Bennett David: Questions for Oral Answer — Questions to Ministers 
Bennett David: Questions for Oral Answer — Questions to Ministers 
[Volume:670;Page:17382] 
2. 
DAVID BENNETT (National—Hamilton East) 
 to the  
Minister of Finance 
: What are some of the likely impacts on the Government’s finances of the Christchurch earthquake? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 First of all as the weeks go by we are getting better information about the costs of the earthquake but a couple of things are clear already. The first is that the earthquake is likely to delay slightly the New Zealand Government’s return to Budget surplus and secondly that meeting the Government’s share of the immediate earthquake costs will require quite a substantial front-loading of Crown debt in the next year or two—that is to meet costs such as the wage support package the rescue and recovery costs and transitional housing. It means the Government will have to borrow more over the next couple of years. Therefore it is important that we put in place a plan to get our debt back to acceptable levels. 
David Bennett 
: What will be the impact on likely fiscal deficits and net Crown debt as the Government meets the immediate costs of the earthquake? 
Hon BILL ENGLISH 
: When the Prime Minister delivered his Prime Minister’s statement earlier in the year he said that the Government intended to get back to Budget surplus in 2014-15. Now with the effect of the earthquake and the need to borrow to fund those costs the surplus is more likely to occur in 2015-16. It looks as though our deficit before gains and losses could be more than 8 percent of GDP which amounts to around $16 billion. In December we announced a revised forecast of $11 billion which is likely to increase. Net Crown debt is also likely to rise from around the forecast 28 percent of GDP to around 30 percent in 2014. 
Hon David Cunliffe 
: What percentage of the additional expected $4.9 billion increase above the forecast in the operating deficit before gains and losses for this year is a result of the stalled economy which New Zealand has been suffering from since as early as June 2010 well before the earthquake hit Canterbury? 
Hon BILL ENGLISH 
: I could not give the member an estimate of the exact proportion but a significant proportion of the increased deficit this year will be just the immediate cash costs of the earthquake. Some of it will be reduced tax revenue because of the stall in economic activity in Christchurch and some of it—who knows maybe a quarter or a third—could be because of a slower economy which was happening regardless of the earthquake. 
David Bennett 
: What will be the basis of decisions about the Government paying its share of earthquake costs and ensuring that net Crown debt returns to pre-earthquake levels? 
Hon BILL ENGLISH 
: The Government will continue with its considered and consistent way of making decisions on economic issues. The Government has made the decision that because it is impractical to find short-term large-scale savings in public spending we will be borrowing to cover the costs of the earthquake. Any other changes we make in Government spending will be made on their merits rather than just because we need to fund the earthquake recovery. 
Hon John Boscawen 
: Does he think that revenue raised from mining schedule 4 land would mitigate the financial effects of the Christchurch earthquake; if so what actions will the Government take to explore mining on schedule 4 land? 
Hon BILL ENGLISH 
: The Government has explored that option. There is no doubt though that the effort that has been put into getting petroleum and gas resources on the list for exploration companies could yield more revenue in the future and that would help us repay the debt that we will incur in the next year or two on the Christchurch reconstruction. 
Hon John Boscawen 
: Does he think that the comments of the Minister of Energy and Resources on 26 August 2009 that no mining on schedule 4 land had potentially “denied significant opportunity for economic benefit at both a national and regional level” are more relevant now that the economy is struggling with the effects of the Christchurch earthquake? 
Hon BILL ENGLISH 
: It is not the Government’s intention to revisit the conclusion of the debate on schedule 4 but that does not mean we cannot have a strong and growing economy in the future. In fact in the regions high commodity prices will begin spilling over into the domestic economy in the next 12 or 18 months and despite the fact that they cannot mine schedule 4 land I think that part of the economy will start growing with some strength.