The rebuild and recovery of Christchurch is at the heart of the assumptions underpinning New Zealand’s return to surplus.
Following are the highlights:
Funding for Canterbury Earthquake Recovery Authority (CERA) of $25.5 million over two years
Further $10 million of support for Cantabrians
Total Government spending of $8.8 billion (including ACC & EQC)
Government creating a $5.5 billion CER Fund (CERF) for CBD demolition, temporary housing, welfare and business support and new infrastructure
Earthquake Kiwi Bond
Treasury’s assumptions on the timing and impact of the Christchurch rebuild are central to the Government’s planned return to surplus by 2014-2015.
It is the bulk of forecast GDP growth in 2013 and 2014. This will bolster the Government’s determination to get the build done on time
This matches the need for some urgency in setting the vision for the rebuild. Canterbury business and residents need to have some certainty to proceed. The Budget does not yet provide this.
The assumptions imply a weaker recovery in the rest of the economy.
This has implications for businesses relying on stronger growth, which may not eventuate. By contrast, it provides some upside for the Government if growth elsewhere is stronger than forecast.
-KPMG New Zealand