John Armstrong: Sorry, Your Majesty, my country needs me

The Prime Minister would be less than human if he wasn't disappointed at having to cancel his weekend engagement as the Queen's guest at Balmoral Castle, the royal family's residence in Scotland.

Such an invitation to a New Zealand prime minister is unprecedented and shows the degree of rapport John Key has with the head of state.

However, last Saturday's Christchurch earthquake is New Zealand's worst disaster in living memory in terms of property damage.

Key personally and National generally will be scrutinised closely by the public on how they handle it and marked accordingly.

Tuesday's decision to ditch Key's trip to Europe was vindicated in very human terms by events in Kaiapoi, the commuter town on the northern outskirts of Christchurch particularly hard hit by the devastating earthquake.

Just 24 hours after Key had inspected damage in the town, a demolition order was placed on the building occupied by the local New World supermarket, forcing its permanent closure with the loss of 34 full-time and 52 part-time jobs.

Had Key stuck to his original plan and flown out of Auckland for London last night, the job losses would surely have given Labour the gold-plated pretext it has been looking for to break the informal truce which the two major parties have maintained for reasons of decorum since the quake struck.

Labour would have been justified in launching a stinging attack on Key as a latter day Nero which would have been extremely difficult to rebut.

Key had indicated on Monday his overseas trip was still on when interviewed on TVNZ's Breakfast.

Later that morning, the Cabinet agreed to a series of measures - including the appointment of Gerry Brownlee as Minister responsible for Earthquake Recovery - which would have given Key the flexibility to depart for overseas fingers crossed that everything was under control.

This was the psyche of the one-time foreign exchange dealer prepared to take a calculated risk. Except in this case any benefit accruing from hob-nobbing with royalty would have been largely personal. And those pluses would have been totally outweighed by the minuses Key would have notched up back home.

So far, National's response to the crisis has been largely exemplary and criticism-free. The Government has been relentlessly single-minded in focusing on providing and co-ordinating a recovery strategy for Christchurch. It has driven the public service to the limit in getting that strategy implemented.

But it could only take one foul-up for the Christchurch public's positive impression of the Government's performance to sour.

As it is, Cabinet ministers know they have to work miracles in the limited window they have before those affected by the quake tire of their plight, community morale slumps, and the Government becomes the target of blame, rightly or wrongly, for things not being fixed.

There is a heavy onus on Brownlee not only to deal with problems as they happen - but to anticipate them.

If anyone needs convincing that Christchurch is a city on edge, they need only replay Wednesday's speech in Parliament by National backbencher Amy Adams.

The MP, whose Selwyn electorate encircles part of Christchurch, came closer than anyone so far in capturing the horror of last Saturday's quake and the psychological anguish felt by many in the after shock-filled aftermath.

It is such intangibles which may prove to be the quake's legacy - alongside the morale-sapping destruction of the city's architectural heritage. The Government's smartest move may turn out to be its blitzing of the city with out-of-town trauma counsellors.

Nationwide, the focus has been more on the tangible - the loss of physical assets, the damage to homes and consequent drop in property values, and the impact on the local and national economy.

The Government may have got off relatively lightly. Compared with similar-sized earthquakes elsewhere, last Saturday's shake has not affected the city's basic infrastructure too badly.

Large-scale industries also report they are by and large still up-and-running. The farming sector crucially seems to have come through reasonably unscathed.

While the Treasury is estimating a 0.5 per cent cut in gross domestic product as a result of the quake, there is some overseas evidence the local economy may pick itself up quite quickly regardless of any construction-driven mini-boom.

The difficulties arise with small and medium-sized enterprises which were housed in now condemned buildings and which were already suffering cash-flow problems.

Some bank economists are worried about the impact of the quake on already shaky economic confidence, especially in the long-suffering retail sector.

They think the injection from increased construction will be offset by a drop-off in activity in other sectors.

National's other worry is the cost of repairing damaged infrastructure and services which are beyond local government to fund, as well as forgone tax revenue.

With about 100 state houses rendered uninhabitable, the Government also faces costs of its own on top of probably having to pay more welfare benefits as unemployment rises and temporary wage assistance.

This is a climate which does not look kindly at penny-pinching by the state. The country is expecting generosity for those who have suffered. Saturday's earthquake has loosened National's purse strings.

Twice in two weeks - the first being the payout to depositors in South Canterbury Finance - Finance Minister Bill English has had to explain why the Government's books are still "manageable" when he previously argued there was no room for more spending.

National would argue the extra spending is a matter of necessity, not choice. But it has undermined English's pleas for restraint elsewhere, while making it harder for him to find the money for election-motivated giveaways in next year's Budget.