Quake-hit workers to get $400 a week Govt subsidy, PM announces

Destruction on Manchester Street in Christchurch. Photo / Brett Phibbs

Prime Minister John Key today announced those put out of work by last week's devastating Canterbury earthquake will be eligible for subsidies of up to $400 per week.

Full-time workers whose employers believed their business was no longer viable because of the quake would receive $400 net per week, to help them transition to either finding another job or seeking other welfare assistance, said Mr Key. Part-time workers would receive $240 net per week.

Employers are also supported by the six-week package, announced by Mr Key at a press conference this afternoon, to help them keep paying wages to workers during the quake recovery.

Business owners would receive payments of $500 gross per week for each full-time employee, which will be paid to the affected worker. For part-time workers the payment will be $300 gross per week

"This subsidy is designed to keep businesses connected with their staff during the first few weeks after the earthquake," said Mr Key.

Mr Key said he expected about 42,000 people will be able to access the assistance packages at a cost of $100 to $120 million.

He said the bill for last week's devastating earthquake would be about 7 to 8 per cent of the GDP, compared to 2005's Hurricane Katrina's one per cent impact on the US economy.

That compares to about $10.7 million price tag of a similar package announced in the wake of the 7.1 magnitude earthquake last September.

"This package is a first step to help the people of Christchurch rebuild their lives and livelihoods. It is designed to get people through the next six weeks, as the Government considers what measures will be needed in the medium-term," Mr Key said at a press conference this afternoon.

"We have made the support package as simple and pragmatic as possible, so that it can be delivered quickly and reach the people who urgently need it."

Both types of payments will be back-dated to the date of the earthquake and Work and Income will begin taking applications today.

"Today's announcements are the beginning of what will be a long process to get Christchurch back on its feet," Mr Key says.

"More will need to be done, and the Government will do everything we can to support the recovery and rebuilding of the city.

"There are some workplaces now operating in Christchurch, and I'd like to encourage people where possible to go back to work if they can. Where their workplace is safe and their family is safe, the biggest contribution people can make to their city's recovery is by going back to work."

Mr Key confirmed it was almost guaranteed the New Zealand earthquake insurance levy would double or triple as a result of the Christchurch earthquake, after indicating this last night.

He said the Treasury was doing detailed work on the implications of the earthquake and options for funding recovery.

He warned that the central business district could be closed for months.

Mr Key said the rebuilding of Christchurch could take between five and 10 years and would cost more than $14 billion.

His preference at present was to increase the Earthquake Commission levies paid from household insurance rather than setting a general temporary disaster levy as the Australians had recently done.

But that could see the EQC component of premiums treble from an average $60 a year to $180.

"The main reason our initial thinking is for an increase in the EQC levy as opposed to an additional levy is because we already have in place that provisioning system, which Australia doesn't."

But that could see the EQC component of premiums treble from an average $60 a year to $180.

"The main reason our initial thinking is for an increase in the EQC levy as opposed to an additional levy is because we already have in place that provisioning system, which Australia doesn't."

The EQC reserves held $6.4 billion before the first earthquake.

It was likely the first $3 billion to $4 billion in costs from the two quakes would come from the EQC, $5 billion from reinsurers and at least a further $5 billion from private insurance.

On current rates it would take until 2025 to get the reserves back to $6.4 billion. "If we triple it we get there in nine years," the Prime Minister said.

Asked if it would alter the plan to get the Government back to surplus in the 2014-15 year - a year ahead of what had been scheduled in December - Mr Key said that was possible.

"It's too early to tell but the earthquake is of such economic significance that it may challenge that proposition."

Major infrastructure projects are being reprioritised - though Auckland's Waterview roading project was not in jeopardy, he said.

In the short-term some businesses will be given help to relocate to other parts of Christchurch. And rules around the subsidies given to businesses after the September 4 quake are expected to be relaxed.

Mr Key said the Crown accounts would take a hit in the May Budget - revenues would be down because of the reduced economic activity.


*The earthquake support subsidy is paid to employers to pass on to employees.

To apply online go to: www.workandincome.govt.nz

To apply by phone call: 0800 779997

There are seven Work and Income offices open in Christchurch this week:
Ashburton Community Link, cnr Cass and Moore Streets
Hornby Service Centre, 25 Shands Road
Rangiora Service Centre, cnr Good and Blake Streets
Riccarton Service Centre, 76 Riccarton Road
Kaiapoi Community Link, 77 Hilton Street
Shirley Service Centre, 203-205 Hills Road
Linwood Community Link, 154 Aldwins Road