needed is put on the table.
• “It is important to get to the bottom of what went wrong, so that we are better prepared for future disasters. We owe it to the people of Canterbury, who have been through so much, to ensure their voices are heard” – Hon. Megan Woods
• $800,000 provided for operating funds in 2017/18 and $2.4 million in 2018/19, as well as $100,000 of capital in 2017/18 to ensure the inquiry has the resources it needs.
• The inquiry will inform legislative changes to the Earthquake Commission Act 1993 and to EQC, and a planned review of insurance contract law.
• Final terms of reference and membership of the inquiry will be announced shortly.

ChristchurchNZ Commentary: This allows the nation to capture the learnings of the Christchurch earthquakes and ensure New Zealanders are better served through efficient clearing of earthquake claims and related settlement issues.


Infrastructure

• Further funding for reinstating the Main North Line following the Kaikōura earthquakes and more funding for KiwiRail.
ChristchurchNZ Commentary: This is a critical link between the South and North Islands. It will enhance our capacity to move people and freight, support business and potentially tourism while contributing to the reduction of freight movement by road, which will improve safety for motorists. This will have positive economic benefit, notably to critical sectors including agriculture and tourism.


Christchurch schools funding:

• $62 million allocated in new capital investment for the Christchurch Schools Rebuild programme.

ChristchurchNZ Commentary: The reorganization of the schools’ post-quake created some anxiety in many Canterbury communities but has also resulted in some modern fit-for-purpose school environments. Many lessons have been learnt. Continued investment in Christchurch’s school infrastructure will be a comfort to the sector and community. Further detail is needed to assess the true impact.


Mackenzie Basin funding:

• $2.6 million to fund better protection of the unique landscapes and biodiversity of the Mackenzie Basin – part of additional Department of Conservation operating funding of $181.6 million

ChristchurchNZ Commentary: This is a positive step to maintain a quality visitor experience. We look forward to further detail on how this will be weighed against existing property rights and land uses.

District Health Boards:

• An extra $2.2 billion to DHBs over the next four years to help relieve the pressure they have been under and ensure they can maintain their standards of care, mental health services and support for older New Zealanders.
• A further $100 million set aside next year for additional deficit support.
• A further $126 million of operational funding over the next four years is also being invested directly into planned care to keep up with demand for elective surgeries and other procedures.

ChristchurchNZ Commentary: The unique post-quake environment in Canterbury has resulted in immense budgetary pressure for the Canterbury DHB. Additional funding that relieves this pressure will be welcome, though again detail is important. The mental health burden in particular needs specific and targeted funding.

Immigration

• Work is underway on developing lists of regional skills and labour shortages. We want an immigration system that really works for New Zealand. We want tomatch migrant skills to the regions and industries where they are needed most. We want to ensure that any genuine skill shortages are filled, with immigration levels that are sustainable.
ChristchurchNZ Commentary: In the context of Canterbury’s extremely low unemployment rate of 3.5%, immigration is critical to ensure continued economic growth. Regional variation in immigration policy settings is essential to meet the needs of specific regions. The application of the Canterbury Skills List has demonstrated the benefit of regional policy. Regional policy supports national prosperity.


Business

• Additional $1.0 billion injected into business research and development over four years to finance: an R&D tax incentive; giving eligible businesses 12.5 cents back for every dollar they spend on R&D – funding available to all businesses spending more than $1000,000 a year on R&D. System designed to transition away from the current Growth Grants model, which is available to a narrower range of firms.

• $100 million of new capital funding for the Green Investment Fund, designed to encourage private-sector investment in high-value, low-carbon industries, clean tech and new jobs. The fund will be established by the end of 2018.

• $5 million investment in operating funds over the new four years to enhance the Overseer farm management tool – used by primary industries and regional councils to help measure nutrient use and greenhouse gas emissions.

ChristchurchNZ Commentary: We welcome the additional spending of $1billion for R&D which helps our businesses remain competitive in a rapidly changing global landscape.

This supports Christchurch’s focus on building on the spirit of innovation and exploration.

The Green Investment Fund aligns with Christchurch’s strategic priority to be a leader in climate change and commitment to being net carbon neutral by 2030.

This investment will provide a more certainty for primary industries moving forward.

Local Government

• $3 million operating funds set aside over the next two years to respond to problems identified in the first stage of a three-waters review this year.

• Government committed to partnerships with local government to tackle the big-picture issues in managing the ‘three waters’.

This provides some mechanism for addressing the recommendations made through the three waters review

• A new unit will be established to oversee compliance with the Resource Management Act and improve consistency across councils - $3.1 million funding over four years allocated to the unit. Unit’s aim is to improve the consistency, effectiveness and transparency of council enforcement of RMA rules and decisions.

ChristchurchNZ Commentary: National consistency provides certainty for businesses but greater detail is required to ensure this does not cut across local decision making. This could facilitate greater clarity as businesses embark on business planning and capital projects.


Prepared by ChristchurchNZ strategy, insights and policy team.

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