The government’s wage subsidy and universal redundancy for quake-affected workers is a start. But with 750 red-stickered buildings in the CBD alone and 200+ jobs already lost, it is just a start. The private sector won’t rebuild without demand, that will have to be supplied by the government upping its spending, and that needs to be paid for.
An earthquake levy that effectively reverses the tax cuts for the rich is needed. Key says that would hurt economic growth. What rot. How does Key pocketing at least $23,000 a year and Telecom’s Paul Reynolds pocketing more than $420,000 a year help the economy one jot? Does it encourage them to be more productive? Of course not. And besides, what economic growth? Even without the quake, NZIER says, growth would be just 1.3%, down from an earlier prediction of 2.3% and basically the same as population growth, due to the oil and food price shock we’re experiencing. With the quake too, growth will be just 0.3% this year and that will be entirely in the form of a one-off hit from the Rugby World Cup.
We can no longer plan to simply grow our way out of trouble. The rebuilding of Christchurch needs to be funded by tapping that enormous wealth transfer to the rich that National made with their tax cuts. No-one else has the money.
Instead, Bill English is proposing to hit Kiwi families worth even larger spending cuts, undermining public services that are already in trouble. He’s also planning to borrow more, which is interesting because a month ago we were being spun that we couldn’t borrow any more and had to sell assets. Doubtlessly, the extra debt taken on now will be used to scaremonger for asset sales at the election. All needless when the rich are sitting on hundreds of millions in new tax cuts.
Turning from funding the recovery to how it should be done-
Wage subsidies and universal redundancy – which National voted against last year and had just introduced for the quake-affected, albeit funded with public money – are good starts but Christchurch will really need a functioning economy to create jobs. The private sector will not lead this and, unfortunately, it appears the government is assuming it will. Sure, businesses will get insurance payouts but they won’t use the money to re-establish operations in Christchurch CBD if it’s a ghost-town, and every business that closes will have a domino effect. There needs to be a critical mass of economic activity, which the government can supply by taking on the rebuilding risk.
SOE Meridian is showing the way by commissioning a new building for its Christchurch call-centre despite its two existing sites being operational. This will mean more economic activity to create jobs, more office space for private businesses, and a replacement building setting the highest earthquake and energy-efficiency standards.
Housing New Zealand should undertake joint equity schemes with homeowners to ensure new homes are also built to the highest standards.
Overarching all this there should be a plan for a sustainable, more liveable city. While rebuilding the architectural charms of the city, the chance must not to lost to design transport and energy systems using the very best of 21st tech and knowledge. Rebuilding should not be done ad hoc and on the cheap. Planning needs to start now.
A final note. At the time of the first quake, I suggested transferring the EQC levy from home insurance premiums to rate so contributions to nd access to the scheme would be universal. I also suggested a tiny natural disaster income protection levy of about $5 per worker per year to cover wages up to the average wage. Obviously, neither of these ideas could have been in place in time for this second quake but they should still be looked at.