Disaster funding review on the cards, English says
By Paul McBeth
Aug. 30 (BusinessDesk) – Finance Minister Bill English says the government will review the way it funds disaster recovery after latest estimates of the Canterbury quake costs climbed to $7.1 billion.
The escalating cost of the Canterbury quakes has wiped out the Earthquake Commission’s $6 billion Natural Disaster Fund, and any future liabilities will call on the government’s guarantee to EQC, Finance Minister Bill English and Earthquake Recovery Minister Gerry Brownlee told media in Wellington today.
That’s blowing this year’s government deficit out to $18 billion, and will prompt a review of how the EQC is funded.
“We’re not looking at any changes in the immediate future,” English said. “As we break the back of the situation in Christchurch, we will be moving to consider, along with the insurance industry and the general public, whether the EQC framework worked well when it was severely tested.”
English didn’t rule out extra levies as he has done in the past, though he stressed that will be a debate for another time.
“The fund we had 12 months ago which was $6 billion is all committed to the Christchurch earthquake and clearly if we were going to rebuild it, you will have to get the revenue somewhere,” he said, referring to the Natural Disaster Fund.
English said the impact to the government’s balance sheet could have been worse if tax revenue hadn’t been running $2.7 billion ahead of forecast. He affirmed the government’s commitment to keeping net debt below 30% of gross domestic product, and said he still expects to return the books to surplus in the 2014/15 financial year.
“This is an extra cost we’re going to have to carry, so it makes us a bit more vulnerable today than before we knew this number,” he said.