New Zealand Economy Responds to Earthquake

June 16, 2011 New Zealand FinanceNew Zealand Taxation

Christchurch EarthquakeNew Zealand is now examining the effect that the latest Christchurch earthquake will have on the national economy.

On June 13th the city of Christchurch was struck with yet another set of earthquakes, leaving the town facing even greater damage and devastation, and even greater rebuilding costs. The country is now looking to see what effect the latest events will have on the economic growth, what changes it might spur the government to carry out in the tax system, and what will be the impact to the ever rising costs of rebuilding the quake shattered town.

According to the international disaster modeling firm EQECAT, the cost of the latest earthquake could rise as high as NZD 6 billion. The assessment is added to the already calculated cost estimates of NZD 15 billion, from the previous two major earthquakes. However, the Finance Minister Bill English has already come forward to question the estimate, saying that he sees no basis for “a large number like that”. He added that the figures were not insurance assessments, and concerned investors should wait a few weeks, until the government is able to examine the new damages adequately.

In the wake of the quake, and as new insurance claims are made on damaged property, there are already some rising concerns as to whether national insurance companies will be willing to open new policies on housing in certain parts of the city, as they are in high risk quake zones.

With the latest earthquake came renewed calls for the government to reconsider instating a quake levy on New Zealand taxpayers, in order to raise funds for the Christchurch rebuild. The Finance Minister Bill English has already said that there will be no levy imposed. However, he remained tight-lipped o how the government will fund the latest costs, saying that a clearer answer will be given when the exact toll of the latest strike is known.

Photo by annzstream