As time goes by and the details of the budget are explored I anticipate there will be some nasty shocks appearing. The first one appears to be that the funding for the Christchurch rebuild has been cut.
A surprise $300 million boost to the Government’s trumpeted Budget surplus relies mainly on a cut to the Earthquake Commission’s insurance bill, Treasury forecasts show.
In December the 2014-15 surplus was tipped at a “wafer thin” $86m, leaving the Government’s flagship promise on a knife edge.
But Budget documents show the improvement to $372m was given a $200m boost from “lower insurance expenses after an updated valuation of EQC’s insurance liabilities”.
The change gives the Government a much-needed buffer against nasty surprises which could emerge to threaten its talisman surplus between now and Treasury’s final pre-election forecasts, due in August.
Keith Ng’s analysis suggests that there has been a total reduction in the spend on the Christchurch rebuild of $524 million. At a time when the rebuild is getting under way this is extraordinary. David Parker’s estimate is that the reduction is $567 million and this is from the Crown’s half share of local infrastructure rebuild.
No wonder Gerry Brownlee was so grumpy with the recent Kordamentha report commissioned by Christchurch City which suggested that costs of the rebuild had been underestimated by $500 million dollars. Even before it was released he was trying to undermine it’s validity.
He also has tried to suggest that the Government does not need to meet the cost of flood repair and reinstatement for the Flockton Basin. He really excelled himself recently by suggesting that the earthquakes are not the cause of the flooding. Radio New Zealand has quoted him as saying:
The difficulty here is that the flooding is perhaps exacerbated by the earthquakes, but not entirely caused by the earthquakes so first responsibility does lie with the city council.”
His problem however is that residents of the flood-prone Flockton Basin say the floods have become worse since the quakes. Their sections have sunk and the ability of Dudley Creek to drain storm water has been impaired.
The Radio New Zealand article included comments from Insurance Law Expert Duncan Webb which contradicted Brownlee’s views.
Insurance law expert Dr Duncan Webb said that irrespective of the cause of the flooding, the city council was responsible for maintaining land drainage.
He said landowners did have a right to compensation from EQC where their land had been damaged and become more flood prone.
“There’s two quite separate things going on,” he said. “One is the prevention of the flood or the removal of the water through the drainage channels – that’s the city council’s obligation.
“The fact though, is that the land is worse land than it was. It has been damaged and the land damage is EQC’s obligation”.
So it looks like the Government has to and should get the cheque book out.
Brownlee’s and the Government’s obvious problem is that if the Government is obliged to do something about the flooding it will not reach surplus.
James Dann has described the situation well.
Remember back to the day after the February 22nd quake, when Key said that this was a journey we would walk together? Well, National has hopped into a Crown limo and sped off, without even looking back to see how we’re doing. The message is clear; if you care about the rebuild of this city, about ensuring that people whose lives have been turned upside down through no fault of their own can get the assistance that they need, that they deserve, and that they were promised, then you need to throw out this government on September the 20th.
I could not agree with him more.
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