Demolition of the earthquake damaged Richmond Working Men's Club, Stanmore Road. Photo / Geoff Sloan
Demolition of the earthquake damaged Richmond Working Men's Club, Stanmore Road. Photo / Geoff Sloan
The Government's anticipated final bill for the Canterbury Earthquakes has risen again, topping the $13 billion mark in today's Half Year Economic and Fiscal Update (Hyefu) and finance Minister Bill English acknowledges it remains a risk to the Government's target of returning to surplus by 2014-15.
But whileit is not expected to increase the overall long term cost, the bill to the taxpayer for the AMI Insurance bail out has been far higher than expected over the last year.
Treasury Secretary Gabriel Makhlouf said official estimates of the total quake damage had been revised upward from $20 billion to $25 billion but total capital costs "maybe around $30 billion".
The latest estimate for the Crown's share of the rebuild was now $13.1 billion, and increase of just over $100 million from the May Budget.
However the Hyefu documents warn: "There remains a significant risk that the final cost to the Crown will exceed the $13.1 billion cost included in these forecasts."
With the $5.5 billion Canterbury Earthquake Recovery Fund now fully allocated, "new policy decisions, or increases in costs above the estimation contingency that are not managed within existing budget allowances , will adversely affect the Crown's fiscal position".
Actual net earthquake expenses during the 2012 year at $1.9 billion were more than $500 million higher than forecast in the Budget.
That was mainly due to higher than anticipated spending on local infrastructure but also significantly higher costs for the Southern Response package as the AMI earthquake claims liabilities held by the Crown are now called.
Uncertainty over the eventual cost of those claims is listed as a "changed" but "unquantified" fiscal risk.
Finance Minister Bill English said "anything to do with the Christchurch Earthquake" represented a risk to the Government's target of returning to surplus by 2014-15.
"We'll go through the cycle of re-estimating those in the run up to next year's Budget.".
English also said at least some of the increase in the total capital cost of the quakes to $30 billion was "likely to flow through to the Government books".
