The Government's anticipated final bill for the Canterbury
Earthquakes has risen again, topping the $13 billion mark in
today's Half Year Economic and Fiscal Update (Hyefu) and
finance Minister Bill English acknowledges it remains a risk
to the Government's target of returning to surplus by
But while it is not expected to increase the overall
long-term cost, the bill to the taxpayer for the AMI
Insurance bailout has been far higher than expected over the
Treasury Secretary Gabriel Makhlouf said official estimates
of the total quake damage had been revised upward from $20
billion to $25b but total capital costs "may be around $30
The latest estimate for the Crown's share of the rebuild was
now $13.1b, an increase of just over $100 million from the
However the Hyefu documents warn: "There remains a
significant risk that the final cost to the Crown will exceed
the $13.1 billion cost included in these forecasts."
With the $5.5b Canterbury Earthquake Recovery Fund now fully
allocated, "new policy decisions, or increases in costs above
the estimation contingency that are not managed within
existing budget allowances, will adversely affect the Crown's
Actual net earthquake expenses during the 2012 year, at
$1.9b, were more than $500m higher than forecast in the
That was mainly due to higher than anticipated spending on
local infrastructure but also significantly higher costs for
the Southern Response package, as the AMI earthquake claims
liabilities held by the Crown are now called.
Uncertainty over the eventual cost of those claims is listed
as a "changed" but "unquantified" fiscal risk.
Finance Minister Bill English said "anything to do with the
Christchurch Earthquake" represented a risk to the
Government's target of returning to surplus by 2014-15.
"We'll go through the cycle of re-estimating those in the
run-up to next year's Budget.".
Mr English also said at least some of the increase in the
total capital cost of the quakes to $30b was "likely to flow
through to the Government books".
- Adam Bennett of the NZ Herald