- Date published:
7:00 am, February 20th, 2023 - 42 comments
Categories: chris hipkins, disaster, economy, election 2023, elections, Environment, labour - Tags:
Just over seven months from the election the Labour government has been granted as great a political momentum as that leading into the 2020 election.
Labour now shows all signs of pulling out of the death-stall it was trapped within under Ardern, to pulling up into near-total media and political dominance. This in the course of less than a month from Hipkins’ swearing in.
From Budget 2023 likely in May, to election in October, is just 5 months.
The recovery plan and Budget 2023 set the course for the election campaign.
Cabinet now prepares for the rebuild of the northern half of New Zealand. The rebuild is according to Minister Woods larger than the Christchurch earthquake recovery over a decade ago. Direct state asset liabilities include damage to about 20% of the North Island’s road and bridge networks, rail network, telecommunication network, central electricity network, massive welfare increases, and civil defence costs. To pay for this rebuild, the export economy that provides a substantial part of the state income has been materially weakened with damage to about 60% of its pip fruit exports, and 10% of its dairy exports. Both of those would have been at peak production for export right now.
The entire National Land Transport Plan into which local governments have all put their regional bids will have to be drastically revised to enable this recovery.
EQC will receive claims that will hit the limit of what they are able to provide.
The above will have a material effect upon Budget 2023, into which submissions were supposed to close on January 29th just gone. Departmental bids are already in. The previous policy drivers of Budget 2023 were focused on:
Even as bodies are still recovered and towns and families are reconnected to each other, Treasury will be figuring out new policy drivers to enable this scale of national emergency response. It is going to require a completely new budget.
This Budget reallocation for central government will also be mirrored in local government budgets out for consultation throughout the northern half of the North Island as they too seek to respond and rebuild to this declared national emergency.
Prime Minister Hipkins had already put the spade through some projects such as Auckland light rail, the RNZ-TVNZ merger, and worker unemployment insurance. Expect the 2nd Waitemata Crossing plan to also be iced. Minister Wood has said that other projects included water infrastructure especially stormwater. He has said there needed to be “better coordination between transport, council, and water agencies about stormwater …”. That was before Gabrielle.
If I were to speculate I’d say that out of this will emerge a single national water entity asset owner and operator with a Board that includes Maori representation. Just like the centralisation of health and tertiary training. The state is not yet strong enough to withstand shocks of this magnitude, but it is the only public entity capable of growing such strength. This will be reflected in water governance.
Minister of Finance Grant Robertson is holding the ship as steady as he can as this budget reprioritisation is underway, noting that Core Crown tax revenue was .7% below forecast at $54.5 billion with core Crown expenses at .7% above forecast at $60.5 billion. Net debt is 21.6% of GDP, roughly the same as forecast, yet interest repayments are now ever-growing.
But none of the big bills have arrived yet, and they are going to come in fast. Anyone who thinks this isn’t a graver test of the entire collective strength of the state and far greater than COVIDs, is fooling themselves.
Even before Cyclone Gabrielle, the OECD was predicting New Zealand would be in economic stagnation.
Businesses surveyed by the Reserve Bank of New Zealand expect that the economy will basically stop, with an average of .79% growth for 2023. That’s down from an expectation of 1.27% for the year just 3 months ago.
Economic growth expectations help banks prepare capital, businesses prepare for consumer demand and for their own investment and employment planning, and help IRD predict the kind of tax take they could get. It is a dire forecast.
Let’s remind ourselves of the big spend areas from Budget 2022 to get a sense of what might need reallocation.
One 2022 budget highlight was the leftovers from the $61.6 billion COVID-19 response fund (CRRF). Most of this has been reallocated already for urgent public health needs.
It had also allocated $10.9 billion over 5 years to the NZ SuperFund. It’s very hard to see that standing uncut this year.
It had allocated $777m in capital allocation for fixing up schools. Whatever is at this moment not signed with construction contracts is going to get reallocated northwards.
One should expect a wholesale reallocation of budget priorities in road and rail transport as well, unless the construction contracts are already signed.
Cabinet has already killed off the unspent portion of the $2.9 billion allocated out of the Climate Emergency Response Fund to help change our cars, and likely it will drain this fund dry to pay for the recovery.
The great big sucking sound you hear is New Zealand’s 3 million people from Hastings northward pulling in every public dollar in the country not yet nailed down with a signed contract.
There will be a question to answer for the rebuild about how much Minister Robertson is prepared to go into debt and how much he will reallocate from existing Departmental expenditure. There’s not much point subsidising the national ballet when your school, town, and hospital care need actual rebuilding.
There will be no tax cuts. There is no electoral mood for tax increases. There will be higher public bills and lower public income. There will be more public debt.
Government has but 3 months in which the Prime Minister and Cabinet have to form, prioritise and cost a complete recovery for New Zealand’s worst disaster since World War 2. This is on top of what was already the Year Of The Long Grind.
The entire budget is going to change. Robertson will propose this as a great field of calm to disguise a very painful public sector reprioritisation, in order that the rebuild gets underway fast and no matter what the national cost.
As with 2020, the 2023 recovery plan and the budget to make it happen will dominate the 2 months to budget and the further 5 months of election 2023.
The plan will be huge, the budgetary changes will be huge, and on both rest the fate of several million New Zealanders trying to recover their lives, and the future political direction of New Zealand through to 2026.
I dont think the recovery/rebuild cost is larger than Canterbury earthquakes as claimed. Robertson was talking about a $10-12 bill cost . Canterbury was a $40 bill all up cost covered by insurance and of course not all losses were.
The electricity network is only minor damage in terms of the whole country , but localised its bad but likely can be mostly fixed for urban areas this week . Longer term resilience will be needed
Those who think the river flood control is a Three Waters area just dont understand , its 3 waters not 4. Essentially your pluvial suburban floods come into that not the fluvial or river ones.
Even architects misunderstand what suburban stormwater systems do , at a certain level of rainfall ( above the 5% annual probability, or 1 in 20 yr ) its working properly to run down the street or over your backyard .
This is the Auckland Council flood sensitive areas ( 'flood plains' ) design standard
Older suburbs didnt have these standards , maybe not so high but were often built on better land anyway.
But like the pandemic it seems the media and online are full of instant experts, ignore them
Probably too early to claim about the comparative scale of the impact vis a vis Christchurch. But Hipkins is already flagging wholesale scale of budget reallocation this morning.
Building back any network for greater resilience than current design always requires massive cost increases and redesign.
Very hard to see flood level design standards staying the same after this, because clearly they didn't work.
For most suburban development , they 'did work'. I noticed the Te Awa more recent subdivision on outskirts of Napier, it appears completely flooded but a closer look at the aerial photo seems to show the streets and front lawns flooded but the houses just above it.
That's selection of one image to make a claim. You know it was bigger than that.
Just pause before stating that everything in planning worked, and reflect on what didn't.
Obviously the newer subdivision Te Awa was my focus, but seems the same approach was used in above area from 70s and 80?. Streets and front and back yards flood but house floor levels arent supposed to.
For many reasons this approach wasnt used at all in the 50s and 60s areas such as Maraenui, Onekawa etc. The Nelson park area created in 20s-30 also has flooding issues
If you dont want to built on former estuary or land with flooding risk , then Napier would be the same size as Wairoa town. ( 3-4k) Can you see now why your approach is beyond what a reasonable person would suggest.
And to me clearly you dont understand even the basics but dismissive of 'how its done' and throw slurs rather than asking what the floor levels would rise for future climate change
You bizarre attempt at flannel is complete nonsense.
I was born and raised in Napier and I have considerable family and social ties to the region. This is a catastrophe; fussing over a photograph with a magnifying glass in order to cherry pick some information to satisfy an anally retentive desire to do nothing about climate change is idiotic.
What is relevant is a discussion of the barely concealed and systemic culture of cronyism and neo-corruption of local councils in relation to approvals for property development in unsuitable areas.
The lackadasical attitudes to proper separation of power in decision making and general regard for ethical and proprietary behaviour in local government have evolved in an atmosphere of unaccountable Laissez–faire greed, fed by the economic challenges faced by regional New Zealand, the death of local media oversight and a complete failure of democracy which has allowed local government to be captured by highly sectional class interests who can operate their informal networks of nod and wink favouritism with impunity.
The upshot is flooding in Napier which, if overlaid with a map of the city prior to the uplift of the 1931 earthquake, accurately mirrors the old lagoons and swamps. Those areas needed draining to become properly dry, and rely on drainage schemes and pumping stations to keep dry. Yet somehow, someone got permission to build a new housing estate in what was, in my youth, a semi-swamp in Te Awa. In an era of climate change and acknowledged sea level rise. Think about that. And one keeps thinking about the poor inhabitants of the flooded developments in Puketapu, off Swamp road… You'd think there was a clue in the name.
Totally agree. Born in Wairoa, lived in Napier for 4 years. The building on low lying land and indeed land raised up by the 1931 earthquake has always given me pause.
This building on silty, unstable land seems to have run amok in the last 10-15 years. When I was last there 4 years ago I was appalled at the building in these areas and especially up the Esk valley which is an area of well known flooding for many, many years.
I am not sure how this building was allowed to start/continue. Surely Councils look at soil maps, climate maps? Clearly Councils have been chasing the mighty dollar by encouraging more and more people to settle there and to spread out.
Around the airport they had pumps going 24/7 and always have.
But what do we do?
I think realistic managed retreats could be a start.
Looking carefully at soil maps and climate data is a must.
Perhaps also a careful rereading of various fairy stories and biblical stories could be useful too…you know the ones about building on sand!
Napier's baby boomer pram suburbs – Onekawa, Pirimai, parts of Taradale, Maraenui – flooded something chronic when they were first built back in the early 1960s. The built the suburbs then put in the big cross country drainage scheme, which was a pretty cack handed way of doing it. When I was a kid we had a flood most years!
No one was dumb enough to build on even lower lying land, which is why there was a golf course put there.
So your vague ideas from living there as a kid on land development are fine but someone who did it for a living and can give information about how the house floor levels are worked out to be above a possible flood is smeared with an insult.?
These would be the current rules and they worked in new subdivision I highlighted.
I dont have specific knowledge river control methods like on those areas like Esk valley where the river left its banks on a large scale, so left that out. Its a different problem with different answers
Future flood levels will be based on future climate trends, Im not knowledgeable on what those might be but instead of using the current 1% ocurrence or 1 in 100yr use the current 1 in 200yr instead
You arent the only one who was born ( Wairoa) and grew up in ( Taradale) hawkes Bay
You clearly have no civil engineering expertise, just another motor mouth who doesnt have expertise to look at photos and work out what has happened.
Who said we dont have to do anything climate change ? Im saying the design standards we have are working. Others can decide on older areas and their solutions and any changes in future design standards.
We had these self appointed experts like Sanctuary in this situation during the pandemic, 'because masks or vaccines arent perfect' lets not do anything.
Youre an uninformed fool and anyone who listens to your spiel is also.
When you lack a coherent argument, (apart from subtle covert climate change denial) attack the messenger!
The personal insult came from Sanctuary was defamatory
' to satisfy an anally retentive desire to do nothing about climate change is idiotic.'
Try to read what was actually said first before hoping in.
So you agree with building on fragile uplifted former swampy seabed soil? All good?
Engineering can hold everything at bay?
I don't actually go along with this.
I feel we will find that ignoring basic geography such as soil and climate data, not to mention EQ data is/will be at our cost.
It is much the same scenario as is playing out in Auckland where we have played fast & loose on flood plains, on steeper hilly unstable country.
Not every single piece of land is able to be build on and not every single piece of land ought to be built on.
As I said I was truly appalled when I saw the urban sprawl of Napier when I went back 4 years ago…….
All of Napier apart from small hill suburbs ( landslide risk) is on uplifted land. So thats 50k people that already live on it
The railway line was the edge of the original shingle bank and ground just below Bluff Hill.
Most your claims are wrong too as you dont consider the drainage works undertaken , including diverting the river away.
Think of the Netherlands my friend
Nothing came to [my] mind instantly so I looked it up, but couldn’t really find much on Wikipedia either!? Unless you mean dikes …
I am well aware of where the uplifted land is, where Bluff Hill is etc.
My roots are deep into HB.
My view is that we do not need to spread out ie sprawl.
Where the choice is between intensification and building on former salt a sensible idea would be intensification.
The pictures you have shown with the roads in the new subdivisions flooded bears out that roads can act as rivers, harbour all sorts of germs from mixed stormwater and sewage etc.
I am sure that Insurance Companies will see this as flood prone land and they would be right.
What is the problem with a managed retreat, better intensification. So a city with a smaller footprint but with houses etc on the more stable areas?
Why do we want to be the Netherlands of the south? If we do want to aim for flooded areas why not aim to be like Venice – the gondolas are special, the food is better, the gondoliers sing while they work….
Reading Incognito’s link I find the last paragraph is telling
‘Global warming in the 21st century might result in a rise in sea level which could overwhelm the measures the Netherlands has taken to control floods. The Room for the River project allows for periodic flooding of indefensible lands. In such regions residents have been removed to higher ground, some of which has been raised above anticipated flood levels’
Venice is suffering from sea level rises and sinking
Managed retreat plus ‘Spongy cities’ seem to offer our best bet
I thought we were supposed to be adults and able to discuss things.
I am reporting your last sentence.
What is also clear is that the EQC levy rates need to increase. They were in 2022/3 budgeted to be
But they started from a negative retained earnings of 1,686,928 million when you include a book-keeping capitalised reverses of 1,500,000 million.
In other words EQC was effectively broke outside of current revenues. The fund still hasn't recovered from the ChCh earthquakes.
The fund should have raised levies after 2011 a lot faster than they actually did, with the significant raises only arriving in 2019 and 2022 after a review of EQC in 2018 by Dame Silvia Cartwright.
Basically National were doing their usual short-term thinking (now so well epitomised by Luxon) after the ChCh earthquakes and not funding the EQC. So it will be somewhat useless as a buffer against the household and businesses insurance costs this time around.
Agree with that . But EQC pays considerable yearly premiums to 'reinsure' for the big disasters ( worth some billions) and also pays a lump sum ($20 mill ?)to Treasury yearly for the Government guarantee side – so its a form of reinsurance of last resort.
The reinsurance will kick in. But it doesn't look to me like it will be adequate either for private insurance or government backed.
A major issue is that the cost of property and the building material has been escalating much faster than the premiums. They only just raised the max residential EQC cover to 300k.
Which is about half of the price of my one bedroom Auckland apartment, about a third of the price of virtually all housing I seriously looked at last year, and a quarter of the price of any new house or apartment with more than one bedroom.
20 million seems rather low. 20 rebuilds a year?
The EQC cap is only a floor after which the private insurance kicks in ( what you must have to get EQC anyway )
So your house or flat that is worth double -triple that in Auckland is covered up to the level you have as the rebuild value is these days mentioned in policy….and adjusted every year.
Also remember EQC/private insurance doesnt cover the land value which say for Auckland and most other places is half the total QV value at least that the councils use.
The purpose is to rebuilt on existing site if its a total loss many will just need major or minor repairs
The recent flooding in Eskdale echoes the 1938 event, which occurred when sea temperatures around NZ were about 1 degree higher than average. 1938 also saw catastrophic flooding in California, and these 2023 NZ flooding events also have a parallel flooding event in California
Since we are currently experiencing a "marine heatwave" in NZ with up to 2 degrees above average, it is frightening to imagine these types of cyclonic flood events could become annual events if a 2c sea temperature rise is bedded in.
We have ex tropical cyclones every year. Well mostly, as they average from 0-6 events per year
Aucklands previous ' big storm' events of 1938 and 1868 were both in February so highly likely cyclonic based
The Wellington /Hutt Valley floods of 1976 were in late December so again likley cyclonic origin. That was massive as all of Petone was underwater
The above Napier street flooding is an older area thats not too bad but Marewa and Maraenui are 1950s-1960s areas are usually very bad . Thats near the course of the old Tutaekuri river which was relocated from there after the 1931 earthquake.
This is the newer Te Awa subdivision ( notice the dark roofs !)
And the point?
If it is messing around with building on known areas of instability I would agree with you.
The spread of cities is always a concern to me. Compact cities have advantages in terms of utilities, public transport etc,
Coming from HB/Gisborne/East Coast areas I have always been aware of how fragile the place is.
The point is modern designs for subdivisions worked. When you come from HB you might already know there isnt any land available that doesnt have some risk. The whole Meeanee areas is a no go , and great for horticulture as is Pakowhai area.
Do they have to go some where? The modern way is to work within the city boundaries. There is plenty of scope to intensify residential land use closer in to the city centre. Not every body wants or needs to have a house on 1/4 or 1/3 of an acre.
We know that the places of uplift after the 1931 earthquake should be looked at extremely carefully before building is allowed. At least that is what I thought was happening ……
We have seemingly uncontrolled urban sprawl now and the rest of NZ will be paying the price either directly through taxes or indirectly through increased insurance premiums.
Perhaps Napier could strive to be a model for a small scale size constrained city.
The street in Taradale we lived in now has double the density from infill housing. A few doors away was a small orchard, thats now housing. The vineyards that was once McDonalds now Church Rd have mostly moved further out
The Te Awa subdivision is much less land per house site compared to the bigger sites originally in Nelson Park, Onekawa etc.
Higher density housing such as 3-4 levels again is very difficult without razing many areas as infill gets a push back form existing residents. They have a community too
They might not want that area, but they do need it. One of the best ways to mitigate climate and increase resiliency is to relocalise food. That means as much food as possible needs to be grown were it is eaten,
The people living on the quarter acre don't have to be the people that grow the food, tend to the plants and animals.
Meanwhile, if we remove those spaces, and infill them we get these,
But where will all the people go?! We don't have a shortage of space in NZ. The idea that we have to constrain people in cities is based in old thinking around infrastructure and perpetual growth economies. There are other ways of organising things.
As the article says, net government debt is 21.6% of GDP, an absurdly low figure by OECD standards – Australia's metric is c 48%.
This means that the government has a huge capacity to borrow long term at low, sovereign rates of interest so that we can actually build back better & not do our usual half arsed, band aid projects, eg. the Chch rebuild.
It also gives the government an ideal opportunity to reinstate the Ministry of Works & Development as the lead contractor for the rebuilds – parasites like Fulton Hogan can operate as sub contractors to the Ministry.
Parasites like FH can FO.
Absolutely ! Get to it Labour !
Net Debt is the the misleading phrase . Its used by credit rating agencies who calculate [gross debt – government funds] , that for NZ thats ACC, Cullen Fund and EQC ( mostly gone)
ACC funds ($45 bill) are allocated for their claimants . The Cullen Fund $60 bill is allocated for pre pay superannuation for elderly
So we can see $105 bill is government wealth funds , but already allocated
Gross Debt , is what has to be repaid ( often recycled into more borrowing) and its what the taxpayer pays interest on every year
It seems that NZ Gross debt ( this time last year) is $130 bill and 'total borrowing' ? is $219 bill is not such a little amount that you might think
Ghost, even if gross government debt is 30% of GDP it's still amongst the lowest in the OECD. If government debt rose to 40% of GDP, (still manageable) it would release billions to eliminate poverty, homelessness, infrastucture deficit, etc.
Obsessing about government debt plays into the hands of the neolibs – they're always screaming their tits off over government debt, in order to keep government as small as possible & look where that's got us over the last 35 years!
Let's break out of the small minded, small government debt mentality & borrow whatever the hell we need to give evrey kiwi a dignified living standard.
You could well be right . But Im wondering about what Treasury calls 'other borrowing' that almost doubles it again
The problem with using nett debt I have noticed is that as it falls ( during the Key years the stock market boom for NZSF and ACC) many think the government debt was being paid down.
When Key-English never paid down a cent , gross debt grew from $20 bill to $90 bill and the Key fan club including some senior business types thought it was being paid pack !
best to ignore the 'nett debt' number completely ( only credit agencies care about it) and it does matter when interest rates rise as its like pensions, beneficiary payments etc an obligation that must be paid . Many other government spending is discretionary
I agree with these sentiments. I feel we have a bit of room to move to borrow to rebuild back better, with conditions about constraining urban sprawl and intensifying land use on land for housing.
In the 'olden days' we used to call the huge areas of new subdivisions 'nappy valley', sterile environments without a spread of age groups, where there were no shops, everyone had to have a car or three to survive.
" There is no electoral mood for tax increases."
That would depend entirely on where they land….as ever. There may well be electoral support for tax increases …provided they impact a minority.
This report from Stuff, with Carmeron Bagrie, reads very sensibly.
From the article…..
And I think the talk is that this time, anticipating further climate change in the future, we won't just be cleaning up the mess and filling in the cracks. We will be looking at whether this or that road will flood again each year and maybe it's cheaper to build the road somewhere else.
Of course, that's the appropriate way to think but it won't come cheap.
more likely is eventually we can't afford to replace or rebuild the road.
I've been arguing all day with dudes saying we can adapt without mitigation. It's an absolute nonsense.
But if we do not do any mitigation we will be forced to adapt to existing with the resulting mess ….
I don't know what that means.
Adaptation and mitigation are basically the same thing in transition terms. It's not about treating GHGs as some isolate thing, it's about understanding the systems that are driving us towards climate and ecological collapse and changing those while we still have time.