Anticipating some Canterbury action

Tim Loan.
Tim Loan.
South Island businesses will be looking for some clear direction on the Canterbury rebuilding in tomorrow's Budget 2012 as it remains one of the Government's four priorities this term, SBS Bank financial officer Tim Loan says.

"Top of mind for us is Canterbury. For many people in the South Island, it's Canterbury. Our whole growth is predicated on the rebuild starting," he said in an interview yesterday.

In last year's Budget, the Government allocated around $5.5 billion to the Canterbury rebuilding fund, of which about half had been spent.

While some people would question where the money had been spent, and what on, there was a need to see more progress being made, Mr Loan said.

"I appreciate the ground has to stop shaking but we need to see the city get back on its feet."

The issue had become top of mind for many organisations, including SBS, which generated about 25% of its turnover from Canterbury.

Otago and Southland businesses had strong connections through to Canterbury and many relied on those connections to generate cash flow and jobs, he said.

News that Fonterra was reducing its payout would affect Southland businesses supporting the dairy industry, further strengthening the case to get the Canterbury rebuilding moved up a gear.

"We are all part of the supply chain," Mr Loan said.

Figures released yesterday by ANZ-National Bank indicated the rebuildinging of Christchurch was gathering speed but that Otago and Southland were yet to benefit from the increased activity.

The latest bank economic activity measure showed that nationwide, economic activity increased 0.7% in the three months ended March.

However, activity in the South Island economy, underpinned by the rebuilding in Canterbury, grew 1.3%.

Excluding Canterbury, the economy across the rest of New Zealand expanded by only 0.4%.

Northland led the quarterly economic activity with 3.5%, followed by Canterbury on 2.6%.

However, both Otago and Southland showed contractions in growth of -0.5% and -0.6% respectively.

ANZ-National Bank economist Steve Edwards said year-on-year economic growth was stronger in 10 of the 14 regions.

"Canterbury leapt ahead of Auckland for the prime position on the annual economic growth rankings, while Southland maintained third position."

Otago maintained fifth position with annual growth of 1.1%.

Mr Edwards noted that Canterbury recorded a 4.7% increase in employment in the March quarter but the level remained below pre-earthquake levels.

Strong job advertising was an indication of things to come as the rebuilding intensified.

The number of residential and commercial building consents issued in Canterbury lifted 34% and 11% respectively in the quarter.

"Four solid quarterly increases in economic activity have propelled Canterbury to the top of the year-on-year economic growth rankings," he said.

In Otago, both consumer and business confidence measures had simultaneously surpassed the nationwide benchmarks for the first time since December 2008, despite employment in the region falling 5.6% in the quarter.

Otago recorded the second strongest lift in median house prices in the three months to April, up 7% to $327,000.

Employment in Southland lifted 1.1% in the March quarter, a 6.4% annual increase, taking the series to a six-and-a-half-year high.

"Despite this lift, the region's unemployment rate also inched up to 5.1%," Mr Edwards said.

dene.mackenzie@odt.co.nz

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