New Zealand Quake Damages May Cost as Much as $15.1 Billion

Repairs to the southern New Zealand city of Christchurch after two earthquakes within the past six months may cost as much as NZ$20 billion ($15.1 billion), Prime Minister John Key said.

Last week’s temblor could cost as much as NZ$15 billion -- the higher end of a preliminary range provided by the Treasury Department -- while a quake that struck the city on Sept. 4 will cost an estimated NZ$5 billion, Key said.

New Zealand’s economic growth will be lower than the government forecast in the first half of 2011 because of the magnitude 6.3 earthquake that struck the city on Feb. 22, Finance Minister Bill English said in an e-mailed statement today. Tax revenue will also be less than previously predicted, he said.

“The earthquake has clearly dealt a considerable human and economic blow to Canterbury, and this will have a significant impact on the government’s finances and the wider New Zealand economy,” English said in the statement. “Its effects will be felt for some years to come.”

Businesses in Christchurch’s central business district were destroyed and at least 148 people killed. Key today announced a subsidy plan for companies unable to operate so they can keep paying wages to as many as 42,000 workers for six weeks.

The two-part package will cost NZ$100 million to NZ$120 million, Key said. The first portion allows employers to pay wages, and the second component will support workers whose employers view their business as no longer viable.

‘Generosity’

“These payments made under the earthquake job cover are universal” and are “available immediately,” Key said. “It is my expectation we will err on the side of generosity.”

Multinational businesses, national chains, businesses with insurance coverage, and central and local governments are eligible for the aid, Key said.

The employer subsidy will pay full-time workers NZ$500 per week and part-time workers NZ$300 per week, Key said. The job loss cover will pay full-time employees NZ$400 per week and part-time employees NZ$240 per week.

New Zealand was unlikely to introduce a separate levy to help rebuild Christchurch, as that could slow the economy, Key said. It was likely that the Earthquake Commission levy, an extra charge on house insurance, would double or triple, he said.

The Reserve Bank of New Zealand’s next rate-setting meeting is scheduled for March 10, and four of eight economists surveyed by Bloomberg News predict the official cash rate will be lowered from 3 percent. Last week, RBNZ Governor Alan Bollard said the central bank is “ready and able to supply any cash required by banks.”

Condemned Buildings

About 755 buildings in the city center, or about a quarter of the total, have been condemned, according to the Christchurch City Council website. Rebuilding the city could take five to 10 years, the New Zealand Herald reported today, citing an interview with Key.

The names of eight victims have so far been released. All are local residents and range in age from 5 months to 46 years, according to police.

About 180,000 metric tons of silt covers Christchurch’s streets, six times the amount that seeped through after September’s earthquake, Christchurch Mayor Bob Parker told reporters today. As much as 90 percent will be cleared by the end of the week, he said.

Pioneer Stadium has been opened for the public to have showers, according to Civil Defence. About 35 percent of Christchurch remains without water and residents are advised to boil water, Parker said today.

More Evacuations

Properties around Redcliffs, in Christchurch’s east, were evacuated this morning because of concerns about the stability of the rock face and hills behind the suburb, Civil Defence Director John Hamilton told reporters today. Some roads in the nearby suburb of Sumner remain closed while the rock face is assessed, according to the Civil Defence website.

Lyttelton Port of Christchurch, New Zealand’s largest coal- exporting hub, today resumed core services after infrastructure was damaged. One ship berthed for fuel exchange and two more are scheduled to arrive at the oil berth in the next two days, the company said on its website. Two container vessels unloaded today, it said.

Key has asked New Zealanders to observe two minutes of silence tomorrow to remember victims of the earthquake.

“I am calling on all New Zealanders to stop and remember those who have lost their lives, those who are missing and the hundreds of people who are mourning family and friends,” Key said on his website. The observance will begin March 1 at 12:51 p.m., one week since the earthquake struck.

To contact the reporter for this story: Phoebe Sedgman in Wellington at psedgman2@bloomberg.net.

To contact the editor responsible for this story: Iain Wilson iwilson2@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.