1. Earthquake Kaikōura—Economic Impact and Government Financial PositionNUK KORAKO (National) to the Minister of FinanceORAL QUESTIONSQUESTIONS TO MINISTERSEarthquake Kaikōura—Economic Impact and Government Financial Position1. NUK KORAKO (National) to the Minister of Finance: How does New Zealand's growing economy and the Government's commitment to responsible fiscal management mean New Zealand is well placed to respond to the Kaikōura earthquake?Hon BILL ENGLISH (Minister of Finance): As we have asserted to the House many times the Government is focused on getting its books back into surplus and maintaining growing surpluses for exactly the reason that we need to be able to handle economic shocks including natural disasters. So with a manageable level of public debt surpluses and a growing economy we are well positioned to respond to the Kaikōura earthquake. Treasury has advised that the economy has relatively strong momentum and business and consumer confidence and with low public debt and strong surplus there is fiscal headroom to support the rebuild and recovery.Nuk Korako: What market commentary has he seen on the ability of the New Zealand economy to respond to the Kaikōura earthquake?Hon BILL ENGLISH: Market reaction has been relatively limited which is reassuring given that the international coverage of the earthquake has tended to emphasise its more dramatic aspects. The New Zealand dollar fell initially but has largely now reversed that fall. BNZ reports that the hit to GDP will be substantially less than the Christchurch impact although there will be some significant short-term effects for the regional economy and some pretty dramatic effects on some industries—potentially the fishing industry. Activity of course will be significantly boosted by the rebuilding of infrastructure.Nuk Korako: What advice has he received from officials on progress in responding to the earthquake and what indications are there of fiscal implications?Hon BILL ENGLISH: We are fortunate that the main impact has fallen outside highly populated areas but of course the impact on the smaller communities is intense. Officials advise that the most significant impacts are likely to be increased infrastructure expenditure to repair roads and other utilities infrastructure and decreased tax revenue in the short term as a result of business disruption. No cost estimates are yet available at this stage. The Government's focus at this point is on immediate response but of course a number of organisations such as owners of buildings and ports will be making their own estimates of damage.Nuk Korako: How does the Government's ongoing commitment to fiscal responsibility mean that New Zealand remains well placed to respond to future shocks?Hon BILL ENGLISH: As the Government's books have come into surplus it was always going to be a challenge to manage rising expectations about what the extra money could be spent on. This week's earthquake is a sharp reminder of why fiscal restraint will need to be ongoing—that is having surpluses does not mean that the Government can go spending more money on ineffective public services or infrastructure that may not be needed. We know that there will be economic and natural disaster shocks at some point in the future—we certainly did not predict this one so soon after the Christchurch earthquakes—so it reinforces the need for the Government to stick to its approach which has been successful.