Including more Treasury advice on how the economy can expect a lift in years to come when the disaster recovery rebuild kicks in.
This is always a particularly facile piece of analysis as it neglects the fact that much value must first be destroyed to achieve the GDP lift — and if carried to extreme would suggest that repetitive national disasters are the way to ensure sustained growth off the back of insurance payouts and taxpayer reinvestment.
After the first Canterbury earthquake in 2010, then-Finance Minister Bill English said New Zealand needed to be in a position where it could handle another recession and another earthquake and “we won’t be the until 2020″. There have since been multiple large earthquakes, Covid, floods aplenty, a cost of living crisis, imminent recession and now a cyclone.
The National Disaster Fund remains under-capitalised and cities and citizens are under-insured.
One thing is certain: New Zealand will face a massive financial bill to restore damaged land, resettle people, build new roads and repair lives and businesses — all against a revised insurance risk.
That’s for the future.
Here’s a starter for five on some quick actions to get the dollars rolling in to fund the recovery in our underinsured country.
1. Hit up higher earners with a national disaster recovery levy
The trick here is not to call the levy an outright tax. But to ensure the revenues raised are hypothecated to a special recovery fund which cannot be plundered for day-to-day government expenditure as occurred with the Covid Fund.
For this to work the levy must be introduced with a sunset clause.
Australia did just this following the 2010-11 Queensland floods. The income of all Australians earning between A$50,000 and A$100,000 attracted a 0.5 per cent levy. Those earning above A$100,000 paid an additional levy of 1 per cent on that income. The levy expired after 12 months.
Some A$1.8 billion was raised through the flood recovery levy. This levy did not apply to anyone directly affected by the disaster.
The Gillard Government also slashed Government expenditure.
Hipkins and Grant Robertson might find that politically difficult heading into recession.
2. Launch recovery lotteries
The Ministry of Internal Affairs gave special permission after the February 2011 earthquake which devastated Christchurch for a special Lotto draw the following month which resulted in more than $8 million in funding being allocated to the Christchurch Earthquake Appeal.
Another special Lotto draw was held in December 2016 to raise funds for the Kaikōura/Hurunui earthquake relief efforts after that area was subject to a 7.8 magnitude earthquake.
The Ministry of Internal Affairs gave special permission so that 50c of every dollar spent on Lotto, Lotto Strike and Powerball during these special lotteries went to a recovery fund.
A national recovery appeal has yet to be set up — but when it is, why not a string of special lotteries?
3. Capitalise on Jacinda Ardern’s international brand
Our foreign investment settings talk about how it is a privilege for international high-net-worthers to invest and become residents in New Zealand.
Jacinda Ardern has stepped back from political life and plans to retire from national politics in April.
Before she goes, maybe she could step up to be the face of an international appeal to support the rebuild. A call to Stephen Colbert at the Late Show and a plea to those foreign investors with Queenstown boltholes to chip in should assist.
This is not a new idea — it was done successfully after the Christchurch earthquake.
4. Pay back the Covid subsidies
Cabinet Ministers must find it particularly galling that a number of New Zealand companies who are now posting good profits have not paid back their Covid subsidies.
Some have found themselves with capital to spare.
Not only do taxpayers find themselves having to finance the repayment of the Covid fund (in truth simply debt) but will now find themselves having to contribute to the next round of disaster recovery.
Moral suasion — better known as ministerial arm twisting — would not go amiss.
5. Launch disaster recovery bonds
This might appeal to those ordinary New Zealanders who reside offshore. It would be an opportunity to raise big money quickly and not add to our already substantial overseas loan portfolio.
It’s a bit akin to the war bonds from WWII.
This idea may well hit a sweet spot with New Zealanders who have emigrated and want to help their home country recover from the damage nature has done.
